Porch Group, Inc. Q4 FY2025 earnings call

Management Statement and Operational Highlights

• 2025 was transformational: Full year adjusted EBITDA ended at $77 million, an 11x increase over 2024. Statutory surplus at the reciprocal grew ~$50 million. Strengthened top of funnel with doubled active agencies and nearly tripled quote volumes.
• Q4 2025: RWP was $126 million, revenue $112 million, gross profit $91 million (81% margin), adjusted EBITDA $23 million (21% margin). Cash used in operations $5.5 million due to timing of interest payments and working capital.
• Strategic initiatives: Focus on growing statutory surplus, quote volume, and conversion rate. Porch Insurance launched in Texas at start of 2026. Advantageous risk assessment via Home factors data led to industry-leading loss ratios in 2025 (gross loss ratio 27%, attritional loss ratio 17%).

Segment Performance

• Insurance Services: Q4 2025 RWP was $125.7 million, revenue $75.7 million (60% of RWP), gross profit $65.1 million (86% margin), adjusted EBITDA $29 million (38% margin). Full year 2025: RWP $418.9 million, revenue $270.1 million (64%), gross profit $220.1 million (82% margin), adjusted EBITDA $76.6 million.
• Software and Data: Q4 2025 revenue $22.3 million (3% increase), gross profit $14.4 million (65% margin), adjusted EBITDA $3.7 million. Full year: revenue $88.7 million (22%), gross profit $57.5 million (65% margin), adjusted EBITDA $14.8 million.
• Consumer Services: Q4 2025 revenue $16.6 million (2% increase), gross profit $14.2 million (85% margin), adjusted EBITDA $1 million. Full year: revenue $59.1 million (14%), gross profit $46.3 million (78% margin), adjusted EBITDA $6 million.

Guidance

• 2026 target: $600 million organic reciprocal written premium (25% growth) and $100 million adjusted EBITDA.
• 2026 guidance for Porch shareholder interest: revenue range $475 million to $490 million (13%-17% growth), associated gross margin 81%-82%, adjusted EBITDA $98 million to $105 million.

Risks

• Stock price volatility impact on statutory surplus, though not a major impediment.
• Soft U.S. housing conditions affecting software and data segments.
• Competitive landscape changes potentially impacting quote volumes or conversion rates.

Question and Answer

Q: Nice to see the top of funnel, a new customer momentum. I guess in terms of pricing, obviously, the elasticity curve is quite steep. But can you give us a sense of the magnitude of price actions you've taken to drive the acceleration so far and whether more is needed on the pricing side or agent distribution to hit that target of $600 million for the year. And just overall, how much more flexibility do you think you have to continue to lean into pricing to drive higher conversion if you see that opportunity just given where loss ratios are today?

A: Yes. I mean on the second point first. I mean, you can see based on where our loss ratios are that we have just tremendous amounts of margin in the system, right? And that is fundamentally a core advantage of what we're able to do and so if we wanted to tick down prices for low-risk new customers, right, the right particular segment of new customers that we want to win, we can do that. . But to your first question, Ryan, like you said it exactly right, which is the slope of the curve of that elasticity curve for new customers is quite steep in certain places. And so you can and we have been able to meaningfully increase conversion without dramatic changes without giving so much price. And you can see that really in some of the metrics that Matthew shared in the KPIs where you see not that big of changes in terms of reciprocal written premium per policy, as an example, so we're able to get the gains that we want with, I would say, very surgical and targeted moves there to the right segment of customers. Obviously, our unique data helps us identify who are those right customers that we want to win and who are the customers that we want to not win and where we're going to be a much higher priced than the rest of the market. And so yes, we feel like we're in control of being able to drive to the right outcomes while still making sure that the reciprocal is very healthy and continuing to perform really well.

Q: Two questions. The first on Porch Insurance and the second, just about the fourth quarter. So on the Porch Insurance, I guess you've already highlighted for us it's coming out as a more premium product, you get more call like a chub like, but you get more functionality with it. I guess just talk about how you're also able to make it a better deal for agents and then kind of perhaps how the relationship, I think, is with Goose that plays into that? And then secondly, just talk about like why you alluded to, but why was the fourth quarter insurance results kind of better than you guided. And if you recall, there was a pretty steep reaction last quarter. Just maybe talk about do you have improved visibility now as you kind of enter first quarter and just broadly how you think about visibility in the insurance business for the year.

A: Maybe I'll take the first. Matthew later on, if there's things you want to add, Shawn, you can take the second. We are excited about Porch insurance. We've been working on this for a long time. And if you look back in years from now, we do think it is going to be a cornerstone of building a household brand, which we fully intend to be able to do. We talked about how it's better for consumers. You're exactly right. Just on we're they get additional coverage, full home warranty. We want Porch insurance to be definitively known as the best insurance product for a home buyer because they get full moving service as well. So we've built these capabilities out in our company for this specific moment so that we are just dramatically differentiated for the consumer. Agents, obviously, therefore, want to sell it because it convert well for them. It's the right product for their customers. But to your question, because there's more margin in our system just overall, we can be able to deploy that. Yes, for more surplus, yes, for more profit at Porch Group, but we're also providing some of that to agents to make sure that they are compensated better than the market, better than their alternatives with bringing Porch insurance out to the market. And so that's obviously great for them. We want to be able to be a true partnership with these agents and help them to be able to prosper as our business also grows. Lastly consumers do pay a 10% surplus contribution, which again creates just more economics in the system. And so that allows us again to be able to share some of that with agents. You mentioned Goosehead specifically, a great partner, great relationship. Just to be clear, Porch insurance is a product we brought out to all Texas agencies just to make sure that, that point was clear. John, do you want to take Q4 results and versus kind of expectations?

Q: So just on the insurance side, we're going from a world of pretty rapid premium increases over the last couple of years. Now I think '26 will be a little bit more muted environment. So I'm curious on a 25% growth target for RWP, how are you balancing that between premium growth and policy growth?

A: Sure. I can take that. We certainly are not expecting the double-digit price increases that we've seen over the last few years. We are, as Matt has mentioned and I mentioned, looking at where we can strategically reduce price for low-risk customers, to increase our conversion rate. And so we aren't materially counting on price increases next year to hit that 25% organic growth number.