Earnings call transcript: Porch Group Q4 2024 misses revenue expectations

Porch Group Inc. (NASDAQ: PRCH) reported its earnings for Q4 2024, revealing a revenue of $100.4 million, which fell short of the $110.26 million forecast. Despite the revenue miss, the company’s stock surged by 22.69% in aftermarket trading, closing at $4.65. According to InvestingPro data, the company has shown strong revenue growth of 19% over the last twelve months, though it currently trades below its Fair Value, suggesting potential upside opportunity. This movement came after the stock had dropped by 3.56% during regular trading hours. The earnings call highlighted Porch Group’s strategic initiatives and future guidance, with a focus on growth in the homeowners insurance market. InvestingPro analysis reveals the stock has demonstrated significant momentum, with a remarkable 182.84% return over the past six months, despite recent volatility. Get access to 10+ additional ProTips and comprehensive analysis with an InvestingPro subscription.

Key Takeaways

• Q4 2024 revenue decreased by 12% year-over-year.
• Stock price increased by 22.69% in aftermarket trading.
• Porch Group launched several new products and services.
• The company aims for $500 million in gross written premium in 2025.
• 2025 revenue guidance set between $390 million and $410 million.

Company Performance

Porch Group experienced a challenging quarter, with revenue declining from the previous year. However, the company reported a significant increase in adjusted EBITDA for Q4 2024, reaching $41.8 million. The full-year revenue for 2024 stood at $437.8 million, marking a modest 2% increase from the prior year. Porch Group is focusing on expanding its presence in the homeowners insurance market, targeting low-risk homes with unique property data.

Financial Highlights

• Q4 2024 Revenue: $100.4 million (12% decrease year-over-year)
• Full Year 2024 Revenue: $437.8 million (2% increase year-over-year)
• Q4 2024 Adjusted EBITDA: $41.8 million (significant increase from prior year)
• Gross Written Premium: $112 million (flat compared to prior year)

Earnings vs. Forecast

Porch Group’s Q4 2024 revenue of $100.4 million was below the expected $110.26 million, representing a miss of approximately 8.9%. This shortfall contrasts with the company’s past performance, where it often met or exceeded expectations. The earnings per share (EPS) forecast was not provided, but the revenue miss was a key focus for analysts.

Market Reaction

Despite the revenue miss, Porch Group’s stock rose sharply by 22.69% in aftermarket trading, suggesting investor optimism about the company’s future prospects. The stock’s movement is notable given its 52-week range, which has seen a low of $1.05 and a high of $6.035. The positive aftermarket reaction may be attributed to the company’s strategic initiatives and growth potential in the insurance market.

Outlook & Guidance

Porch Group has set its 2025 revenue guidance between $390 million and $410 million, with an adjusted EBITDA target of $55 million to $65 million. The company is focused on achieving 80% gross margins and reaffirmed its $100 million adjusted EBITDA target for 2026. Porch Group aims to reach $500 million in gross written premium in 2025, with a long-term goal of $3 billion over the next 5 to 10 years.

Executive Commentary

CEO Matt Ehrlichman emphasized the growth opportunities in the homeowners insurance industry, stating, "We believe the homeowners insurance industry presents a huge and exciting growth opportunity." He also highlighted the company’s data-driven advantages, saying, "Our unique data drives long-term pricing and underwriting advantages."

Risks and Challenges

• Market volatility could impact stock performance.
• The competitive landscape in the insurance sector remains intense.
• Economic conditions may affect consumer spending and insurance demand.
• Regulatory changes could pose challenges to Porch Group’s operations.
• Dependence on data accuracy for underwriting could be a risk factor.

Q&A

During the earnings call, analysts inquired about premium growth and the company’s strategic focus. Porch Group reported strong early signs of premium growth, with a 50% increase in Q4 and expectations of doubling in Q1. The company discussed its conservative approach to housing market assumptions and the promising interest in its Homefactors product from carriers.

Full transcript - Porch Group Inc (PRCH) Q4 2024:

Earnings Call Moderator, Porch Group: Good afternoon everyone and thank you for participating in Port Group’s Fourth Quarter twenty twenty four Conference Call. Today we issued our earnings release and filed our related Form eight ks with the SEC. The press release can be found on our Investor Relations website at ir.portergroup.com. I would 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, 02/25/2025.

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 risks and uncertainties, which could cause our 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 reconciliation of non GAAP measures to the most comparable GAAP measures discussed during this earnings call, which are 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.portragroup.com. Joining me here today are Matt Ehrlichman, Portra Group CEO, Chairman and Founder, Sean Tabak, Portrait Group CFO, and Matthew Nagel, Portrait Group COO. Thank you. I’ll now turn the call over to Matt for key updates.

Matt Ehrlichman, CEO, Chairman and Founder, Porch Group: Good afternoon, everyone. Thank you for joining us. We demonstrated exceptional progress this last quarter toward our objective of being a new kind of homeowners insurance company differentiated by one, advantaged underwriting with unique data, two, early access to home buyers, and three, a customer experience that makes the move in home simple. Our vertical software powers 40% of the home inspection industry, 40% of title transactions, and operates in key sectors, including mortgage and roofing. Our data platform now includes home factors for 90% of US properties and early insights into 90% of US home buyers.

We are a leader nationwide in providing moving labor and expanded long term partnerships with the major moving companies, utilities, insurance agencies, and more. With these advantages, we aim to build one of the largest and most profitable homeowners insurance companies. I believe this update today will demonstrate we’re on our way to doing so. So now onto the key highlights, and there are a number of them that I’m excited to share. Three years ago, we set an important goal to hit adjusted EBITDA profitability for the second half of twenty twenty three and the full year 2024.

I am proud to share that we achieved that goal, delivering $7,000,000 in adjusted EBITDA for the full year 2024. This means that in the fourth quarter, profitability was meaningfully better than guidance. Adjusted EBITDA was a record $42,000,000 Net income was $30,000,000 The progress we’ve made is even more clear as we look ahead. For full year 2025, we are providing adjusted EBITDA guidance of $60,000,000 at the midpoint, a 15% adjusted EBITDA margin, and more than a $50,000,000 increase over 2024. More, we are increasing our outlook for revenue, gross profit, and adjusted EBITDA for 2025.

’20 ’20 ’5 revenue guidance is $400,000,000 at the midpoint. Going forward, our revenue is much higher quality, given our transition away from holding weather risk toward a simpler commission and fee based higher margin model. Case in point, we are guiding to approximately 80% gross margins in 2025. At our December investor day, we highlighted our 2026 target of $100,000,000,000 of adjusted EBITDA. Given this is our first earnings call since our investor day, I do wanna confirm that we are on track and remain confident in achieving this goal.

Importantly, we expect Porch to generate cash for shareholders this year. We expect to deliver positive adjusted EBITDA every quarter going forward. This is an exciting time for the company. So the end of twenty twenty four marked an important moment for Porch. On 01/01/2025, we completed the formation of the Porch Insurance Reciprocal Exchange, which we may refer to as Pyre, and the sale of our homeowners of America insurance carrier into Pyre.

This transforms the financial results for Porch Group shareholders to be more predictable and higher margin. The member owned design of the reciprocal means both Peyer and HOA will operate as a separate entity outside of Porch Group. Porch will receive commission and fees for operating higher, benefiting from higher margins and more predictable earnings. I do wanna zoom out here just for a second and provide some context on our journey. In the last few years, we have focused on profitability and I certainly am pleased with the progress.

We’ve now entered this next chapter, one focused on growing rapidly while simultaneously expanding margins. Now that we’ve completed the optimal structuring of our insurance business, we’ve reopened geographies and reactivated distribution partners. We’ve already seen substantial growth in new business premium here in Q1. Thank you to our employees for your work to get us here. Thank you to our shareholders for your support.

We are excited to deliver spectacularly for you all. Now, Sean, over to you to provide the financial details.

Sean Tabak, CFO, Porch Group: Thank you, Matt, and good afternoon, everyone. As a reminder, Q4 twenty twenty four revenue has a tough comparison due to two items. First, in the fourth quarter of twenty twenty in the fourth quarter, excuse me, of 2023, revenue was $26,000,000 higher due to lower reinsurance seating following the vest due matter. And second, in the first quarter of twenty twenty four, we sold EIG, our legacy in house agency. With that consideration, total revenue in the fourth quarter of twenty twenty four was $100,400,000 a $14,200,000 or 12% decrease from the prior year.

In addition, in the fourth quarter of twenty twenty four, there was a $5,000,000 non recurring year end adjustment, which reduced revenue and adjusted EBITDA related to the wrap up of some legacy reinsurance complexity in life of EBS. Absent these non recurring items, the business performed well and has strong 20% organic growth trends led by the insurance segment. Revenue less cost revenue was $89,300,000 an 89% margin. Q4 adjusted EBITDA was $41,800,000 That’s a $30,100,000 increase over the prior year and ahead of our expectations, driven by strong execution, risk selection, capital allocation and cost control. I want to take a second to show appreciation and highlight the performance of the team.

This is quite a significant improvement in adjusted EBITDA year over year. Gross written premium was $112,000,000 broadly flat compared to the prior year, with premium per policy increases offset by the divestiture of our legacy insurance agency EIG in the first quarter of twenty twenty four. The reciprocal approval and formation took a bit longer than originally anticipated, but we reopened for growth late last year. Matthew will talk through the progress shortly. Now, looking at our results by segment.

In insurance, revenue was $72,000,000 The items I discussed above for total revenue all apply to the insurance segment. Absent these non recurring items, the insurance segment performed well and has strong 29% organic growth trends driven by increases in premium per policy. In vertical software, revenue was $29,300,000 a 6% increase from the prior year, driven by SaaS price increases. Moving on to adjusted EBITDA. Insurance adjusted EBITDA was $48,800,000 a $17,200,000 increase over the prior year, driven by our insurance profitability actions and advantage underwriting, which have helped us select the right risks to ensure.

Vertical software adjusted EBITDA was $5,000,000 a $5,300,000 increase over the prior year, driven by the SaaS price increases and strong cost control. There was a 500 basis point increase in revenue less cost revenue margin in this segment. Finally, corporate expenses were $12,000,000 8 million dollars lower than the prior year as we continue to manage costs and see the benefit of the actions we’ve taken. Now let’s take a step back and look at our full year performance. Total (EPA:TTEF) revenue for the full year 2024 was $437,800,000 a 2% increase over the prior year driven by the insurance segment.

As a reminder, in the prior year, the best due matter resulted in approximately $55,000,000 of incremental revenue in the 2023 comparative period. Revenue less cost revenue was $212,200,000 representing a margin of 48%. Adjusted EBITDA was $7,200,000 for the full year, better than our expectations, driven by strong execution across all segments. This was an increase of $51,700,000 over the prior year. Gross written premium decreased from the prior year, driven by the divestiture of EIG in Q1.

Otherwise, we managed HOA gross written premiums to our plan of roughly flat compared to the prior year. Now, moving on to the balance sheet, there are several benefits from the shift toward the commission and fee based insurance services business model. It is simpler, higher margin and asset light. Excluding HOA, we ended 2024 with cash, cash equivalents and investments of $70,000,000 At that time, Quartz Group also held a $49,000,000 surplus note in HOA that yields a coupon equal to 9.75% plus over. Following the sale of HOA to Pyre on 01/01/2025, as of month end January, cash and investments was approximately $93,000,000 and the surplus note balance increased to $106,000,000 Additionally, following the period end, there was positive progress with our vest due claims.

We now expect to receive approximately $7,000,000 of additional cash later in Q1 from the vest due bankruptcy process with potential for more over time. Additionally, our litigation against other parties remain ongoing, and we will keep you posted as things develop. At the so far current rates, these surplus notes would generate approximately $15,000,000 of interest income annually for port shareholders, which substantially offsets our debt interest payments. Now looking ahead to 2025. First, I wanted to remind about a few changes starting in Q1 consistent with what we laid out at our Investor Day.

First, we will continue to focus on generating cash for the Porch shareholders as the primary measure of value creation. While we will consolidate Peyer and HOA into our GAAP financials for the time being, Adjusted EBITDA will exclude the results of Pyre and HOA as they do not contribute to cash available to port shareholders. Adjusted EBITDA will include results of the segments that contribute to generating porch cash, which will include insurance services, software and data, and consumer services, offset by corporate expenses. We will call this Porch shareholder interest and provide guidance on this basis for revenue, gross profit and adjusted EBITDA. We expect to introduce new KPIs in 2025, which align with our go forward business segments.

Starting with Q1 twenty twenty five, we plan to report gross profit instead of revenue less cost revenue. This requires a reclassification of approximately $10,000,000,000 of depreciation and amortization expense into cost revenue predominantly in the software and data segment. Even with this change, we expect gross margins to be substantially improved in 2025 Now for our 2025 guidance for Porch shareholder interest, we expect 2025 revenue of $390,000,000 to $410,000,000 better than previously communicated. This is a slight decrease year over year given the shift to the lower revenue but higher margin reciprocal operating services model. Case in point, we expect gross profit to grow approximately 50% compared to 2024 revenue less cost to revenue.

We expect 2025 gross profit of $310,000,000 to $325,000,000 with an associated margin of approximately 80%, highlighting the more profitable and predictable model. Overall, we expect adjusted EBITDA of 55,000,000 to $65,000,000 At the midpoint, this is approximately a 15% adjusted EBITDA margin and a $53,000,000 increase over 2024. Our higher adjusted EBITDA guidance includes increasing sales and product investments in the first half of twenty twenty five to drive faster growth in 2026 and beyond across each of our segments. I’ll now hand over to Matthew to discuss a strategic update and review our KPIs.

Matthew Nagel, COO, Porch Group: Thank you, Sean. I’d like to start by highlighting our four focus areas to drive revenue growth for the business. First is to scale insurance premiums. We expect the massive homeowners insurance market to increase rapidly for years to come. We focus on homebuyers and low risk homes.

Homebuyers make up about 40% of homeowners insurance purchases each year. Low risk homes are what everybody in the industry wants. We just have the advantage to identify and price them more effectively given our unique property data. Toward the end of q four after the prior approval was received, we started, we restarted premium growth after a period of managing premiums to flat. We’ve been reopening geographies, hiring sales leadership, reengaging legacy agency partners, and adding new agencies to expand distribution.

Momentum is building. And in fact, we saw 50% growth in new business premium in q four. And already in q one, we are seeing new business double versus the prior year. Most of our premiums, though, will come through renewals, so rate increases make a big impact. We will continue to take rate and expect average rate premium per policy nearing $3,000 at the end of twenty twenty five, an increase of approximately 20% over the prior year.

Overall, we’re excited about the momentum towards our $500,000,000 gross written premium target for 2025. We expect premium growth to continue to accelerate throughout the year. The second area of revenue growth is innovation on our vertical software businesses. We are executing our product roadmap, which supports our strong customer retention and our strategic price increases. Q four key advancements include an AI powered assistant to accelerate inspection report building, advanced reporting capabilities for Rhino, Flowify Verify for streamlined income and employment verification, and a new measurement as a service product in our roofing software.

Retention and satisfaction rates remain strong. And as the housing market stabilizes, we expect solid revenue growth. Next (LON:NXT) is the growth of our data business. Launched in 2024, Homefactors has the potential to become a big and profitable business. Our work with HOA and third party carriers clearly indicates that Homefactors improves risk selection.

We’re adding new Homefactors each quarter, increasing value for Pirate and HOA, and driving third party revenue. Lastly, there is a real opportunity to access more homebuyers and help them with more high value home services. In December, we launched Moving Place, a marketplace that simplifies moving. We also signed new warranty and moving partnerships, which expands our access to high value homebuyers early in their journey. Strategically, this is important as it creates more leads for our insurance agency partners and incentivizes them to sell higher and HOA insurance products.

Now to KPIs. Twenty twenty four KPIs are presented on the legacy segments and will be updated in q one twenty twenty five to reflect the go forward business segments. Looking at the legacy KPIs for q four twenty twenty four, first, the average number of companies was 27,000. Average revenue per company per month was $1,236. We had 219,000 monetized services in the quarter, and the average revenue per monetized service was $390 Looking now at our insurance segment KPIs, as a reminder, this segment currently includes HOA and warranty.

From q one twenty twenty five, warranty will be included in our consumer services segment. Also, when comparing year over year figures, a reminder that we divested our insurance agency, EIG, in January 2025. In q four twenty twenty four, gross rent premium was a hundred and 12,000,000, roughly flat compared to the prior year. Policies enforced was 206,000. As we previously discussed, our strategy has been to use tactics such as targeted nonrenewals to manage a decline in policies over the last couple of years while maintaining premium roughly flat.

Annualized revenue per policy was $1,396, an increase of 25% from the prior year driven by premium per policy increases. Focusing on HOA, the annualized earned premium per policy increased 31% to $2,446. Premium retention was 105%. Lastly, HOA is healthy with a record surplus as it transitions to the reciprocal structure. As of 12/31/2024, it held $157,000,000 of surplus combined with non admitted assets that include a portion related to port sales held by HOA.

In q four, our gross loss ratio was exceptional at 21% down from 36% last year. Our attritional loss ratio sets the bar for the industry at 16% compared to 30% in the prior year. November and December saw the lowest claims volumes for many years. We have effectively targeted and retained the homes with lower risk over the last few years. Also note that the insurance carrier has no exposure in California.

For the full year, we delivered a 65% gross loss ratio lower than 69% in the prior year despite hurricane barrel, one of HOA’s larger weather events. As you can see in the chart, we improved despite the increase in catastrophic weather costs, driven by a 22% attritional loss ratio compared to a 34% in the prior year. Gross combined ratio was 79% in 2024, an improvement from 88% in the prior year and a fantastic result for the year. All of these metrics reflect our success in targeting and retaining lower risk homes through the strength of our advantaged underwriting and strategic actions over the last couple of years. I’ll now hand it back to Matt for closing remarks.

Matt Ehrlichman, CEO, Chairman and Founder, Porch Group: Thank you, Matthew. We believe the numbers speak for themselves and that our performance ahead will clearly demonstrate the value in what we’re building. We believe the homeowners insurance industry presents a huge and exciting growth opportunity with highly sticky and valuable customers. With our insurance services, commission and fee structure, we’re positioned for consistent and sustained profitable revenue growth with approximately 80% expected gross margins and mitigation from weather volatility. Our unique data drives long term pricing and underwriting advantages.

We laid out our objectives clearly in our recent investor day to achieve a hundred million dollars of adjusted EBITDA in 2026, to scale our insurance business to $3,000,000,000 in premiums over time, to build a large and defensible data business, grow our software and consumer services divisions, and generate a consistent and increasing amount of cash for shareholders. I’ll wrap up by reinforcing the most important messages from today. First, delivering record quarterly adjusted EBITDA of $42,000,000 in Q4 twenty twenty four and full year adjusted EBITDA of $7,000,000 Second, we increased our 2025 adjusted EBITDA guidance to $60,000,000 at the midpoint and reaffirmed our $100,000,000 20 20 6 adjusted EBITDA target. Three, the formation of Pyre and the sale of HOA occurred as expected. Four, we opened geographies and commenced our premium growth plan and are seeing strong early signs.

We expect some fantastic years ahead. Thank you again to our shareholders for your continued support. And with that, John, please open up the call for questions.

Q&A Moderator, Porch Group: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Your first question comes from the line of Dan Kurnos with The Benchmark Company. Please go ahead.

Dan Kurnos, Analyst, The Benchmark Company: Great. Thanks. Good afternoon. Matt, the investor day was a little over two months ago and we’re already starting to tweak numbers up in ’25. So, can we just get some more color on what’s informing that enthusiasm that you have out of the gate, specific segments, gross written premium trends?

Is there anything to start would be helpful?

Matt Ehrlichman, CEO, Chairman and Founder, Porch Group: Yeah. Maybe I’ll kick it off and Sean go ahead and layer in. I think a few things. One, you know, the plan has just come together as we had intended. So actually getting through the formation of the reciprocal, completing the sale, you know, of HOA’s plan.

Obviously, we would, you know, leave a bit of cushion there, until those those events actually occurred. And so it’s nice to see those things, again, happening as expected. Two, Matthew mentioned just as we, you know, activated our growth plan, you know, we’re just seeing really good signs, you know, there. And so, you know, certainly comforting and exciting to see, you know, see the growth happening as intended and as expected. And then lastly, I would just say across across the board, you know, we’re we’re seeing, you know, strong execution, continued strong execution, you know, from our from our business units and and the leaders.

We feel really good about where the team is and and just the the day to day, week to week, month to month, execution. Anything else that you’d like to layer in there, Sean?

Sean Tabak, CFO, Porch Group: Yeah. I’ll just maybe touch on the insurance segment in particular. I think at the investor day, we talked about about a 40% conversion of premium insurance premium to revenue there. We also talked to our about our ability to toggle up that conversion rate as well with other opportunities. And so as we progress with Pyre to Matt’s point, given the very strong, you know, out the gate early progress on a number of things, we’re seeing those opportunities ahead.

The other point I’ll make there is that is a very high gross profit margin as well as adjusted EBITDA margin, business that we’re able to drive.

Dan Kurnos, Analyst, The Benchmark Company: That’s super helpful. If I can just follow-up on that point and maybe Matthew, maybe if you want to step into just you commented on new business being strong. Just any way to give us some directional color on agencies turn back on, how receptive they are to driving higher in new business. And just, you know, obviously, that’s going to layer into how we should think about surplus and take rate. So just directionally some initial, I know it’s really early, but directional thoughts would be helpful.

Thank you.

Matthew Nagel, COO, Porch Group: Yeah. So we, as Sean mentioned, we turned back on growth towards the end of Q4 just to share, give you a little color of what that means. First, we reopened geographies. We took a closer look at our commission plans to make sure we’re incenting the type of behavior that we wanted. We started to invest in our growth team, which is a team that goes out and onboards new agents and engages our existing agents.

We hired a phenomenal leader from Farmers. He was a VP of growth there. He led a region that did over $3,000,000,000 in premium and also brings his own set of contacts in the agency industry. Right now, what I would the color that I would give additionally is agents are excited about Pyre. There’s a number of exciting things about the Port Insurance product in terms of the value it can provide to consumers.

And what we’re seeing is just people getting reengaged with HOA after a period where, we were quiet, you know, intentionally quiet. So a lot of it is just being open for business, telling folks we wanna grow, and all of that is encouraging. And so we’re seeing it in the number of policy the number of new policies. We’re starting to see it in the number of agencies being active, and we’re certainly seeing it in the number of, agents, that we’re onboarding. And then, of course, as we onboard those agents, there’s sort of a ramp up period before they get fully appointed and then they start running business and that business starts to get active.

It is early, but, you know, we I think we’re encouraged by how things are shaping up out the gate.

Dan Kurnos, Analyst, The Benchmark Company: Alright. I’ll jump back in queue, but, it’s a nice start

Q&A Moderator, Porch Group: to the year guys, obviously. Well done.

Matthew Nagel, COO, Porch Group: Thanks, Jeff.

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

Jason Helfstein, Analyst, Oppenheimer: Thanks. I guess, I wanted to say it’s similar, but just how are you thinking about leaning more into growth or leaning into growth now that the buyer is closed? Can you address some of like the, I guess, organic benefits you’ll get and some of the uncertainty around HOA is kind of gone? But just what proactively can you do, kind of with your own investments to drive more growth in

Q&A Moderator, Porch Group: the business broadly? Thank you.

Matthew Nagel, COO, Porch Group: I’ll take that, Matt and Sean, if you guys wanna layer on. You know, some of what I wanna reiterate is what I just shared and what we talked about at, the investor day. But, you know, our our go to market in insurance is through agents, and there are many, many more agents that are out there than are currently engaged or appointed with HOA. And so a lot of the focus is just how do we go reactivate that agent channel, and it’s a lot of blocking and tackling. It’s getting people on the team.

It’s having conversations with agents, and it’s getting the right incentives in place, which we feel we have done and are able to do. There’s also a little bit of benefit that we’ve talked about just from, you know, the natural rate increases that we’re getting. A lot of those from 2024 are still flowing through into 2025. We already have some, planned for 2025. So from an insurance standpoint, you know, it’ll take some time and it’s and it requires us to execute, but, kind of the path is there for us.

And, you know, the goal is 500,000,000 gross written premium for this year, $600,000,000 for next year. But our real ambition is, you know, we think we can get to $3,000,000,000 over the next five to ten years. When we look beyond the insurance business, we are starting to invest in more growth. Sean did mention that we’ve introduced some investments into sales and marketing, in particular in our consumer services group but also some in our software group And then also starting to invest more in, just the strategic product roadmap that we have where we’re trying to consistently roll out new features that are then, paired with price increases. And we think we have a good enough understanding of kind of the mechanics there and the economics where, you know, all of those investments that, we’re gonna do this year, you know, we went through and did the analysis and found really good returns.

Q&A Moderator, Porch Group: I

Matthew Nagel, COO, Porch Group: still think, you know, insurance is a big opportunity for us, but there there is growth opportunity across other parts of the business as we look, you know, ’25 certainly into ’26 and ’27.

Matt Ehrlichman, CEO, Chairman and Founder, Porch Group: Two quick things, Jason, just to layer on. Matthew mentioned that the additional investments that we’re making, the the return profile of those investments is really attractive, you know, and and strong. And so we set a certain kind of threshold for what kind of returns we want to be able to deploy more capital in our businesses. And, you know, and and it’s attractive. And so we’re excited clearly to be able to be able to deploy more capital and still increase EBITDA guidance like we are.

And then the second thing is, I would just say that the market is set up really well for us. We’re not assuming anything in our plan here in terms of big housing market bounce backs or anything. So if and as that happens, that will just be tailwinds, you know, for us. But in the insurance industry as well, it’s a very attractive market, you know, dynamic where certain carriers are wanting to write less. You know, we’ve done the work to go out ahead and to get things priced correctly so that we can generate the types of margins, you know, that we are, and add add surplus to, you know, the insurance business.

And with the reciprocal structure, we get to participate in in, you know, this this attractive insurance market, which will just naturally lead to solid growth.

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

John Campbell, Analyst, Stephens: Hey guys, good afternoon. Congrats on a great quarter and a good close to the year.

Matt Ehrlichman, CEO, Chairman and Founder, Porch Group: Thank you.

Jason Helfstein, Analyst, Oppenheimer: It was

John Campbell, Analyst, Stephens: great seeing you guys raise your EBITDA guidance. I mean obviously in just two months, your stock is trading at a pretty silly low multiple of the ’26 EBITDA guidance. So this is definitely a nitpick like question if you keep that stuff in mind. But I saw that you guys reiterated the ’26 guidance, despite the 2025 raise. Maybe it’s a desire not to get over your skis, which I’m assuming that probably is the case.

But I’m curious why you wouldn’t go ahead and raise the ’26 guidance by a similar amount.

Matthew Nagel, COO, Porch Group: Yeah. We’re on.

Sean Tabak, CFO, Porch Group: Sure. Happy to. We’re we’re certainly seeing, as I think as we just talked about, really great progress and momentum in the business and the execution has been really, really wonderful. And it really is, I think, what you’re thinking about there, John, one hundred million dollars is a really important target for us in adjusted EBITDA for next year. The business is certainly marching towards that.

Today, we’re happy to, you know, increase the 2025 guidance to $60,000,000 and we’ll provide, we’ll just leave it there for now.

Matt Ehrlichman, CEO, Chairman and Founder, Porch Group: Let me add one more thing, which is, John, it is really just about not getting over our skis. I think you said it really well. We don’t want every quarter, you know, to be updating on the next year’s, you know, guidance. That’s not our plan, just to update on on this year’s guidance. We feel good, like I said, about how we’re set up for 2026.

But we’ll update and change that number as we get closer to 2026.

John Campbell, Analyst, Stephens: Yeah. Makes sense. How we do on the sell side, we’ll run away without your numbers,

Ryan Tomasello, Analyst, KBW: so smart move. On home factors,

John Campbell, Analyst, Stephens: I saw on the press release you guys are growing the pipeline for testing. That’s great to hear. I’m curious how the product is performing versus maybe original expectations. And then for the 2026 targets, if you can maybe shed any kind of light on the Homefactors revenue kind of baked in or just maybe more generally just the shape of the curve or maybe the trajectory of growth out to ’26.

Matthew Nagel, COO, Porch Group: Yeah. I can speak to that. You know, we see very strong evidence in using it in our own underwriting and pricing. We’re now engaged with, multiple carriers in a deep way to, either test or to begin using the Homefactors data in the early signal is there is interest that it does have an impact on their pricing in underwriting. The other point I would just mention is we’re still building out more home factors.

We release some factors every quarter really faster than that, and think, you know, we’ll have over a hundred by the end of twenty twenty five. Investing in the go to market teams, in fact, we just identified a leader that will start in the next month or so, and that will accelerate our pipeline building. We have communicated that it is it is a, a laddering process of getting more and more carriers engaged, and the sales cycle does take time. You know, you gotta work through some of these larger carriers. You gotta get a test, and then they gotta kinda roll it out.

So we haven’t assumed really much revenue for 2025. We start to assume some in 2026, and then it, we see a bigger opportunity in ’27 and ’28. And right now, we’re just we’re focused on executing and adding more home factors in talking to to more carriers carriers. It’s still early, but I would say the energy internally and the people we’re talking to is very strong and and encouraging.

Ryan Tomasello, Analyst, KBW: Okay. It’s very helpful. Good work, guys. Thanks.

Matthew Nagel, COO, Porch Group: Thanks, John.

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

Jason Helfstein, Analyst, Oppenheimer: Hi everyone. Thanks for taking

Ryan Tomasello, Analyst, KBW: the questions. Just wanted to dovetail on the Home Factors topic. And Matthew, I know you kind of already touched on it, but just, if you can provide some more color on what would there still is to CHOP on building out the go to market for that product? You mentioned, I think, you just hired a new sales leader there. But what that go to market will look like?

How much of that is being baked into some of the investments you’re alluding to here in 2025?

Matthew Nagel, COO, Porch Group: Yeah. It’s certainly an investment area in ’25. It’s not a a massive infrastructure right now that’s needed. It’s a sales team that can go you know, there’s four to 500, targets. You know, our goal is to try to start conversations with with all of them in some form and then, you know, the p o the proof of concepts and other things take time.

There’s some, you know, sales engineer work in order to support the test and roll it out, but the actual infrastructure is all done via APIs and it’s and it’s very scalable. You know, over time, we’re already starting to kind of envision, you know, variations of products to meet particular use cases that we may invest in as as those come up. But it’s it’s it’s within our means. You know, it’s we just gotta go execute, build out the team, and then just work work the work the pipeline and work our way through the purchasing processes of insurance companies. But the the interest is certainly certainly there.

Ryan Tomasello, Analyst, KBW: Great. And then I recall from the Investor Day, it sounds like you are still interested in opportunistic M and A. So, Matt, I’m just curious, where that ranks on the list of growth priorities currently. And, you know, among the ways that you can leverage M and A, it seems like scaling, the insurance business is an interesting way to lean on that inorganic area. So just curious how you’re thinking about M and A from here.

Matt Ehrlichman, CEO, Chairman and Founder, Porch Group: Yeah, certainly to be clear, the guidance we put out today is all organic. And so M and A would be incremental to what we’re laying out. We are at a point where we can begin to start to talk about that again. We do believe we have a strong set of capabilities, the ability to integrate acquisitions effectively and to be able to accelerate growth given kind of a broad set of capabilities that we have. I agree with you.

I think there’s different ways that you could use the M and A capabilities to accelerate

Earnings Call Moderator, Porch Group: what

Matt Ehrlichman, CEO, Chairman and Founder, Porch Group: we’re doing in the insurance industry. And obviously, as we progress there, we’ll provide more updates, but more to come. Nothing to share in terms of details here today.

Ryan Tomasello, Analyst, KBW: Great. Thanks guys.

Matt Ehrlichman, CEO, Chairman and Founder, Porch Group: Thanks, Ryan.

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

Kyle, Analyst, Craig Hallum Capital Group: Great. Thank you. This is Kyle on for Jason. Maybe just to start, can you just talk about your expectations, to grow policies and, you know, what a cadence for PIP growth as 2025 progressions could look like?

Matthew Nagel, COO, Porch Group: Sure. I can. So in terms of, you know, we’re working towards the $500,000,000 gross premium target grocery and premium target. We are assuming, an increase policy due to rate increases that are already filed that are still flowing through and also ones that we have planned for this year. In terms of growth, you know, we aren’t expecting a lot of growth in 2025.

It’s, you know, mostly flat. And then we’ll start to see that pick up, you know, as we head into to 2026. But we’re excited. Great, thanks. Yeah, go ahead.

Kyle, Analyst, Craig Hallum Capital Group: Sorry. I guess maybe just secondly, you know, we’ve seen a bit more mild start to the real estate market this year. So just just curious your thoughts on how this potentially impact the poor trends as 2025 moves on.

Matthew Nagel, COO, Porch Group: I mean, we’re conservative

Matt Ehrlichman, CEO, Chairman and Founder, Porch Group: as it relates to just our assumptions that are built into our guidance as compared to kind of third party estimates. We think that’s the prudent place to kind of pick housing market growth. Again, like I said, we’re not assuming much in terms of housing market bounce back. And like you see in our guidance, you know, a flat year in the housing market, our businesses can perform really nicely. And when the housing market does come back and it will normalize, obviously, you know, we’ll benefit from that.

But yes, we are, we are being conservative as compared to what third parties expect at this point.

Matthew Nagel, COO, Porch Group: Great. Thank you.

Q&A Moderator, Porch Group: As there are no further questions at this time, I would like to turn the call back over to Matt for closing remarks.

Matt Ehrlichman, CEO, Chairman and Founder, Porch Group: I just would say I appreciate the questions. I appreciate the the time. You know, this is, you know, a great moment for the company. We worked hard to be able to to to get the business structured what we believe is optimally, and you can start to see it in the results. We’re clearly excited to get back together, you know, here for Q1 earnings, and then to to continue to share more as we progress through an important 2025.

With that, we will close the call. Thank you all very much.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.