Porch Group, Inc.
For the period ended Mar 31, 2025. Filed May 8, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 8, 2025
Extracted filing text, with the paragraph anchors used by the comparison.
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Consolidated Results
| Three Months Ended March 31, | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 2025 · 2024 · $ Change · % Change | |||||||||
| (dollar amounts in thousands) | |||||||||
| Revenue | $104,745 | $115,443 | $(10,698) | (9)% | |||||
| Operating expenses: | |||||||||
| Cost of revenue | 39,297 | 78,366 | (39,069) | (50)% | |||||
| Selling and marketing | 29,516 | 33,948 | (4,432) | (13)% | |||||
| Product and technology | 13,201 | 12,292 | 909 | 7% | |||||
| General and administrative | 23,997 | 25,505 | (1,508) | (6)% | |||||
| Total operating expenses | 106,011 | 150,111 | (44,100) | (29)% | |||||
| Operating loss | (1,266) | (34,668) | 33,402 | (96)% | |||||
| Other income (expense): | |||||||||
| Interest expense | (11,246) | (10,787) | (459) | 4% | |||||
| Change in fair value of private warrant liability | (732) | (425) | (307) | 72% | |||||
| Change in fair value of derivatives | 6,673 | 1,483 | 5,190 | 350% | |||||
| Gain on extinguishment of debt | — | 4,891 | (4,891) | (100)% | |||||
| Investment income and realized gains and losses, net of investment expenses | 2,810 | 3,644 | (834) | (23)% | |||||
| Other income, net | 8,400 | 22,678 | (14,278) | (63)% | |||||
| Total other income | 5,905 | 21,484 | (15,579) | (73)% | |||||
| Income (loss) before income taxes | 4,639 | (13,184) | 17,823 | (135)% | |||||
| Income tax provision | (903) | (178) | (725) | 407% | |||||
| Net income (loss) | 3,736 | (13,362) | 17,098 | (128)% | |||||
| Less: Net loss attributable to the Reciprocal | (4,659) | — | (4,659) | N/A | |||||
| Net income (loss) attributable to Porch | $8,395 | $(13,362) | $21,757 | (163)% | |||||
| Net income (loss) | $3,736 | $(13,362) | $17,098 | (128)% | |||||
| Net loss (income) attributable to the Reciprocal | 4,659 | — | 4,659 | N/A | |||||
| Interest expense | 11,195 | 10,787 | 408 | 4% | |||||
| Income tax provision | 14 | 178 | (164) | (92)% | |||||
| Depreciation and amortization | 5,024 | 6,317 | (1,293) | (20)% | |||||
| Gain on extinguishment of debt | — | (4,891) | 4,891 | (100)% | |||||
| Other income, net | (7,162) | (21,502) | 14,340 | (67)% | |||||
| Stock-based compensation expense | 4,910 | 5,368 | (458) | (9)% | |||||
| Mark-to-market gains | (5,969) | (7) | (5,962) | 85,171% | |||||
| Restructuring costs | 319 | 157 | 162 | 103% | |||||
| Acquisition and other transaction costs | 135 | 167 | (32) | (19)% | |||||
| Adjusted EBITDA (Loss) | (1) | $16,861 | $(16,788) | $33,649 | (200)% | ||||
| Adjusted EBITDA (Loss) Margin | (1) | 16% | (15)% | ||||||
(1)Adjusted EBITDA (Loss) and Adjusted EBITDA (Loss) Margin are non-GAAP measures. See Non-GAAP Financial Measures section for definitions.
Revenue. Total consolidated revenue including the Reciprocal decreased by $10.7 million, or 9%, from $115.4 million in the three months ended March 31, 2024, to $104.7 million in the three months ended March 31, 2025. The decrease in revenue was primarily a result of higher reinsurance ceding under the 2024 reinsurance program that began on April 1, 2024. Revenue related to the Porch Shareholder Interest was $84.5 million in the three months ended March 31, 2025, as detailed in the following table.
Cost of revenue. Total consolidated cost of revenue including the Reciprocal decreased by $39.1 million, or 50%, from $78.4 million in the three months ended March 31, 2024, to $39.3 million in the three months ended March 31, 2025. The decrease was primarily the result of higher reinsurance ceding under the 2024 reinsurance program and a reduction in weather related claims. As a percentage of revenue, cost of revenue represented 38% of revenue in the three months ended March 31, 2025, compared with 68% in the three months ended March 31, 2024. Cost of revenue typically exhibits seasonal trends, with lower costs in the first and fourth quarters and higher costs in the second and third quarters, primarily due to increased frequency and severity of weather-related events and timing of insurance-related expenses. However, there were weather events in the first quarter of 2024 that were inconsistent wit historical seasonal trends. Cost of revenue related to Porch Shareholder Interest was $15.5 million in the three months ended March 31, 2025, as detailed in the table below. Porch Shareholder Interest Cost of Revenue is a non-GAAP measure. See Non-GAAP Financial Measures section for definition.
Selling and marketing. Total consolidated selling and marketing expenses including the Reciprocal decreased by $4.4 million, or 13%, from $33.9 million in the three months ended March 31, 2024, to $29.5 million in the three months ended March 31, 2025. The decrease is primarily driven by a reduction in the amortization of deferred policy acquisition costs, reflecting a shift away from policies written under historically higher commission rates. As a percentage of revenue, selling and marketing expenses represented 28% of revenue in the three months ended March 31, 2025 compared with 29% in the three months ended March 31, 2024. Selling and marketing expense related to Porch Shareholder Interest was $32.9 million in the three months ended March 31, 2025, as detailed in the table below. Porch Shareholder Interest Selling and Marketing is a non-GAAP measure. See Non-GAAP Financial Measures section for definition
General and administrative. Total consolidated general and administrative expenses including the Reciprocal decreased by $1.5 million, or 6%, from $25.5 million in three months ended March 31, 2024, to $24.0 million in the three months ended March 31, 2025, primarily due to a $1.1 million non-cash loss on revaluation of contingent considerations during the three months ended March 31, 2024. General and administrative expenses related to Porch Shareholder Interest were $22.9 million in the three months ended March 31, 2025, as detailed in the table below. Porch Shareholder Interest General and Administrative is a non-GAAP measure. See Non-GAAP Financial Measures section for definition
Change in fair value of derivatives. The fair value of the derivative liability increased more in the three months ended March 31, 2025, compared to the three months ended March 31, 2024. The value is driven by various factors, including the fair value of the underlying debt, stock price, and assumptions regarding timing of possible repurchase events. See Note 6 in the unaudited Notes to Condensed Consolidated Financial Statements. The change in fair value of derivatives related entirely to Porch Shareholder Interest.
Gain on extinguishment of debt. In connection with the repurchase of a portion of the 2026 Notes, we recognized a $4.9 million gain on extinguishment of debt during the three months ended March 31, 2024. There was no corresponding debt extinguishment during the three months ended March 31, 2025. See Note 9 in the notes to the unaudited condensed consolidated financial statements. The gain on extinguishment of debt related entirely to Porch Shareholder Interest.
Other income, net. Total consolidated other income, net, including the Reciprocal decreased by $14.3 million from $22.7 million in the three months ended March 31, 2024, to $8.4 million in the three months ended March 31, 2025. The decrease is primarily driven by a $14.9 million gain on settlement of contingent consideration and $5.2 million loss on sale of our EIG business, both of which occurred during the three months ended March 31, 2024, with no comparable events during the three months ended March 31, 2025. Additionally, recoveries on reinsurance contracts were approximately $4.5 million lower in the three months ended March 31, 2025 compared to the three months ended March 31, 2024. Other income, net, related to Porch Shareholder Interest was $7.2 million in the three months ended March 31, 2025, as detailed table below. Porch Shareholder Interest Other Income is a non-GAAP measure. See Non-GAAP Financial Measures section for definition
Adjusted EBITDA (Loss). Adjusted EBITDA (Loss) for the three months ended March 31, 2025, was $16.9 million, a $33.6 million improvement from Adjusted EBITDA (Loss) of $(16.8) million for the same period in 2024. The improvement in Adjusted EBITDA (Loss) for the first quarter of 2025 was primarily driven by the shift in the business model from carrier to the manager of the Reciprocal, producing higher margin management fees and a reduction in weather-related claims. Our Insurance Services segment benefited from the receipt of management fees from the Reciprocal Segment which began in January 2025 and an increase in interest income from the surplus note due from the Reciprocal Segment. Corporate costs also declined due to less reliance on third party consultants, centralizing administrative functions, and shifting hiring to target lower-cost locations.. Adjusted EBITDA (Loss) is a non-GAAP measure. See Non-GAAP Financial Measures section for definition.
The following tables summarize operating results of our four segments as well as corporate expenses and eliminations.
| Insurance Services · Software & Data · Consumer Services · Corporate · Eliminations (1) · Porch Shareholder Interest Subtotal (2) · Reciprocal Segment · Eliminations Related to Reciprocal Segment (3) · Consolidated | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | $49,806 | $21,999 | $14,721 | $— | $(1,980) | $84,546 | $39,938 | $(19,739) | $104,745 | ||||||
| Cost of revenue | 7,481 | 5,506 | 2,490 | — | (5) | 15,472 | 26,249 | (2,424) | 39,297 | ||||||
| Gross Profit | 42,325 | 16,493 | 12,231 | — | (1,975) | 69,074 | 13,689 | (17,315) | 65,448 | ||||||
| Gross Margin | 85% | 75% | 83% | —% | 100% | 82% | 34% | 88% | 62% | ||||||
| Less: Operating expenses: | |||||||||||||||
| Selling and marketing | 15,527 | 9,169 | 9,798 | 408 | (1,975) | 32,927 | 7,411 | (10,822) | 29,516 | ||||||
| Product and technology | 2,451 | 4,288 | 1,131 | 4,196 | — | 12,066 | 1,135 | — | 13,201 | ||||||
| General and administrative | 4,377 | 2,508 | 3,301 | 12,701 | — | 22,887 | 7,603 | (6,493) | 23,997 | ||||||
| Operating income (loss) | (17,305) | — | 1,194 | (2,460) | — | (1,266) | |||||||||
| Other expense (income) | (4,994) | (9) | (93) | (2,119) | — | (7,215) | 1,310 | — | (5,905) | ||||||
| Income (loss) before income taxes | (15,186) | — | 8,409 | (3,770) | — | 4,639 | |||||||||
| Income tax benefit (provision) | (14) | — | (14) | (889) | — | (903) | |||||||||
| Net income (loss) | $(15,200) | $— | $8,395 | $(4,659) | $— | 3,736 | |||||||||
| Less: Net loss attributable to the Reciprocal | (4,659) | ||||||||||||||
| Net income attributable to Porch | $8,395 | ||||||||||||||
| Adjusted EBITDA (Loss) Reconciliation: | |||||||||||||||
| Net income (loss) | $(15,200) | $8,395 | $3,736 | ||||||||||||
| Less Reconciling items: | |||||||||||||||
| Net loss attributable to the Reciprocal | — | (4,659) | |||||||||||||
| Depreciation and amortization | (91) | (3,479) | (885) | (569) | — | (5,024) | (5,024) | ||||||||
| Stock-based compensation expense | (679) | (556) | (388) | (3,287) | — | (4,910) | (4,910) | ||||||||
| Interest expense | — | (2) | — | (11,193) | — | (11,195) | (11,195) | ||||||||
| Income tax provision | — | — | — | (14) | — | (14) | (14) | ||||||||
| Mark-to-market gains (losses) | — | — | 28 | 5,941 | — | 5,969 | 5,969 | ||||||||
| Recoveries of Losses on Reinsurance Contracts | — | — | — | 7,100 | — | 7,100 | 7,100 | ||||||||
| Other gains and losses | (75) | 3 | 9 | (329) | — | (392) | (392) | ||||||||
| Adjusted EBITDA (Loss) (4) | $25,809 | $4,571 | $(670) | $(12,849) | $16,861 | $16,861 | |||||||||
(1)The “Eliminations” column represents eliminations of transactions between the Insurance Services segment, Software & Data segment, Consumer Services segment, and Corporate column.
(2)The “Porch Shareholder Interest Subtotal” column includes non-GAAP measures that are used by management to evaluate performance. Porch Shareholder Interest includes the Insurance Services, Software & Data, and Consumer Services segments as well as Corporate expenses and applicable intercompany eliminations. See Non-GAAP Financial Measures section.
(3)The “Eliminations Related to Reciprocal Segment” column represents eliminations of transactions between the Reciprocal Segment and other segments or Corporate.
(4)Adjusted EBITDA (Loss) is a non-GAAP measure. See Non-GAAP Financial Measures section for definition.
| Insurance Services · Software & Data · Consumer Services · Corporate · Eliminations (1) · Subtotal · Reciprocal Segment · Eliminations Related to Reciprocal Segment (2) · Consolidated | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | $47,359 | $21,134 | $16,186 | $— | $(263) | $84,416 | $47,495 | $(16,468) | $115,443 | ||
| Cost of revenue | 25,409 | 5,654 | 3,533 | — | (18) | 34,578 | 46,607 | (2,819) | 78,366 | ||
| Gross Profit | 21,950 | 15,480 | 12,653 | — | (245) | 49,838 | 888 | (13,649) | 37,077 | ||
| Gross Margin | 46% | 73% | 78% | —% | 93% | 59% | 2% | 83% | 32% | ||
| Less: Operating expenses: | |||||||||||
| Selling and marketing | 16,018 | 10,002 | 8,377 | 647 | (245) | 34,799 | 12,798 | (13,649) | 33,948 | ||
| Product and technology | 362 | 4,215 | 927 | 5,320 | — | 10,824 | 1,468 | — | 12,292 | ||
| General and administrative | 1,643 | 4,538 | 3,599 | 13,470 | — | 23,250 | 2,255 | — | 25,505 | ||
| Operating income (loss) | (19,437) | — | (19,035) | (15,633) | — | (34,668) | |||||
| Other expense (income) | (10,313) | (14,917) | (160) | 4,795 | — | (20,595) | (889) | — | (21,484) | ||
| Income (loss) before income taxes | (24,232) | — | 1,560 | (14,744) | — | (13,184) | |||||
| Income tax benefit (provision) | (178) | — | (178) | — | — | (178) | |||||
| Net income (loss) | $(24,410) | $— | $1,382 | $(14,744) | $— | $(13,362) | |||||
| Adjusted EBITDA (Loss) Reconciliation: | |||||||||||
| Net income (loss) | $(24,410) | $1,382 | $(13,362) | ||||||||
| Less: Reconciling items: | |||||||||||
| Depreciation and amortization | (993) | (3,792) | (1,091) | (434) | — | (6,310) | (7) | — | (6,317) | ||
| Stock-based compensation expense | (343) | (1,072) | (500) | (3,453) | — | (5,368) | — | — | (5,368) | ||
| Gain (loss) on extinguishment of debt | — | — | — | 4,891 | — | 4,891 | — | — | 4,891 | ||
| Interest expense | — | (8) | (11) | (10,573) | — | (10,592) | (2,035) | 1,840 | (10,787) | ||
| Income tax provision | — | — | — | (178) | — | (178) | — | — | (178) | ||
| Mark-to-market gains (losses) | — | (909) | (142) | 1,058 | — | 7 | — | — | 7 | ||
| Recoveries of Losses on Reinsurance Contracts | 8,664 | — | — | 2,981 | — | 11,645 | — | — | 11,645 | ||
| Other gains and losses | (3) | 14,869 | 171 | (3,675) | — | 11,362 | 11 | (1,840) | 9,533 | ||
| Adjusted EBITDA (Loss) (3) | $6,915 | $2,554 | $1,483 | $(15,027) | $(4,075) | $(16,788) | |||||
(1)The “Eliminations” column represents eliminations of transactions between the Insurance Services segment, Software & Data segment, Consumer Services segment, and Corporate column.
(2)The “Eliminations Related to Reciprocal Segment” column represents eliminations of transactions between the Reciprocal Segment and other segments or Corporate.
(3)Adjusted EBITDA (Loss) is a non-GAAP measure. See Non-GAAP Financial Measures section for definition.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.