Porch Group, Inc.

In our early years, we raised capital primarily through equity investments. As a publicly traded company, we have relied on convertible debt as our primary source of capital. As of March 31, 2025, we had $507.1 million of aggregate principal amount outstanding in convertible notes and promissory notes.

Based on our current operating and growth plan, management believes cash and cash equivalents and liquid investments at March 31, 2025, are sufficient to finance our operations, planned capital expenditures, working capital requirements, and debt service obligations for at least the next 12 months. As our operations evolve and we continue our growth strategy, including through acquisitions, we may elect or need to obtain alternative sources of capital, and we may finance additional liquidity needs in the future through one or more equity or debt financings. We may not be able to obtain equity or additional debt financing in the future when needed or, if available, the terms may not be satisfactory to us or could be dilutive to our stockholders.

We may, at any time and from time to time, seek to retire or purchase our outstanding debt or equity through cash purchases and/or exchanges for equity or debt, in open-market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will be upon such terms and at such prices as we may determine, and will depend on prevailing market conditions, liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

We incurred net losses historically, resulting in an accumulated deficit of $636.5 million at March 31, 2025, and $754.9 million at December 31, 2024. Our results of operations during the three months ended March 31, 2025, were favorable and reduced the accumulated deficit since December 31, 2024.

Porch Group, Inc. is a holding company that transacts the majority of its business through operating subsidiaries, including subsidiaries that are involved in providing reinsurance and management services for the Reciprocal which is an insurance carrier. Consequently, our ability to pay dividends and expenses is largely dependent on dividends or other distributions from our subsidiaries. The insurance industry is highly regulated, and insurance businesses are restricted by statute as to the amount of dividends they may pay without the prior approval of regulatory authorities.

Liquidity and Capital Resources of Porch Shareholder Interest

The following table provides the components of cash and cash equivalents, restricted cash and cash equivalents, and investments of Porch Shareholder Interest.

(1)Includes $9.2 million of treasury bills as of March 31, 2025, held as collateral for the benefit of the Reciprocal temporarily while in the process of converting to short-term investments. See Note 1 in the unaudited Notes to Condensed Consolidated Financial Statements for a description of the nature of restrictions.

2026 Convertible Notes. As of March 31, 2025, outstanding principal was $173.8 million on our 0.75% Convertible Senior Notes due on September 15, 2026 (the “2026 Notes”). During 2024, we repurchased a total of $51.2 million aggregate principal amount of our 2026 Notes, including $8.0 million in the first quarter for $3.0 million, and $43.2 million through the rest of the year for $20.2 million, representing 45.3% of par value, in total. We recognized a total gain on extinguishment of debt in 2024 of $27.4 million, of which $4.9 million was recognized in the first quarter of 2024. We may redeem for cash all or any portion of the 2026 Notes, at our option if the last reported sale price of the common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide a notice of redemption, at a redemption price equal to 100% of the principal amount of the 2026 Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the 2026 Notes. The 2026 Notes are convertible at an initial conversion rate of 39.9956 shares of common stock per one thousand dollars principal amount of 2026 Notes, which is equivalent to an initial conversion price of approximately $25.00 per share of common stock (the “Conversion Rate”). The Conversion Rate is subject to customary adjustments for certain events as described in the indenture governing the 2026 Notes. We may settle the conversion option obligation with cash, shares of our common stock, or any combination of cash and shares of our common stock. Holders of the 2026 Notes may convert the 2026 Notes at their option (in whole or in part) on or after June 15, 2026, until the close of business on the second trading day immediately preceding the maturity date of September 15, 2026. In addition, holders of the 2026 Notes may convert the 2026 Notes at their option (in whole or in part) at any time prior to the close of business on the business day immediately preceding June 15, 2026, only under certain circumstances described in our Annual Report for the year ended December 31, 2024.

2028 Convertible Notes. As of March 31, 2025, outstanding principal was $333.3 million on our 6.75% Senior Secured Convertible Notes due in 2028 (the “2028 Notes”). The 2028 Notes are convertible into cash, shares of common stock, or a combination of cash and shares of common stock at our election at an initial conversion rate of 39.9956 shares of common stock per one thousand dollars principal amount of the 2028 Notes, which is equivalent to an initial conversion price of approximately $25.00 per share. The 2028 Notes will mature on October 1, 2028, unless earlier repurchased, redeemed or converted. Prior to the close of business on the business day immediately preceding July 1, 2028, the 2028 Notes will be convertible at the option of the holders only upon the satisfaction of certain conditions and during certain periods. Thereafter, until the close of business on the second scheduled trading day immediately preceding the maturity date, the 2028 Notes will be convertible at the option of the holders at any time regardless of these conditions. Additionally, if more than $30.0 million aggregate principal amount of 2026 Notes remain outstanding on June 14, 2026, the holders of the 2028 Notes have the right to require us to repurchase for cash on June 15, 2026, all or any portion of the 2028 Notes, in principal amounts of $1,000 or an integral multiple thereof, at a repurchase price equal to 106.5% of the principal amount of the 2028 Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the repurchase date.

Liquidity and Capital Resources of the Reciprocal (Consolidated VIE)

The following table provides the components of cash and cash equivalents, restricted cash and cash equivalents, and investments of the Reciprocal.

(1)See Note 1 in the unaudited Notes to Condensed Consolidated Financial Statements for a description of the nature of restrictions.

Insurance companies in the United States are required by state law to maintain a minimum level of policyholder’s surplus. As of March 31, 2025, the Reciprocal’s total statutory surplus combined with non-admitted assets was $197.6 million. Insurance regulators in the states in which the Reciprocal operates have a risk-based capital standard designed to identify property and casualty insurers, or reinsurers, that may be inadequately capitalized based on inherent risks of the insurer’s assets and liabilities and its mix of net written premium. Insurers falling below a calculated threshold may be subject to varying degrees of regulatory action. See Note 12 in the unaudited Notes to Condensed Consolidated Financial Statements for a description of our reinsurance programs.

Cash Flow Information

The following table provides a summary of consolidated cash flow information for the three months ended March 31, 2025 and 2024:

Operating Cash Flows

Net cash provided by (used in) operating activities was $(11.2) million for the three months ended March 31, 2025. Net cash used in operating activities was primarily driven by timing of changes in working capital, particularly ceded insurance premiums payable as settlement terms with reinsurance partners changed from quarterly to monthly.

Net cash provided by (used in) operating activities was $8.5 million for the three months ended March 31, 2024. Net cash provided by (used in) operating activities consists of primarily of cash flow from the non-recurring cash receipt of $25 million related to the Aon agreement (see Note 12 in the notes to the unaudited condensed consolidated financial statements) partially offset by the net loss of $13.4 million during the three months ended March 31, 2024.

Investing Cash Flows

Net cash provided by (used in) investing activities was $19.4 million for the three months ended March 31, 2025. Net cash provided by (used in) investing activities is primarily related to proceeds from maturities and sales of investments of $24.9 million offset by purchases of investments of $40.9 million and investments in developing internal-use software of $3.3 million.

Net cash provided by (used in) investing activities was $12.7 million for the three months ended March 31, 2024. Net cash provided by (used in) investing activities is primarily related to proceeds from sale of EIG of $10.3 million and maturities and sales of investments of $4.7 million offset by investments in developing internal-use software of $2.3 million.

Financing Cash Flows

Net cash used in financing activities was $(0.2) million for the three months ended March 31, 2025. Net cash used in financing activities is primarily related to a payment of a promissory note of $0.2 million.

Net cash used in financing activities was $2.5 million for the three months ended March 31, 2024. Net cash used by financing activities is primarily related to the repurchase of the 2026 Notes of $3.0 million.

Supplemental Cash Flow Information

The following table provides further detail of cash flows of Porch Group and cash flows of the Reciprocal Segment for the three months ended March 31, 2025.

(1)Porch Shareholder Interest net cash provided by or used in operating, investing, and financing activities are non-GAAP measures. See Non-GAAP Financial Measures section. This table reconciles these non-GAAP measures to the nearest GAAP measures in the “Consolidated” column.