- Reports $75.4 Million of Revenue, up 20% Year-Over-Year

- Announces Authorization of Up to $15 Million Repurchase Program

- Provides Updated 2022 Guidance; Reflecting Weather and Housing Market Impacts

Porch Group, Inc. (“Porch Group” or “the Company”) (NASDAQ: PRCH), a leading vertical software company reinventing the home services and insurance industries, today reported third-quarter results for the Company as of September 30, 2022, with revenues of $75.4 million, compared to third-quarter 2021 revenues of $62.8 million. For the nine months ended September 30, 2022, Porch Group reported revenues of $208.7 million, compared to $140.9 million in 2021.

CEO Summary

“While macroeconomic headwinds continue to impact certain industries in which we operate, Porch Group continues to progress toward becoming one of the fastest growing homeowners insurance companies with the important long-term advantages our vertical software platform provides,” said Matt Ehrlichman, founder and Chief Executive Officer of Porch Group, Inc. “Due to the continued execution from our team, we are still tracking towards Adjusted EBITDA profitability in the second half of 2023, actively engaged in solutions to improve the capital efficiency and lower volatility at our insurance business, and are making progress on key initiatives to position us for continued strong growth anticipated throughout 2023.”

Third Quarter 2022 Financial Results

• Total revenue for the third quarter of 2022 was $75.4 million, an increase of $12.6 million from $62.8 million in the third quarter of 2021.
• Revenue less cost of revenue for the third quarter of 2022 was $42.1 million or 55.9% of total revenue, compared to $43.6 million or 69.5% of total revenue for the third quarter of 2021. Volatile weather, including Hurricane Ian, and inflation-related insurance claims costs drove the higher-than-average third quarter cost of revenue.
• GAAP net loss for the third quarter of 2022 totaled $86.4 million, compared to a GAAP net loss of $5.1 million for the third quarter of 2021. GAAP net loss was impacted by a $57.1 million goodwill and intangible impairment recorded in the quarter.
• Adjusted EBITDA loss for the third quarter of 2022 totaled $ (13.0) million or -17.2% of total revenue, compared to Adjusted EBITDA of $873 thousand or 1.4% of total revenue for the third quarter of 2021.

Segment Results for the Third Quarter 2022

• Vertical Software revenue for the quarter was $44.5 million, revenue less cost of revenue was $29.9 million or 67.2% of Vertical Software revenue, and GAAP net loss was $2.7 million. Adjusted EBITDA for the third quarter was $5.0 million, or 11.1% of Vertical Software revenue.
• Insurance revenue for the quarter was $30.9 million, revenue less cost of revenue was $12.2 million or 39.6% of Insurance revenue, and GAAP net loss was $6.9 million. Adjusted EBITDA loss for the third quarter was $2.3 million, or (7.5)% of Insurance revenue.
• Insurance gross written premium for the quarter was $157 million with over 391 thousand policies.

Third Quarter 2022 and Recent Operational Highlights

• Announced the appointment of Shawn Tabak (Chief Financial Officer), Nicholas Graham (Group GM, Moving Group), and Amanda Reierson and Camilla Velasquez (new and independent members of Porch Group’s Board of Directors).
• Filed and received approval from 5 states to utilize Porch Group’s proprietary data in insurance pricing.
• Launched home warranty in the State of Florida, now offering warranties across 49 states.
• Floify, the mortgage industry’s leading point-of-sale solution, announced Technology Industry Partnership with National Association of Mortgage Brokers (NAMB), named a Service Partner of the Year by the NAMB
• Launched the Porch consumer app to more consumers of home inspection companies, and expanded insurance embedded within Floify.
• Ended the quarter with approximately $276 million in cash, restricted cash, and cash equivalents

Third Quarter 2022 Key Performance Indicators (KPIs)

Software and services to companies:

• Average companies in quarter increased to 30,951 from 20,419 in the third quarter of 2021.
• Average revenue per account per month in quarter decreased to $812 from $987 in the third quarter of 2021, driven partly by macroeconomic impacts to the move and post-move businesses.

Monetized services for consumers:

• Number of monetized services in quarter was 318,452 in the third quarter of 2022, down from 338,157 in the third quarter of 2021.
• Average revenue per monetized service in quarter was $181, a 36.1% increase from $133 in the third quarter of 2021.

Repurchase Program

Porch Group also announced today that its Board of Directors has approved a new repurchase program authorizing management’s deployment of up to $15 million to repurchase the Company’s outstanding common stock and/or convertible notes. Repurchases under the newly authorized program may be made from time to time on the open market between November 10, 2022 and June 30, 2023, at prevailing market prices, in privately negotiated transactions, in block trades, and/or through other legally permissible means, depending on market conditions and in accordance with applicable rules and regulations (including through Rule 10b5-1 trading plans and under 10b-18 of the Exchange Act). Certain executive officers and directors of Porch Group may also purchase shares of Company common stock in accordance with the Company’s insider trading policy and federal securities laws.

Matt Ehrlichman commented, “We believe the current market value of both the common shares and convertible note creates an attractive opportunity to consider a repurchase. My primary focus has always been finding opportunities to create value for long-term shareholders. I believe this repurchase program reflects our confidence in Porch Group’s future and our commitment to driving long-term value.”

The timing and amount of common stock or convertible notes repurchased will depend on various factors, including price, corporate and regulatory requirements, market conditions, and other corporate liquidity requirements and priorities. All purchased shares will be cancelled. The repurchase program does not obligate the Company to acquire a specific dollar amount or number of shares or notes and may be modified, suspended, or discontinued at any time without prior notice.

Full Year 2022 Financial Outlook
Porch Group provides updated guidance based on current market conditions and expectations.

¹ Adjusted EBITDA is a non-GAAP measure.
² 2022 gross written premium (“GWP”) guidance is stated as the expected full-year GWP for 2022 and is the total premium written across Homeowners of America, Porch Group’s insurance agency, and warranty products for the face value of one year’s premium, before deductions for reinsurance and ceding commissions.

Porch Group is not providing reconciliations of expected Adjusted EBITDA (loss) for future periods to the most directly comparable measures prepared in accordance with GAAP because the Company is unable to provide these reconciliations without unreasonable effort because certain information necessary to calculate such measures on a GAAP basis is unavailable or dependent on the timing of future events outside of the Company’s control.