Porch Group Inc.
07/29/2026 | Press release | Distributed by Public on 07/29/2026 15:12
Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
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;
•the possibility that a decline in our share price would result in a negative impact to our captive reinsurance business' capital and collateral portfolio, and may require further financial support to enable the captive reinsurance business to meet applicable regulatory requirements;
•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;
•the ability to effectively integrate and leverage artificial intelligence and machine learning technologies;
•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;
•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 for the year ended December 31, 2025, 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.
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 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. 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., together with its consolidated subsidiaries, ("Porch," the "Company," "we," "our," "us") is a new kind of homeowners insurance company-one designed to stand out in a massive and growing market. Our strategy is built on three differentiators that set us apart.
1.Advantaged Underwriting Through Proprietary Data
Leveraging unique property insights, we can assess risk with greater precision, enabling competitive pricing for low-risk customers and avoiding high-risk customers, while delivering superior underwriting performance.
2.Best Services for Homebuyers
We are committed to being the go-to partner during one of life's most significant transitions-buying a home-by offering services that simplify moving and home setup.
3.More Protection
We combine homeowners insurance with home warranty, filling coverage gaps and reducing unexpected costs for consumers.
Beyond insurance, Porch is a leader in the home software-as-a-service ("SaaS") space, serving approximately 19 thousand companies across industries essential to the home-buying process-home inspectors, title companies, mortgage providers, and more. Our deep relationships and proprietary data give us unique visibility into approximately 90% of U.S. homebuyers and approximately 90% of U.S. homes, enabling superior risk assessment and competitive pricing.
Our mission is to be the best homeowners insurance partner for homebuyers, offering more than just coverage. Through the Porch app, we provide a full moving concierge service, helping customers with moving logistics and essential home services like security, TV/Internet setup, and more.
Finally, we deliver greater home protection by pairing homeowners insurance with full home warranty, additional coverages, and appliance recall monitoring. This approach fills coverage gaps, reduces unexpected costs, and strengthens our value proposition-creating deeper, lasting relationships with our customers.
Segments
We operate under four reportable segments that are also our operating segments. Three of these segments are owned by Porch - Insurance Services, Software & Data, and Consumer Services. The fourth segment, the Reciprocal Segment, is managed, but not owned, by Porch 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 reinsurance support to improve capital efficiency for the Reciprocal. Our captive reinsurer only provides reinsurance coverage for risks with low earnings volatility
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.
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. The Reciprocal Segment provides consumers with insurance to protect their homes, earning revenue primarily through premiums collected on policies.
Relationship with Reciprocal
Porch manages and operates the Reciprocal for its subscribers, providing services related, but not limited, to underwriting, policy renewal, risk management, insurance portfolio management, financial management, and setting investment guidelines. The Reciprocal is a subscriber-owned reciprocal insurance exchange organized under the Texas Insurance Code under which individuals, partnerships, and corporations are authorized to exchange reciprocal or inter-insurance contracts with each other, or with individuals, partnerships, and corporations of other states and countries, providing indemnity among themselves from any loss which may be insured against under any provision of the insurance laws. In exchange for these services, Porch receives policy fees from policyholders and ongoing commissions from the Reciprocal.
Our operating results are, in large part, tied to the growth and financial condition of the Reciprocal. If any events occurred that impaired 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 received by our Insurance Services segment.
Basis of Presentation
The financial information herein should be read in conjunction with the consolidated financial statements for the year ended December 31, 2025, contained in our Annual Report on Form 10-K for the year ended December 31, 2025, 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. Additionally, certain financial amounts for the three and six months ended June 30, 2025, included in this Management's Discussion and Analysis of Financial Condition and Results of Operations have been revised to correct certain immaterial prior period errors as discussed in Note 21, "Quarterly Financial Data (Unaudited)," to the consolidated financial statements included in Part II, Item 8, of our Annual Report for the year ended December 31, 2025.
The Reciprocal is a separate legal entity, owned by its member policyholders, and is not owned, wholly or in part, by the Company. The Reciprocal is consolidated in our financial statements solely as a result of the Company's variable interest in, and status as primary beneficiary of, the entity. We include the Reciprocal's results in this discussion for explanatory and informational purposes only, to give our investors a complete understanding of our business and of the amounts reflected in our consolidated results. Because the Company does not own the Reciprocal, the Reciprocal's results of operations, net income (loss), and equity are attributable to its member policyholders and do not accrue to the Company's shareholders. Nothing in the discussion that follows should be read to suggest that the economic results of the Reciprocal are available to, or accrue to the benefit of, the Company or its shareholders.
Artificial Intelligence
We utilize artificial intelligence ("AI") and machine learning tools to support and enhance certain operational activities and platform workflows across our businesses, with an emphasis on improving productivity and reducing errors while maintaining appropriate governance and regulatory compliance. For purposes of this Quarterly Report, AI refers to a category of technologies that enable systems to learn from data, identify patterns, automate processes, or augment human decision-making. AI may improve efficiency and accuracy in certain workflows across our software suite and insurance operations (for example, expediting voice call answering activity; assisting with inspection report quality and speed in our home inspection business; supporting reconciliation, verification, and fraud monitoring in our real estate title and settlement software business; and enhancing insurance pricing, underwriting, claims handling, and customer service
workflows). The use of these tools is subject to internal policies designed to address data security, confidentiality, and appropriate use, and outputs are reviewed by employees and are not relied upon as the sole basis for decisions where human judgment is required. Management oversees the evaluation and use of AI tools as part of our broader risk management and information security processes. We continue to evaluate the appropriate scope of our AI use and related governance as these technologies and applicable regulations evolve. While we believe responsible use of AI may create opportunities for improved efficiency and scalability over time, the development and implementation of these technologies involve risks and uncertainties, including data privacy, cybersecurity, regulatory compliance, model accuracy, and reliance on third-party systems. See risks and uncertainties discussed in Part II, Item 1A, "Risk Factors," in our Annual Report on Form 10-K for the year ended December 31, 2025.
Recent Developments
Porch Insurance
In January 2026, the Reciprocal launched Porch Insurance, a new homeowners insurance offering that expands upon the historical HOA insurance product. While the HOA product is primarily designed to provide standard coverage, Porch Insurance is structured as a more comprehensive home protection solution that combines expanded insurance coverage with a membership-based model. The new Porch Insurance product includes broader protections intended to address common household incidents that can result in unexpected out-of-pocket expenses and is designed to support faster recovery from everyday losses.
In addition to enhanced coverage, Porch Insurance includes membership benefits that extend value beyond traditional insurance by providing ongoing support related to homeownership, including maintenance, repairs, and life events such as product recalls and moving. These benefits are designed to complement the insurance coverage and are fulfilled through other Porch service offerings. Together, the combination of expanded coverage and service-based benefits differentiates Porch Insurance from the legacy HOA product and aligns with our strategy to deliver a more integrated home services experience.
As Porch Insurance grows, this new product may provide opportunities to grow Reciprocal Written Premium ("RWP", see Key Performance Measures and Operating Metrics section for definition), which indirectly affects the Insurance Services segment's results through commissions and fees earned by Porch. Porch Insurance is designed to support faster premium growth by improving conversion through a differentiated product offering and pricing for good risks, alongside continued expansion in agencies and quote volume that drives the top of the funnel.
Reinsurance Programs for the Reciprocal
As of April 1, 2026, coverage for excess-of-loss catastrophe reinsurance from a panel of third-party reinsurers started at $35.0 million for per occurrence for all perils, up to a loss of $365.0 million. We also purchased reinstatement premium protection for the first three layers of our third-party placed excess-of-loss ("XOL") program. In addition, our captive reinsurance business provides reinsurance support to improve capital efficiency for the Reciprocal. Our captive reinsurer provides reinsurance coverage for risks with low earnings volatility.
In July 2026, the Reciprocal obtained approximately $100.0 million of multi-peril collateralized catastrophe reinsurance protection through a catastrophe bond transaction. This coverage attaches above the top of the Reciprocal's third-party excess-of-loss reinsurance tower, providing additional catastrophe protection beyond the $365.0 million upper limit of the XOL program described above. Under the arrangement, Harbor Crest Re Ltd., a bankruptcy-remote special purpose insurance vehicle, issued $100.0 million of Class A principal-at-risk notes and entered into a reinsurance agreement providing protection for certain losses arising from named storms, winter storms, severe weather events, wildfires, and fire-following earthquake events in the United States. The coverage is structured on an indemnity and per-occurrence basis and provides approximately four years of reinsurance protection. The proceeds from the notes are held in collateral accounts and are available to satisfy the reinsurer's obligations under the reinsurance agreement. Premiums ceded under the arrangement will be recognized as ceded earned premium over the coverage period, while any recoveries are recognized in the period covered losses are incurred and recovery becomes probable. Costs directly attributable to obtaining the reinsurance coverage are deferred and amortized over the applicable coverage period, while other transaction costs are expensed as incurred. The Reciprocal entered into the transaction as part of its broader risk management and reinsurance strategy to diversify sources of catastrophe protection and enhance capital efficiency.
Share Repurchase from the Reciprocal
In June 2026, we, through our wholly owned captive reinsurance business, repurchased approximately 2.1 million shares of our common stock from the Reciprocal for approximately $15.0 million, or $7.17 per share. By converting a portion of the
Reciprocal's Porch common stock holdings into cash, this transaction increases the Reciprocal's statutory surplus given that a large portion of the value of Porch shares of common stock is counted as non-admitted assets in statutory filings. The Reciprocal still holds approximately 16.2 million shares of Porch common stock, providing continued upside potential should the share price appreciate. While this increases Reciprocal's surplus, there is no GAAP impact to the unaudited condensed consolidated financial statements. Additionally, the shares of Porch common stock held by our captive reinsurer and the Reciprocal will remain treasury shares for GAAP accounting purposes and under Delaware law are not considered outstanding for quorum and are not entitled to vote.
Results of Operations
Key Factors Affecting Operating Results
The following key factors affected our operating results in the three and six months ended June 30, 2026:
•Top-of-funnel expansion continued in our insurance business with the number of producing third-party agency branch locations increasing by 148% and quote volumes rising by 87% from the same quarter last year.
•Reciprocal Policies Written grew 38% year-over-year.
•In Software and Data, we implemented a price increase in our title insurance software and sunset certain legacy software products that serve very small businesses to support our strategy to focus on larger customers.
•In Consumer Services, our warranty business experienced lower claims expense for the six months ended June 30, 2026, compared to the same period last year. While U.S. housing market conditions remain challenging, we are in the early-stages of expanding Movingplace.com and Securityplace.com.
•Capacity continued to build: statutory surplus at the Reciprocal ended Q2 2026 at $169.9 million, up 33% compared to Q2 2025. Surplus combined with non-admitted assets ended at $376.5 million, supporting our ability to scale premiums while maintaining a healthy Reciprocal.
Quarter-to-Date Results
| Three Months Ended June 30, | ||||||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | |||||||||||||||||||||||
| (dollar amounts in thousands) | ||||||||||||||||||||||||||
| Revenue | $ | 140,882 | $ | 126,077 | $ | 14,805 | 12 | % | ||||||||||||||||||
| Cost of revenue | 53,302 | 43,422 | 9,880 | 23 | % | |||||||||||||||||||||
| Gross Profit | 87,580 | 82,655 | 4,925 | 6 | % | |||||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||
| Selling and marketing | 41,332 | 33,640 | 7,692 | 23 | % | |||||||||||||||||||||
| Product and technology | 14,676 | 13,076 | 1,600 | 12 | % | |||||||||||||||||||||
| General and administrative | 35,685 | 30,890 | 4,795 | 16 | % | |||||||||||||||||||||
| Provision for doubtful accounts | - | - | - | N/A | ||||||||||||||||||||||
| Impairment loss on intangible assets and goodwill | - | - | - | N/A | ||||||||||||||||||||||
| Total operating expenses | 91,693 | 77,606 | 14,087 | 18 | % | |||||||||||||||||||||
| Operating income (loss) | (4,113) | 5,049 | (9,162) | (181) | % | |||||||||||||||||||||
| Other income (expense): | ||||||||||||||||||||||||||
| Interest expense | (14,775) | (12,056) | (2,719) | 23 | % | |||||||||||||||||||||
| Change in fair value of earnout liability | - | - | - | N/A | ||||||||||||||||||||||
| Change in fair value of private warrant liability | - | (2,878) | 2,878 | (100) | % | |||||||||||||||||||||
| Change in fair value of derivatives | 860 | 12,853 | (11,993) | (93) | % | |||||||||||||||||||||
| Gain on extinguishment of debt | - | 34 | (34) | (100) | % | |||||||||||||||||||||
| Investment income and realized gains and losses, net of investment expenses | 3,151 | 2,665 | 486 | 18 | % | |||||||||||||||||||||
| Other income, net | 1,312 | 1,493 | (181) | (12) | % | |||||||||||||||||||||
| Total other income (expense) | (9,452) | 2,111 | (11,563) | (548) | % | |||||||||||||||||||||
| Income (loss) before income taxes | (13,565) | 7,160 | (20,725) | (289) | % | |||||||||||||||||||||
| Income tax benefit (expense) | (585) | 1,087 | (1,672) | (154) | % | |||||||||||||||||||||
| Net income (loss) | (14,150) | 8,247 | (22,397) | (272) | % | |||||||||||||||||||||
| Less: Net income (loss) attributable to the Reciprocal | (19,753) | 5,668 | (25,421) | (449) | % | |||||||||||||||||||||
| Net income attributable to Porch | $ | 5,603 | $ | 2,579 | $ | 3,024 | 117 | % | ||||||||||||||||||
| Net income (loss) | $ | (14,150) | $ | 8,247 | $ | (22,397) | (272) | % | ||||||||||||||||||
| Net loss (income) attributable to the Reciprocal | 19,753 | (5,668) | 25,421 | (449) | % | |||||||||||||||||||||
| Interest expense | 14,581 | 12,026 | 2,555 | 21 | % | |||||||||||||||||||||
| Income tax benefit | (695) | (1,186) | 491 | (41) | % | |||||||||||||||||||||
| Depreciation and amortization | 9,504 | 4,461 | 5,043 | 113 | % | |||||||||||||||||||||
| Gain on extinguishment of debt | - | (34) | 34 | (100) | % | |||||||||||||||||||||
| Other income, net | (79) | (95) | 16 | (17) | % | |||||||||||||||||||||
| Stock-based compensation costs | 10,733 | 8,000 | 2,733 | 34 | % | |||||||||||||||||||||
| Change in fair value of private warrant liability | - | 2,878 | (2,878) | (100) | % | |||||||||||||||||||||
| Change in fair value of derivatives | (860) | (12,853) | 11,993 | (93) | % | |||||||||||||||||||||
| Other | 297 | (146) | 443 | (303) | % | |||||||||||||||||||||
| Adjusted EBITDA (Excluding Reciprocal) | (1) | $ | 39,084 | $ | 15,630 | $ | 23,454 | 150 | % | |||||||||||||||||
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(1)Adjusted EBITDA (Excluding Reciprocal) is a non-GAAP measure. See Non-GAAP Financial Measures section for definition.
Revenue. Total consolidated revenue including the Reciprocal increased by $14.8 million, or 12%, from $126.1 million in the three months ended June 30, 2025, to $140.9 million in the three months ended June 30, 2026. Approximately 9% of the increase resulted from increased premium revenue, net of ceded premiums, and the remainder of the increase resulted from increased fee revenue, both as a result of more Reciprocal Policies Written, partially offset by a slight reduction in RWP per Policy Written, as described in the following individual segment operating results sections. See Key Performance Measures and Operating Metrics for definition of Reciprocal Policies Written and RWP per Policy Written metrics.
Cost of revenue. Total consolidated cost of revenue including the Reciprocal increased by $9.9 million, or 23%, from $43.4 million in the three months ended June 30, 2025, to $53.3 million in the three months ended June 30, 2026. Approximately 16% of the increase was due to a reduction in losses ceded by the Reciprocal Segment. Under the new reinsurance program effective April 1, 2026, (see Note 12, Reinsurance for the Reciprocal, in the unaudited Notes to Condensed Consolidated Financial Statements), the Reciprocal cedes a smaller share of losses to reinsurers than it did in the prior-year period. The remaining approximately 7% of the increase was driven by growth in the number of Reciprocal Policies Written, which increases the volume of exposures in force. As a percentage of revenue, cost of revenue represented 38% of revenue in the three months ended June 30, 2026, compared with 34% in the three months ended June 30, 2025.
Selling and marketing. Total consolidated selling and marketing expenses including the Reciprocal increased by $7.7 million, or 23%, from $33.6 million in the three months ended June 30, 2025, to $41.3 million in the three months ended June 30, 2026. The increase was driven by higher commission rates to third-party insurance agencies as well as an increase in the number of agencies. As a percentage of revenue, selling and marketing expenses represented 29% of revenue in the three months ended June 30, 2026, compared with 27% in the three months ended June 30, 2025.
Product and technology. Total consolidated product and technology expenses including the Reciprocal increased by $1.6 million, or 12%, from $13.1 million in the three months ended June 30, 2025, to $14.7 million in the three months ended June 30, 2026. As a percentage of revenue, product and technology expenses represented 10% of revenue in the three months ended June 30, 2026, compared with 10% in the same period in 2025. The dollar increase is consistent with the rate of increase in revenue.
General and administrative. Total consolidated general and administrative expenses including the Reciprocal increased by $4.8 million, or 16%, from $30.9 million in three months ended June 30, 2025, to $35.7 million in the three months ended June 30, 2026. Approximately $5.5 million of the increase relates to amortization of an intangible asset upon reassessment of its useful life (see Note 8, Intangible Assets and Goodwill, in the unaudited Notes to Condensed Consolidated Financial Statements). This increase was partially offset by savings from reduced reliance on third-party consultants and centralizing administrative functions.
Interest expense. Interest expense increased by $2.7 million, or 23%, from $12.1 million in the three months ended June 30, 2025, to $14.8 million in the three months ended June 30, 2026. The increase was driven by the May 2025 exchange of our 2026 Notes (as defined below) for newly issued 2030 Notes (as defined below). The higher coupon rate associated with the 2030 Notes contributed to the overall increase in interest expense during the period. The following table details the components of interest expense on the unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss):
| Three Months Ended June 30, | |||||||||||||||||
| 2026 | 2025 | $ Change | |||||||||||||||
| Contractual interest expense | $ | 8,654 | $ | 6,860 | $ | 1,794 | |||||||||||
| Amortization of debt issuance costs and discount | 6,237 | 5,317 | 920 | ||||||||||||||
| Capitalized interest and other | (116) | (121) | 5 | ||||||||||||||
| Total interest expense | $ | 14,775 | $ | 12,056 | $ | 2,719 | |||||||||||
Change in fair value of private warrant liability. We recognized a loss on change in fair value of the private warrant liability of $2.9 million in the three months ended June 30, 2025. The private warrants expired in December 2025; therefore, there was no corresponding gain or loss in the current year.
Change in fair value of derivatives. The gain recognized for the change in fair value of derivatives decreased in the three months ended June 30, 2026, compared to the three months ended June 30, 2025. The fair value of derivatives 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.
Income tax benefit (expense). Income tax provision of $0.6 million and income tax benefit of $1.1 million were recognized for the three months ended June 30, 2026 and 2025, respectively, and the effective tax rates for these periods were 4.3% and 15.2%, respectively. The difference between our effective tax rates for the three months ended June 30, 2026 and 2025, and
the U.S. statutory rate of 21% was attributable to the impact of a full valuation allowance on our net deferred tax assets. Our consolidated effective tax rate increased for the three months ended June 30, 2026, compared to the same period in the prior year decreased due to a change in the mix of income between the Reciprocal and Porch, which are treated as separate reporting entities for income tax accounting purposes.
Net income attributable to Porch. Net income attributable to Porch for the three months ended June 30, 2026, was $5.6 million, a $3.0 million increase from Net income attributable to Porch of $2.6 million for the three months ended June 30, 2025. The increase was driven by growth in fee revenue associated with an increase in RWP and Reciprocal Policies Written, partially offset by higher operating expenses, higher interest expense, and lower derivative gains. See Key Performance Measures and Operating Metrics for definition of Reciprocal Policies Written and RWP per Policy Written metrics.
Adjusted EBITDA (Excluding Reciprocal). Adjusted EBITDA (Excluding Reciprocal), for the three months ended June 30, 2026, was $39.1 million, a $23.5 million improvement from $15.6 million for the same period in 2025. The year-over year improvement was due to an increase in fee revenue associated with increases in RWP and Reciprocal Policies Written, and strong cost control across the business including lower legal and accounting professional fees. These improvements were partially offset by an increase in selling and marketing expense resulting from higher ceded commissions at our captive reinsurer. Adjusted EBITDA (Excluding Reciprocal), is a non-GAAP measure. See Non-GAAP Financial Measures section for definition.
INSURANCE SERVICES
| Three Months Ended June 30, | ||||||||||||||||||||||||||
| 2026 | 2025 | Change | % Change | |||||||||||||||||||||||
| Revenue | $ | 92,925 | $ | 67,390 | $ | 25,535 | 38 | % | ||||||||||||||||||
| Revenue from external customers | 10,028 | 6,748 | 3,280 | 49 | % | |||||||||||||||||||||
| Intersegment revenue | 82,897 | 60,642 | 22,255 | 37 | % | |||||||||||||||||||||
| Gross Profit | $ | 81,189 | $ | 57,864 | $ | 23,325 | 40 | % | ||||||||||||||||||
| Gross Margin | 87 | % | 86 | % | ||||||||||||||||||||||
| Adjusted EBITDA | (1) | $ | 44,399 | $ | 19,657 | $ | 24,742 | 126 | % | |||||||||||||||||
| Adjusted EBITDA Margin | (1) | 48 | % | 29 | % | |||||||||||||||||||||
| RWP (in millions) | (2) | $ | 139.8 | $ | 120.7 | $ | 19.1 | 16 | % | |||||||||||||||||
| Reciprocal Policies Written (in thousands) | (2) | 58.7 | 42.5 | 16.2 | 38 | % | ||||||||||||||||||||
| RWP per Policy Written (unrounded) | (2) | $ | 2,383 | $ | 2,843 | $ | (460) | (16) | % | |||||||||||||||||
| Insurance Service Gross Profit as % of RWP | 58 | % | 48 | % | ||||||||||||||||||||||
| Insurance Services Adjusted EBITDA % of RWP | (1) | 32 | % | 16 | % | |||||||||||||||||||||
______________________________________
(1)Insurance Services Adjusted EBITDA, Insurance Services Adjusted EBITDA Margin, and Insurance Services Adjusted EBITDA % of RWP are non-GAAP measures. See Non-GAAP Financial Measures section.
(2)See Key Performance Measures and Operating Metrics for definitions of metrics.
For the three months ended June 30, 2026, Insurance Services segment revenue increased by $25.5 million, or 38%, to $92.9 million compared to $67.4 million for the three months ended June 30, 2025. Our Insurance Services segment generates revenue in several ways: management fees from the Reciprocal based on a percentage of RWP, policy fees from policyholders based on the number of Reciprocal Policies Written, captive reinsurance premiums from the Reciprocal, and lead fees from third-party insurance agencies. Fee revenue represented approximately 29% of the increase which resulted from the 16% increase in RWP and 38% increase in Reciprocal Policies Written as discussed in the following Reciprocal Segment section. Reinsurance premiums from the Reciprocal represented 9% of the increase which resulted from an increase in ceding from the Reciprocal Segment.
For the three months ended June 30, 2026, Insurance Services segment gross profit increased by 40% compared to the three months ended June 30, 2025, which is consistent with the 38% increase in revenue for the same period. The $23.3 million increase in Insurance Services segment gross profit resulted from the $25.5 million increase in revenue as described above with only a slight increase in cost of revenue due to an increase in ceding activity from the Reciprocal Segment.
Insurance Services segment gross margin remained steady at 87% for the three months ended June 30, 2026, compared to 86% for the three months ended June 30, 2025, as gross profit increased at approximately the same rate as revenue as described above.
Insurance Services Adjusted EBITDA was $44.4 million for the three months ended June 30, 2026, which increased by $24.7 million compared to prior year due to the $23.3 million increase in gross profit described above.
Insurance Services Adjusted EBITDA Margin increased to 48% for the three months ended June 30, 2026, compared to 29% for the three months ended June 30, 2025. This increase was driven by higher fee-based revenue associated with growth in RWP and Reciprocal Policies Written while fixed operating costs remained relatively stable.
RECIPROCAL SEGMENT
| Three Months Ended June 30, | ||||||||||||||||||||||||||
| 2026 | 2025 | Change | % Change | |||||||||||||||||||||||
| Revenue | $ | 59,624 | $ | 55,409 | $ | 4,215 | 8 | % | ||||||||||||||||||
| Gross Profit | $ | 22,697 | $ | 31,513 | $ | (8,816) | (28) | % | ||||||||||||||||||
| Gross Margin | 38 | % | 57 | % | ||||||||||||||||||||||
| Net Income (Loss) | $ | (8,832) | $ | 5,668 | $ | (14,500) | (256) | % | ||||||||||||||||||
| RWP (in millions) | (1) | $ | 139.8 | $ | 120.7 | $ | 19.1 | 16 | % | |||||||||||||||||
| Reciprocal Policies Written (in thousands) | (1) | 58.7 | 42.5 | 16.2 | 38 | % | ||||||||||||||||||||
| RWP per Policy Written (unrounded) | (1) | $ | 2,383 | $ | 2,843 | $ | (460) | (16) | % | |||||||||||||||||
______________________________________
(1)See Key Performance Measures and Operating Metrics for definitions of metrics.
The Reciprocal is a separate legal entity, owned by its member policyholders, and is not owned, wholly or in part, by the Company. The Reciprocal is consolidated in our financial statements solely as a result of the Company's variable interest in, and status as primary beneficiary of, the entity. We include the Reciprocal's results in this discussion for explanatory and informational purposes only, to give our investors a complete understanding of our business and of the amounts reflected in our consolidated results. Because the Company does not own the Reciprocal, the Reciprocal's results of operations, net income (loss), and equity are attributable to its member policyholders and do not accrue to the Company's shareholders. Nothing in the discussion that follows should be read to suggest that the economic results of the Reciprocal are available to, or accrue to the benefit of, the Company or its shareholders.
For the three months ended June 30, 2026, Reciprocal Segment revenue increased by $4.2 million, or 8%, to $59.6 million compared to $55.4 million for the three months ended June 30, 2025. The 8% increase in revenue resulted from increased RWP and the associated earned premium, net of ceded premium. RWP rose because of the 38% increase in the number of Reciprocal Policies Written, which was driven by an increase in the number of agencies and quotes, coupled with improved conversion rates from quotes to written policies for new policyholders. Premiums paid by new policyholders are typically lower than premiums on renewing policies; thus, the large increase in new policies is a significant driver of the 16% decrease in RWP per Policy Written.
For the three months ended June 30, 2026, Reciprocal Segment gross profit decreased by 28% to $22.7 million. The decrease in gross profit resulted from increased net losses compared to the same period in the prior year as the Reciprocal cedes less to reinsurers under the updated reinsurance program effective April 1, 2026.
Gross margin for the Reciprocal Segment decreased from 57% for the three months ended June 30, 2025, to 38% for the three months ended June 30, 2026, because the Reciprocal retains more loss under the updated reinsurance program effective April 1, 2026.
Reciprocal Segment Net Income (Loss) was $(8.8) million for the three months ended June 30, 2026, compared to $5.7 million in the three months ended June 30, 2025. The $8.8 million decrease in gross profit described above drove part of the change as well as the increase in management fees and reinsurance premiums discussed in the Insurance Services section above. A $10.9 million gain on the sale of shares of Porch common stock partially offset these changes (see Note 10, Stockholders' Equity, in the unaudited Notes to Condensed Consolidated Financial Statements) and is eliminated in consolidation.
SOFTWARE & DATA
| Three Months Ended June 30, | ||||||||||||||||||||||||||
| 2026 | 2025 | Change | % Change | |||||||||||||||||||||||
| Revenue | $ | 23,087 | $ | 24,013 | $ | (926) | (4) | % | ||||||||||||||||||
| Gross Profit | $ | 17,424 | $ | 18,167 | $ | (743) | (4) | % | ||||||||||||||||||
| Gross Margin | 75 | % | 76 | % | ||||||||||||||||||||||
| Adjusted EBITDA | (1) | $ | 5,210 | $ | 5,542 | $ | (332) | (6) | % | |||||||||||||||||
| Adjusted EBITDA Margin | 23 | % | 23 | % | ||||||||||||||||||||||
| Average Number of Companies (in thousands) | (2) | 18.7 | 24.2 | (5.4) | (22) | % | ||||||||||||||||||||
| Annualized Average Revenue per Company (unrounded) | (2) | $ | 4,926 | $ | 3,974 | $ | 952 | 24 | % | |||||||||||||||||
______________________________________
(1)Software & Data Adjusted EBITDA and Software & Data Adjusted EBITDA Margin are non-GAAP measures. 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 June 30, 2026, Software & Data segment results were relatively stable, with revenue, gross profit, gross margin, Software & Data Adjusted EBITDA, and Software & Data Adjusted EBITDA Margin all remaining consistent when compared to the three months ended June 30, 2025. Average Number of Companies decreased slightly compared to the same period last year as we sunset certain legacy software products that serve very small home service contractor businesses to better support our strategy to focus on larger, more profitable, customers. Annualized Average Revenue per Company increased due to this shift toward larger customers as well as price increases on some of our software products.
CONSUMER SERVICES
| Three Months Ended June 30, | ||||||||||||||||||||||||||
| 2026 | 2025 | Change | % Change | |||||||||||||||||||||||
| Revenue | $ | 18,130 | $ | 17,650 | $ | 480 | 3 | % | ||||||||||||||||||
| Gross Profit | $ | 15,281 | $ | 15,236 | $ | 45 | - | % | ||||||||||||||||||
| Gross Margin | 84 | % | 86 | % | ||||||||||||||||||||||
| Adjusted EBITDA | (1) | $ | 3,247 | $ | 1,957 | $ | 1,290 | 66 | % | |||||||||||||||||
| Adjusted EBITDA Margin | 18 | % | 11 | % | ||||||||||||||||||||||
| Monetized Services (in thousands) | (2) | 83.9 | 87.2 | (3.3) | (4) | % | ||||||||||||||||||||
| Average Revenue per Monetized Service (unrounded) | (2) | $ | 216 | $ | 202 | $ | 14 | 7 | % | |||||||||||||||||
______________________________________
(1)Consumer Services Adjusted EBITDA and Consumer Services Adjusted EBITDA Margin are non-GAAP measures. 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
For the three months ended June 30, 2026, Consumer Services segment results were relatively stable, with revenue, gross profit, and gross margin all remaining consistent when compared to the three months ended June 30, 2025. There was a slight increase in Average Revenue per Monetized Service, particularly in our warranty businesses. This increase was partially offset by a decrease in the number of Monetized Services which was expected as we focus our strategy on more profitable services.
Consumer Services Adjusted EBITDA improved by $1.3 million for the three months ended June 30, 2026, when compared to the three months ended June 30, 2025, due to lower personnel-related costs, including increased capitalization of software development labor costs associated with internally developed software.
Consumer Services Adjusted EBITDA Margin improved for the three months ended June 30, 2026, driven by a decrease personnel-related costs as described above. This decrease in cost led to an increase in Consumer Services Adjusted EBITDA that exceeded the increase in revenue, leading to higher Consumer Services Adjusted EBITDA Margin.
UNALLOCATED CORPORATE EXPENSES
| Three Months Ended June 30, | ||||||||||||||||||||||||||
| 2026 | 2025 | Change | % Change | |||||||||||||||||||||||
| Selling and marketing | $ | 509 | $ | 398 | $ | 111 | 28 | % | ||||||||||||||||||
| Product and technology | 4,409 | 4,287 | 122 | 3 | % | |||||||||||||||||||||
| General and administrative | 17,833 | 13,028 | 4,805 | 37 | % | |||||||||||||||||||||
Corporate selling and marketing expense and product and technology expense for the three months ended June 30, 2026, were consistent with the same period for 2025.
Corporate general and administrative expense increased by $4.8 million for the three months ended June 30, 2026, compared to the same period for 2025. The increase was due to increased payroll costs resulting from payroll taxes on stock compensation vestings as well as the consolidation of headcount from operating segments into Corporate which was partially offset by strong cost control across the business including lower legal and accounting professional fees.
Year-to-Date Results
| Six Months Ended June 30, | ||||||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | |||||||||||||||||||||||
| (dollar amounts in thousands) | ||||||||||||||||||||||||||
| Revenue | $ | 262,005 | $ | 230,822 | $ | 31,183 | 14 | % | ||||||||||||||||||
| Cost of revenue | 83,577 | 82,719 | 858 | 1 | % | |||||||||||||||||||||
| Gross profit | 178,428 | 148,103 | 30,325 | 20 | % | |||||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||
| Selling and marketing | 81,396 | 63,156 | 18,240 | 29 | % | |||||||||||||||||||||
| Product and technology | 27,707 | 26,277 | 1,430 | 5 | % | |||||||||||||||||||||
| General and administrative | 61,623 | 54,887 | 6,736 | 12 | % | |||||||||||||||||||||
| Total operating expenses | 170,726 | 144,320 | 26,406 | 18 | % | |||||||||||||||||||||
| Operating income | 7,702 | 3,783 | 3,919 | 104 | % | |||||||||||||||||||||
| Other income (expense): | ||||||||||||||||||||||||||
| Interest expense | (29,381) | (23,302) | (6,079) | 26 | % | |||||||||||||||||||||
| Change in fair value of private warrant liability | - | (3,610) | 3,610 | (100) | % | |||||||||||||||||||||
| Change in fair value of derivatives | 2,627 | 19,526 | (16,899) | (87) | % | |||||||||||||||||||||
| Gain on extinguishment of debt | - | 34 | (34) | (100) | % | |||||||||||||||||||||
| Investment income and realized gains and losses, net of investment expenses | 6,549 | 5,475 | 1,074 | 20 | % | |||||||||||||||||||||
| Other income, net | 2,679 | 9,893 | (7,214) | (73) | % | |||||||||||||||||||||
| Total other income (expense) | (17,526) | 8,016 | (25,542) | (319) | % | |||||||||||||||||||||
| Income (loss) before income taxes | (9,824) | 11,799 | (21,623) | (183) | % | |||||||||||||||||||||
| Income tax benefit (provision) | (2,390) | 184 | (2,574) | (1,399) | % | |||||||||||||||||||||
| Net income (loss) | $ | (12,214) | $ | 11,983 | $ | (24,197) | (202) | % | ||||||||||||||||||
| Less: Net income (loss) attributable to the Reciprocal | (13,104) | 1,009 | (14,113) | (1,399) | % | |||||||||||||||||||||
| Net income attributable to Porch | $ | 890 | $ | 10,974 | $ | (10,084) | (92) | % | ||||||||||||||||||
| Net income (loss) | $ | (12,214) | $ | 11,983 | $ | (24,197) | (202) | % | ||||||||||||||||||
| Net loss (income) attributable to the Reciprocal | 13,104 | (1,009) | $ | 14,113 | (1,399) | % | ||||||||||||||||||||
| Interest expense | 29,183 | 23,221 | $ | 5,962 | 26 | % | ||||||||||||||||||||
| Income tax benefit | (658) | (1,172) | $ | 514 | (44) | % | ||||||||||||||||||||
| Depreciation and amortization | 13,619 | 9,485 | $ | 4,134 | 44 | % | ||||||||||||||||||||
| Gain on extinguishment of debt | - | (34) | $ | 34 | (100) | % | ||||||||||||||||||||
| Other income, net | (96) | (7,257) | $ | 7,161 | (99) | % | ||||||||||||||||||||
| Stock-based compensation costs | 18,016 | 12,910 | $ | 5,106 | 40 | % | ||||||||||||||||||||
| Change in fair value of private warrant liability | - | 3,610 | $ | (3,610) | (100) | % | ||||||||||||||||||||
| Change in fair value of derivatives | (2,627) | (19,526) | $ | 16,899 | (87) | % | ||||||||||||||||||||
| Other | 459 | 280 | $ | 179 | 64 | % | ||||||||||||||||||||
| Adjusted EBITDA (Excluding Reciprocal) | (1) | $ | 58,786 | $ | 32,491 | $ | 26,295 | 81 | % | |||||||||||||||||
______________________________________
(1)Adjusted EBITDA (Excluding Reciprocal) is a non-GAAP measure. See Non-GAAP Financial Measures section for definition.
Revenue. Total consolidated revenue including the Reciprocal increased by $31.2 million, or 14%, from $230.8 million in the six months ended June 30, 2025, to $262.0 million in the six months ended June 30, 2026. Approximately 12% of the increase in revenue resulted from increased premium revenue, net of ceded premiums, and the remaining the increase resulted from increased policy fees, both as a result of more Reciprocal Policies Written. See Key Performance Measures and Operating Metrics for definition of Reciprocal Policies Written and RWP per Policy Written metrics.
Cost of revenue. Total consolidated cost of revenue, including the Reciprocal, increased $0.9 million, or 1%, to $83.6 million for the six months ended June 30, 2026, from $82.7 million for the six months ended June 30, 2025. This increase reflects offsetting factors. There was an approximately $20 million increase due to lower ceded losses as the Reciprocal retains a larger share of losses under the new reinsurance program effective April 1, 2026 (see Note 12, Reinsurance for the Reciprocal). This increase was offset by approximately $18 million of lower direct losses at the Reciprocal Segment due to improved prior period development and overall loss performance. As a percentage of revenue, cost of revenue represented 32% of revenue in the six months ended June 30, 2026, compared with 36% in the six months ended June 30, 2025.
Selling and marketing. Total consolidated selling and marketing expenses including the Reciprocal increased by $18.2 million, or 29%, from $63.2 million in the six months ended June 30, 2025, to $81.4 million in the six months ended June 30, 2026. The increase was driven by higher commission rates to third-party insurance agencies as well as an increase in the number of agencies earning commissions. As a percentage of revenue, selling and marketing expenses represented 31% of revenue in the six months ended June 30, 2026, compared with 27% in the six months ended June 30, 2025.
Product and technology. Total consolidated product and technology expenses including the Reciprocal increased by $1.4 million, or 5%, from $26.3 million in the six months ended June 30, 2025, to $27.7 million in the six months ended June 30, 2026. As a percentage of revenue, product and technology expenses represented 11% of revenue in the six months ended June 30, 2026, compared with 11% in the same period in 2025, exhibiting change that is consistent with the change in revenue.
General and administrative. Total consolidated general administrative expenses including the Reciprocal increased by $6.7 million, or 12%, from $54.9 million in the six months ended June 30, 2025, to $61.6 million in the six months ended June 30, 2026. Approximately $5.5 million of the increase relates to amortization of an intangible asset upon reassessment of its useful life (see Note 8, Intangible Assets and Goodwill, in the unaudited Notes to Condensed Consolidated Financial Statements.
Interest expense. Interest expense increased by $6.1 million, or 26%, from $23.3 million in the six months ended June 30, 2025, to $29.4 million in the six months ended June 30, 2026. The increase was driven by the May 2025 exchange of our 0.75% 2026 Notes for newly issued 9.00% 2030 Notes. The higher coupon rate associated with the 2030 Notes contributed to the overall increase in interest expense during the period. The following table details the components of interest expense, on the unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss):
| Six Months Ended June 30, | |||||||||||||||||
| 2026 | 2025 | $ Change | |||||||||||||||
| Contractual interest expense | $ | 17,309 | $ | 12,811 | $ | 4,498 | |||||||||||
| Amortization of debt issuance costs and discount | 12,451 | 10,690 | 1,761 | ||||||||||||||
| Capitalized interest and other | (379) | (199) | (180) | ||||||||||||||
| Total interest expense | $ | 29,381 | $ | 23,302 | $ | 6,079 | |||||||||||
Change in fair value of private warrant liability. We recognized a loss on change in fair value of the private warrant liability of $3.6 million in the six months ended June 30, 2025. The private warrants expired in December 2025; therefore, there was no corresponding gain or loss in the current year.
Change in fair value of derivatives. The gain recognized for the change in fair value of the derivatives decreased in the six months ended June 30, 2026, compared to the six months ended June 30, 2025. The fair value of derivatives 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.
Investment income and realized gains and losses, net of investment expenses. Total investment income and realized gains and losses, net of investment expenses, including the Reciprocal, were $6.5 million and $5.5 million in the six months ended June 30, 2026 and 2025, respectively. The $1.1 million increase was attributable to a larger average investment portfolio and favorable market conditions, which resulted in higher investment returns during the six months ended June 30, 2026.
Other income, net. Total consolidated other income, net, including the Reciprocal decreased by $7.2 million from $9.9 million in the six months ended June 30, 2025, to $2.7 million in the six months ended June 30, 2026. The decrease was driven by a non-recurring recovery on reinsurance contracts that occurred in the six months ended June 30, 2025. See Note 14 in the unaudited Notes to Condensed Consolidated Financial Statements for detail of other income, net, for each period presented.
Income tax benefit (provision). Income tax provision of $2.4 million and income tax benefit of $0.2 million were recognized for the six months ended June 30, 2026 and 2025, respectively, and the effective tax rates for these periods were (24.3)% and (1.6)%, respectively. The difference between the effective tax rate and the U.S. statutory rate of 21% was attributable to the impact of a full valuation allowance on our net deferred tax assets. Our consolidated effective tax rate decreased for the six months ended June 30, 2026, compared to the same period in the prior year due to a change in the mix of income between the Reciprocal and Porch, which are treated as separate reporting entities for income tax accounting purposes, and a sale of Porch common shares by the Reciprocal.
Net income attributable to Porch.. Net income attributable to Porch decreased by $10.1 million from $11.0 million in the six months ended June 30, 2025, to $0.9 million in the six months ended June 30, 2026. The decrease was driven by higher ceded commissions at our captive reinsurer, higher interest expense resulting from the May 2025 exchange of the 2026 Notes for 2030 Notes, which carry a higher coupon rate, a lower gain on the valuation of derivatives, and the absence of a $7.1 million recovery on reinsurance contracts that occurred in 2025. These decreases were offset by growth in fee revenue associated with an increase in RWP and Reciprocal Policies Written. See the Key Performance Measures and Operating Metrics section for definitions of Reciprocal Policies Written and RWP per Policy Written metrics.
Adjusted EBITDA (Excluding Reciprocal). Adjusted EBITDA (Excluding Reciprocal), for the six months ended June 30, 2026, was $58.8 million, a $26.3 million improvement from Adjusted EBITDA (Excluding Reciprocal) of $32.5 million for the same period in 2025. The year-over year improvement was due to an increase in fee revenue associated with an increase in RWP and Reciprocal Policies Written, partially offset by an increase in selling and marketing expense resulting from higher ceded commissions. Adjusted EBITDA (Excluding Reciprocal) is a non-GAAP measure. See Non-GAAP Financial Measures section for definition.
INSURANCE SERVICES
| Six Months Ended June 30, | ||||||||||||||||||||||||||
| 2026 | 2025 | Change | % Change | |||||||||||||||||||||||
| Revenue | $ | 167,596 | $ | 117,196 | $ | 50,400 | 43 | % | ||||||||||||||||||
| Revenue from external customers | 18,335 | 11,202 | 7,133 | 64 | % | |||||||||||||||||||||
| Intersegment revenue | 149,261 | 105,994 | 43,267 | 41 | % | |||||||||||||||||||||
| Gross Profit | $ | 144,973 | $ | 100,189 | $ | 44,784 | 45 | % | ||||||||||||||||||
| Gross Margin | 87 | % | 85 | % | ||||||||||||||||||||||
| Adjusted EBITDA | (1) | $ | 71,890 | $ | 45,466 | $ | 26,424 | 58 | % | |||||||||||||||||
| Adjusted EBITDA Margin | (1) | 43 | % | 39 | % | |||||||||||||||||||||
| RWP (in millions) | (2) | $ | 254.3 | $ | 217.6 | $ | 36.6 | 17 | % | |||||||||||||||||
| Reciprocal Policies Written (in thousands) | (2) | 106.6 | 78.6 | 28.1 | 36 | % | ||||||||||||||||||||
| RWP per Policy Written (unrounded) | (2) | $ | 2,384 | $ | 2,770 | $ | (386) | (14) | % | |||||||||||||||||
| Gross Profit as % of RWP | 57 | % | 46 | % | ||||||||||||||||||||||
| Insurance Services Adjusted EBITDA % of RWP | (1) | 28 | % | 21 | % | |||||||||||||||||||||
______________________________________
(1)Insurance Services Adjusted EBITDA, Insurance Services Adjusted EBITDA Margin, and Insurance Services Adjusted EBITDA % of RWP are non-GAAP measures. See Non-GAAP Financial Measures section.
(2)See Key Performance Measures and Operating Metrics for definitions of metrics.
For the six months ended June 30, 2026, Insurance Services segment revenue increased by $50.4 million, or 43%, to $167.6 million compared to $117.2 million for the six months ended June 30, 2025. Our Insurance Services segment generates revenue in several ways: management fees from the Reciprocal based on a percentage of RWP, policy fees from policyholders based on the number of Reciprocal Policies Written, captive reinsurance premiums from the Reciprocal, and lead fees from third-party insurance agencies. Fee revenue represented 30% of the increase which resulted from the 17% increase in RWP and 36% increase in Reciprocal Policies Written as discussed in the following Reciprocal Segment section. Reinsurance premiums from the Reciprocal represented 10% of the increase which resulted from an increase in ceding from the Reciprocal Segment.
For the six months ended June 30, 2026, Insurance Services segment gross profit increased by 45% compared to the six months ended June 30, 2025, which is consistent with the 43% increase in revenue for the same period. The $44.8 million increase in Insurance Services segment gross profit resulted from the $50.4 million increase in revenue as described above with only a slight increase in cost of revenue.
Insurance Services segment gross margin slightly increased to 87% for the six months ended June 30, 2026, compared to 85% for the six months ended June 30, 2025, as gross profit increased at approximately the same rate as revenue as described above.
Insurance Services Adjusted EBITDA was $71.9 million for the six months ended June 30, 2026, which increased by $26.4 million compared to prior year due to the $44.8 million increase in gross profit. The increase in gross profit was partially offset by a $20.6 million increase in selling and marketing expense resulting from higher ceding commission and increased ceding from the Reciprocal Segment following updates to its reinsurance program on April 1, 2026.
Insurance Services Adjusted EBITDA Margin increased to 43% for the six months ended June 30, 2026, compared to 39% for the six months ended June 30, 2025. This increase was driven by the increase in gross margin discussed above while fixed operating costs remained relatively stable.
RECIPROCAL SEGMENT
| Six Months Ended June 30, | |||||||||||||||||||||||
| 2026 | 2025 | Change | % Change | ||||||||||||||||||||
| Revenue | $ | 110,907 | $ | 95,347 | $ | 15,560 | 16 | % | |||||||||||||||
| Gross Profit | $ | 58,995 | $ | 45,202 | $ | 13,793 | 31 | % | |||||||||||||||
| Gross Margin | 53 | % | 47 | % | |||||||||||||||||||
| Net Income (Loss) | $ | (2,180) | $ | 1,009 | $ | (3,189) | (316) | % | |||||||||||||||
| RWP (in millions) | (1) | $254.3 | $217.6 | $ | 36.6 | 17 | % | ||||||||||||||||
| Reciprocal Policies Written (in thousands) | (1) | 106.6 | 78.6 | 28.1 | 36 | % | |||||||||||||||||
| RWP per Policy (unrounded) | (1) | $2,384 | $2,770 | $ | (386) | (14) | % | ||||||||||||||||
______________________________________
(1)See Key Performance Measures and Operating Metrics for definitions of metrics.
The Reciprocal is a separate legal entity, owned by its member policyholders, and is not owned, wholly or in part, by the Company. The Reciprocal is consolidated in our financial statements solely as a result of the Company's variable interest in, and status as primary beneficiary of, the entity. We include the Reciprocal's results in this discussion for explanatory and informational purposes only, to give our investors a complete understanding of our business and of the amounts reflected in our consolidated results. Because the Company does not own the Reciprocal, the Reciprocal's results of operations, net income (loss), and equity are attributable to its member policyholders and do not accrue to the Company's shareholders. Nothing in the discussion that follows should be read to suggest that the economic results of the Reciprocal are available to, or accrue to the benefit of, the Company or its shareholders.
For the six months ended June 30, 2026, Reciprocal Segment revenue increased by $15.6 million, or 16%, to $110.9 million compared to $95.3 million for the six months ended June 30, 2025. The 16% increase in revenue resulted from the 17% increase in RWP. RWP rose because of the 36% increase in the number of Reciprocal Policies Written, which was driven by an increase in the number of agencies and improved conversion rates from quotes to written policies for new policyholders. Premiums paid by new policyholders are typically a bit lower than premiums on renewing policies; thus, the 14% decrease in RWP per Policy Written.
For the six months ended June 30, 2026, Reciprocal Segment gross profit increased by 31% to $59.0 million. The increase in gross profit resulted from the increase in revenue.
Gross margin for the Reciprocal Segment increased from 47% for the six months ended June 30, 2025, to 53% for the six months ended June 30, 2026, reflecting the impact of higher revenue as discussed above while losses remained relatively stable year-over-year.
Reciprocal Segment Net Income (Loss) was $(2.2) million for the six months ended June 30, 2026, compared to $1.0 million for the six months ended June 30, 2025. A $13.8 million increase in gross profit was offset by increased management fees to the Insurance Segment as a result of increased RWP. A $10.9 million gain on the sale of shares of Porch common stock (see Note 10, Stockholders' Equity, in the unaudited Notes to Condensed Consolidated Financial Statements) is also included in Reciprocal Segment Net Income (Loss) and is eliminated in consolidation.
SOFTWARE & DATA
| Six Months Ended June 30, | ||||||||||||||||||||||||||
| 2026 | 2025 | Change | % Change | |||||||||||||||||||||||
| Revenue | $ | 45,019 | $ | 46,012 | $ | (993) | (2) | % | ||||||||||||||||||
| Gross Profit | $ | 33,952 | $ | 34,660 | $ | (708) | (2) | % | ||||||||||||||||||
| Gross Margin | 75 | % | 75 | % | ||||||||||||||||||||||
| Adjusted EBITDA | (1) | $ | 9,778 | $ | 10,113 | $ | (335) | (3) | % | |||||||||||||||||
| Adjusted EBITDA Margin | (1) | 22 | % | 22 | % | |||||||||||||||||||||
| Average Number of Companies (in thousands) | (2) | 20.6 | 24.2 | (3.6) | (15) | % | ||||||||||||||||||||
| Annualized Average Revenue per Company (unrounded) | (2) | $ | 4,378 | $ | 3,809 | $ | 569 | 15 | % | |||||||||||||||||
______________________________________
(1)Software & Data Adjusted EBITDA and Software & Data Adjusted EBITDA Margin are non-GAAP measures. 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 six months ended June 30, 2026, Software & Data segment results were relatively stable, with revenue, gross profit, gross margin, Software & Data Adjusted EBITDA, and Software & Data Adjusted EBITDA Margin all remaining consistent when compared to the six months ended June 30, 2025. Average Number of Companies decreased slightly compared to the same period last year as we sunset certain legacy software products that serve very small home service contractor businesses to support our strategy to focus on larger, more profitable, customers. Annualized Average Revenue per Company increased due to this shift toward larger customers and price increases on our title insurance software.
CONSUMER SERVICES
| Six Months Ended June 30, | ||||||||||||||||||||||||||
| 2026 | 2025 | Change | % Change | |||||||||||||||||||||||
| Revenue | $ | 33,271 | $ | 32,371 | $ | 900 | 3 | % | ||||||||||||||||||
| Gross Profit | $ | 28,450 | $ | 27,467 | $ | 983 | 4 | % | ||||||||||||||||||
| Gross Margin | 86 | % | 85 | % | ||||||||||||||||||||||
| Adjusted EBITDA | (1) | $ | 3,241 | $ | 1,287 | $ | 1,954 | 152 | % | |||||||||||||||||
| Adjusted EBITDA Margin | (1) | 10 | % | 4 | % | |||||||||||||||||||||
| Monetized Services (in thousands) | (2) | 152.6 | 158.2 | (5.6) | (4) | % | ||||||||||||||||||||
| Average Revenue per Monetized Service (unrounded) | (2) | $ | 218 | $ | 205 | $ | 13 | 6 | % | |||||||||||||||||
______________________________________
(1)Consumer Services Adjusted EBITDA and Consumer Services Adjusted EBITDA Margin are non-GAAP measures. 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 six months ended June 30, 2026, Consumer Services segment results were relatively stable, with revenue, gross profit, and gross margin all remaining consistent when compared to the six months ended June 30, 2025.
Consumer Services segment gross profit improved by $1.0 million due to a slight increase in revenue and a $0.9 million decrease in warranty claims expense. The change in revenue and change in gross profit were relatively the same, leading to relatively stable gross margin compared to the same period in the prior year.
Consumer Services Adjusted EBITDA improved by $2.0 million for the six months ended June 30, 2026, when compared to the six months ended June 30, 2025, due to a decrease in warranty claims expense and lower personnel-related costs, including increased capitalization of software development labor costs associated with internally developed software. These improvements were offset by increased consumer marketing costs in our warranty businesses.
Consumer Services Adjusted EBITDA Margin increased to 10% for the six months ended June 30, 2026, driven by decreases in warranty claims expense and personnel-related costs as described above. This decrease in cost led to an
increase in Consumer Services Adjusted EBITDA that exceeded the increase in revenue, leading to higher Consumer Services Adjusted EBITDA Margin.
UNALLOCATED CORPORATE EXPENSES
| Six Months Ended June 30, | ||||||||||||||||||||||||||
| 2026 | 2025 | Change | % Change | |||||||||||||||||||||||
| Selling and marketing | $ | 879 | $ | 806 | $ | 73 | 9 | % | ||||||||||||||||||
| Product and technology | 8,548 | 8,483 | 65 | 1 | % | |||||||||||||||||||||
| General and administrative | 31,873 | 25,729 | 6,144 | 24 | % | |||||||||||||||||||||
Corporate selling and marketing expense and product and technology expense for the six months ended June 30, 2026, were consistent with the same period for 2025.
Corporate general and administrative expenses increased by $6.1 million for the six months ended June 30, 2026, compared to the same period for 2025. The increase was due to increased payroll costs resulting from organizational realignment and consolidation of headcount from operating segments into Corporate which was partially offset by strong cost control across the business including lower legal and accounting professional fees.
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 Segments
Reciprocal Written Premium ("RWP") - We define RWP as the total premium written by the Reciprocal for the face value of one year's premium gross of cancellations, plus surplus contributions and policy fees, and before deductions for reinsurance in the period. RWP excludes the impact of cancellations and premiums ceded to reinsurers and includes surplus contributions and policy fees, and, therefore, should not be used as a substitute for revenue. We use RWP to manage the business because we believe it represents the business volume generated by associated customer acquisition activities and is reflective of the competitive market position when evaluated on a per written policy basis and is a key driver of both Porch and the Reciprocal's growth and profit opportunities.
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.
RWP per Policy Written - We define RWP per Policy Written as the RWP in the period, which is reflective of the total amount a policyholder is expected to pay, divided by the Reciprocal Policies Written in the period.
Software & Data
Average Number of Companies - We define Average Number of Companies as the average number of companies during the period across all of our Software & Data segment. This only includes the number of companies in our Software & Data segment.
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).
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
As a publicly traded company, we have relied on convertible debt as our primary source of capital. As of June 30, 2026, we had $475.1 million of aggregate principal amount outstanding in convertible notes.
Based on our current operating and growth plan, management believes cash and cash equivalents and liquid investments at June 30, 2026, 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 $649.9 million at June 30, 2026, and $648.3 million at December 31, 2025.
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.
Cash and Investments
The following table provides the components of cash and cash equivalents, restricted cash and cash equivalents, and investments.
| June 30, 2026 | December 31, 2025 | |||||||||||||
| Cash and cash equivalents (excluding Reciprocal) | $ | 54,140 | $ | 44,676 | ||||||||||
| Short-term investments (excluding Reciprocal) | 5,031 | 12,616 | ||||||||||||
| Long-term investments (excluding Reciprocal) | (1) | 60,091 | 55,412 | |||||||||||
| Unrestricted cash, cash equivalents, and investments (excluding Reciprocal) | 119,262 | 112,704 | ||||||||||||
| Restricted cash and cash equivalents (excluding Reciprocal) | 7,562 | 8,503 | ||||||||||||
| All cash, cash equivalents, investments, and restricted cash and cash equivalents (excluding Reciprocal) | $ | 126,824 | $ | 121,207 | ||||||||||
| Cash and cash equivalents of the Reciprocal | $ | 133,321 | $ | 115,373 | ||||||||||
| Short-term investments of the Reciprocal | 25,386 | 7,664 | ||||||||||||
| Long-term investments of the Reciprocal | (2) | 171,702 | 172,978 | |||||||||||
| Unrestricted cash, cash equivalents, and investments of the Reciprocal | 330,409 | 296,015 | ||||||||||||
| Restricted cash and cash equivalents of the Reciprocal | (3) | 581 | 559 | |||||||||||
| All cash, cash equivalents, investments, and restricted cash and cash equivalents of the Reciprocal | $ | 330,990 | $ | 296,574 | ||||||||||
______________________________________
(1)Excludes 2.1 million shares of common stock held by our wholly owned captive reinsurance business.
(2)Excludes 16.2 million shares of common stock held by the Reciprocal.
(3)See Note 1 in the unaudited Notes to Condensed Consolidated Financial Statements for a description of the nature of restrictions.
Financing
2026 Convertible Senior Unsecured Notes
As of June 30, 2026, the outstanding principal was $7.8 million on our 0.75% Convertible Senior Unsecured Notes due on September 15, 2026 (the "2026 Notes"). 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 "2026 Note Conversion Rate"). The 2026 Note 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.
2028 Convertible Senior Secured Notes
As of June 30, 2026, the outstanding principal was $333.3 million on our 6.75% Convertible Senior Secured 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.
2030 Convertible Senior Unsecured Notes
As of June 30, 2026, the outstanding principal was $134.0 million on our 9.00% Convertible Senior Unsecured Notes due in 2030 ("2030 Notes"). The 2030 Notes are convertible in cash, shares of common stock, or a combination of cash and shares of common stock at our election at an initial conversion rate of 63.6333 shares of common stock per one thousand dollars principal amount of the 2030 Notes, which is equivalent to an initial conversion price of $15.72 per share (the "2030 Note Conversion Rate"). The 2030 Note Conversion Rate is subject to customary adjustments for certain events as described in the indenture governing the 2030 Notes.
The 2030 Notes will mature on May 15, 2030, unless earlier repurchased, redeemed, or converted. Holders of the 2030 Notes may convert the 2030 Notes at their option (in whole or in part) on or after February 15, 2030, until the close of business on the second trading day immediately preceding the maturity date of May 15, 2030. In addition, holders of the 2030 Notes may convert the 2030 Notes at their option (in whole or in part) at any time prior to the close of business on the business day immediately preceding February 15, 2030, only under certain circumstances described in our Annual Report for the year ended December 31, 2025.
Statutory Surplus
As of June 30, 2026, the Reciprocal had $169.9 million in total statutory surplus and $376.5 million in total statutory surplus combined with non-admitted assets. Insurance companies in the United States are required by state law to maintain a minimum level of policyholder's surplus. 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 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 six months ended June 30, 2026 and 2025:
| Six Months Ended June 30, | |||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||
| Net cash provided by operating activities | $ | 54,289 | $ | 24,391 | $ | 29,898 | 123 | % | |||||||||||||||
| Net cash used in investing activities | (25,715) | (25,269) | (446) | 2 | % | ||||||||||||||||||
| Net cash used in financing activities | (2,081) | (8,011) | 5,930 | (74) | % | ||||||||||||||||||
| Change in cash, cash equivalents and restricted cash and cash equivalents | $ | 26,493 | $ | (8,889) | $ | 35,382 | (398) | % | |||||||||||||||
Operating Cash Flows
Net cash provided by operating activities including the Reciprocal was $54.3 million for the six months ended June 30, 2026. Net cash provided by operating activities was driven operating income and cash received from reinsurers on losses incurred prior to the period.
Net cash provided by operating activities was $24.4 million for the six months ended June 30, 2025. Net cash provided by operating activities was driven by higher reinsurance for weather-related activity in the prior year. The increase in reinsurance recoverables due led to greater cash collections when compared to the prior year.
Investing Cash Flows
Net cash used in investing activities was $25.7 million for the six months ended June 30, 2026. Net cash used in investing activities is related to purchases of investments of $62.8 million and investments in developing internal-use software of $8.3 million, partially offset by proceeds from maturities and sales of investments of $45.9 million.
Net cash used in investing activities was $25.3 million for the six months ended June 30, 2025. Net cash used in investing activities was related to purchases of investments of $75.4 million and investments in developing internal-use software of $6.8 million, offset by proceeds from maturities and sales of investments of $57.2 million.
Financing Cash Flows
Net cash used in financing activities was $2.1 million for the six months ended June 30, 2026. Net cash used in financing activities relates to $2.5 million of common share repurchases.
Net cash used in financing activities was $8.0 million for the six months ended June 30, 2025. Net cash used in financing activities relates to $55.9 million of repurchases of 2026 Notes. We also incurred $2.2 million in debt issuance costs associated with the issuance of the 2030 Notes. These outflows were partially offset by $51.0 million in proceeds from the issuance of the 2030 Notes.
Non-GAAP Financial Measures
This Quarterly Report includes non-GAAP financial measures, such as Adjusted EBITDA (Excluding Reciprocal), Insurance Services Adjusted EBITDA, Insurance Services Adjusted EBITDA Margin, Insurance Services Adjusted EBITDA % of RWP, Software & Data Adjusted EBITDA, Software & Data Adjusted EBITDA Margin, Consumer Services Adjusted EBITDA, and Consumer Services Adjusted EBITDA Margin.
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 expenses are included or excluded in determining these non-GAAP financial measures.
Adjusted EBITDA (Excluding Reciprocal)
We define Adjusted EBITDA (Excluding Reciprocal) 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; other income; impairments of intangible assets and goodwill; gain or loss on reinsurance contract; impairments of property, equipment, and software; stock-based compensation expense and employer payroll tax related to PRSU vestings; mark-to-market gains or losses recognized on changes in the value of contingent consideration arrangements, unexercised warrants, and derivatives; restructuring and other costs; acquisition and other transaction costs; and non-cash bonus expense.
Beginning in the second quarter of 2026, we revised our definition of Adjusted EBITDA (Excluding Reciprocal) to exclude employer payroll tax expense related to the vesting and settlement of our performance restricted stock units ("PRSUs"). Our PRSUs vest upon the completion of a specified service period and the achievement of distinct multi-year performance goals. The first such vesting and settlement events occurred in 2026. As a result, we incurred employer payroll tax expense related to PRSUs for the first time in 2026, and no comparable expense was present in any prior period. We have historically excluded stock-based compensation expense from Adjusted EBITDA (Excluding Reciprocal), and we believe excluding the associated employer payroll tax expense on PRSUs ongoing is consistent with that treatment. The amount of this expense is driven by the price of our common stock at the time the PRSUs vest and settle and by the episodic timing of those events upon achievement of multi-year performance goals, each of which is subject to unpredictable fluctuations outside of our control. Accordingly, we do not consider this expense to be representative of our core operating results. Because this expense first arose in 2026, no prior-period amounts were recast, and this change had no effect on any prior period presented.
Our segment operating and financial performance measures are Gross Profit and Adjusted EBITDA for the Insurance Services, Software & Data, and Consumer Services segments. Adjusted EBITDA for each segment 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 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. Adjusted EBITDA Margin for each segment is defined as Adjusted EBITDA for the segment divided by the segment's revenue. Insurance Services Adjusted EBITDA % of RWP is defined as Insurance Services Adjusted EBITDA divided by RWP.
We believe that presenting Insurance Services Adjusted EBITDA % of RWP provides useful information to investors by illustrating the profitability and operating efficiency of the Insurance Services segment relative to insurance premium volume. Because the Insurance Services segment earns economics primarily through fees, commissions, and ceding arrangements rather than underwriting risk, management uses this measure to facilitate evaluation of unit economics, scalability, and comparability across periods.
The following tables reconcile Insurance Services Gross Profit to Insurance Services Adjusted EBITDA, Insurance Services Gross Margin to Insurance Services Adjusted EBITDA Margin, and Insurance Services Gross Profit as a percentage of RWP to Insurance Services Adjusted EBITDA % of RWP.
| Three Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||||||||||||||
| INSURANCE SERVICES | Amount | Margin |
As a % of RWP
|
Amount | Margin |
As a % of RWP
|
||||||||||||||||||||||||||||||||
| Gross Profit | $ | 81,189 | 87 | % | 58% | $ | 57,864 | 86 | % | 48 | % | |||||||||||||||||||||||||||
| Selling and marketing | (37,481) | (40) | % | (27)% | (37,025) | (55) | % | (31) | % | |||||||||||||||||||||||||||||
| Product and technology | (1,364) | (1) | % | (1)% | (2,539) | (4) | % | (2) | % | |||||||||||||||||||||||||||||
| General and administrative | (4,278) | (4) | % | (3)% | (5,313) | (8) | % | (4) | % | |||||||||||||||||||||||||||||
| Other income (expense) | 5,024 | 5 | % | 4% | 5,453 | 8 | % | 4 | % | |||||||||||||||||||||||||||||
| Add: Reconciling items: | ||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 101 | - | % | -% | 85 | - | % | - | % | |||||||||||||||||||||||||||||
| Stock-based compensation costs | 1,141 | 1 | % | 1% | 1,039 | 2 | % | 1 | % | |||||||||||||||||||||||||||||
| Other gains and losses | 67 | - | % | -% | 93 | - | % | - | % | |||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 44,399 | 48 | % | 32% | $ | 19,657 | 29 | % | 16 | % | |||||||||||||||||||||||||||
| Revenue | $ | 92,925 | 100 | % | $ | 67,390 | 100 | % | ||||||||||||||||||||||||||||||
| Reciprocal Written Premium | $ | 139,789 | 100 | % | $ | 120,720 | 100 | % | ||||||||||||||||||||||||||||||
| Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||||||||||||||
| INSURANCE SERVICES | Amount | Margin | As a % of RWP | Amount | Margin | As a % of RWP | ||||||||||||||||||||||||||||||||
| Gross Profit | $ | 144,973 | 87 | % | 57% | $ | 100,189 | 85 | % | 46 | % | |||||||||||||||||||||||||||
| Selling and marketing | (73,145) | (44) | % | (29)% | (52,552) | (45) | % | (24) | % | |||||||||||||||||||||||||||||
| Product and technology | (4,118) | (2) | % | (2)% | (4,990) | (4) | % | (3) | % | |||||||||||||||||||||||||||||
| General and administrative | (8,703) | (5) | % | (4)% | (9,690) | (8) | % | (4) | % | |||||||||||||||||||||||||||||
| Other income (expense) | 10,492 | 6 | % | 4% | 10,447 | 9 | % | 5 | % | |||||||||||||||||||||||||||||
| Add: Reconciling items: | ||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 210 | - | % | -% | 176 | - | % | - | % | |||||||||||||||||||||||||||||
| Stock-based compensation costs | 2,118 | 1 | % | 1% | 1,718 | 1 | % | 1 | % | |||||||||||||||||||||||||||||
| Other gains and losses | 63 | - | % | -% | 168 | - | % | - | % | |||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 71,890 | 43 | % | 28% | $ | 45,466 | 39 | % | 21 | % | |||||||||||||||||||||||||||
| Revenue | $ | 167,596 | 100 | % | $ | 117,196 | 100 | % | ||||||||||||||||||||||||||||||
| Reciprocal Written Premium | $ | 254,277 | 100 | % | $ | 217,630 | 100 | % | ||||||||||||||||||||||||||||||
The following tables reconcile Software & Data Gross Profit to Software & Data Adjusted EBITDA and Software & Data Gross Margin to Software & Data Adjusted EBITDA Margin.
| Three Months Ended June 30, | ||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||
| SOFTWARE & DATA | Amount | Margin | Amount | Margin | ||||||||||||||||||||||
| Gross Profit | $ | 17,424 | 75 | % | $ | 18,167 | 76 | % | ||||||||||||||||||
| Selling and marketing | (8,567) | (37) | % | (9,226) | (38) | % | ||||||||||||||||||||
| Product and technology | (5,177) | (22) | % | (4,625) | (19) | % | ||||||||||||||||||||
| General and administrative | (2,024) | (9) | % | (2,622) | (11) | % | ||||||||||||||||||||
| Other income (expense) | 1 | - | % | 10 | - | % | ||||||||||||||||||||
| Add: Reconciling items: | ||||||||||||||||||||||||||
| Depreciation and amortization | 2,554 | 11 | % | 2,951 | 12 | % | ||||||||||||||||||||
| Stock-based compensation costs | 999 | 5 | % | 897 | 3 | % | ||||||||||||||||||||
| Interest expense | - | - | % | - | - | % | ||||||||||||||||||||
| Other gains and losses | - | - | % | (10) | - | % | ||||||||||||||||||||
| Adjusted EBITDA | $ | 5,210 | 23 | % | $ | 5,542 | 23 | % | ||||||||||||||||||
| Revenue | $ | 23,087 | 100 | % | $ | 24,013 | 100 | % | ||||||||||||||||||
| Six Months Ended June 30, | ||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||
| SOFTWARE & DATA | Amount | Margin | Amount | Margin | ||||||||||||||||||||||
| Gross Profit | $ | 33,952 | 75 | % | $ | 34,660 | 75 | % | ||||||||||||||||||
| Selling and marketing | (17,132) | (38) | % | (18,395) | (40) | % | ||||||||||||||||||||
| Product and technology | (9,924) | (22) | % | (8,913) | (19) | % | ||||||||||||||||||||
| General and administrative | (3,861) | (8) | % | (5,130) | (11) | % | ||||||||||||||||||||
| Other income (expense) | 4 | - | % | 19 | - | % | ||||||||||||||||||||
| Add: Reconciling items: | ||||||||||||||||||||||||||
| Depreciation and amortization | 5,083 | 11 | % | 6,430 | 14 | % | ||||||||||||||||||||
| Stock-based compensation costs | 1,540 | 4 | % | 1,453 | 3 | % | ||||||||||||||||||||
| Interest expense | - | - | % | 2 | - | % | ||||||||||||||||||||
| Other gains and losses | 116 | - | % | (13) | - | % | ||||||||||||||||||||
| Adjusted EBITDA | $ | 9,778 | 22 | % | $ | 10,113 | 22 | % | ||||||||||||||||||
| Revenue | $ | 45,019 | 100 | % | $ | 46,012 | 100 | % | ||||||||||||||||||
The following tables reconcile Consumer Services Gross Profit to Consumer Services Adjusted EBITDA and Consumer Services Gross Margin to Consumer Services Adjusted EBITDA Margin.
| Three Months Ended June 30, | ||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||
| CONSUMER SERVICES | Amount | Margin | Amount | Margin | ||||||||||||||||||||||
| Gross Profit | $ | 15,281 | 84 | % | $ | 15,236 | 86 | % | ||||||||||||||||||
| Selling and marketing | (10,150) | (56) | % | (10,465) | (59) | % | ||||||||||||||||||||
| Product and technology | (689) | (4) | % | (1,067) | (6) | % | ||||||||||||||||||||
| General and administrative | (8,117) | (45) | % | (3,089) | (18) | % | ||||||||||||||||||||
| Other income (expense) | 106 | 1 | % | 110 | 1 | % | ||||||||||||||||||||
| Add: Reconciling items: | ||||||||||||||||||||||||||
| Depreciation and amortization | 6,278 | 35 | % | 840 | 5 | % | ||||||||||||||||||||
| Stock-based compensation costs | 670 | 4 | % | 437 | 2 | % | ||||||||||||||||||||
| Interest expense | (1) | - | % | (1) | - | % | ||||||||||||||||||||
| Mark-to-market gains (losses) | (26) | - | % | - | - | % | ||||||||||||||||||||
| Other gains and losses | (105) | (1) | % | (44) | - | % | ||||||||||||||||||||
| Adjusted EBITDA | $ | 3,247 | 18 | % | $ | 1,957 | 11 | % | ||||||||||||||||||
| Revenue | $ | 18,130 | 100 | % | $ | 17,650 | 100 | % | ||||||||||||||||||
| Six Months Ended June 30, | ||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||
| CONSUMER SERVICES | Amount | Margin | Amount | Margin | ||||||||||||||||||||||
| Gross Profit | $ | 28,450 | 86 | % | $ | 27,467 | 85 | % | ||||||||||||||||||
| Selling and marketing | (20,402) | (61) | % | (20,263) | (63) | % | ||||||||||||||||||||
| Product and technology | (1,315) | (4) | % | (2,198) | (7) | % | ||||||||||||||||||||
| General and administrative | (11,737) | (35) | % | (6,390) | (20) | % | ||||||||||||||||||||
| Other income (expense) | 192 | - | % | 203 | 1 | % | ||||||||||||||||||||
| Add: Reconciling items: | ||||||||||||||||||||||||||
| Depreciation and amortization | 7,129 | 21 | % | 1,725 | 5 | % | ||||||||||||||||||||
| Stock-based compensation costs | 1,078 | 3 | % | 825 | 3 | % | ||||||||||||||||||||
| Interest expense | (1) | - | % | (1) | - | % | ||||||||||||||||||||
| Mark-to-market gains (losses) | (39) | - | % | (28) | - | % | ||||||||||||||||||||
| Other gains and losses | (114) | - | % | (53) | - | % | ||||||||||||||||||||
| Adjusted EBITDA | $ | 3,241 | 10 | % | $ | 1,287 | 4 | % | ||||||||||||||||||
| Revenue | $ | 33,271 | 100 | % | $ | 32,371 | 100 | % | ||||||||||||||||||
Critical Accounting Estimates
Our critical accounting policies, including the assumptions and judgments underlying them, are disclosed in the Annual Report for the year ended December 31, 2025, including those policies as discussed in Note 1 to the Notes to Consolidated Financial Statements included in the Annual Report for the year ended December 31, 2025. There have been no material changes to these policies during the six months ended June 30, 2026.
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 SEC.
Porch Group Inc. published this content on July 29, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on July 29, 2026 at 21:12 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]