Earnings call transcript: Porch Group Q3 2025 beats revenue expectations

Porch Group Inc. (PRCH) reported its third-quarter 2025 financial results, surpassing revenue expectations and posting a notable stock price increase. The company reported a revenue of $118.08 million, exceeding the forecast of $111.13 million, marking a 6.25% surprise. However, the company faced an earnings per share (EPS) miss, with an actual EPS of -$0.10 compared to the forecasted -$0.03. Following the announcement, Porch Group’s stock rose by 9.31% in regular trading and 3.35% in after-hours trading, reaching $15.10.

Key Takeaways

• Porch Group’s Q3 revenue exceeded expectations by 6.25%.
• The company reported an EPS miss, with a negative surprise of 233.33%.
• Stock surged by over 9% in regular trading and continued to rise after hours.
• Strong cash flow from operations at $28.8 million in Q3.
• Porch Group’s AI and data-driven innovations are gaining traction.

Company Performance

Porch Group demonstrated robust revenue growth in Q3 2025, driven by its innovative product offerings and operational efficiencies. The company’s strategic focus on expanding its Home Factors product and integrating AI across its software platforms has contributed to its strong market position. Despite a challenging housing market, Porch Group’s insurance services and data licensing opportunities continue to show promise.

Financial Highlights

• Revenue: $118.08 million, up from the forecast of $111.13 million.
• EPS: -$0.10, missing the forecast of -$0.03.
• Gross profit: $94.2 million, with an 82% gross margin.
• Adjusted EBITDA: $20.6 million, representing an 18% margin.
• Cash flow from operations: $28.8 million.

Earnings vs. Forecast

Porch Group’s Q3 revenue surpassed expectations by 6.25%, while the EPS fell short, with a negative surprise of 233.33%. This marks a significant deviation from the expected performance, highlighting areas for potential improvement in cost management or revenue generation.

Market Reaction

Following the earnings announcement, Porch Group’s stock experienced a considerable rise, increasing by 9.31% during regular trading and an additional 3.35% in after-hours trading. The stock’s upward movement reflects investor optimism, likely driven by the company’s revenue beat and promising future guidance.

Outlook & Guidance

Porch Group maintains a positive outlook, with an emphasis on surplus generation over premium scaling. The company anticipates revenue from data licensing to commence in 2026 and plans to expand its market presence into additional states. The full-year 2025 adjusted EBITDA guidance stands at $70 million, a significant increase from the previous year.

Executive Commentary

CEO Matt Ehrlichman expressed confidence in the company’s unique data capabilities, stating, "Our unique property data allows us to assess and price risk better than the industry." COO Matthew Neagle highlighted the potential of the Home Factors product, saying, "We see a lot of opportunity with our Home Factors product."

Risks and Challenges

• Continued low housing market activity could impact future growth.
• Potential regulatory changes in the insurance sector.
• Dependence on data-driven products and services for competitive advantage.
• Macroeconomic pressures affecting consumer spending and housing demand.

Q&A

During the earnings call, analysts inquired about Porch Group’s strategic approach to premium growth and surplus generation. The management team addressed these concerns by emphasizing their focus on long-term shareholder value and exploring geographic expansion strategies.

Full transcript - Porch Group Inc (PRCH) Q3 2025:

Moderator/Introducer, Porch Group: Good afternoon, everyone, and thank you for participating in Porch Group’s third quarter 2025 conference call, the day we issued our earnings release and filed our related Form 8-K with the SEC. The press release can be found on our investor relations website at ir.porchgroup.com. I’d like to take a moment to review the company’s safe harbor statement within the meaning of the Private Securities Litigation Reform Act of 1995, which provides important cautions regarding forward-looking statements. Today’s discussion, including responses to your questions, reflects management’s views as of today, November 5, 2025. We do not undertake any obligations to update or revise this information. Additionally, we will make forward-looking statements about our expected future financial or business performance or conditions, business strategy, and plans. These statements are subject to risk and uncertainties, which could cause actual results to differ materially from these forward-looking statements.

Please refer to the information on this slide and in our SEC filings for important disclaimers. We will reference both GAAP and non-GAAP financial measures on today’s call. Please refer to today’s press release for reconciliations of non-GAAP measures to the most comparable GAAP measures discussed during the earnings call, which are also available on our website. As a reminder, this webcast will be available for replay along with a presentation shortly after this call on the company’s website at ir.porchgroup.com. With that, joining us today here are Matt Ehrlichman, Porch’s CEO, Chairman, and Founder; Shawn Tabak, Porch’s CFO; and Matthew Neagle, Porch’s COO. With that, I’ll now turn the call over to Matt for his key updates.

Matt Ehrlichman, CEO, Chairman, and Founder, Porch Group: Good afternoon, everyone. Thank you for joining us. We are proud to report another excellent quarter where we once again exceeded expectations. Before diving into Q3 results, I would like to take a moment to reflect on the progress we’ve made this year. In December 2024, we held an investor day and told you all that we would deliver $50 million of adjusted EBITDA in 2025. I remember getting follow-up questions from investors asking why we were being that aggressive, and I understood where it came from. The year prior, we had posted a $45 million adjusted EBITDA loss, and 2024 was tracking close to breakeven. I responded we were confident in the go-forward model of the fundamental differentiation and margin advantage that our unique data provides to our insurance business. Our ability to execute to get our desired results.

Despite the level of improvement it represented, we had ambitions to deliver more than the $50 million in adjusted EBITDA, and we thought that $70 million would be a fantastic outcome for the year. Here we are, three quarters through 2025, and I am pleased to announce another strong quarter in which we delivered $21 million in adjusted EBITDA and $29 million in cash flow from operations for Porch shareholders. This means that in the first nine months of 2025, we’ve already generated $53.1 million in adjusted EBITDA, surpassing that initial $50 million target. We’re proud of the execution this year and the control we’re demonstrating over the business, as we now expect to deliver full-year performance at that $70 million. Which represents a 10 times increase versus the prior year.

Our shift to a simpler commission and fee-based model was designed to deliver straightforward, predictable, and high-margin results for Porch shareholders. It has been a resounding success. As an example, year-to-date gross profit rose 119% versus the prior year, and year-to-date adjusted EBITDA improved $88 million versus the prior year. Let me highlight a few key metrics for our Q3 Porch shareholder interest. Reciprocal written premium, or RWP, was $138 million. Revenue was $115 million. Q3 gross profit was $94 million, resulting in an 82% gross margin. Q3 adjusted EBITDA was $21 million and 18% margin. We continue to see a high rate of cash conversion with Q3 cash flow from operations for Porch shareholders of $29 million. Operationally, we are pleased with the progress, in particular with our insurance business.

The conversion rate of reciprocal written premium to Porch Insurance Services adjusted EBITDA improved again in Q3, now to 18%. This exceeded our expectations and led to the strong profit results. Our data teams continued their progress this last quarter, launching more new Home Factors, bringing us to 89 unique property characteristics we know and aren’t widely available in the market. Our unique property data and capabilities, such as Home Warranty and Moving Services, create sustainable advantages. Industry-leading loss ratios, and fundamentally more margin in the system. We see this as a structural advantage as it supports Porch shareholder interest profitability and the reciprocal surplus expansion. Outside of hitting our profitability goals, the second most important priority for us this year was to position ourselves to scale premium into the future in order to achieve our future profitability goals.

The two main components to doing so are, one, generating as much surplus as possible at the reciprocal, and two, to grow agent and quote volume such that we can lower price for new low-risk customers when the time’s right. We’ve been able to deliver on this year’s adjusted EBITDA guidance without needing to lower prices to scale premium faster. This is a fantastic scenario for us as it results in surplus expanding much more than anticipated. I’m excited to share that at the end of Q3, the reciprocal surplus combined with non-admitted assets increased more than $100 million quarter over quarter to now $412 million. With this capital in place, we have a clear path to scaling premiums, which we believe will drive exceptional profit growth at Porch Group.

We continue to grow our insurance staff, including welcoming a new Chief Actuary, Head of Data Science, and ramping up our agency recruiter and engagement teams. Tied to these investments, we’re seeing strong levels of agency appointments and quote volumes that Matthew will cover off later in the call. The strength at the top of the funnel and the reciprocal’s healthy capital position set us up for an exciting time ahead. Okay, let’s go into this in a little more detail by revisiting this slide here from last quarter, where we’ve updated for capital generated now in Q3. On the left-hand side, as you can see in the surplus combined with non-admitted assets chart, you’ll see the reciprocal ended Q3 with $412 million. Again, this was a $113 million improvement from last quarter and a $214 million improvement in just six months. Overall, just exceptional results.

As a reminder, we talk about managing to a 5-1 premium-to-surplus ratio as a general rule of thumb, though it can be better over time. As you’ll see in the middle chart, this level of capital could support approximately $2 billion of premium as we look ahead. Moving to the right-hand side, in Q2, the conversion rate of RWP to insurance services adjusted EBITDA was 16%. This conversion rate improved to 18% in the third quarter. You can see why we’ve prioritized surplus generation to drive future value creation. In just the third quarter, we added more than $100 million of capital, which, based on a rule of thumb, supports additional adjusted EBITDA of more than $100 million annually. Overall, with this capital already in place and without further surplus expansion, we can show the path to support more than $350 million in annual insurance services adjusted EBITDA.

We’re just getting started. This is exactly the setup we’ve been working toward, and I couldn’t be more energized by the opportunity in front of us. I’ll now turn it over to Shawn to cover our financial results.

Shawn Tabak, CFO, Porch Group: Thank you, Matt, and good afternoon, everyone. Similar to Matt’s overview, my comments will address performance of the Porch shareholder interest since generating cash for Porch shareholders is our ultimate goal. Under GAAP, we are consolidating the reciprocal exchange financials, which you can find throughout the press release and our 10-Q. Q3 performance was strong, driven by insurance services. Q3 2025 Porch shareholder interest revenue was $115.1 million, with an 82% gross margin producing $94.2 million in gross profit. Adjusted EBITDA of $20.6 million was ahead of expectations, driven by insurance services. Cash flow from operations for Porch shareholders was $28.8 million. The Porch shareholder interest revenue of $115.1 million was comprised of insurance services at 64%, followed by software and data at 21%, and the remainder from consumer services.

Q3 Porch shareholder interest gross profit was $94.2 million, with an 82% gross margin led by our Insurance Services segment, which had an 84% gross margin. We are pleased with the high margin profile we are seeing across all of our businesses. Q3 adjusted EBITDA was $20.6 million, with an 18% adjusted EBITDA margin overall. This was driven by our Insurance Services segment posting a 34% adjusted EBITDA margin and good profitability overall across our other two core segments, despite a continued challenging housing market. Now let’s move a little deeper into the segment results, starting with Insurance Services. Overall, we are pleased with the conversion rate of reciprocal written premium, or RWP, to Insurance Services adjusted EBITDA. In Q3, the rate accelerated to 18%, 200 basis points higher than Q2. We are seeing good operating leverage here and are focused on driving efficiency.

In the quarter, RWP was $137.5 million, and insurance services revenue was $73.8 million, which is a premium-to-revenue conversion rate of 54%. As a reminder, there are five economic drivers for this segment: management fees, policy fees, quota share reinsurance, lead fees to agencies, and surplus note interest. Segment gross profit was $62.3 million, with a gross margin of 84%. Segment adjusted EBITDA was $25.3 million, a margin of 34%. As a quick reminder on seasonality for the reciprocal, RWP is typically highest in Q2 and Q3 when consumers are buying their homes and therefore buying or renewing their homeowners insurance. Therefore, we expect the reciprocal to experience its typical seasonal decrease in RWP from Q3 to Q4, as there are fewer renewals. Shifting now to software and data. As backdrop, most of our software businesses charge per transaction, and we continue to see a trough U.S. housing market.

With that, segment revenue was $24.6 million, a 7% increase over the prior year, driven by product innovation and corresponding price increases. Gross profit was $18.2 million, a 74% gross margin. Adjusted EBITDA was $5.1 million, relatively flat with the prior year. We continue to invest in product innovation in our software business, including incorporating AI into our product suite and the go-to-market and sales organization in our data business. We believe these businesses are set up to grow nicely as the housing market recovers. Okay, shifting now to consumer services, which is also impacted by the trough housing market. Revenue was $19.4 million, a 9% increase over the prior year. Gross profit was $16.6 million, an 86% gross margin, and adjusted EBITDA for this segment was $2.5 million. Over the last few years, we’ve reduced corporate expenses as we moved to lower-cost locations and reduced G&A back-office costs.

While most of the heavy lifting has been done, we continue to pursue operational efficiencies. In the third quarter, corporate expenses of $12.3 million decreased $700,000 from the prior year. Now moving on to the balance sheet, we continue to be pleased with the cash flow profile of the insurance services operating model. Year-to-date, Porch shareholder cash flow from operations was $71 million, driven by $53 million in adjusted EBITDA and favorable working capital. For Q3, we ended the quarter with Porch cash plus investments of $132 million. Porch shareholder interest cash flow from operations was $28.8 million in the quarter, driven by $20.6 million in adjusted EBITDA. Throughout the year, we have made notable progress on our capital structure. In Q3, we repurchased an additional $12.8 million of our 2026 convertible notes, which resulted in a gain of approximately $400,000, and which leaves a remaining balance of $7.8 million.

The board has authorized management to repurchase these remaining notes with cash from the balance sheet. Lastly, shifting to our updated 2025 guidance for Porch shareholder interest. As we’ve discussed, our primary goal is to generate cash flow for Porch shareholders, and adjusted EBITDA is the key proxy for that metric. As Matt said, we thought that $70 million of adjusted EBITDA would be an excellent outcome for this year, and we’re proud that we are right on track to deliver this result. We are updating our guidance accordingly. This is a $63 million, or a 10 times increase versus the prior year, and a result that will put us amongst the top-performing companies in the S&P Small Cap Index. It is also $20 million better than the guidance at the beginning of the year.

Given where we are against our adjusted EBITDA target, in Q4, we’ll continue to prioritize surplus generation at the reciprocal over the scaling of premium, which we believe will create the most long-term value. As Matt discussed, we’ve delivered a step function change in the reciprocal’s capital position year-to-date, and we expect continued progress here in Q4. This foundation gives us the ability to scale RWP faster as we enter 2026. With that background, we are also raising our gross profit midpoint by $2.5 million, with a new range of $335 million-$340 million. Our revenue midpoint remains the same, with a tightened range of $410 million-$420 million. I’ll now hand over to Matthew to provide a strategic update and KPI review.

Matthew Neagle, COO, Porch Group: Thank you, Shawn. I’ll start by giving a brief business update and then dig into our KPIs. 2025 has been an important year where we generated substantial profitability and cash flow for shareholders. Also positioned ourselves to scale premium sustainably in the years ahead. Reciprocal written premium is driven by quote volume and conversion rates. We are seeing a strong level of top-of-funnel activity, such as agent appointments and quote volumes. The conversion rate of RWP to adjusted EBITDA has exceeded our expectations, which has allowed us to deliver on our profit objectives while being patient in adjusting price. This has helped produce exceptional surplus generation results at the reciprocal year-to-date, with more expected in Q4. Let’s dive into the insurance KPIs. Reciprocal written premium in Q3 was $138 million, up 14% versus last quarter.

Reciprocal policies written reflects the total number of new and renewal insurance policies written by the reciprocal during the period. We generate policy fee revenue directly from these policyholders. In the quarter, we wrote nearly 48,000 policies. RWP per policy written is calculated by dividing the reciprocal written premium by the total number of reciprocal policies written and represents the amount the customer is expected to pay. For the third quarter, we posted RWP per policy written of $2,884. As Matt highlighted earlier, one of the key reasons why we’re well-positioned to scale RWP is our top-of-funnel activity. These two charts provide some context. First, the chart on the left shows total agency appointments since 2024. As we have grown our agent recruiting and account management team significantly, we have seen the expected increase in the number of appointed agencies.

While this is great progress, we continue to have a fraction of the agencies in Texas and across the country. We are just getting started here, but excited about the momentum. With more agents, we see more quote volume, as you can see on the right. More quotes allow us to see more opportunities of homeowners and home buyers looking for a new homeowners insurance company. We can then continue to be selective with our pricing actions to win good risks and continue to avoid properties that have higher risks than the rest of the market realizes. The key message here is that we have the capital that could support our targeted growth levels, a healthy and growing top-of-funnel that we can tap into. It simply comes down to the conversion rates we manage to.

Given the steep conversion rate elasticity in our industry and our margin advantages, we are in a strong position. To control the pace of growth by adjusting pricing with the right new low-risk customers and providing the right targeted incentives to our distribution partners. Moving to software and data, we continue to execute price increases supported by continued software innovation, ongoing market share expansion, and growth of our data business. Our collection of vertical SaaS businesses rolled out over 20 product releases and enhancements in the quarter. Our data business and its Home Factors product continues to show strong promise through the ROI metrics from tests with other carriers, an expanding pipeline, and continued product innovation.

Our data engineering teams continue to move us forward with 89 total home factors now in the market after recently launching eight new home factors, including electrical panel location, roof life stage, and plumbing material insights. In terms of the software and data KPIs in Q3, we served approximately 24,000 companies with annualized revenue per company of $4,140, which rose 14% versus Q2, driven by seasonality. In our consumer services segment, where the housing headwinds are greatest felt, we see bright spots with home warranty claims frequency, and we continue to see positive outcomes with our partnership efforts. Like software and data, the combination of strategic investments and a leaner cost structure positions us for outsized benefits when the housing cycle turns. As for the consumer services KPIs in Q3, we had 94,000 monetized services with annualized revenue per monetized service of $206.

I’ll now pass it back to Matt to wrap us up.

Matt Ehrlichman, CEO, Chairman, and Founder, Porch Group: Thanks, Matthew. I’ll wrap up by reinforcing the most important messages from today, stuff I’m most excited about. Again, once again, strong quarter where we delivered Q3 adjusted EBITDA of $21 million and $29 million in Porch shareholder cash flow from operations. We’re proud to report that year-to-date, we’ve already surpassed our initial 2025 adjusted EBITDA guidance, and we’re tracking towards $70 million for the full year. Second, as we talked about, we’re excited about the surplus health of the reciprocal. Our unique property data allows us to assess and price risk better than the industry, which creates more margin in the system. The gains we produce this year at the reciprocal not only create resiliency in the system, but we believe set us up for years and years of strong profit growth ahead.

With the surplus in place, we can scale RWP at the appropriate pace to achieve our desired outcomes for the next many years ahead. As Matthew mentioned, the top-of-the-funnel metrics in insurance are growing nicely, setting us up well there also. The work we did over the last decade got our business positioned for success with sustainable advantages. The work we’ve done in 2025 demonstrates the power of the system we’re building and how profitable it can be. The next set of years are going to be a lot of fun. Thank you all for your time today. To my fellow shareholders, we appreciate your support, and we look forward to continuing to share this journey with you. With that, John, please go ahead and open up the call for questions.

John, Q&A Moderator, Porch Group: Thank you. Ladies and gentlemen, we will now begin the question and answer session. As a reminder for everyone, in order to ask a question, please press star followed by the number one on your telephone keypad. If you would like to withdraw your question, simply press star one again. We kindly ask everyone to limit themselves to two questions only. Thank you. Our first question comes from the line of Dan Kurnos with Benchmark Company.

Dan Kurnos, Analyst, Benchmark Company: Yeah, great. Thanks. Good, I guess, afternoon in your guys’ case. Matt, I just want to understand. This is going to be just one multi-part question around reciprocal written premium, generally speaking. So we go into Q4. Obviously, Shawn called out seasonality, but I think a lot of us were anticipating that you guys would sort of grow through seasonality, just given how early you are in the process. And I know that you’ve got your kind of cadence and your targets on where RWP should end. So kind of the two components, one, obviously on the volume metric side, as you continue to bring agencies back on. Is there anything from a competitive standpoint or something else for a reason why in sort of the near term there’s not a little bit more gas being thrown on the fire?

Obviously, you’ve got the P side of the equation where I don’t know what you’re underwriting for premium increases, but in your prepared remarks, you talked about maybe pricing down. Maybe that goes to my competitive question. Maybe just your thoughts on how the P component of the equation looks as you guys scale into 2026. I know that was a lot, but.

Matt Ehrlichman, CEO, Chairman, and Founder, Porch Group: No, that’s great. It’s all kind of one thing.

Dan Kurnos, Analyst, Benchmark Company: It’s the right place to start. I appreciate that. I mean, you can get a good sense for what we’re prioritizing this year and how we’re thinking about the future. I’ve said this before, I’ll say it again. If we wanted to go and grow premium exceptionally fast this year, we could do so very clearly. If we wanted to go and grow profit a lot faster this year, again, we could do so. What I really am focused on, what we’re really focused on, is maximizing long-term shareholder value. What we think about is, okay, what do we want to deliver in terms of EBITDA and cash flow for shareholders this year? What kind of growth do we want to produce next year and the year after that and the year after that?

We want to be able to show this consistent and, frankly, accelerating growth curve instead of growing fast and then slowing down over time. Yes, you could increase the value today, but really, what’s going to drive the most value here? I do believe that accelerating growth and accelerating and expanding adjusted EBITDA margins each year is going to create the most value overall. With that lens, we think about the target, the adjusted EBITDA target we want to go and achieve this year that, again, I think we’ve made really great progress against. Like we said, within that constraint, then, how do we go and maximize surplus generation at the reciprocal? Clearly, we’ve just crushed it in terms of how much progress we’ve delivered over the last six months there. Now, Matthew talked about it briefly.

The elasticity curve in the insurance market is quite steep. You can be able to lower prices for good risks and be able to increase your conversion rate and grow faster. By definition, you are getting a lower price point on that particular cohort of customers. Right now, for us, it is the balance of those things. You can hear it coming through, hopefully, which is we feel really confident in our ability to grow this business and to control the growth of the premium at the right pace, which for us is just really exciting because we think it is going to be, like I said, going to be a really fun set of years. Do you have a view on what renewals around premium look like into 2026?

Matt Ehrlichman, CEO, Chairman, and Founder, Porch Group: Yeah. I mean, the underlying metrics I don’t share, but the underlying metrics look really good. At some point, we’ll do an analyst day and we’ll unpack, I would say, probably a lot of those underlying metrics, but clearly, we haven’t disclosed that at this time. The underlying metrics, it all shows it points really clearly to us being able to grow premium at a really nice clip here.

Dan Kurnos, Analyst, Benchmark Company: Okay. Thanks, Matt. I appreciate it.

Matt Ehrlichman, CEO, Chairman, and Founder, Porch Group: Yeah, thank you. Appreciate it.

John, Q&A Moderator, Porch Group: Your next question comes from the line of Jason Helfstein with Oppenheimer. Please go ahead.

Jason Helfstein, Analyst, Oppenheimer: Hey, thanks, everybody. I just want to unpack the fourth quarter guide a little more and just think through the kind of relative performance versus 3Q. When you’re calling out housing as being maybe a headwind in 4Q, I mean, was housing at all a tailwind? I mean, I think, look, we’ve seen some pretty good numbers from the real estate companies that we cover with 3Q, but I just think there’s a surprise that the flow through is not flowing through the full year. Again, maybe did you just have a better third quarter than you expected? Then fourth quarter is looking a bit more normal on the insurance side. Just unpack that a little more. Thank you.

Matt Ehrlichman, CEO, Chairman, and Founder, Porch Group: Yeah, sure. I’m happy to take that one. How’s it going, Jason? I’ll start with Q3 and the outperformance that we saw there. One of the things I mentioned is the conversion, and I think Matt talked to it too. The conversion rate of RWP to adjusted EBITDA was very strong in the quarter. It was 18%. Very strong operating leverage there in the business. We were quite pleased with that. There’s a lot of focus on driving efficiency. That is why you see that increase there. That just means, obviously, every dollar of RWP translates into more adjusted EBITDA for the insurance services segment. That was the driver of the outperformance. You mentioned housing market. We haven’t seen. Really a large change there. We continue to see low levels of housing activity.

Now, our software and data and consumer services businesses, they both charge on a per-transaction level. We are waiting for the, for the day it’ll be nice when the housing market does recover. We’re not reliant on it, but that will drive growth and margin accretion for us when that occurs, but we’re not anticipating that in the short term.

Dan Kurnos, Analyst, Benchmark Company: Yeah, Jason, I mean, like you saw with other housing companies, we saw toward the end of the third quarter some possible momentum, but there’s been enough teases over the last few years that we’re just going to stay cautious and conservative with kind of our go-forward forecast as it relates to housing until it really has played out consistently for a good period of time.

Jason Helfstein, Analyst, Oppenheimer: That makes sense. I guess, I mean, is there a reason to think that you’re just taking your foot off the gas a little bit on growth in the fourth quarter?

Dan Kurnos, Analyst, Benchmark Company: I think that we are, the way I would put it, just overall, is that we think right now with where our loss ratios are at, at the insurance business, that we can continue to, and we’re positioned to be able to drive a lot of surplus growth. As one does that, it is a huge advantage. You can be able to use that capital really effectively as we look ahead to be able to create lots of value. I think it’s more about just being patient, given how much EBITDA we’re generating this year and kind of at our goals, and some really important numbers for us. Just being patient with when do we really start to pull the levers, and it’ll create outcomes for us to just set us up really well.

Jason Helfstein, Analyst, Oppenheimer: Got it. I appreciate the call. Thank you, guys.

Dan Kurnos, Analyst, Benchmark Company: You got it.

John, Q&A Moderator, Porch Group: Your next question comes from the line of Jason Kreyer with Craig-Hallum Capital Group. Please go ahead.

Jason Kreyer/Cal Bartzell, Analyst, Craig-Hallum Capital Group: Great. Thank you. This is Cal Bartzell on for Jason. Just first, on Home Factors, you kind of alluded on the call to some AI across the software offering, but just given how much data you’re ingesting there, is there any learnings in applying AI to the platform and Home Factors becoming kind of a leading AI-enabled platform for insurance carriers?

Matthew Neagle, COO, Porch Group: I can take that. We see a lot of opportunity with our Home Factors product. We continue to build out additional Home Factors. One of the places where AI is helping us is to speed up our ability to pull out the insights from the data. There are whole sets of data, such as visual data, that before would have been very hard for us to pull insights from, but AI is making it possible. I also think the way the Home Factors product is set up is going to be very easy for partners to pull the data into their operations, into their workflows, in which they can build, for example, AI-driven underwriting where they pull in our data. I certainly see some opportunity there. Where we see it today is in how we’re accelerating the extraction of the insights from the data.

Jason Kreyer/Cal Bartzell, Analyst, Craig-Hallum Capital Group: Great. Makes sense. Just given how much room you have on the insurance side to expand into additional agencies, just curious how you think about the ability to unlock more agencies and get that convergence of more capital, more surplus, and more agencies kind of converging in 2026.

Matthew Neagle, COO, Porch Group: Yeah, I can take that one too. We are building out our growth teams. That’s the teams that work with agents. You can see it in the numbers. We’ve seen growth steadily over the last six months. There is lots of room for that team to keep going and building out new agent appointments. We’ve talked about how we built up surplus, which sets us up for growth in the future. I would say the other thing that we haven’t necessarily taken our foot off the gas is around agent appointments. We’ve been continuing to build that team to get the largest distribution we can. There are years of work for us to fully mature our distribution. As Matt said, there are some levers. There are incentives we can give to agents. There is the way we set pricing to target attractive low risk.

I would say there’s room for us still to pull some of those levers.

Jason Kreyer/Cal Bartzell, Analyst, Craig-Hallum Capital Group: Great. Thank you.

Matt Ehrlichman, CEO, Chairman, and Founder, Porch Group: Yup.

John, Q&A Moderator, Porch Group: Your next question comes from the line of Adam Hotchkiss with Goldman Sachs. Please go ahead.

Great. Thanks so much for taking the question. I want to follow up on the insurance services business and reciprocal written premium. Just when we think about the sort of $500 million in premium that you had laid out at Investor Day last year, it seems like based on the seasonality commentary, you’ll be a little light of that. Maybe just highlight for us anything that’s changed. Any impact that might have on 2026. Maybe what is the sort of driver of this concept that adding or accelerating premium, particularly given the attritional loss ratios that this business is operating at, would or could negatively impact surplus? I’m just trying to understand why at this attritional loss ratio that wouldn’t actually incrementally benefit surplus to sort of ramp up the premium path given where loss ratios are today. Thanks so much.

Dan Kurnos, Analyst, Benchmark Company: Yeah, thanks, Adam. Appreciate it. Maybe I’ll take the second one first and maybe a comment. If Shawn, if you want to layer onto the first one, that’s great. I mean, the loss ratios that the insurance business continue to be really, really strong. It was 22% gross loss ratio in the third quarter. 17% attritional loss ratio in the quarter. Just to kind of reiterate from previous quarters, these are industry-leading types of levels. Our unique data fundamentally, when we talk about fundamentally, gives us the ability to price and underwrite more effectively and gives a margin advantage. I mean, the proof continues to show up in those numbers there. You have a choice, which is you can be able to maintain all of that margin, or you can be able to tick up those ratios slightly.

This is what we’re talking about in terms of managing the price point. To the right low-risk customers and have a little bit higher loss ratios and grow premium faster. The great thing is you really are in control because of the margin advantage that we have. You really are in control to be able to make those choices. It’s really clear, actually, in terms of those choices. To your question, your first question, Adam. Yeah, we’ve chosen, just like we were talking about today, to, given where we are against adjusted EBITDA, to not do some of the actions that we would have thought we would three months or even maybe even six months ago in terms of starting to lower the price, continue to be able to maximize.

Surplus generation here and really just take advantage of the types of results that we’re seeing just because of how impactful that can be in terms of continuing to build that capital base. It’s a big deal for us and gives us lots of different choices as we look ahead. I don’t know if Shawn, if there’s anything else you would want to layer on to that.

Matt Ehrlichman, CEO, Chairman, and Founder, Porch Group: Yeah. I mean, I would just say, as I mentioned earlier, the place where we really over-exceeded our expectations was on that, just the efficiency of the insurance services business operation. And as I mentioned, we saw the 200 basis points of leverage on RWP to adjusted EBITDA. And so that’s what drove the additional earnings. Then to Matt’s point, it becomes a strategic choice around when to pull the levers. I think, as we’ve talked about over several quarters now, we’re going to remain focused and disciplined and grow to maximize shareholder value over the long term.

Dan Kurnos, Analyst, Benchmark Company: Yeah. Two quick things just to finish it off. I’m going to go back to it. I want to make sure it wasn’t missed. I hit on a slide, which is I just want to communicate how impactful, why we’re making that choice. Adding $100 million of surplus combined with non-admitted assets, I talked about how, given the ratios, what premium it can support. That supports the capacity to generate an extra, an incremental $100 million of adjusted EBITDA annually. Right? If you think about the long-term value impact to be able to add that much into the surplus in a given quarter, it’s pretty extraordinary future value creation. Really, Adam, that’s what we’re seeing, I’m seeing, which is, okay, we can go and continue to be able to just make progress. You just are able to create a lot of fuel.

That set us up for a very long time. It’s very powerful. You also, Adam, I just want to be comprehensive, asked about 2026. Just to be clear, we’re not commenting on 2026, but we feel really good about, hopefully, you get the tone, but feel really good about 2026. We’re not indicating anything changing from 2026 here. We will provide guidance, obviously, next quarter.

Okay. That was really comprehensive and helpful. Thanks for that. On the software and data business, maybe just give us an update where you are on sort of the data licensing opportunity in states you do not operate in. Thanks so much.

Matthew Neagle, COO, Porch Group: The data licensing under Home Factors? Yeah.

Exactly.

Yep. Yep. We see a lot of traction in engaging with carriers. What we have communicated in the past, which we will communicate again today, is the sales cycle will set us up to start seeing more revenue in 2026. We do have an expanding pipeline. For us, that means carriers who are actively involved in testing the data. Those that have completed the tests are indicating there is a strong ROI for those tests. We continue to bring out more insights. We are still full steam ahead on that part of our business and excited about starting to grow that business and impacting the bottom line more in 2026.

Great. Thank you very much.

Dan Kurnos, Analyst, Benchmark Company: Thank you.

John, Q&A Moderator, Porch Group: Your next question comes from the line of Ryan Tomasello with KBW. Please go ahead.

Hi everyone. Thanks for taking the questions. In terms of capital allocation, can you talk about the current appetite for M&A? Especially with respect to the insurance business in terms of expanding both the product offering and geographic footprint? Given the excess capital position that the reciprocal has, if there’s any unique way to leverage that for inorganic growth. Thanks.

Dan Kurnos, Analyst, Benchmark Company: Ryan, you know I’m not going to give you too much on that question, but I respect the question nonetheless. I mean, you kind of hit it on the head, actually, at the end of that question, Ryan, which is having more capital. When I say it gives you more choices, there’s a variety of choices that it presents in terms of how you can be able to use the advantage capital. And as we’re making those choices that we’re talking about and being able to grow, prioritize growing capital here, it sets us up to have lots of really good, impactful choices. I have commented previously on M&A that we, whatever it was, six months ago, nine months ago, that we would be restarting the M&A process and beginning to look at different companies that would be good fits. No news to share, certainly, but.

It’s something that we’re thinking about.

Great. On the surplus creation, nice to see the solid growth. Can you just clarify how much of the $113 million of the increase was generated from the increase in the stock price from last quarter?

Matt Ehrlichman, CEO, Chairman, and Founder, Porch Group: It was about 80/20 or so. A big chunk of it was from the stock price, and the flywheel there continues to work exceptionally well. Also, the reciprocal generated really strong net income in the period. That also contributed to the increase in the surplus. Both of those are having a positive impact, and the flywheel, as I mentioned, continues to really work as intended and drive value.

Dan Kurnos, Analyst, Benchmark Company: Easiest rule of thumb for anybody out there that wants to just track that ongoing, there’s 18.3 million shares that the reciprocal owns. And so at any point in time, you can be able to peg what the value is of the Porch stock that the reciprocal owns.

Great. Thanks for the color.

John, Q&A Moderator, Porch Group: The next question comes from the line of Timothy DeAgostino from B. Riley Securities. Please go ahead.

Matt Ehrlichman, CEO, Chairman, and Founder, Porch Group: Yeah. Hi. Thank you. Yeah. For our first question in the insurance segment. Last quarter, you mentioned you were in 22 states. I was wondering if that number is still 22. Or if you’ve gone into other states. Thinking about expanding into other states and writing more business, what does that process look like and how long might it take?

Matthew Neagle, COO, Porch Group: Yeah. We’re still in 22 states, but we do see opportunity in additional states in 2026. The exact process does vary by state, but a lot of the infrastructure we have in place allows us to move into a new state. It is not a years-long process, but months-long process. It does then take time to build up a book within that state. The one thing we do have is we are now working with larger national agencies. We would have agencies that could start writing with us once we open up in a new state.

Matt Ehrlichman, CEO, Chairman, and Founder, Porch Group: Okay. Great. Awesome. And then just a quick follow-up. I know Texas is the majority of the reciprocal’s book. I was wondering if you could quantify maybe the percentage of how much reciprocal written premiums is coming from Texas. Thank you. It’s around 60%, I believe. It’ll be in the Q filing when that comes out. Okay. Great. Thank you so much.

Dan Kurnos, Analyst, Benchmark Company: Thank you.

John, Q&A Moderator, Porch Group: The next question comes from the line of Timothy Greaves with Loop Capital. Please go ahead.

Shawn Tabak, CFO, Porch Group: Hi. Thank you for taking the question. I guess my first question is on Home Factors. You had a goal of 100 by the end of the year, I believe. How is that pacing, and are you still on pace to reach that goal?

Matthew Neagle, COO, Porch Group: We continue to add Home Factors. We’ve launched eight just since the last time we met with you guys, bringing us up to 89. We’re still in the process of identifying new insights. I do think there is a lot of insights within the data. What we have now is already very interesting. I mentioned briefly before, with AI, we’re able to accelerate our ability to extract new insights. We’re also interested in, over time, pulling insights from some of the visual data that we have. There is still good room there for Home Factors in terms of product innovation. As a side note too, we’re also finding that there’s additional use cases for the data. I just think it’s still early in that business with a lot of potential still.

Shawn Tabak, CFO, Porch Group: Okay. Great. I guess my second question would be around the new policies. From the new policies, I think you said that you will get a percentage if the business comes from the lead generation comes from you guys. What percentage of new is coming from leads that you guys provide versus the third parties on their own? Thank you.

Dan Kurnos, Analyst, Benchmark Company: Yeah. We don’t break that down specifically, but. I mean, obviously, the homebuyer leads that we get from third-party agencies when we have homebuyers coming through us is part of our insurance services revenue, and it’s part of our strategy. I mean, we meet lots of homebuyers through our various channels, introduced from inspectors or other types of companies that are out there. We help them as they go through the move. Obviously, they need insurance as one of the things that they need. Yeah, obviously, we help them with other services as well, security and TV internet and moving services. Insurance is one of the things that we’ll lead with clearly because of our strategy and our focus. We haven’t broken out the percentage, but it’s an important part of our strategy.

Shawn Tabak, CFO, Porch Group: Okay. Thank you.

John, Q&A Moderator, Porch Group: At this time, we have no further questions. I will now turn the call back over to Matt Ehrlichman for closing remarks.

Dan Kurnos, Analyst, Benchmark Company: I’ll just say thanks for spending time with us today. I mean, as you can tell, we’re fired up about the year, and we’re fired up about the next set of years. We really do believe we’re positioned to post some really cool numbers and to make a lot of progress against our strategy. With that, we will wrap up the call. Have a great rest of the day.

John, Q&A Moderator, Porch Group: Ladies and gentlemen, that concludes today’s conference call. We thank you for your participation. You may now disconnect.

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