Porch Group Inc.

11/06/2025 | Press release | Distributed by Public on 11/06/2025 05:01

Quarterly Report for Quarter Ending September 30, 2025 (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;
•uncertainties related to regulatory approval of insurance rates, policy forms, insurance products, license applications, acquisitions of businesses, or strategic initiative, and other matters within the purview of insurance regulators (including the discount associated with the shares contributed to HOA that were subsequently transferred to the Reciprocal in connection with the closing of the sale of HOA to the Reciprocal);
•the ability of the Company and its affiliates to successfully operate and manage the Reciprocal and our ability to successfully operate our businesses alongside a reciprocal exchange;
•our ability to implement our plans, forecasts and other expectations with respect to the Reciprocal and to realize expected synergies and/or convert policyholders from our existing insurance carrier business into policyholders of the Reciprocal;
•reliance on strategic, proprietary relationships to provide us with access to personal data and product information, and the ability to use such data and information to increase transaction volume and attract and retain customers;
•the ability to develop new, or enhance existing, products, services, and features and bring them to market in a timely manner;
•changes in capital requirements, and the ability to access capital when needed to provide statutory surplus;
•our ability to timely repay our outstanding indebtedness;
•the increased costs and initiatives required to address new legal and regulatory requirements arising from developments related to cybersecurity, privacy, and data governance and the increased costs and initiatives to protect against data breaches, cyber-attacks, virus or malware attacks, or other infiltrations or incidents affecting system integrity, availability, and performance;
•retaining and attracting skilled and experienced employees;
•costs related to being a public company; and
•other risks and uncertainties discussed in Part II, Item 1A, "Risk Factors," in our Annual Report on Form 10-K ("Annual Report") for the year ended December 31, 2024, as well as those discussed elsewhere in this report and in subsequent reports filed with the Securities and Exchange Commission ("SEC"), all of which are available on the SEC's website at www.sec.gov.
We caution you that the foregoing list may not contain all the risks to forward-looking statements made in this Quarterly Report on Form 10-Q.
You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends we believe may affect our business, financial condition, results of operations and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors, including those described above and elsewhere in this Quarterly Report on Form 10-Q. We disclaim any obligation to update publicly any forward-looking statements, whether in response to new information, future events, or otherwise, except as required by applicable law.
Business Overview
Porch Group, Inc., ("Porch," the "Company," "we," "our," "us") is a new kind of homeowners insurance company. We differentiate and look to win in the massive and growing homeowners insurance opportunity by:
•Utilizing our unique property data, with insights into approximately 90% of United States ("U.S.") homebuyers and properties, to enhance our property risk assessment, which creates advantages in pricing and underwriting decisions for the policyholder-owned Porch Reciprocal Exchange (the "Reciprocal") we manage. This enables the Reciprocal to attract lower-risk properties and appropriately price higher-risks, in turn supporting growth of profitable premium and thus more management fees for our insurance services business.
•Aiming to be the best homeowners insurance partner for homebuyers by helping with more than just insurance. We provide moving services and offer both a full moving concierge and the Porch app. We help make moving easier and assist with important services such as insurance, moving, warranty, security, TV/Internet, and more.
•Providing more protection for the home by including home warranty alongside homeowners insurance. We are able to fill the gaps of protection for consumers, minimize surprises, and deepen our relationships and value proposition.
As a leader in the home services software-as-a-service ("SaaS") space, we've built deep relationships with approximately 24 thousand companies who utilize our software. These companies are from industries key to the home-buying transaction, such as home inspectors, title companies, and mortgage companies.
Beginning in January 2025, we operate under four reportable segments that are also our operating segments. Three of these segments are owned by Porch - Insurance Services, Software & Data, and Consumer Services. We collectively call these three segments, along with corporate functions, the "Porch Shareholder Interest." 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 non-catastrophic weather reinsurance support to improve capital efficiency for the Reciprocal.
Software & Data - Our Software & Data segment provides, on a subscription and predominantly transactional basis, software to inspection, mortgage, title, and roofing companies and data products to insurance and other types of companies. This segment includes several strategically important businesses, including home inspection software, title and mortgage software, Home Factors (our unique property insights product), and mover marketing products.
Consumer Services - Our Consumer Services segment provides warranty products through Porch Warranty and other warranty brands to protect the whole home. Our Consumer Services segment also provides moving related services such as movers, TV/Internet, and security.
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.
Porch manages and operates the Reciprocal as the attorney-in-fact 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 ongoing commissions and policy fees as a percentage of the Reciprocal's gross written premium.
Porch Shareholder Interests 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.
The financial information herein should be read in conjunction with the consolidated financial statements for the year ended December 31, 2024, contained in our Annual Report on Form 10-K for the year ended December 31, 2024, and the unaudited Condensed Consolidated Financial Statements included in Item 1 of this Quarterly Report. Unless otherwise noted herein, all numbers are in thousands, except per share amounts.
Recent Developments
Debt Refinancing
On May 27, 2025, we completed a series of privately negotiated refinancing transactions with certain holders of our 0.75% Convertible Senior Unsecured Notes due in September 2026 (the "2026 Notes"). As part of these refinancing transactions, we:
•Exchanged $96.8 million aggregate principal amount of 2026 Notes for $83.0 million aggregate principal amount of newly issued 9.00% Convertible Senior Unsecured Notes due 2030 (the "2030 Notes"),
•Issued an additional $51.0 million aggregate principal amount of 2030 Notes for cash to the same investors that participated in the exchange, and
•Repurchased $47.5 million aggregate principal amount of 2026 Notes for $47.3 million in cash.
After funding the cash portion of the repurchase and related expenses, net cash proceeds were approximately $3.7 million. We used these proceeds, along with existing cash on hand, to repurchase an additional $8.9 million aggregate principal amount of the 2026 Notes for $8.4 million cash in May 2025. We recognized a net gain on extinguishment of debt of less than $0.1 million in the second quarter of 2025. Our Board of Directors authorized management to repurchase the remaining 2026 Notes in cash in the open market or through privately negotiated transactions.
During the third quarter of 2025, we repurchased in a series of privately negotiated transactions $12.8 million in aggregate principal amount of our 2026 Notes for $12.3 million, representing 96.5% par value. As a result, we recognized a gain on extinguishment of debt of $0.4 million during the third quarter.
Reinsurance Programs for the Reciprocal
As of April 1, 2025, coverage for excess of loss catastrophe reinsurance starts at $25.0 million per occurrence up to a loss of $410.0 million. Additionally, the third party quota share reinsurance contracts start immediately at 7.5% of property and casualty ("P&C") losses, which includes catastrophe events, bringing the effective retention for the Reciprocal from $25.0
million per occurrence to $23.1 million per occurrence. We also place reinstatement premium protection to cover any reinstatement premiums due on the second through fourth layers.
Additionally, our captive reinsurance entity provides a non-catastrophic weather quota share in order to create more capital efficiency at the Reciprocal. This contract was approved for an initial period of 10 years but can be cancelled by Porch or the Reciprocal each year.
Reciprocal Formation
On January 1, 2025, we completed the formation of the Reciprocal. In connection with the formation, we completed the sale of our homeowners insurance carrier, HOA, to the Reciprocal for a purchase price equal to HOA's estimated surplus at December 31, 2024, of approximately $105 million, less $58 million of principal and unpaid interest under a surplus note issued by HOA to Porch in 2023. The purchase price was financed by a surplus note issued by the Reciprocal to Porch, bringing the total surplus notes held by Porch to approximately $106 million. Following the sale, HOA became a wholly owned subsidiary of the Reciprocal and, as part of the transaction, subsequently transferred certain economics to the Reciprocal following TDI approval, including the 18.3 million Porch shares held by HOA. Porch will manage and operate the Reciprocal, providing services related, but not limited, to underwriting, policy renewal, risk management, insurance portfolio management, financial management, and setting investment guidelines. In addition, Porch will maintain the Reciprocal's books and records and be responsible for its accounting and financial reporting. In exchange for these services, Porch will receive commissions and fees. The Reciprocal will pay all claims and claims adjustment expenses, reinsurance costs, agency commissions, and taxes and license fees.
New Segments
Beginning in January 2025, there was a change in internal reporting provided to the Chief Operating Decision Maker ("CODM") and a change in the lens through which the CODM makes decisions and allocates resources. As a result, our reportable segments, that are also our operating segments, changed from Vertical Software and Insurance prior to 2025 to Insurance Services, Software & Data, Consumer Services, and the Reciprocal Segment. Three of these segments are owned by Porch - Insurance Services, Software & Data, and Consumer Services. Management references the Insurance Services, Software & Data, and Consumer Services segments, together with corporate expenses, as "Porch Shareholder Interest." The fourth segment, the Reciprocal Segment, is managed, but not owned, by Porch and is consolidated for reporting purposes.
The changes in reporting were driven by how the CODM views our target customer (e.g. primarily total premium in Insurance Services, primarily businesses in Software & Data, and primarily direct consumers in Consumer Services) and by the shift to a reciprocal exchange model where we are the manager rather than the owner.
Results of Operations
Key Factors Affecting Operating Results
The following key factors affected our operating results in the three and nine months ended September 30, 2025:
•On January 1, 2025, we completed the formation of the Reciprocal and sold HOA into the Reciprocal; Porch now holds $106 million of surplus notes due from the Reciprocal which pay interest of 9.75% plus SOFR. These surplus notes are included in the Reciprocal's statutory surplus and are eliminated in consolidation for U.S. generally accepted accounting principles ("GAAP"). Porch earns management fees, policy fees, and non-catastrophic weather quota share reinsurance premiums from the Reciprocal.
•Insurance Services top of the funnel activity reached strong levels across quoting activity and agency appointments.
•In Software and Data, Rynoh implemented a 20% price increase in the first quarter, in line with strategic pricing goals. We remain focused on product innovation, including a continuation of introducing new Home Factors to the market.
•In Consumer Services, new services were launched including packing services online for movers. Partnership efforts are progressing nicely, while our warranty business experienced lower claims activity compared to the prior year.
•The Reciprocal is healthy with $412.0 million of surplus combined with non-admitted assets as of September 30, 2025, an increase of $254.0 million from December 31, 2024.
Three Months Ended September 30, 2025, compared to the Three Months Ended September 30, 2024
Consolidated Quarter-to-Date Results
Three Months Ended September 30,
2025 2024 $ Change % Change
(dollar amounts in thousands)
Revenue $ 118,082 $ 111,200 $ 6,882 6 %
Cost of revenue 31,135 49,483 (18,348) (37) %
Gross Profit 86,947 61,717 25,230 41 %
Operating expenses:
Selling and marketing 30,180 27,233 2,947 11 %
Product and technology 13,379 12,687 692 5 %
General and administrative 27,053 24,301 2,752 11 %
Total operating expenses 70,612 64,221 6,391 10 %
Operating income (loss) 16,335 (2,504) 18,839 (752) %
Other income (expense):
Interest expense (13,963) (10,645) (3,318) 31 %
Change in fair value of private warrant liability (5,702) 50 (5,752) (11,504) %
Change in fair value of derivatives 1,785 (1,048) 2,833 (270) %
Gain on extinguishment of debt 361 22,545 (22,184) (98) %
Investment income and realized gains and losses, net of investment expenses 2,989 3,787 (798) (21) %
Other income, net 1,535 2,014 (479) (24) %
Total other income (expense) (12,995) 16,703 (29,698) (178) %
Income before income taxes 3,340 14,199 (10,859) (76) %
Income tax benefit (provision) (4,322) 183 (4,505) (2,462) %
Net income (loss) (982) 14,382 (15,364) (107) %
Less: Net income attributable to the Reciprocal 9,875 - 9,875 N/A
Net income (loss) attributable to Porch $ (10,857) $ 14,382 $ (25,239) (175) %
Net income (loss) $ (982) $ 14,382 $ (15,364) (107) %
Net loss (income) attributable to the Reciprocal (9,875) - (9,875) N/A
Interest expense 13,953 10,645 3,308 31 %
Income tax provision (benefit) 1,160 (183) 1,343 (734) %
Depreciation and amortization 4,910 6,049 (1,139) (19) %
Gain on extinguishment of debt (361) (22,545) 22,184 (98) %
Other income, net (118) (773) 655 (85) %
Loss (gain) on reinsurance contract - (285) 285 (100) %
Stock-based compensation expense 7,181 6,735 446 7 %
Mark-to-market losses (gains) 3,909 1,140 2,769 243 %
Restructuring and other costs 837 1,668 (831) (50) %
Acquisition and other transaction costs 12 102 (90) (88) %
Adjusted EBITDA (Loss) (1) $ 20,626 $ 16,935 $ 3,691 22 %
Adjusted EBITDA (Loss) Margin (1) 17 % 15 %
______________________________________
(1)Adjusted EBITDA (Loss) and Adjusted EBITDA (Loss) Margin are non-GAAP measures. See Non-GAAP Financial Measures section for definitions.
Revenue.Total consolidated revenue including the Reciprocal increased by $6.9 million, or 6%, from $111.2 million in the three months ended September 30, 2024, to $118.1 million in the three months ended September 30, 2025. The increase in revenue was primarily a result of higher premium per policy, partially offset by a reduction in policies in force. Revenue related to the Porch Shareholder Interest was $115.1 million in the three months ended September 30, 2025, as detailed in the following table.
Cost of revenue. Total consolidated cost of revenue including the Reciprocal decreased by $18.3 million, or 37%, from $49.5 million in the three months ended September 30, 2024, to $31.1 million in the three months ended September 30, 2025. The decrease was primarily the result of a reduction in weather related claims at the Reciprocal. As a percentage of revenue, cost of revenue represented 26% of revenue in the three months ended September 30, 2025, compared with 44% in the three months ended September 30, 2024. Cost of revenue at the Reciprocal typically exhibits seasonal trends, with lower costs in the first and fourth quarters and higher costs in the second and third quarters, primarily due to increased frequency and severity of weather-related events and timing of insurance-related expenses. There were fewer weather related claims at the Reciprocal in the third quarter of 2025 compared to the same quarter of 2024. Cost of revenue related to Porch Shareholder Interest was $20.8 million in the three months ended September 30, 2025, as detailed in the table below. Porch Shareholder Interest Cost of Revenue is a non-GAAP measure. See Non-GAAP Financial Measures section for definition.
Selling and marketing. Total consolidated selling and marketing expenses including the Reciprocal increased by $2.9 million, or 11%, from $27.2 million in the three months ended September 30, 2024, to $30.2 million in the three months ended September 30, 2025. The increase is primarily driven by the timing of direct mail advertising expense. As a percentage of revenue, selling and marketing expenses represented 26% of revenue in the three months ended September 30, 2025, compared with 24% in the three months ended September 30, 2024. Selling and marketing expense related to Porch Shareholder Interest was $54.9 million in the three months ended September 30, 2025, as detailed in the table below. Porch Shareholder Interest selling and marketing expense is greater than the consolidated amount because it includes fees and expenses related to reinsurance contracts with the Reciprocal, which are eliminated during the consolidation process. Porch Shareholder Interest Selling and Marketing is a non-GAAP measure. See Non-GAAP Financial Measures section for definition.
General and administrative. Total consolidated general and administrative expenses including the Reciprocal increased by $2.8 million, or 11%, from $24.3 million in three months ended September 30, 2024, to $27.1 million in the three months ended September 30, 2025, primarily due to increased employee benefit costs, partially offset by savings from reduced reliance on third party consultants and centralizing administrative functions. General and administrative expenses related to Porch Shareholder Interest were $24.4 million in the three months ended September 30, 2025, as detailed in the table below. Porch Shareholder Interest General and Administrative is a non-GAAP measure. See Non-GAAP Financial Measures section for definition.
Interest expense. Interest expense increased by $3.3 million, or 31%, from $10.6 million in the three months ended September 30, 2024, to $14.0 million in the three months ended September 30, 2025. The increase was primarily 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):
Three Months Ended September 30,
2025 2024 $ Change
Contractual interest expense $ 8,663 $ 6,024 $ 2,639
Amortization of debt issuance costs and discount 5,667 5,006 661
Capitalized interest and other (367) (385) 18
Total interest expense $ 13,963 $ 10,645 $ 3,318
Change in fair value of private warrant liability. Change in fair value of the private warrant liability was $5.7 million (loss) for the three months ended September 30, 2025, and less than $0.1 million for the three months ended September 30, 2024. The change in fair value was primarily related to an increase in the market value of our common stock which exceeded the exercise price of the private warrants compared to the same period in the prior year during which the exercise price exceeded the market value of our common stock. The change in fair value of private warrant liability relates entirely to Porch Shareholder Interest.
Change in fair value of derivatives. The fair value of the derivative liability decreased in the three months ended September 30, 2025, resulting in a gain, and increased during the three months ended September 30, 2024, resulting in a loss. The value is driven by various factors, including the fair value of the underlying debt, stock price, and assumptions regarding timing of possible repurchase events. See Note 6 in the unaudited Notes to Condensed Consolidated Financial Statements. The change in fair value of derivatives relates entirely to Porch Shareholder Interest.
Gain on extinguishment of debt. In connection with the repurchase of a portion of the 2026 Notes, we recognized a $22.5 million gain on extinguishment of debt during the three months ended September 30, 2024, compared to $0.4 million during the three months ended September 30, 2025. The difference in gain amount when compared to prior year relates to the lower effective price of the repurchase last year. See Note 9 in the unaudited Notes to Condensed Consolidated Financial Statements. The gain on extinguishment of debt related entirely to Porch Shareholder Interest.
Adjusted EBITDA (Loss). Adjusted EBITDA (Loss) for the three months ended September 30, 2025, was $20.6 million, a $3.7 million improvement from Adjusted EBITDA (Loss) of $16.9 million for the same period in 2024. The year-over year improvement in Adjusted EBITDA (Loss) was primarily attributable to the shift in the business model from carrier to the manager of the Reciprocal, producing higher margin management fees. Our Insurance Services segment benefited from the receipt of commissions and fees related to the Reciprocal Segment which began in January 2025 and an increase in interest income from the surplus note due from the Reciprocal Segment. Corporate costs and cost in our Software & Data and Consumers Services segments also declined due to reduced workforce, less reliance on third party consultants, centralizing administrative functions, and shifting hiring to target lower-cost locations. Adjusted EBITDA (Loss) is a non-GAAP measure. See Non-GAAP Financial Measures section for definition.
The following tables summarize operating results of the four segments as well as corporate expenses and eliminations.
Three Months Ended September 30, 2025
Insurance Services Software & Data Consumer Services Corporate
Eliminations (1)
Porch Shareholder Interest Subtotal (2)
Reciprocal Segment
Eliminations Related to Reciprocal Segment (3)
Consolidated
Revenue $ 73,845 $ 24,635 $ 19,367 $ - $ (2,773) $ 115,074 $ 51,941 $ (48,933) $ 118,082
Cost of revenue 11,595 6,480 2,758 - (1) 20,832 11,509 (1,206) 31,135
Gross Profit 62,250 18,155 16,609 - (2,772) 94,242 40,432 (47,727) 86,947
Gross Margin 84 % 74 % 86 % - % 100 % 82 % 78 % 98 % 74 %
Less: Operating expenses:
Selling and marketing 35,719 9,832 11,644 483 (2,772) 54,906 4,896 (29,622) 30,180
Product and technology 2,583 4,864 1,224 4,121 - 12,792 587 - 13,379
General and administrative 5,147 2,564 2,479 14,237 - 24,427 20,731 (18,105) 27,053
Operating income (loss) (18,841) - 2,117 14,218 - 16,335
Other expense (income) (5,240) (11) (109) 17,174 - 11,814 1,181 - 12,995
Income (loss) before income taxes (36,015) - (9,697) 13,037 - 3,340
Income tax benefit (provision) (1,160) - (1,160) (3,162) - (4,322)
Net income (loss) $ (37,175) $ - $ (10,857) $ 9,875 $ - (982)
Less: Net income attributable to the Reciprocal 9,875
Net loss attributable to Porch $ (10,857)
Adjusted EBITDA (Loss) Reconciliation:
Net income (loss) $ (37,175) $ (10,857) $ (982)
Less Reconciling items:
Net income attributable to the Reciprocal - 9,875
Depreciation and amortization (84) (3,409) (808) (609) - (4,910) (4,910)
Stock-based compensation expense (1,183) (593) (422) (4,983) - (7,181) (7,181)
Gain (loss) on extinguishment of debt - - - 361 - 361 361
Interest expense - - - (13,953) - (13,953) (13,953)
Income tax provision - - - (1,160) - (1,160) (1,160)
Mark-to-market gains (losses) - - 8 (3,917) - (3,909) (3,909)
Other gains and losses 8 (220) 100 (619) - (731) (731)
Adjusted EBITDA (Loss) (4)
$ 25,300 $ 5,128 $ 2,493 $ (12,295) $ 20,626 $ 20,626
______________________________________
(1)The "Eliminations" column represents eliminations of transactions between the Insurance Services segment, Software & Data segment, Consumer Services segment, and Corporate column.
(2)The "Porch Shareholder Interest Subtotal" column includes non-GAAP measures that are used by management to evaluate performance. Porch Shareholder Interest includes the Insurance Services, Software & Data, and Consumer Services segments as well as Corporate expenses and applicable intercompany eliminations. See Non-GAAP Financial Measures section.
(3)The "Eliminations Related to Reciprocal Segment" column represents eliminations of transactions between the Reciprocal Segment and other segments or Corporate.
(4)Adjusted EBITDA (Loss) is a non-GAAP measure. See Non-GAAP Financial Measures section for definition.
Three Months Ended September 30, 2024
Insurance Services Software & Data Consumer Services Corporate
Eliminations (1)
Subtotal Reciprocal Segment
Eliminations Related to Reciprocal Segment (2)
Consolidated
Revenue $ 37,147 $ 23,127 $ 17,800 $ - $ (382) $ 77,692 $ 49,153 $ (15,645) $ 111,200
Cost of revenue 27,488 5,826 4,285 - (22) 37,577 17,708 (5,802) 49,483
Gross Profit 9,659 17,301 13,515 - (360) 40,115 31,445 (9,843) 61,717
Gross Margin 26 % 75 % 76 % - % 94 % 52 % 64 % 63 % 56 %
Less: Operating expenses:
Selling and marketing 12,081 10,136 6,683 426 (251) 29,075 8,001 (9,843) 27,233
Product and technology 34 4,357 1,116 5,352 (109) 10,750 1,937 - 12,687
General and administrative 1,766 3,244 3,576 13,748 - 22,334 1,967 - 24,301
Operating income (loss) (19,526) - (22,044) 19,540 - (2,504)
Other expense (income) (1,481) 2 (193) (13,445) - (15,117) (1,586) - (16,703)
Income (loss) before income taxes (6,081) - (6,927) 21,126 - 14,199
Income tax benefit (provision) 183 - 183 - - 183
Net income (loss) $ (5,898) $ - $ (6,744) $ 21,126 $ - $ 14,382
Adjusted EBITDA (Loss) Reconciliation:
Net income (loss) $ (5,898) $ (6,744) $ 14,382
Less: Reconciling items:
Depreciation and amortization (985) (3,648) (900) (510) - (6,043) (6) - (6,049)
Stock-based compensation expense (272) (1,194) (539) (4,730) - (6,735) - - (6,735)
Gain (loss) on extinguishment of debt - - - 22,545 - 22,545 - - 22,545
Interest expense - (2) 36 (10,916) - (10,882) (1,618) 1,855 (10,645)
Income tax provision - - - 183 - 183 - - 183
Mark-to-market gains (losses) - - (143) (998) - (1,141) - - (1,141)
Recoveries of Losses on Reinsurance Contracts - - - 350 - 350 - - 350
Other gains and losses (117) (607) 24 1,208 - 508 286 (1,855) (1,061)
Adjusted EBITDA (Loss) (3)
$ (1,367) $ 5,013 $ 3,855 $ (13,030) $ (5,529) $ 16,935
______________________________________
(1)The "Eliminations" column represents eliminations of transactions between the Insurance Services segment, Software & Data segment, Consumer Services segment, and Corporate column.
(2)The "Eliminations Related to Reciprocal Segment" column represents eliminations of transactions between the Reciprocal Segment and other segments or Corporate.
(3)Adjusted EBITDA (Loss) is a non-GAAP measure. See Non-GAAP Financial Measures section for definition.
Porch Shareholder Interest Quarter-to-Date Results (Non-GAAP)
Effective January 1, 2025, Porch shareholders own three segments: Insurance Services, Software & Data, and Consumer Services. Together, these segments-offset by corporate expenses-comprise what we refer to as the "Porch Shareholder Interest." These segments contribute to Net Income Attributable to Porch and are what is expected to generate cash for Porch shareholders. Comparative period amounts in the following table include only the Insurance Services, Software & Data, and Consumer Services segments as well as corporate expenses. Certain amounts presented in the following table are non-GAAP measures and are reconciled to the nearest GAAP measure in the earlier "Consolidated Quarter-to-Date Results" section.
Three Months Ended September 30,
2025 2024 Change
Porch Shareholder Interest Revenue (1) $ 115,074 $ 77,692 $ 37,382
Porch Shareholder Interest Gross Profit (1) 94,242 40,115 54,127
Porch Shareholder Interest Adjusted EBITDA (Loss) (1) 20,626 (5,529) 26,155
______________________________________
(1)Porch Shareholder Interest Revenue, Gross Profit, and Adjusted EBITDA (Loss) are non-GAAP measures. For the three months ended September 30, 2025, Porch Shareholder Interest Adjusted EBITDA (Loss) is equivalent to total Adjusted EBITDA (Loss) for consolidated Porch, as Porch no longer owns HOA following its sale to the Reciprocal on January 1, 2025. See Non-GAAP Financial Measures section.
For the three months ended September 30, 2025, revenue for Porch Shareholder Interest increased $37.4 million when compared to the prior year period. The increase was primarily due to an increase in ceding from the Reciprocal Segment with the new reinsurance programs beginning on April 1, 2025, and the launch of the Reciprocal on January 1, 2025, and the associated revenue streams as Porch acts as its manager.
Porch Shareholder Interest Gross Profit improved by $54.1 million for the three months ended September 30, 2025, when compared to the prior year period. This improvement was primarily driven the launch of the Reciprocal and higher revenue resulting from increased ceding activity from the Reciprocal Segment. Porch Shareholder Interest Gross Profit is a non-GAAP measure. See Non-GAAP Financial Measures section for definition.
Porch Shareholder Interest Adjusted EBITDA (Loss) improved by $26.2 million for the three months ended September 30, 2025, compared to the prior year period. The improvement was primarily driven by increased ceding activity from the Reciprocal Segment and the shift in the business model from carrier to the manager of the Reciprocal, producing higher margin management fees. Our Insurance Services segment benefited from the receipt of management fees from the Reciprocal Segment which began in January 2025 and an increase in interest income from the surplus note due from the Reciprocal Segment. Our other segment and corporate costs also declined due to lower professional fees, reduced reliance on third-party consultants, and strong cost control. Porch Shareholder Interest Adjusted EBITDA (Loss) is a non-GAAP measure. See Non-GAAP Financial Measures section for definition.
INSURANCE SERVICES
Three Months Ended September 30,
2025 2024 Change
Revenue $ 73,845 $ 37,147 $ 36,698
Gross Profit $ 62,250 $ 9,659 $ 52,591
Gross Margin 84 % 26 %
Adjusted EBITDA (Loss) (1) $ 25,300 $ (1,367) $ 26,667
Adjusted EBITDA (Loss) Margin (1) 34 % (4) %
RWP (in millions) (2) $ 137.5 N/A
Reciprocal Policies Written (in thousands) (2) 47.7 N/A
RWP per Policy (unrounded) (2) $ 2,884 N/A
______________________________________
(1)Insurance Services Adjusted EBITDA (Loss) and Adjusted EBITDA (Loss) Margin 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 September 30, 2025, Insurance Services segment revenue was $73.8 million. For the three months ended September 30, 2024, Insurance Services segment revenue was $37.1 million. The 99% increase in Insurance Services segment revenue was primarily driven by an increase in ceding from the Reciprocal Segment with the new reinsurance program beginning on April 1, 2025. Additionally, Insurance Services revenue increased due to the launch of the Reciprocal on January 1, 2025, and the associated revenue streams as the Insurance Services segment acts as the Reciprocal's manager.
Our Insurance Services segment generates economics in several ways: management fees based on a percentage of written premium from the Reciprocal, policy fees based on the number of Reciprocal Policies Written, non-catastrophic weather quota share reinsurance, lead fees from third-party insurance agencies, and interest from the surplus note due from the Reciprocal. Insurance Services revenue as a percentage of RWP was 54% for the three months ended September 30, 2025.
For the three months ended September 30, 2025, Insurance Services segment gross profit was $62.3 million. For the three months ended September 30, 2024, Insurance Services segment gross profit was $9.7 million. The increase in gross profit was primarily driven by higher revenue resulting from increased ceding activity from the Reciprocal Segment..
Insurance Services Adjusted EBITDA (Loss) was $25.3 million in the third quarter of 2025, which improved compared to prior year due to increased ceding activity from the Reciprocal Segment and the various commissions and fees beginning January 1, 2025, including interest income from the surplus note due from the Reciprocal Segment.
Insurance Services Adjusted EBITDA (Loss) Margin increased to 34% for the three months ended September 30, 2025, primarily due to the increase in revenue driven by increased ceding activity from the Reciprocal Segment. The Adjusted EBITDA (Loss) Margin increase outpaced the increase in revenue, reflecting a shift in the business model from carrier to the manager of the Reciprocal, producing higher margin management fees. Higher interest income earned on surplus notes with the Reciprocal Segment also contributed to the increase.
SOFTWARE & DATA
Three Months Ended September 30,
2025 2024 Change
Revenue $ 24,635 $ 23,127 $ 1,508
Gross Profit $ 18,155 $ 17,301 $ 854
Gross Margin 74 % 75 %
Adjusted EBITDA (1) $ 5,128 $ 5,013 $ 115
Adjusted EBITDA Margin 21 % 22 %
Average Number of Companies (in thousands) (2) 23.8
Annualized Average Revenue per Company (unrounded) (2) $ 4,140
______________________________________
(1)Software & Data Adjusted EBITDA and 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.
Software & Data Adjusted EBITDA was $5.1 million in the third quarter of 2025, which improved compared to the prior year due to an increase in revenue from greater transaction volume of our Home Factors product and price increases of our title insurance software.
Software & Data Adjusted EBITDA Margin decreased to 21% for the three months ended September 30, 2025. While revenue increased by 7% compared with the prior year, primarily due to title insurance software price increases and higher transaction volume of our Home Factors product, Adjusted EBITDA Margin declined due to an increase in growth-driven investments in headcount and professional fees to support the Home Factors sales organization and product innovation.
CONSUMER SERVICES
Three Months Ended September 30,
2025 2024 Change
Revenue $ 19,367 $ 17,800 $ 1,567
Gross Profit $ 16,609 $ 13,515 $ 3,094
Gross Margin 86 % 76 %
Adjusted EBITDA (1) $ 2,493 $ 3,855 $ (1,362)
Adjusted EBITDA Margin 13 % 22 %
Monetized Services (in thousands) (2) 93.9
Average Revenue per Monetized Service (unrounded) (2) $ 206
______________________________________
(1)Consumer Services Adjusted EBITDA and 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 September 30, 2025, Consumer Services segment revenue was $19.4 million. For the three months ended September 30, 2024, Consumer Services segment revenue was $17.8 million. The increase in revenue was primarily driven by higher fees for providing third-party TV/Internet services.
Consumer Services Adjusted EBITDA decreased by $1.4 million for the three months ended September 30, 2025, when compared to the three months ended September 30, 2024. The decrease was primarily driven by the timing of direct mail advertising expense compared to the prior year and was partially offset by the increase in revenue.
Consumer Services Adjusted EBITDA Margin decreased to 13% for the three months ended September 30, 2025, primarily driven by the timing of direct mail advertising expense. This increase had a greater impact to Adjusted EBITDA than the increase in revenue, leading to lower Adjusted EBITDA Margin.
CORPORATE
Three Months Ended September 30,
2025 2024 Change
Selling and marketing $ 483 $ 426 $ 57
Product and technology 4,121 5,352 $ (1,231)
General and administrative 14,237 13,748 $ 489
Other (6,546) (6,496) $ (50)
Adjusted EBITDA Loss $ 12,295 $ 13,030 $ (735)
______________________________________
(1)Adjusted EBITDA Loss is a non-GAAP measure. See Non-GAAP Financial Measures section for definition.
Corporate expenses decreased for the three months ended September 30, 2025, compared to the same period for 2024. The decrease was driven primarily by lower professional fees and reduced reliance on third-party consultants as well as strong cost control across the business. Our cost control measures included centralizing administrative functions and shifting hiring to target lower-cost locations.
Nine Months Ended September 30, 2025, compared to the Nine Months Ended September 30, 2024
Consolidated Year-to-Date Results
Nine Months Ended September 30,
2025 2024 $ Change % Change
(dollar amounts in thousands)
Revenue $ 342,122 $ 337,487 $ 4,635 1 %
Cost of revenue 113,854 221,895 (108,041) (49) %
Gross Profit 228,268 115,592 112,676 97 %
Operating expenses:
Selling and marketing 86,554 94,378 (7,824) (8) %
Product and technology 39,656 37,906 1,750 5 %
General and administrative 81,940 72,959 8,981 12 %
Total operating expenses 208,150 205,243 2,907 1 %
Operating income (loss) 20,118 (89,651) 109,769 (122) %
Other income (expense):
Interest expense (37,265) (31,758) (5,507) 17 %
Change in fair value of private warrant liability (9,312) 1,076 (10,388) (965) %
Change in fair value of derivatives 21,311 (7,772) 29,083 (374) %
Gain on extinguishment of debt 395 27,436 (27,041) (99) %
Investment income and realized gains and losses, net of investment expenses 8,464 10,957 (2,493) (23) %
Other income, net 11,428 27,092 (15,664) (58) %
Total other income (expense) (4,979) 27,031 (32,010) (118) %
Income (loss) before income taxes 15,139 (62,620) 77,759 (124) %
Income tax provision (4,138) (683) (3,455) 506 %
Net income (loss) $ 11,001 $ (63,303) $ 74,304 (117) %
Less: Net income attributable to the Reciprocal 10,884 - 10,884 N/A
Net income (loss) attributable to Porch $ 117 $ (63,303) $ 63,420 (100) %
Net income (loss) $ 11,001 $ (63,303) $ 74,304 (117) %
Net loss (income) attributable to the Reciprocal (10,884) - $ (10,884) N/A
Interest expense 37,174 31,758 $ 5,416 17 %
Income tax provision (benefit) (12) 683 $ (695) (102) %
Depreciation and amortization 14,395 18,568 $ (4,173) (22) %
Gain on extinguishment of debt (395) (27,436) $ 27,041 (99) %
Other income, net (7,375) (22,979) $ 15,604 (68) %
Loss (gain) on reinsurance contract - (1,391) $ 1,391 (100) %
Stock-based compensation expense 20,091 19,208 $ 883 5 %
Mark-to-market losses (gains) (12,035) 6,538 $ (18,573) (284) %
Restructuring and other costs 969 3,460 $ (2,491) (72) %
Acquisition and other transaction costs 188 268 $ (80) (30) %
Adjusted EBITDA (Loss) $ 53,117 $ (34,626) $ 87,743 (253) %
Adjusted EBITDA (Loss) Margin 16 % (10) %
Revenue. Total consolidated revenue including the Reciprocal increased by 1% compared to the same period last year, reflecting stable performance. Revenue related to the Porch Shareholder Interest was $306.6 million in the nine months ended September 30, 2025, as detailed in the following table.
Cost of revenue. Total consolidated cost of revenue including the Reciprocal decreased by $108.0 million, or 49%, from $221.9 million in the nine months ended September 30, 2024, to $113.9 million in the nine months ended September 30, 2025. The decrease was primarily the result of a reduction in weather related claims at the Reciprocal. As a percentage of revenue, cost of revenue represented 33% of revenue in the nine months ended September 30, 2025, compared with 66% in the nine months ended September 30, 2024. Cost of revenue at the Reciprocal typically exhibits seasonal trends, with lower costs in the first and fourth quarters and higher costs in the second and third quarters, primarily due to increased frequency and severity of weather-related events and timing of insurance-related expenses. There were fewer weather related claims at the Reciprocal in the second and third quarters of 2025 compared to historical seasonal trends. Cost of revenue related to Porch Shareholder Interest was $54.1 million in the nine months ended September 30, 2025, as detailed in the table below. Porch Shareholder Interest Cost of Revenue is a non-GAAP measure. See Non-GAAP Financial Measures section for definition.
Selling and marketing. Total consolidated selling and marketing expenses including the Reciprocal decreased by $7.8 million, or 8%, from $94.4 million in the nine months ended September 30, 2024, to $86.6 million in the nine months ended September 30, 2025. The decrease is primarily driven by a reduction in the amortization of deferred policy acquisition costs, reflecting a shift away from policies written under historically higher commission rates. As a percentage of revenue, selling and marketing expenses represented 25% of revenue in the nine months ended September 30, 2025, compared with 28% in the nine months ended September 30, 2024. Selling and marketing expense related to Porch Shareholder Interest was $142.9 million in the nine months ended September 30, 2025, as detailed in the table below. Porch Shareholder Interest Selling and Marketing is a non-GAAP measure. See Non-GAAP Financial Measures section for definition
General and administrative. Total consolidated general administrative expenses including the Reciprocal increased by $9.0 million, or 12%, from $73.0 million in the nine months ended September 30, 2024, to $81.9 million in the nine months ended September 30, 2025, primarily due to a one-time agency partnership payment during the nine months ended September 30, 2025. General and administrative expenses related to Porch Shareholder Interest were $71.4 million in the nine months ended September 30, 2025, as detailed in the table below. Porch Shareholder Interest General and Administrative is a non-GAAP measure. See Non-GAAP Financial Measures section for definition.
Interest expense. Year-to-date interest expense, increased by $5.5 million, or 17%, from $31.8 million in the same period in 2024. The increase is primarily 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):
Nine Months Ended September 30,
2025 2024 $ Change
Contractual interest expense $ 21,474 $ 18,095 $ 3,379
Amortization of debt issuance costs and discount 16,357 14,177 2,180
Capitalized interest and other (566) (514) (52)
Total interest expense $ 37,265 $ 31,758 $ 5,507
Change in fair value of private warrant liability. Change in fair value of the private warrant liability was $9.3 million (loss) for the three months ended September 30, 2025, and $1.1 million (gain) for the three months ended September 30, 2024. The change in fair value was primarily related to an increase in the market value of our common stock which exceeded the exercise price of the private warrants since the same period in the prior year. The change in fair value of private warrant liability relates entirely to Porch Shareholder Interest.
Change in fair value of derivatives. The fair value of the derivative liability decreased in the nine months ended September 30, 2025, resulting in a gain, and increased during the nine months ended September 30, 2024, resulting in a loss. The value is driven by various factors, including the fair value of the underlying debt, stock price, and assumptions regarding timing of possible repurchase events. See Note 6 in the unaudited Notes to Condensed Consolidated Financial Statements. The change in fair value of derivatives related entirely to Porch Shareholder Interest.
Gain on extinguishment of debt. In connection with the repurchase of a portion of the 2026 Notes, we recognized a $27.4 million gain on extinguishment of debt during the nine months ended September 30, 2024, compared to less than $0.4
million during the nine months ended September 30, 2025. The trading prices of the 2026 Notes have increased since prior year. See Note 9 in the unaudited Notes to Condensed Consolidated Financial Statements. The gain on extinguishment of debt related entirely to Porch Shareholder Interest.
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 $8.5 million and $11.0 million in the nine months ended September 30, 2025 and 2024, respectively. The decrease was primarily driven by unfavorable market conditions, which resulted in lower returns on our investment portfolio. Investment income and realized gains, net of investment expenses, related to Porch Shareholder Interest was $1.2 million for the nine months ended September 30, 2025. Porch Shareholder Interest Other Income is a non-GAAP measure. See Non-GAAP Financial Measures section for definition.
Other income, net.Total consolidated other income, net, including the Reciprocal decreased by $15.7 million from $27.1 million in the nine months ended September 30, 2024, to $11.4 million in the nine months ended September 30, 2025. The decrease is primarily driven by a $14.9 million gain on settlement of contingent consideration and a $5.3 million loss on sale of our EIG business, both which occurred during the nine months ended September 30, 2024, with no comparable events during the nine months ended September 30, 2025. Additionally, recoveries on reinsurance contracts were approximately $4.5 million lower in the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024. A decrease in recoveries over time was expected following the previously disclosed termination of a reinsurance contract in 2023. See Note 14 in the unaudited Notes to Condensed Consolidated Financial Statements for detail of other income, net, for each period presented. Other income, net, related to Porch Shareholder Interest was $22.7 million for the nine months ended September 30, 2025. Porch Shareholder Interest Other Income is a non-GAAP measure. See Non-GAAP Financial Measures section for definition.
Adjusted EBITDA (Loss). Adjusted EBITDA (Loss) for the three months ended September 30, 2025, was $53.1 million, a $87.7 million improvement from Adjusted EBITDA (Loss) of $(34.6) million for the same period in 2024. The year-over year improvement in Adjusted EBITDA (Loss) was primarily attributable to the shift in the business model from carrier to the manager of the Reciprocal, producing higher margin management fees. Our Insurance Services segment benefited from the receipt of commissions and fees related to the Reciprocal Segment which began in January 2025 and an increase in interest income from the surplus note due from the Reciprocal Segment. Corporate costs also declined due to reduced workforce, less reliance on third party consultants, centralizing administrative functions, and shifting hiring to target lower-cost locations. Adjusted EBITDA (Loss) is a non-GAAP measure. See Non-GAAP Financial Measures section for definition.
The following tables summarize operating results of the four segments as well as corporate expenses and eliminations.
Nine Months Ended September 30, 2025
Insurance Services Software & Data Consumer Services Corporate
Eliminations (1)
Porch Shareholder Interest Subtotal (2)
Reciprocal Segment
Eliminations Related to Reciprocal Segment (3)
Consolidated
Revenue $ 191,041 $ 70,647 $ 51,738 $ - $ (6,788) $ 306,638 $ 147,288 $ (111,804) $ 342,122
Cost of revenue 28,602 17,832 7,662 - (8) 54,088 61,654 (1,888) 113,854
Gross Profit 162,439 52,815 44,076 - (6,780) 252,550 85,634 (109,916) 228,268
Gross Margin 85 % 75 % 85 % - % 100 % 82 % 58 % 98 % 67 %
Less: Operating expenses:
Selling and marketing 88,271 28,227 31,907 1,289 (6,780) 142,914 15,942 (72,302) 86,554
Product and technology 7,573 13,777 3,422 12,604 - 37,376 2,280 - 39,656
General and administrative 14,837 7,694 8,869 39,966 - 71,366 48,188 (37,614) 81,940
Operating income (loss) (53,859) - 894 19,224 - 20,118
Other expense (income) (15,687) (30) (312) 16,818 - 789 4,190 - 4,979
Income (loss) before income taxes (70,677) - 105 15,034 - 15,139
Income tax benefit (provision) 12 - 12 (4,150) - (4,138)
Net income (loss) $ (70,665) $ - $ 117 $ 10,884 $ - $ 11,001
Less: Net income attributable to the Reciprocal 10,884
Net income attributable to Porch $ 117
Adjusted EBITDA (Loss) Reconciliation:
Net income (loss) $ (70,665) $ 117 $ 11,001
Less Reconciling items:
Net income attributable to the Reciprocal - 10,884
Depreciation and amortization (260) (9,839) (2,533) (1,763) - (14,395) (14,395)
Stock-based compensation expense (2,901) (2,046) (1,247) (13,897) - (20,091) (20,091)
Gain (loss) on extinguishment of debt - - - 395 - 395 395
Interest expense - (2) 1 (37,173) - (37,174) (37,174)
Income tax provision - - - 12 $ - 12 12
Mark-to-market gains (losses) - - 36 11,999 - 12,035 12,035
Recoveries of Losses on Reinsurance Contracts - - - 7,100 - 7,100 7,100
Other gains and losses (160) (207) 153 (668) - (882) (882)
Adjusted EBITDA (Loss) (4)
$ 70,766 $ 15,241 $ 3,780 $ (36,670) $ 53,117 $ 53,117
______________________________________
(1)The "Eliminations" column represents eliminations of transactions between the Insurance Services segment, Software & Data segment, Consumer Services segment, and Corporate column.
(2)The "Porch Shareholder Interest Subtotal" column includes non-GAAP measures that are used by management to evaluate performance. Porch Shareholder Interest includes the Insurance Services, Software & Data, and Consumer Services segments as well as Corporate expenses and applicable intercompany eliminations. See Non-GAAP Financial Measures section.
(3)The "Eliminations Related to Reciprocal Segment" column represents eliminations of transactions between the Reciprocal Segment and other segments or Corporate.
(4)Adjusted EBITDA (Loss) is a non-GAAP measure. See Non-GAAP Financial Measures section for definition.
Nine Months Ended September 30, 2024
Insurance Services Software & Data Consumer Services Corporate
Eliminations (1)
Subtotal Reciprocal Segment
Eliminations Related to Reciprocal Segment (2)
Consolidated
Revenue $ 118,586 $ 67,436 $ 52,844 $ - $ (892) $ 237,974 $ 145,387 $ (45,874) $ 337,487
Cost of revenue 72,355 17,326 11,608 - (58) 101,231 133,387 (12,723) 221,895
Gross Profit 46,231 50,110 41,236 - (834) 136,743 12,000 (33,151) 115,592
Gross Margin 39 % 74 % 78 % - % 93 % 57 % 8 % 72 % 34 %
Less: Operating expenses:
Selling and marketing 40,158 30,542 25,675 1,645 (725) 97,295 30,234 (33,151) 94,378
Product and technology 109 13,158 3,095 15,969 (109) 32,222 5,684 - 37,906
General and administrative 5,110 11,192 9,497 41,340 - 67,139 5,820 - 72,959
Operating income (loss) (58,954) - (59,913) (29,738) - (89,651)
Other expense (income) (13,458) (14,944) (115) 5,038 - (23,479) (3,552) - (27,031)
Income (loss) before income taxes (63,992) - (36,434) (26,186) - (62,620)
Income tax benefit (provision) (683) - (683) - - (683)
Net income (loss) $ (64,675) $ - $ (37,117) $ (26,186) $ - $ (63,303)
Adjusted EBITDA (Loss) Reconciliation:
Net income (loss) $ (64,675) $ (37,117) $ (63,303)
Less: Reconciling items:
Depreciation and amortization (2,970) (11,235) (2,909) (1,434) - (18,548) (18,568)
Stock-based compensation expense (1,007) (3,538) (1,600) (13,063) - (19,208) (19,208)
Gain (loss) on extinguishment of debt - - - 27,436 - 27,436 27,436
Interest expense - 19 21 (31,966) - (31,926) (31,758)
Income tax provision - - - (683) - (683) (683)
Mark-to-market gains (losses) - (909) 1,066 (6,696) - (6,539) (6,539)
Recoveries of Losses on Reinsurance Contracts 8,664 - - 3,331 - 11,995 11,995
Other gains and losses (134) 14,222 16 (1,313) - 12,791 8,648
Adjusted EBITDA (Loss) (3)
$ 9,759 $ 11,603 $ 6,490 $ (40,287) $ (12,435) $ (34,626)
______________________________________
(1)The "Eliminations" column represents eliminations of transactions between the Insurance Services segment, Software & Data segment, Consumer Services segment, and Corporate column.
(2)The "Eliminations Related to Reciprocal Segment" column represents eliminations of transactions between the Reciprocal Segment and other segments or Corporate.
(3)Adjusted EBITDA (Loss) is a non-GAAP measure. See Non-GAAP Financial Measures section for definition.
Porch Shareholder Interest Year-to-Date Results (Non-GAAP)
Effective January 1, 2025, Porch shareholders own three segments: Insurance Services, Software & Data, and Consumer Services. Together, these segments-offset by corporate expenses-comprise what we refer to as the "Porch Shareholder Interest." These segments contribute to Net Income Attributable to Porch and are what is expected to generate cash for Porch shareholders. Comparative period amounts in the following table include only the Insurance Services, Software & Data, and Consumer Services segments as well as corporate expenses. Certain amounts presented in the following table are non-GAAP measures and are reconciled to the nearest GAAP measure in the earlier "Consolidated Year-to-Date Results" section.
Nine Months Ended September 30,
2025 2024 Change
Porch Shareholder Interest Revenue (1) $ 306,638 $ 237,974 $ 68,664
Porch Shareholder Interest Gross Profit (1) $ 252,550 $ 136,743 $ 115,807
Porch Shareholder Interest Adjusted EBITDA (Loss) (1) $ 53,117 $ (12,435) $ 65,552
______________________________________
(1)Porch Shareholder Interest Revenue, Gross Profit, and Adjusted EBITDA (Loss) are non-GAAP measures. For the nine months ended September 30, 2025, Porch Shareholder Interest Adjusted EBITDA (Loss) is equivalent to total Adjusted EBITDA (Loss) for consolidated Porch, as Porch no longer owns HOA following its sale to the Reciprocal on January 1, 2025. See Non-GAAP Financial Measures section.
For the nine months ended September 30, 2025, revenue for Porch Shareholder Interest increased $68.7 million when compared to the prior year period. The increase was primarily due to the launch of the Reciprocal on January 1, 2025, and the associated revenue streams as Porch acts as its manager, and an increase in ceding from the Reciprocal Segment with the new reinsurance programs beginning on April 1, 2025. This increase was partially offset by an increase in the average coverage period of our warranty products, resulting in revenue being recognized over a longer timeframe, and strategic shift to lower revenue, higher profit services in our moving businesses.
Porch Shareholder Interest Gross Profit improved by $115.8 million for the nine months ended September 30, 2025, when compared to the prior year period. This improvement was primarily driven the launch of the Reciprocal and higher revenue resulting from increased ceding activity from the Reciprocal Segment. Porch Shareholder Interest Gross Profit is a non-GAAP measure. See Non-GAAP Financial Measures section for definition.
Porch Shareholder Interest Adjusted EBITDA (Loss) improved by $65.6 million for the nine months ended September 30, 2025, compared to the prior year period. The improvement was primarily driven by increased ceding activity from the Reciprocal Segment and the shift in the business model from carrier to the manager of the Reciprocal, producing higher margin management fees. Our Insurance Services segment benefited from the receipt of management fees from the Reciprocal Segment which began in January 2025 and an increase in interest income from the surplus note due from the Reciprocal Segment. Our other segment and corporate costs also declined due to lower professional fees, reduced reliance on third-party consultants, and strong cost control. Porch Shareholder Interest Adjusted EBITDA (Loss) is a non-GAAP measure. See Non-GAAP Financial Measures section for definition.
INSURANCE SERVICES
Nine Months Ended September 30,
2025 2024 Change
Revenue $ 191,041 $ 118,586 $ 72,455
Gross Profit $ 162,439 $ 46,231 $ 116,208
Gross Margin 85 % 39 %
Adjusted EBITDA (1) $ 70,766 $ 9,759 $ 61,007
Adjusted EBITDA Margin (1) 37 % 8 %
RWP (in millions) (2) $ 355.1 $ - N/A
Reciprocal Policies Written (in thousands) (2) 126.2 - N/A
RWP per Policy (unrounded) (2) $ 2,813 $ - N/A
______________________________________
(1)Insurance Services Adjusted EBITDA and 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.
For the nine months ended September 30, 2025, Insurance Services segment revenue was $191.0 million. For the nine months ended September 30, 2024, Insurance Services segment revenue was $118.6 million. The 61% increase in Insurance Services segment revenue was primarily driven by an increase in ceding from the Reciprocal Segment with the new reinsurance programs beginning on April 1, 2025. Additionally, revenue increased due to the launch of the Reciprocal on January 1, 2025, and the associated revenue streams as Porch acts as its manager.
Our Insurance Services segment generates economics in several ways: management fees based on a percentage of written premium from the Reciprocal, policy fees based on the number of Reciprocal Policies Written, non-catastrophic weather quota share reinsurance, lead fees from third-party insurance agencies, and interest from the surplus note due from the Reciprocal. Insurance Services revenue as a percentage of RWP was 54% for the nine months ended September 30, 2025
For the nine months ended September 30, 2025, Insurance Services segment gross profit was $162.4 million. For the nine months ended September 30, 2024, Insurance Services segment profit was $46.2 million. The increase in gross profit was primarily driven by higher revenue resulting from increased ceding activity from the Reciprocal Segment.
Insurance Services Adjusted EBITDA was $70.8 million in the nine months ended September 30, 2025, which improved compared to prior year primarily due to the various commissions and fees beginning January 1, 2025, including interest income from the surplus note due from the Reciprocal Segment.
Insurance Services Adjusted EBITDA Margin increased to 37% for the nine months ended September 30, 2025, primarily due to the increase in revenue driven by increased ceding activity from the Reciprocal Segment. The Adjusted EBITDA Margin increase outpaced the increase in revenue, reflecting a shift in the business model from carrier to the manager of the Reciprocal, producing higher margin management fees. Higher interest income earned on higher principal balance of surplus notes with the Reciprocal Segment also contributed to the increase.
SOFTWARE & DATA
Nine Months Ended September 30,
2025 2024 Change
Revenue $ 70,647 $ 67,436 $ 3,211
Gross Profit $ 52,815 $ 50,110 $ 2,705
Gross Margin 75 % 74 %
Adjusted EBITDA (1) $ 15,241 $ 11,603 $ 3,638
Adjusted EBITDA Margin (1) 22 % 17 %
Average Number of Companies (in thousands) (2) 24.0
Annualized Average Revenue per Company (unrounded) (2) $ 3,918
______________________________________
(1)Software & Data Adjusted EBITDA and 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 nine months ended September 30, 2025, Software & Data segment revenue was $70.6 million. For the nine months ended September 30, 2024, Software & Data segment revenue was $67.4 million. Revenue was impacted by an increase in transaction volume of our Home Factors product and price increases of our title insurance software.
For the nine months ended September 30, 2025, Software & Data segment gross profit was $52.8 million. For the nine months ended September 30, 2024, Software & Data segment gross profit was $50.1 million. Gross Profit improvement correlated with the increase in Software & Data segment revenue.
Software & Data Adjusted EBITDA was $15.2 million in the nine months ended September 30, 2025, which improved compared to prior year due to strong cost control, including a reduction in workforce, lower professional fees, and lower rent expense.
Software & Data Adjusted EBITDA Margin increased to 22% for the nine months ended September 30, 2025, reflecting improved operational efficiency. While revenue increased by 5% compared with the prior year, primarily due to title insurance software price increases and higher transaction volume of our Home Factors product, Adjusted EBITDA Margin growth was driven by reduction in operating costs from strong cost control, including a reduction in workforce and lower professional fees.
CONSUMER SERVICES
Nine Months Ended September 30,
2025 2024 Change
Revenue $ 51,738 $ 52,844 $ (1,106)
Gross Profit $ 44,076 $ 41,236 $ 2,840
Gross Margin 85 % 78 %
Adjusted EBITDA (1) $ 3,780 $ 6,490 $ (2,710)
Adjusted EBITDA Margin (1) 7 % 12 %
Monetized Services (in thousands) (2) 252.1
Average Revenue per Monetized Service (unrounded) (2) $ 205
______________________________________
(1)Consumer Services Adjusted EBITDA and 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 nine months ended September 30, 2025, Consumer Services segment revenue was $51.7 million. For the nine months ended September 30, 2024, Consumer Services segment revenue was $52.8 million. The decrease in revenue was primarily driven by an increase in the average coverage period of our warranty products, resulting in revenue being recognized over a longer timeframe. The decrease in revenue was also driven by a strategic shift to lower revenue higher
profit services in our moving businesses. These decreases were partially offset by increased revenue from greater fee retention for providing third-party TV/Internet services.
Consumer Services Adjusted EBITDA was $3.8 million in the nine months ended September 30, 2025, which decreased compared to prior year, was primarily driven by the decrease in monthly revenue resulting from a longer warranty coverage period. The new longer warranty is priced higher but results in a lower monthly rate. In addition, the decrease was also impacted by the timing of direct mail marketing expense for new warranty products compared to the prior year.
Consumer Services Adjusted EBITDA Margin decreased to 7% for the nine months ended September 30, 2025, primarily driven by decrease in monthly revenue related to longer coverage period of our warranty products and the shift to higher profit moving services.
CORPORATE
Nine Months Ended September 30,
2025 2024 Change
Selling and marketing $ 1,289 $ 1,645 $ (356)
Product and technology 12,604 15,969 $ (3,365)
General and administrative 39,966 41,340 $ (1,374)
Other (17,191) (18,667) $ 1,476
Adjusted EBITDA Loss $ 36,668 $ 40,287 $ (3,619)
______________________________________
(1)Adjusted EBITDA Loss is a non-GAAP measure. See Non-GAAP Financial Measures section for definition.
Corporate expenses decreased for the nine months ended September 30, 2025, compared to the the same period for 2024. The decrease was driven primarily by lower professional fees and reduced reliance on third-party consultants as well as strong cost control across the business. Our cost control measures included centralizing administrative functions and shifting hiring to target lower-cost locations.
Key Performance Measures and Operating Metrics
In the management of these businesses, we identify, measure and evaluate various operating metrics. The key performance measures and operating metrics used in managing the businesses are discussed below. These key performance measures and operating metrics are not prepared in accordance with generally accepted accounting principles in the United States ("GAAP") and may not be comparable to or calculated in the same way as other similarly titled measures and metrics used by other companies.
Insurance Services
Reciprocal Written Premium ("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 straight-line average of the number of companies as of the end of period compared with the beginning of period across all of our Software & Data segment. This only includes the number of companies in our Software & Data segment.
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.
Change in Key Performance Indicator
Effective beginning with the quarter ended September 30, 2025, we have updated the definition of an operational metric, RWP, to include surplus contributions to the Reciprocal and policy fees. Management believes the revised definition reflects the total amount the policyholder is expected to pay and provides better insight to management. The primary reason for the change is the anticipated launch of the Porch Insurance product, where policyholders will pay a 10% surplus contribution in addition to traditional premium and fees. The updated definition ensures RWP aligns the operating metric with the full economic payment expected from the policyholder. The change in calculation methodology and updated definition did not result in a significant or material difference to the reported figures as compared to the definition utilized in prior quarters.
Liquidity and Capital Resources
In our early years, we raised capital primarily through equity investments. As a publicly traded company, we have relied on convertible debt as our primary source of capital. As of September 30, 2025, 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 September 30, 2025, are sufficient to finance our operations, planned capital expenditures, working capital requirements, and debt service obligations for at least the next 12 months. As our operations evolve and we continue our growth strategy, including through acquisitions, we may elect or need to obtain alternative sources of capital, and we may finance additional liquidity needs in the future through one or more equity or debt financings. We may not be able to obtain equity or additional debt financing in the future when needed or, if available, the terms may not be satisfactory to us or could be dilutive to our stockholders.
We may, at any time and from time to time, seek to retire or purchase our outstanding debt or equity through cash purchases and/or exchanges for equity or debt, in open-market purchases, privately negotiated transactions, or otherwise. Such repurchases or exchanges, if any, will be upon such terms and at such prices as we may determine, and will depend on prevailing market conditions, liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.
We incurred net losses historically, resulting in an accumulated deficit of $644.8 million at September 30, 2025, and $754.9 million at December 31, 2024. The improvement in accumulated deficit during the nine months ended September 30, 2025, is a result of reclassification upon formation of the Reciprocal, slightly offset by a net loss.
Porch is a holding company that transacts the majority of its business through operating subsidiaries, including subsidiaries that are involved in providing reinsurance and management services for the Reciprocal which is an insurance carrier. Consequently, our ability to pay dividends and expenses is largely dependent on dividends or other distributions from our subsidiaries. The insurance industry is highly regulated, and insurance businesses are restricted by statute as to the amount of dividends they may pay without the prior approval of regulatory authorities.
Liquidity and Capital Resources of Porch Shareholder Interest
The following table provides the components of cash and cash equivalents, restricted cash and cash equivalents, and investments of Porch Shareholder Interest.
September 30, 2025 December 31, 2024
Cash and cash equivalents of Porch Shareholder Interest $ 73,433 $ 46,526
Short-term investments of Porch Shareholder Interest 11,607 1,613
Long-term investments of Porch Shareholder Interest 38,895 13,509
Unrestricted cash, cash equivalents, and investments of Porch Shareholder Interest
123,935 61,648
Restricted cash and cash equivalents of Porch Shareholder Interest 8,128 28,244
All cash, cash equivalents, investments, and restricted cash and cash equivalents of Porch Shareholder Interest
$ 132,063 $ 89,892
2026 Convertible Senior Unsecured Notes
As of September 30, 2025, the outstanding principal was $7.8 million on our 0.75% Convertible Senior Unsecured Notes due on September 15, 2026 (the "2026 Notes").
On May 27, 2025, we completed a series of privately negotiated refinancing transactions with certain holders of our 0.75% Convertible Senior Unsecured Notes due in September 2026 (the "2026 Notes"). As part of these refinancing transactions, we:
•Exchanged $96.8 million aggregate principal amount of 2026 Notes for $83.0 million aggregate principal amount of newly issued 9.00% Convertible Senior Unsecured Notes due 2030 (the "2030 Notes"),
•Issued an additional $51.0 million aggregate principal amount of 2030 Notes for cash to the same investors that participated in the exchange, and
•Repurchased $47.5 million aggregate principal amount of 2026 Notes for $47.3 million in cash.
After funding the cash portion of the repurchase and related expenses, net cash proceeds were approximately $3.7 million. We used these proceeds, along with existing cash on hand, to repurchase an additional $8.9 million aggregate principal amount of the 2026 Notes for $8.4 million cash in May 2025. We recognized a net gain on extinguishment of debt of less than $0.1 million in the second quarter of 2025. Our Board of Directors authorized management to repurchase the remaining 2026 Notes in cash in the open market or through privately negotiated transactions.
During the third quarter of 2025, we repurchased in a series of privately negotiated transactions $12.8 million in aggregate principal amount of our 2026 Notes for $12.8 million, representing 96.5% par value. As a result, we recognized a gain on extinguishment of debt of $0.4 million during the third quarter.
We may redeem for cash all or any portion of the 2026 Notes at our option if the last reported sale price of the common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide a notice of redemption, at a redemption price equal to 100% of the principal amount of the 2026 Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the 2026 Notes. The 2026 Notes are convertible at an initial conversion rate of 39.9956 shares of common stock per one thousand dollars principal amount of 2026 Notes, which is equivalent to an initial conversion price of approximately $25.00 per share of common stock (the "Conversion Rate"). The Conversion Rate is subject to customary adjustments for certain events as described in the indenture governing the 2026 Notes. We may settle the conversion option obligation with cash, shares of our common stock, or any combination of cash and shares of our common stock. Holders of the 2026 Notes may convert the 2026 Notes at their option (in whole or in part) on or after June 15, 2026, until the close of business on the second trading day immediately preceding the maturity date of September 15, 2026. In addition, holders of the 2026 Notes may convert the 2026 Notes at their option (in whole or in part) at any time prior to the close of business on the business day immediately preceding June 15, 2026, only under certain circumstances described in our Annual Report for the year ended December 31, 2024.
2028 Convertible Senior Secured Notes
As of September 30, 2025, 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 September 30, 2025, the outstanding principal was $134.0 million on our 9.00% Convertible Senior Unsecured Notes due in 2030.
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 $15.71 per share (the "Conversion Rate"). The conversion price is subject to adjustment based on the Conversion Rate then in effect. If all outstanding 2030 Notes were converted in full at this initial conversion price as of the closing date of the 2030 Notes issuance, this would have equated to approximately 8.5 million shares of common stock. These shares, along with Conversion Rate, are subject to customary adjustments for certain events as described in the indenture governing the 2030 Notes. 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 the following circumstances:
•during any fiscal quarter commencing after the calendar quarter ending September 30, 2025, if our common stock price exceeds 120% (or $18.85) of the conversion price for at least 20 trading days during the 30 consecutive trading days at the end of the prior calendar quarter;
•during five business days after any five consecutive trading days in which the trading price per one thousand dollars of 2030 Notes was less than 98% of the product of the closing sale price of our common stock and the then current conversion rate;
•upon the occurrence of certain corporate actions;
•upon the occurrence of a fundamental change, a make-whole fundamental change or any share exchange event; or
•prior to the related redemption date if we elect to exercise the company call option.
Upon the occurrence of a make-whole fundamental change or the exercise of our redemption option as described below, we would, under certain circumstances, increase the applicable conversion rate for a holder that elects to convert its 2030 Notes in connection with such make-whole fundamental change or exercise of redemption (not to exceed 101.8132 shares of common stock per one thousand dollars of principal amount of the 2030 Notes). As of September 30, 2025, none of the conditions of the 2030 Notes to early convert were met.
The 2030 Notes are also redeemable at the option of the Company on or after November 20, 2026, if the last reported sale price of Porch's common stock has been at least 120% (or $18.85) of the conversion price for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period.
The 2030 Notes are senior unsecured obligations, accrue interest at a rate of 9.00%, payable semi-annually in arrears on May 15 and November 15 of each year, beginning on November 15, 2025. The 2030 Notes mature on May 15, 2030, unless earlier converted, redeemed, or repurchased.
Liquidity and Capital Resources of the Reciprocal (Consolidated VIE)
The following table provides the components of cash and cash equivalents, restricted cash and cash equivalents, and investments of the Reciprocal.
September 30, 2025 December 31, 2024
Cash and cash equivalents of the Reciprocal $ 110,204 $ 121,117
Short-term investments of the Reciprocal 3,767 22,485
Long-term investments of the Reciprocal (1) 174,089 145,144
288,060 288,746
Restricted cash and cash equivalents of the Reciprocal (2) 1,031 895
$ 289,091 $ 289,641
______________________________________
(1)Excludes 18.3 million shares of common stock held by HOA as of December 31, 2024, and held by the Reciprocal as of September 30, 2025 (following the distribution of such shares to the Reciprocal in connection with the sale of HOA to the Reciprocal in the first quarter of 2025).
(2)See Note 1 in the unaudited Notes to Condensed Consolidated Financial Statements for a description of the nature of restrictions.
As of September 30, 2025, the Reciprocal had $412.0 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 nine months ended September 30, 2025 and 2024:
Nine Months Ended September 30,
2025 2024 $ Change % Change
Net cash provided by (used in) operating activities $ 65,218 $ (5,080) $ 70,298 (1384) %
Net cash used in investing activities (49,411) (52,209) 2,798 (5) %
Net cash used in financing activities (19,793) (23,265) 3,472 (15) %
Change in cash, cash equivalents and restricted cash and cash equivalents $ (3,986) $ (80,554) $ 76,568 (95) %
Operating Cash Flows
Net cash provided by operating activities was $65.2 million for the nine months ended September 30, 2025. Net cash provided by operating activities was primarily driven by net income and the collection in the current year of reinsurance receivables from the prior year.
Net cash used in operating activities was $5.1 million for the nine months ended September 30, 2024. Net cash used in operating activities includes cash outflows to cover losses at the Reciprocal from severe weather during the year and timing of working capital disbursements. These outflows of cash were partially offset by positive cash flow from the non-recurring cash receipt of $25 million related to the Aon agreement (see Note 12 in the unaudited Notes to Condensed Consolidated Financial Statements).
Investing Cash Flows
Net cash used in investing activities was $49.4 million for the nine months ended September 30, 2025. Net cash used in investing activities is primarily related to purchases of investments of $104.0 million and investments in developing internal-use software of $10.5 million, partially offset by proceeds from maturities and sales of investments of $64.2 million.
Net cash used in investing activities was $52.2 million for the nine months ended September 30, 2024. Net cash used in investing activities was primarily related to purchases of investments of $98.1 million and investments in developing internal-use software of $8.6 million, partially offset by proceeds from sale of EIG of $10.9 million and maturities and sales of investments of $44.0 million.
Financing Cash Flows
Net cash used in financing activities was $19.8 million for the nine months ended September 30, 2025. Net cash used in financing activities primarily relates to $68.2 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.
Net cash used in financing activities was $23.3 million for the nine months ended September 30, 2024. Net cash used in financing activities was primarily related to the repurchase of 2026 Notes for $23.2 million.
Supplemental Cash Flow Information
The following table provides further detail of cash flows of Porch and cash flows of the Reciprocal Segment for the nine months ended September 30, 2025.
Consolidated Reciprocal Segment Eliminations
Porch Shareholder Interest (1)
Net cash provided by (used in) operating activities $ 65,218 $ (5,696) $ - $ 70,914
Cash flows from investing activities:
Purchases of property and equipment and capitalized software development costs (10,875) (6) - (10,869)
Maturities, sales, (purchases) of investments, net (39,753) (5,075) - (34,678)
Proceeds from sale of business 1,217 - - 1,217
Issuance of surplus note to Reciprocal - - 46,813 (46,813)
Sale of HOA to the Reciprocal - (46,813) - 46,813
Net cash provided by (used in) investing activities (49,411) (51,894) 46,813 (44,330)
Cash flows from financing activities:
Proceeds from surplus note with Porch - 46,813 (46,813) -
Proceeds from debt issuance 51,000 - - 51,000
Repayments of principal (68,164) - - (68,164)
Other financing activities (2,629) - - (2,629)
Net cash provided by (used in) financing activities (19,793) 46,813 (46,813) (19,793)
Net change in cash and cash equivalents & restricted cash and cash equivalents (3,986) (10,777) - 6,791
Cash and cash equivalents & restricted cash and cash equivalents, beginning of period 196,782 122,012 - 74,770
Cash and cash equivalents & restricted cash and cash equivalents, end of period $ 192,796 $ 111,235 $ - $ 81,561
Supplemental disclosures
Cash received (paid) for interest on intercompany surplus notes - (9,181) - 9,181
______________________________________
(1)Porch Shareholder Interest net cash provided by (used in) operating, investing, and financing activities are non-GAAP measures. See Non-GAAP Financial Measures section. This table reconciles these non-GAAP measures to the nearest GAAP measures in the "Consolidated" column.
Non-GAAP Financial Measures
This Quarterly Report includes non-GAAP financial measures, such as Adjusted EBITDA (Loss), Adjusted EBITDA (Loss) Margin, and certain amounts related to Porch Shareholder Interest.
Our management uses these non-GAAP financial measures as supplemental measures of our operating and financial performance, for internal budgeting and forecasting purposes, to evaluate financial and strategic planning matters, and to establish certain performance goals for incentive programs. We believe that the use of these non-GAAP financial measures provides investors with useful information to evaluate our operating and financial performance and trends and in comparing our financial results with competitors, other similar companies and companies across different industries, many of which present similar non-GAAP financial measures to investors. However, our definitions and methodology in calculating these non-GAAP measures may not be comparable to those used by other companies. In addition, we may modify the presentation of these non-GAAP financial measures in the future, and any such modification may be material.
You should not consider these non-GAAP financial measures in isolation, as a substitute to or superior to financial performance measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude specified income and expenses, some of which may be significant or material, that are required by GAAP to be recorded in our consolidated financial statements. We may also incur future income or expenses similar to those excluded from these non-GAAP financial measures, and the presentation of these measures should not be construed as an inference that future results will be unaffected by unusual or non-recurring items. In addition, these non-GAAP financial measures reflect the exercise of management judgment about which income and expenses are included or excluded in determining these non-GAAP financial measures.
Adjusted EBITDA (Loss)
We define Adjusted EBITDA (Loss) as net income (loss) adjusted for net income (loss) attributable to the Reciprocal; interest expense; income taxes; depreciation and amortization; gain or loss on extinguishment of debt; other expense; other income; impairments of intangible assets and goodwill; gain or loss on reinsurance contract; impairments of property, equipment, and software; stock-based compensation expense; mark-to-market gains or losses recognized on changes in the value of contingent consideration arrangements, unexercised warrants, and derivatives; restructuring and other costs; acquisition and other transaction costs; and non-cash bonus expense. Adjusted EBITDA (Loss) Margin is defined as Adjusted EBITDA (Loss) divided by total revenue.
The following table reconciles Net income (loss) to Adjusted EBITDA (Loss) and Net income (loss) as a percentage of revenue to Adjusted EBITDA (Loss) Margin.
Three Months Ended September 30,
2025 2024
Amount Margin Amount Margin
Net income (loss) $ (982) (1)% $ 14,382 13%
Net loss (income) attributable to the Reciprocal (9,875) (8)% - -%
Interest expense 13,953 12% 10,645 10%
Income tax provision (benefit) 1,160 1% (183) -%
Depreciation and amortization 4,910 4% 6,049 5%
Gain on extinguishment of debt (361) -% (22,545) (20)%
Other income, net (118) -% (773) (1)%
Loss (gain) on reinsurance contract - -% (285) -%
Stock-based compensation expense 7,181 6% 6,735 6%
Mark-to-market losses (gains) 3,909 3% 1,140 1%
Restructuring and other costs 837 1% 1,668 2%
Acquisition and other transaction costs 12 -% 102 -%
Adjusted EBITDA (Loss) $ 20,626 17% $ 16,935 15%
Revenue $ 118,082 100% $ 111,200 100%
Nine Months Ended September 30,
2025 2024
Amount Margin Amount Margin
Net income (loss) $ 11,001 3% $ (63,303) (19)%
Net loss (income) attributable to the Reciprocal (10,884) (3)% - -%
Interest expense 37,174 11% 31,758 9%
Income tax provision (benefit) (12) -% 683 -%
Depreciation and amortization 14,395 4% 18,568 6%
Gain on extinguishment of debt (395) -% (27,436) (8)%
Other income, net (7,375) (2)% (22,979) (7)%
Loss (gain) on reinsurance contract - -% (1,391) -%
Stock-based compensation expense 20,091 6% 19,208 6%
Mark-to-market losses (gains) (12,035) (4)% 6,538 2%
Restructuring and other costs 969 -% 3,460 1%
Acquisition and other transaction costs 188 -% 268 -%
Adjusted EBITDA (Loss) $ 53,117 16% $ (34,626) (10)%
Revenue $ 342,122 100% $ 337,487 100%
The impact of corporate expenses on Adjusted EBITDA (Loss) is also a non-GAAP financial measure. Reconciliations of these non-GAAP financial measures to the nearest GAAP measure are included in the Consolidated Results sections.
Porch Shareholder Interest
Certain amounts related to Porch Shareholder Interest are non-GAAP financial measures. We define Porch Shareholder Interest as the Insurance Services, Software & Data, and Consumer Services segments, together with corporate expenses.
The operating results of these segments comprise "Net income (loss) attributable to Porch" in our unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). Reconciliations of the following non-GAAP financial measures to the nearest GAAP measure are included in the Consolidated Results sections:
•Porch Shareholder Interest Adjusted EBITDA (Loss)
•Porch Shareholder Interest Cost of Revenue
•Porch Shareholder Interest Depreciation and Amortization
•Porch Shareholder Interest General and Administrative
•Porch Shareholder Interest Gross Margin
•Porch Shareholder Interest Gross Profit
•Porch Shareholder Interest Income (Loss) Before Income Taxes
•Porch Shareholder Interest Income Tax Benefit (Provision)
•Porch Shareholder Interest Interest Expense
•Porch Shareholder Interest Mark-to-Market Losses (Gains)
•Porch Shareholder Interest Operating Income (Loss)
•Porch Shareholder Interest Other Expense (Income)
•Porch Shareholder Interest Other Gains and Losses
•Porch Shareholder Interest Product and Technology
•Porch Shareholder Interest Revenue
•Porch Shareholder Interest Selling and Marketing
•Porch Shareholder Interest Stock-based Compensation Expense
Reconciliations of the following non-GAAP financial measures to the nearest GAAP measure are included in the Liquidity and Capital Resources section:
•Porch Shareholder Interest net cash provided by (used in) financing activities
•Porch Shareholder Interest net cash provided by (used in) investing activities
•Porch Shareholder Interest net cash provided by (used in) operating activities
Critical Accounting Estimates
Our critical accounting policies, including the assumptions and judgments underlying them, are disclosed in the 2024 Annual Report, including those policies as discussed in Note 1 to the Notes to Consolidated Financial Statements included in the 2024 Annual Report. There have been no material changes to these policies during the nine months ended September 30, 2025.
Off-Balance Sheet Arrangements
Since the date of incorporation, we have not engaged in any off-balance sheet arrangements, as defined in the rules and regulations of the Securities and Exchange Commission (the "SEC").
Porch Group Inc. published this content on November 06, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on November 06, 2025 at 11:02 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]