Porch Group at Stephens Annual Conference: Strategic Data-Driven Growth

On Wednesday, 19 November 2025, Porch Group (NASDAQ:PRCH) presented at the Stephens Annual Investment Conference 2025. The company outlined its strategic focus on leveraging proprietary data to enhance its position in the homeowners insurance market. While Porch Group highlighted its robust financial performance and growth plans, it also addressed market misconceptions and emphasized long-term stability over short-term gains.

Key Takeaways

• Porch Group aims to grow premiums from $500 million to $3 billion.
• The company launched a reciprocal exchange, shifting risk to policyholders.
• Proprietary data has improved loss ratios, cutting them in half.
• Porch Group anticipates $70 million in adjusted EBITDA for the year.
• The company is exploring monetizing its "Home Factors" data by 2027.

Financial Results

• Revenue Composition:

- Insurance accounts for about two-thirds of total revenue.

- Software businesses contribute 25%.

- Consumer services, including home warranty and moving services, make up the remainder.

• Profitability and Margins:

- Gross margins stand at 82%.

- Adjusted EBITDA margin was 18% last quarter.

- Premium to revenue conversion is around 54%.

- Premium to adjusted EBITDA conversion is at 18%.

• Capital and Surplus:

- Statutory surplus at the reciprocal increased from $100 million to $152 million by Q3.

Operational Updates

• Reciprocal Exchange:

- Launched in January, transferring carrier ownership to policyholders.

- Porch Group operates the reciprocal, earning commissions and fees.

- The exchange is well-capitalized and protected against catastrophic weather events through reinsurance.

• Data and Underwriting:

- Collects data on 89 home characteristics, covering 90% of U.S. homes.

- Home inspection software is used by over 40% of inspection companies.

- Proprietary data has significantly improved risk pricing.

• Software Businesses:

- Home inspection software generates $100 million in revenue with 80% gross margins.

- Title software is used in over 40% of title transactions.

• New Product Offerings:

- Introduced Porch Insurance, which bundles homeowners insurance with home warranty and moving services.

Future Outlook

• Growth Strategy:

- Focus on consistent growth rather than short-term spikes.

- Plans to organically grow premium volume, leveraging excess capital.

- Exploring M&A opportunities to acquire regional carriers.

• 2026 and Beyond:

- Detailed plans for 2026 will be provided next quarter.

- The company is confident in its growth strategy through 2027.

• Data Monetization Timeline:

- Significant revenue from data licensing is expected by 2027.

Q&A Highlights

• Data Usage:

- Porch Group has data on 90% of homes.

• Competition:

- No new entrants have been seen in their verticals recently.

• Growth Slowdown:

- The focus is on building more capital at the reciprocal, not market weakness.

For a detailed discussion, refer to the full conference call transcript below.

Full transcript - Stephens Annual Investment Conference 2025:

Unidentified speaker, Host, Stevens Annual Investment Conference: Today, too, of the Stevens Annual Investment Conference here in Nashville. We’re excited to have Porch Group Ticker PRCH with us today. Joining us are Matt Ehrlichman, CEO, and a known face, John Campbell, Head of IR. For those less familiar, Porch operates one of the more unique models in the real estate and home services ecosystem, combining insurance data and software to help homeowners and professionals. We’ll start by framing the business model and strategy, then moving to performance and outlook, and finish with some questions around investor perceptions and what to watch for in 2026. Matt, let’s start at the top. Can you walk us through Porch Group’s business model and how the reciprocal structure creates value for shareholders?

Matt Ehrlichman, CEO, Porch Group: Absolutely. Good to be with you all. Looking forward to getting your questions. Nice to see some of you again. It was about 10 years ago we decided to go after the homeowners insurance opportunity. Massive TAM, $170 billion U.S. TAM. High retention characteristics for customers, something they need to have that holds up in all kinds of economic cycles. The way we went after that homeowners insurance opportunity is really unique. Instead of building a carrier from scratch, we started by thinking about what would create long-term competitive moats. Specifically in the game of insurance, it’s about if you can be able to price risk better than others, understand the risk better than others by having unique data. Fundamentally, it creates advantages that sustain and allow you to win.

We went about building out vertical software companies, businesses in key strategic vertical markets to be able to go amass unique data about properties and to be able to go amass unique access to home buyers really early on. At this point, we have almost half of all of the home inspection companies in the country using our home inspection software, north of 40%. We have 40% plus of all title transactions going through our title software, large mortgage software business, roofing software business. In particular, with the home inspection software, that’s very important for us strategically, where you get this 40-60 page long report from an inspector who spent four hours inside of a home using our software to document everything about the property. It just tells us it’s gold. I mean, it really is, because it tells us everything about the home.

We’ve spent years breaking down and creating more and more intelligence off of those inspection reports. At this point, we have 89 unique characteristics we call home factors that we know about properties. It’d be things like, is there a sump pump in the crawl space? Is there signs of water escape or rusting on the hot water system? Are there signs that repairs are needed in the electrical panel, or does it have less than 100 amps? Where is the hot water system located? On and on and on. We have 89 characteristics about properties for 90% of U.S. homes right now. What that allows for is, five years ago, we made the leap to move into the homeowners insurance industry through an acquisition of Homeowners of America, a regional insurance carrier, and we’ve grown substantially since then.

As we brought that data into Homeowners of America, we’ve cut its loss ratios, the amount that it spends on losses, in half because we simply can avoid the bad risks. When we’re presenting our pricing and it’s a customer that’s probably going to have a big claim because there’s lots of information about their home that signal there’s real risk here. The industry is going to price that customer in a certain spot, and we’re going to be way up here, and we’re not going to win that customer. When it’s a customer that has a good set of risks and lower risk than the market perceives, we’re going to be priced below the market, and we’ll win that particular risk. We have truly industry-leading loss ratios, dramatically better than others that are in the industry. We can talk more about that.

The last key thing that we did is structurally designing the insurance business in the way that we wanted to be able to scale. As of January 1 this year, we launched what’s called a reciprocal exchange, where we actually moved the carrier into the reciprocal called the Porch Reciprocal Exchange. We actually don’t own the reciprocal, so it’s owned by the policyholders. It’s very common in the insurance industry, though you might not know it. Farmers, for example, is a reciprocal, and Zurich is the operator of that reciprocal that gets really high margin fees back. Erie is another good public comp where the public company manages a third-party reciprocal, again, that the policyholders own. For us, it creates this really elegant system where all of the volatility of participating in the homeowners insurance market is owned in the reciprocal. We operate it.

We have all of the employees that run the day-to-day of the business, and we get commissions and fees back. That is how we generate our revenues. That means that Porch Group and our shareholders aren’t exposed to catastrophic weather. Even at the reciprocal, we make sure it’s well protected by making sure it has lots of excess capital and by purchasing reinsurance at the reciprocal so that even if a big bad weather event happened, it is protected. Our economic model has really attracted where we’re 82% gross margins. We don’t have any volatility tied to weather. Last quarter, it was an 18% adjusted EBITDA margin. For the year, we’re going to do $70 million of adjusted EBITDA based on our latest guidance, which is our proxy for cash flow. Cash flow matches very closely to our adjusted EBITDA.

At a high level, that transition was an important one for us. We’re now set up where we will just be growing the premiums of this business at this very consistent 25%+ tight clip. We’ve laid out a very clear path from going from where we are today, almost $500 million of premiums, to $3 billion of premiums for the next set of years, which still would be sub 2% market share in this market. As we go do that, the business would produce over $600 million of adjusted EBITDA because of how it flows through to cash flow at this point, given the excess margin in the system. At a high level, that’s kind of where we are, what we’re doing. Last comment, the insurance business for us represents about two-thirds of our revenue.

Our software businesses represent, give or take, 25%, and then the balance is with our consumer services segment, where we offer home warranty and moving services. Strategically, the reason that’s here is that we are building out differentiated insurance offerings, not only based on pricing with unique data, but with Porch Insurance, a newer insurance product where a consumer, a home buyer in particular, gets full home warranty coverage along with their homeowners insurance and gets built-in moving service, where we really want to stand out for a home buyer, where we actually provide you with four hours of moving services and help you get fully moved into that home. We are very differentiated from others in the industry.

Unidentified speaker, Host, Stevens Annual Investment Conference: Right. Staying with insurance, what are the key drivers of profitable growth? You alluded to surplus. How do you balance that with discipline on the writing, which has been a differentiator?

Matt Ehrlichman, CEO, Porch Group: Yeah. Because our loss ratios are so much lower than the industry, it creates margin in the system. The margin you can use to be able to drive more capital at the reciprocal quickly. We have grown the capital base very, very rapidly this year from $100 million of statutory surplus at the start of the year to $152 million at the end of the third quarter. Second, you can use it to be able to grow rapidly so you can provide certain discounts to new customers. The elasticity curve, kind of where if you lower your price, it is very clear in terms of the amount of conversion rate increase you can be able to get, which means you really can control the premium growth very clearly and effectively. Thirdly, through fees that come back to Porch Group.

It’s a really kind of key thing to note. Right now, we generate premium to revenue at Porch Group. So premium at the reciprocal flows through to revenue at Porch Group at around a 54% clip last quarter. More importantly, premium to adjusted EBITDA flows through at an 18% clip last quarter. I just want to make sure that’s clear for a second. If you compare that to an insurance agency, like the brokerages or a bunch of public agencies that are out there, they will generate premium to revenue, and I call it a 13-14% clip, right? That’s their commission that they will generate. And then on that revenue, they’ll generate, let’s call it 25% adjusted EBITDA margins. They’re generating premium to EBITDA, I’d call it a 3 or 4% type clip.

We’re generating cash flow for our shareholders from premium to our adjusted EBITDA at 18%. That is a powerful mass trap, which just means the premium for us as we grow is very valuable and creates real advantages in terms of what a customer has worked for us.

Unidentified speaker, Host, Stevens Annual Investment Conference: You talked about the strength of Porch’s proprietary data and underwriting capabilities, but what sets Porch apart from others in the market and what protects that advantage the company has?

Matt Ehrlichman, CEO, Porch Group: I mean, fundamentally, there’s no other place to go get 40-60 pages long of data on a property other than having a human spend four hours in a home documenting everything. You literally need a human going into the crawl space of a home to see if there’s mold or if there’s a sump pump or whatever it might be. You need somebody up on the roof. You need somebody up in the attic. The only moment where that happens, where it makes economic sense to spend $400 or $500 to hire somebody to go spend four hours in the home, is at the moment that a home buyer is purchasing a home. When you’re buying a home, you’re spending hundreds of thousands of dollars, biggest purchase in your life, great. Almost everybody hires a home inspector.

You go get this 40-60 pages of information about the home. The reason it’s a good ROI for the home buyer is you can then take that information, you go to the seller, and you say, "Hey, look at all the stuff I found. I want $10,000 off the property." That works great. That’s a great ROI for the home buyer. It doesn’t make any financial sense for an insurance carrier where the premium is going to be, call it $2,000 or whatever it might be, to go spend $400 or $500 of that to hire a home inspector to go spend that much time. It just breaks the economic model. They’d have to charge 20% more to be able to make that work. The math just upside down.

It really is the home inspection industry really is a unique industry just in terms of the amount of data collection that’s happening at that moment. For us, I mean, it’s special because our software business is a $100 million revenue segment for us. We’re getting paid with 80% gross margins. We’re getting paid handsomely by companies to provide them the full software that they use to run their business. Strategically, for us, the reason we’re doing it is to be able to go have this data collection engine where every day, huge number of people are out there just collecting data for us and informing us what’s happening in all these properties across the country.

That allows us to be able to go after the big prize, which is the homeowners insurance opportunity because we just have data and insights that nobody else does, which again allows us to avoid the really bad risks. Only 7% of consumers are going to file a claim this year. If you can just avoid those customers, right, you’re going to be having an incredibly valuable business. That is what we can do, is we just avoid more of those customers than everybody else can because we know more about the property than anybody else does.

Unidentified speaker, Host, Stevens Annual Investment Conference: Perfect.

Matt Ehrlichman, CEO, Porch Group: There’s a question in the back.

Did you say you have 90% of the home that you have data on?

Yeah, exactly right. We have 89 home factors, which is, again, that’s each characteristic about a property. That number continues to grow for 90% of U.S. properties. Our inspection software goes back for a long time. Some of the data is more fresh than other of the data. Some of the data, you can put very high confidence that it remains consistent over a long period of time, like the type of pipe in the home. You know if the inspection happened eight years ago, it’s still the same type of pipe. You can put a very high confidence score on that. When an inspector is going through, they take pictures of all the nameplates of all of the appliances, and that matches to our database. We know what kind of a dishwasher it is and how old it is.

Your confidence score degrades slightly based on that because somebody may have replaced your dishwasher and you just do not know. You have different confidence scores on every one of those home factors for every single property. Yes, for 90% of homes, simply just now I am going to riff for a second. Some stuff that I am really excited about in terms of what AI and the compute power that is available allows you to do is the home factors that we have created so far is mostly driven off of the text that is in these reports where you go through and you break down and you create intelligence off of the text. Very little of that is actually based on the images, and none of it is based on videos that inspectors are taking.

Now with what you can do with compute, you’re able to go and be able to create intelligence off of the images much more cost-effectively and be able to create intelligence off of the videos, which is just a gold mine of information that’s out there as you try to understand this particular property. There is just continued really valuable work that’s ahead as we continue to understand these properties really well through the images and through the videos as well as the text that we’ve been focused on previously.

Yeah. 90% of the properties and only, say, 40% of the inspectors.

Yeah. Great question. Every year, new homes are getting inspected. It goes back for a long period of time. Not only when we started 10 years ago, but we acquired some companies, some small inspection software companies along the way that bring us kind of history of data. Our current market share is, I would say, north of 40%, what we’ve said publicly. You actually are able to map through that a huge amount of the property data. You’re actually able to expand some of the data set. For example, if you know that it was this particular builder in this particular neighborhood and they built these other three homes, it’s very predictive. They use this type of pipe for whatever it is. Exactly. They’re putting the hot water heater in the same places on these homes.

You can be able to, for some of the data, expand it with very high confidence as well. The reality is we are the software platform in the home inspection industry. We are plugged into all of the inspection schools. As new inspectors come into the industry, they naturally have to go through a certification process. They use our software during the certification. We just get plugged into their business as they enter in the industry. Obviously, these industries, home inspection and title and mortgage, have all faced huge headwinds over the last three, four years, just fewer transactions, people that have moved out of the industry. It does look like things have turned maybe from one.

That would be amazing for our business because any incremental transactions flow directly to the bottom line in our software businesses. There are also more people coming into the industries as soon as that gets healthy again. We will track that, obviously, and see. The dynamic could set up for that to really be the tail end for us.

If you’ve been buying up some of your competitors in software, are there people coming in and trying to displace you?

No, there’s really no interest. It’s kind of interesting, these niche verticals where independently as a software business, they’re not large attractive verticals independently. Going and doing inspection software, it’s just not a big enough market to go have a really well-capitalized company to just go do that. It’s a nice business, and we’re growing it, and we’ll continue to grow it. It’s not like a huge TAM. The play, of course, is if you can do this for the purpose of going after the $170 billion TAM, that’s the play where you can create real value out of it over time. No, we’ve not seen actually new entrants in any of these verticals for some time.

What’s the value prop for a home inspector that you should got?

It runs their entire business. At the end of the day, what it allows them to do is to do more home inspections per day and spend less time after hours having to go and create these reports, and you manage their business. It increases their profitability with less time, fundamentally. Our software provides the report writing capability. Everything they’re doing when they’re in the home, they’re using our software to be able to go collect that data. It has a lot of the preset information for them. It can create this report for them where they can customize the report to look whatever they like, but it creates that report very quickly for them so they can distribute it soon thereafter.

It used to take huge amounts of time for them to go and have to collect data to go create these reports later. It just saves them a lot of time. We also provide all of the CRM software for them to run their whole business, like mini ERP in some respect where it’s doing all of their scheduling, their employee management, the routing of their team if they have multiple inspectors on their team, all the payment collections, all the payment processing is built into our system. There are automated communications. They need their clients to sign contracts, it’s built into the software to make sure the contract’s signed before they show up, on and on and on. It’s basically all the tools they use to run their business as well as to go and create the inspection reports on-site.

Can you give us any data on the growth rate and the market share of home inspectors and what that trend looks like?

Yeah. The public data points, when we went public five-ish years ago, we were at a 27% market share. The last data point we’ve given is north of 40%, where we’ve said basically a coin toss in terms of if an inspector uses our software or not. I’d say those are the two public data points that are out there. It’s kind of showing our growth.

Unidentified speaker, Host, Stevens Annual Investment Conference: We’ve touched on insurance and software.

Matt Ehrlichman, CEO, Porch Group: There’s one more, sorry.

Just.

Go ahead.

There was some talk that you might sell your data. Data is very valuable.

That was my question.

You’re a huge marketer. I mean, how do you go about monetizing your data? I mean, I understand the use case internally.

Yep. That’s great. Right now, we operate the reciprocal, and it covers 23 states today. There are other states that we think are really attractive geographies, and we’ll continue to expand into some of these other states as we go. There are some states where the regulation in those states would prevent us from wanting to go into those states where the regulator, like California would be an example, right, where the regulator right now makes it difficult to be able to consistently get the right price. Why would you want to enter a market if you can’t get the right price? This industry is all about getting the right price. There are lots of geographies where we’re not competing, but we have tremendous amounts of data about the properties. We know definitively that that data is really valuable for predicting risk.

About a year ago, we announced that we’re starting to take our Home Factors data out to the market to be able to go and license data just as another leg of the stool for us. It’s actually gone well. There are long sales cycles, but the pipeline building, the testing that we’ve done with these carriers, both small and big, has been really exciting because they go through and they get a subset of the Home Factors data. They match it to their claims history. And just like we’ve seen, it’s consistently very predictive of this data being able to correlate to their losses, right? If there was a hot water system in the attic with signs of rust, what do you know? It’s correlated with higher frequency and higher severity of water loss for them.

You have to go through contracting and you go through implementation for them. We are excited about what our Home Factors data business can be able to produce for us. It’s very high margin. It simply allows us to take advantage of this large unique asset that we have.

Customers want to be exclusive or they do not let them?

We would not let them be exclusive.

The reality is if they can make money using your data, great. Then somebody else can make money.

What’s fun actually about this is that there’s a variety of data sets where it hadn’t been used in the industry, and then you start to use it. As some start to use it, everybody has to use it. Credit Score is a good example, right? Credit Score wasn’t used before. People started using it. Sure enough, Credit Score is predictive with losses and claims. Once that becomes known and people start to use, you have to use it. You have to be competitive in the market. For us right now, our strategy and our focus there is to simply you have your first set of carriers start to use it small and big. You get the others to start to use it.

Pretty soon you do tip the market where if you’re trying to price homeowners insurance and you don’t know anything about the property, what are you doing in some respect, right, in terms of being able to assess the risk? Of course, you need to know about the property. If you look back in five years from now, it’s going to be obvious that you have to know about the property that you’re trying to insure. People are just blind today. They’re looking at the size of the home, how valuable is it, square footage, bedrooms, bathrooms, the neighborhood for weather risk. Obviously, they have a lot of weather patterns that they’re kind of assessing, credit score of the consumer. But there’s not actually the fundamental data about how risky is this property that you’re insuring, which is correlated to losses.

For us, it’s just a really, it’s a big opportunity over time to be able to not only use this data for our own underwriting, and we’ll obviously hold some of the real gold back for ourselves to create the differentiation. For certainly some of it, you can be able to bring that out to the market and be able to monetize that. Yeah.

Unidentified speaker, Host, Stevens Annual Investment Conference: On that last point, what are the mechanisms that the company has in place to prevent people from signing up one year, ingesting all the data into their systems, and calling it a day and just going about it?

Matt Ehrlichman, CEO, Porch Group: There’s a lot of maturity in the data world. We had bought a small company right around when we had bought Home North America that was really for this intent coming on V12 that we brought in, rebranded into Porch. That leads our home factors business. There’s a lot of things you can do in terms of how you expose the data, the contracts you have in place with those customers. We sell the home factors data on a per address, per home factor basis. We’re not giving them this broad dump of data where, "Here, you get all of our data and you’re paying us a lump sum fee or something like that." They ping an API and they can be able to use that particular home factor for a particular use case. They can use it for pricing, for underwriting, for reinsurance, for marketing.

There is a certain fee that we charge per home factor where you can actually differentiate the pricing based on how valuable we know that home factor actually is for this property. Now, again, day one, you are keeping the pricing fairly low because right now our goal over the next set of years is just to tip the market where the data is something that everybody feels like they need to be using. Once you do that, since we are the only source of data, you can start to be able to raise prices as you go. That is our strategy.

Unidentified speaker, Host, Stevens Annual Investment Conference: Moving on to capital allocation, how do you think about balancing organic growth investments with potential M&A opportunities down the line?

Matt Ehrlichman, CEO, Porch Group: I wouldn’t typically talk very much about this, but it did come up in Q&A in this last earnings call. I’ll talk about it a little bit more. Obviously, we’re going to grow very quickly organically. We’ve set out kind of our path here for 2026 and then ongoing to that midterm. Because there’s more margin in the system, because claims costs are lower, that gives us a lot of latitude in terms of where we want to price a policy for a new customer. We can be able to tick the price down for a new customer, which really meaningfully moves the conversion rate. It’s a very price-sensitive market. Through that, be able to control premium growth. We feel very confident in our ability to grow premium growth at the clip that we want to organically.

One of the things that we’ve done this year is at the reciprocal prioritize building more capital at the reciprocal, again, called statutory surplus. It is just capital that the insurance regulators look at. One of the reasons that we’ve done that is if you have excess capital, not only does that support the organic growth that we want to pursue, but also you have enough to be able to go support M&A if we were to have the right target where you could bring in another regional carrier. The interesting and exciting thing about that is you can potentially acquire another carrier and the premium that comes along with that without Porch Group or our shareholders having to spend a dollar, without our shareholders having to spend a share.

It simply would have the reciprocal use some of that excess surplus to go and acquire a carrier. That carrier would actually bring surplus back into the reciprocal. You could even do it at or near surplus neutral for the reciprocal, and you just layer a premium on top. We think the mix, I do not think it is mutually exclusive, the mix of really attractive organic growth where we can layer more premium on top as we go deeper into an existing market or as we expand into a new geography is an attractive combination and creates a lot of value. The reason we can do that is because the data creates underwriting results that allow us to grow excess capital at the reciprocal faster than would be typical.

Unidentified speaker, Host, Stevens Annual Investment Conference: On that point of the surplus, can you explain the role of Porch stock in supporting premium growth and at what price level it would start to become harder to support surplus growth?

Matt Ehrlichman, CEO, Porch Group: Yeah. One of the things when we designed the reciprocal that we did that’s unique is we injected the reciprocal with 18.3 million shares of Porch stock. And we were able to do this actually because the market was, in our view, nonsensical and had priced our company at actually for a while sub $1 per share. And so we were able to really take advantage and be able to move a set of shares or inject a set of shares in the reciprocal. That’s going to be a really powerful engine for the reciprocal because it is another way to be able to build capital at the reciprocal as the Porch shares continue to appreciate over time. There’s opportunity. You could use shares for an acquisition, although I certainly wouldn’t want to do that now.

In the future, you could use some of those shares to be able to acquire other insurance carriers. You could sell some of those shares down the line to be able to move more capital into statutory surplus. All opportunities for us. The question came up after this last earnings of, "Oh, if share price goes down, does that limit the amount of capital that the reciprocal has to be able to support growth?" We should have proactively and will ongoing make it really clear that it does not at all. The share price could be sub $2 per share, and the reciprocal has all of the capital it needs to support the growth that we want to go over these next set of years. It is really healthy regardless of what the share price is.

The share price really is shares are just in there to create this long-term capital building engine that we can be able to turn into statutory surplus when we want to in the future.

Unidentified speaker, Host, Stevens Annual Investment Conference: On the topic of growing premiums, what are the main factors driving core volume and conversion rates, especially given the current depressed market conditions?

Matt Ehrlichman, CEO, Porch Group: I mean, there’s three things you need to be able to grow premium in the insurance industry. You need capital. And so check, we’ve built up more than enough capital to be able to go pursue the growth goals that we have over this next set of years. Two, you need top of funnel volume, quote volume effectively, right? And so we distribute our insurance products through insurance agencies. We’ve grown the number of agencies that work with us dramatically over this last year. With that, we’ve grown the volume of quotes dramatically over this last year. And so again, we have enough quotes right now without adding any more agencies to support all the growth that we would want over the next set of years. So then it just comes down to conversion rate.

Typically, insurance carrier is a bit constrained on what they can do from conversion rate because they have their set of claims costs, they have all their expenses, and that really forces them to kind of price at a certain level for this consumer where I kind of have to be here. That is going to dictate kind of my conversion rate and growth. Because our loss costs are just a lot less in the industries, we really do get to choose where we want to play on that price elasticity curve. For us, it is about balancing how much growth and premium do we want versus how much capital generation do we want at the reciprocal, right? That is a great place to be.

It’s a great choice to have because that allows us to be able to drive the price point down a little bit for certain types of low-risk new customers and be able to throw that growth premium at the clip that we want to. Last point on this is just level up for a second. This is my last company. I’m going to be doing this for a long time, next set of decades. For me, the whole play is to go build something really big. I’ve been fortunate to have done some cool stuff before Porch, but the point is to go build something really big over a long period of time. We are not going to optimize around growing super fast this year or next year and then slowing down growth.

What we’re really focused on is being able to grow at a really nice clip and then a little bit faster the next year and a little bit faster the next year and a little bit faster the next year. Each year show an expansion and the adjusting of their margins by a little bit and a little bit and a little bit. That, I believe, over a long period of time is actually what can create the most value. That’s what we’re focused on is being able to build this engine that’s going to be able to produce, I would say, these really consistent and exceptional and improving results over time. That’s kind of how we’ve designed the system.

Unidentified speaker, Host, Stevens Annual Investment Conference: On that point of the growth, I think you mentioned during your last earnings call that the company made a decision to slow growth in the fourth quarter. There’s been some confusion around that. Can you walk us through the thinking behind that decision?

Matt Ehrlichman, CEO, Porch Group: It wasn’t even so much in the fourth quarter. It’s just this year. When we started the 2025 year, we provided guidance back in December Investor Day of doing $500 million of premium and $50 million of adjusted EBITDA. That’s what we kind of laid out. As we started to see the results post-reciprocal launch in the first quarter and even the second quarter, the thing that was surprising is we saw the flow-through of premium to adjusted EBITDA. It was a higher clip than what we had expected. We internally had a goal. We wanted to get to $70 million of adjusted EBITDA for this year. We saw that flow-through happening such that we didn’t need to lower prices for new customers to grow premium to accomplish our adjusted EBITDA goal.

The reason that that was a big deal for us is that it allowed us not only to hit our adjusted EBITDA goal, but to be able to build more capital, more statutory surplus at the reciprocal than what we had expected. We grew that from $100 million to $152 million from the beginning of the year to the third quarter. We did decide, as we were especially turning on the M&A engine and starting to build the M&A pipeline, that if we could be able to prioritize building more capital at the reciprocal, it would create room for the reciprocal to be able to do an acquisition and to be able to move meaningfully more premium forward into the system. We just got to let that play itself out here.

It is set up such that that capital at the reciprocal that we were able to prioritize generating will turn into, we believe, really meaningful value for shareholders as we just let this thing play itself out. That is some of the choices that we have made.

Unidentified speaker, Host, Stevens Annual Investment Conference: You’ve also announced a partnership with or a revamp in your partnership with Goosehead. What’s the TL;DR on that?

Matt Ehrlichman, CEO, Porch Group: I mean, we have partnerships with lots of insurance agencies. Goosehead is one of those insurance agencies. It’s a great partnership. It’s a valued partnership, but we have lots and lots of agencies just to make sure that’s clear. There are two things that are important there. One, really currently, the agency has been selling our Homeowners of America insurance product. One of the things that we’re expanding with agencies is to be able to bring the Porch Insurance product into the market as well. HOA is a bit lower price. I would say a more standard insurance product in the market. Porch Insurance is a bit up market. Includes home warranty, includes moving service. It’s really for us what we’re going to be positioning as being the best for home buyers.

From across lots of agencies, we’ve really expanded the relationship with them, let some agencies go through testing of Porch Insurance, and we’re very close here to actually letting them rip and letting them start to go sell Porch Insurance out into the market, which will just be another, it’ll be a tailwind for the business. Yeah, it’s a great relationship with those guys.

Unidentified speaker, Host, Stevens Annual Investment Conference: If you can elaborate on the Porch product, because you mentioned that the reciprocal is owned by the policyholders, what’s the relationship between buying the Porch product and being part of the ownership of their reciprocal, so to speak?

Matt Ehrlichman, CEO, Porch Group: The reciprocal structure, again, just like mutuals, it’s a lot of the insurance industry, like I’d mentioned, USAA, all these others where it’s a reciprocal, it’s owned by the policyholder, and then we manage that business. The reciprocal owns the Homeowners of America carrier and that product. It will now have a second product, has a second product with Porch Insurance. The reciprocal will have multiple insurance products that it’s able to bring out to the market.

Unidentified speaker, Host, Stevens Annual Investment Conference: Going back to the data, a common question that we hear is if inspection data is so impactful to underwriting as you have clearly laid out, why don’t traditional carriers use it?

Matt Ehrlichman, CEO, Porch Group: Yeah. At the end of the day, imagine a carrier that had to go spend $400 to hire an inspector to go to the home. They do not have $400 margin in their price point, right, to be able to go and deploy that. A lot of these carriers operate to a 100 combined ratio and are generating their economics through entry, through investment income. There is just not the economics that are available. They’d have to meaningfully change their price point, which would meaningfully slow down their conversion rates and their growth, their ability to grow premium. The math just doesn’t work for an insurance carrier to do it. There is what’s called an insurance inspection where they’ll spend $25-$40 for a subset of homes and have an insurance inspector walk the home.

That person, by definition, in terms of the dollars that’s spent, can afford to basically drive up to the home, walk around the home quickly, see if there’s any major issues with the outside. Are there any trees that are overhanging? Anything that’s obvious? Is there a trampoline? Is there a pool? That’s kind of what they can review. Everything else, everything that’s inside of the home, they just don’t have enough margin in the system to be able to spend that much money to go collect that data.

Unidentified speaker, Host, Stevens Annual Investment Conference: Beyond those topics, what are some other misconceptions you?

Matt Ehrlichman, CEO, Porch Group: This will be a perfect one from investors. What would you say?

Unidentified speaker, Host, Stevens Annual Investment Conference: Yeah. Yeah. It’s strange sitting up here and finally getting a thought. I love it.

Matt Ehrlichman, CEO, Porch Group: I would say the misconception is partly what you asked about with the implied, we’d beat and raise throughout the year, but their expectation was that you would grow through that. Our premium growth in Porch U. I think people tend to miss that there’s reasons maybe that you would preserve capital, and there’s things you can do with capital. We’re playing this in a marathon, not a sprint, right, as Matt mentioned. I think people, patience there, we’ll play that out. That’s one thing. Secondly, what we just talked about was the stock price having an influence on our operations. That’s not the case at all. We’ve updated our investor deck. This is out on our IR site now. You can see the clear difference.

We even do price scenarios where the stock could drop below $2, and we can still hit exactly what we’ve talked about over this next year and premium goals. Other than that, I think when people view it as a slowdown of growth, right, they ask questions, is it something market-driven, something like that? I think I’ll tell you just from our conversations internally with our insurance team, there’s never any mentions about competition. There’s nothing there. I think there was a misconception that maybe we slowed down growth or implied that we’re slowing down growth based on the view that maybe it’s something market-driven or there’s something in the backbook of insurance that makes us unsettled where we want to slow down. There’s just nothing there. I’d say those three things are probably the main thing.

There was a non-cash accounting charge tied to warrants that are expiring in December for the business, which was a $0.06 EPS hit. There was a $0.06 EPS miss because of that. I think the machines right after hours started trading hard off of that also. We’ve beaten and raised consistently. We’ve beaten and raised again this last quarter. We feel good in terms of what we’re producing in terms of the fundamentals of the business.

Unidentified speaker, Host, Stevens Annual Investment Conference: Oscar, I’d add one more thing. I think because housing has been in a trough for so long that people tend to lose sight. Those are real businesses, inspection businesses, Matt mentioned. It’s a true vertical SaaS business. I mean, they are powering the operations of the inspectors daily. We have Rhino, which is title insurance software. It’s used by 40% of the market. These are real businesses. A lot of them are transactional-based. You’re sitting here in a trough for multiple years, and you’re just kind of bumping along. We’ve gotten those businesses incredibly lean. We’ve been innovating rapidly and lots of new product innovations coming out where when the market turns, those businesses are primed to really move. The incrementals on those businesses are really, really high, right? I think people tend to lose sight of that.

I’d say that’s one other misconception is that people think it’s all insurance. Those are other real businesses. Yeah. On that point, what are the key milestones or catalysts that investors should be watching for as we move into 2026?

Matt Ehrlichman, CEO, Porch Group: I mean, next quarter, we’ll just lay out our 2026 plans. There might be other fun stuff to talk about. We think we’re set up, like I said, to have a really successful year organically and otherwise. As we look ahead, certainly we’ll just continue to kind of lay out periodically and periodic investor day, be able to lay out kind of the multi-year plans, that mid-year forecast, and the following year. I’ve said this repeatedly, but I do think these next set of years are going to be really fun years for us. We’ve got really good line of sight at 2026 and at 2027, how to be able to control the growth. We think that we think it’s going to be a really special time for the company. For us, it’s just execute. That’s the game. Just go and work each year. Yeah, go ahead.

Could you frame your data set up against Clue, which is inside of LexisNexis, the various ISO stuff?

Yeah. Our carrier uses both those data sets as do most carriers. Those are great comps for what our data should become, where it just becomes standard in the industry. They’re very different data sets, obviously, in terms of kind of what our data is versus what those data sets are. The various data, really important to be able to get understanding of the value of the home, what the value of repairs would be, if there are claims in this particular geography or for this particular home, variety of other data sets, obviously. That’s what that team is doing, is to bring out Home Factors as another core data set in the industry that just helps underwriters and carriers improve their margins at the end of the day, improve their pricing. I think those are really good examples, though, because at the beginning, those weren’t used.

You start to use it, and then pretty soon, everybody has to use it, right? Those are just kind of staples, I would say, in the industry. It takes time, though. You could see from those companies, too, especially in those earlier years, it takes time to be able to go and get the market tipped. Once you get it tipped, I mean, everybody really has to use that data to be able to be competitive.

Are there other databases like those too? Is there a case for you to mimic that? There’s three credit bureaus for a reason, right? Banks want it that way. Is there a spot for you on those types of business models or a contributory alliance database?

We are debating. There are other companies. Those would be some of the big companies, but there’s a variety of data providers. Insurance companies are spending, I think it’s like $8 billion a year on data right now, something like that. Verisk is a 50% plus just even that margin business. I mean, there’s just not a lot of variable costs. That’s the reality as you scale those things up. We are debating internally, do you distribute this through third parties? Do you partner with those types of companies who have all the relationships and you let them distribute it, or do you go to market? It’s really as a short-term versus long-term trade-off because obviously, you can get out in the market very rapidly. You’re giving up a chunk of your permanent margins as you go do that.

You can take longer, you can build your own go-to-market, you can get out there. Obviously, that’s going to be a longer process, but then you retain all the economics. I’ve indicated kind of how I’m thinking about the opportunity and kind of the I’m very long-term oriented, what’s going to go build a really, really large business over time. You’re always pragmatic about it too, right? Depends on kind of the economic negotiation in terms of how much margin are you really giving up. We’ll continue to debate those types of things. It is an option for us if we wanted to go out to market faster to use distribution partners. Yeah.

How do you manage claims? And do you have any sort of, "Hey, we’re rated A-plus in claims?

Great question. Yeah. We are A-rated, which is the highest rating, excellent by Demotech. We acquired a company, Homeowners of America, that before we had acquired it, it had been in business for more than 10 years prior to that. With that, we brought all of the, I would say, core infrastructure of a well-run carrier. A claims operation, as an example. We’ve upgraded the team over time, certainly. We brought in the person that had led claims at Progressive, who leads that operation for us, and he’s built out that team. I would say we do a very good job from a claims perspective. What very good means is you treat, I mean, this is the product that we’re selling, right?

You have to be able to consistently deliver so you can build confidence, not just with the rating agency or with consumers, but with agents as well. Agents need to know that you are going to be able to deliver for their customers so they want to go sell you, right, at the end of the day and leave with you.

That’s what he calls the agent when he gets.

That’s exactly right. You have to build trust with the agent. You have to deliver on your promise, but you have to also not overpay too, right? It is the balance of those treating customers appropriately and fairly with care. I think that team has actually done a really good job overall and will continue to. It is all about the people. We have got the right people in place that are leading that operation. Yeah.

How many carriers are you testing your data with now? Have you talked about that?

We have mentioned a number, have we?

Elements of sales cycle.

We talked about there are many that we’ve talked about that we are ahead of our goals that the team had in terms of kind of the number that we’re in testing. There’s different elements of the sales cycle. There’s the pipeline building phase. There’s then get them into testing, which that can take actually a small set of months. It can take a long set of months. It varies actually quite dramatically. Sometimes the smaller carriers don’t have a lot of data science capabilities, and so they will actually give us a subset of their claims history, and we will go run the test, and we’ll give them the feedback. The larger carriers do it themselves, where we will give them a subset of our data, and they’ll go run the test. The next part of the sales cycle is the contracting process.

That whole testing phase has gone really well. We said that publicly several times. We’re very happy with the results. The contracting process, and everybody told me this was going to be true, it just takes a long time in this industry. They are slow-moving, which, as an aside, is a real competitive advantage for us just to have velocity in this industry of these fairly slow-moving incumbents. Still, that’s the reality as you go through contracting with them. You go through implementation, where you’re then bringing the data, integrating it in with their policy admin system, bringing it into their rate filings. We’ve got carriers at all these different phases. The process, we’ve said that we didn’t certainly expect anything for 2025.

We do not expect it to be a meaningful impact for 2026, but all the signs in terms of the ramp show that it can start to be something that really does show up for 2027 as we look ahead.

Unidentified speaker, Host, Stevens Annual Investment Conference: Just to add to that, when we run the—this is what gets us so excited—is when we run those tests and look at the historical data, we can say, "Well, this was what it might have looked like if you were to utilize this," right? When you think about 5 basis points, 10 basis points of savings on loss ratios on billions of dollars of spend, it becomes very meaningful. A lot of times with carriers, naturally, you’re going to be kind of risk-averse. You’re working; it just takes time to fully implement that into your underwriting, how you make the sausage, so to speak. It is just a process.

Matt Ehrlichman, CEO, Porch Group: All right. Great. Matt and John, thanks again for joining us.

Thanks.

Thanks to everyone for being part of the discussion.

Hey, good job. Thanks.

Thank you.

Good stuff.

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