Porch Group, Inc.

(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 increased by $6.9 million, or 6%, from $111.2 million in the three months ended September 30, 2024, to $118.1 million in the three months ended September 30, 2025. The increase in revenue was primarily a result of higher premium per policy, partially offset by a reduction in policies in force. Revenue related to the Porch Shareholder Interest was $115.1 million in the three months ended September 30, 2025, as detailed in the following table.

Cost of revenue. Total consolidated cost of revenue including the Reciprocal decreased by $18.3 million, or 37%, from $49.5 million in the three months ended September 30, 2024, to $31.1 million in the three months ended September 30, 2025. The decrease was primarily the result of a reduction in weather related claims at the Reciprocal. As a percentage of revenue, cost of revenue represented 26% of revenue in the three months ended September 30, 2025, compared with 44% in the three months ended September 30, 2024. Cost of revenue at the Reciprocal 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. There were fewer weather related claims at the Reciprocal in the third quarter of 2025 compared to the same quarter of 2024. Cost of revenue related to Porch Shareholder Interest was $20.8 million in the three months ended September 30, 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 increased by $2.9 million, or 11%, from $27.2 million in the three months ended September 30, 2024, to $30.2 million in the three months ended September 30, 2025. The increase is primarily driven by the timing of direct mail advertising expense. As a percentage of revenue, selling and marketing expenses represented 26% of revenue in the three months ended September 30, 2025, compared with 24% in the three months ended September 30, 2024. Selling and marketing expense related to Porch Shareholder Interest was $54.9 million in the three months ended September 30, 2025, as detailed in the table below. Porch Shareholder Interest selling and marketing expense is greater than the consolidated amount because it includes fees and expenses related to reinsurance contracts with the Reciprocal, which are eliminated during the consolidation process. 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 increased by $2.8 million, or 11%, from $24.3 million in three months ended September 30, 2024, to $27.1 million in the three months ended September 30, 2025, primarily due to increased employee benefit costs, partially offset by savings from reduced reliance on third party consultants and centralizing administrative functions. General and administrative expenses related to Porch Shareholder Interest were $24.4 million in the three months ended September 30, 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.

Interest expense. Interest expense increased by $3.3 million, or 31%, from $10.6 million in the three months ended September 30, 2024, to $14.0 million in the three months ended September 30, 2025. The increase was primarily driven by the May 2025 exchange of our 0.75% 2026 Notes for newly issued 9.00% 2030 Notes. The higher coupon rate associated with the 2030 Notes contributed to the overall increase in interest expense during the period. The following table details the components of interest expense, on the unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss):

Change in fair value of private warrant liability. Change in fair value of the private warrant liability was $5.7 million (loss) for the three months ended September 30, 2025, and less than $0.1 million for the three months ended September 30, 2024. The change in fair value was primarily related to an increase in the market value of our common stock which exceeded the exercise price of the private warrants compared to the same period in the prior year during which the exercise price exceeded the market value of our common stock. The change in fair value of private warrant liability relates entirely to Porch Shareholder Interest.

Change in fair value of derivatives. The fair value of the derivative liability decreased in the three months ended September 30, 2025, resulting in a gain, and increased during the three months ended September 30, 2024, resulting in a loss. 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 relates 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 $22.5 million gain on extinguishment of debt during the three months ended September 30, 2024, compared to $0.4 million during the three months ended September 30, 2025. The difference in gain amount when compared to prior year relates to the lower effective price of the repurchase last year. See Note 9 in the unaudited Notes to Condensed Consolidated Financial Statements. The gain on extinguishment of debt related entirely to Porch Shareholder Interest.

Adjusted EBITDA (Loss). Adjusted EBITDA (Loss) for the three months ended September 30, 2025, was $20.6 million, a $3.7 million improvement from Adjusted EBITDA (Loss) of $16.9 million for the same period in 2024. The year-over year improvement in Adjusted EBITDA (Loss) was primarily attributable to the shift in the business model from carrier to the manager of the Reciprocal, producing higher margin management fees. Our Insurance Services segment benefited from the receipt of commissions and fees related to 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 and cost in our Software & Data and Consumers Services segments also declined due to reduced workforce, 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 the four segments as well as corporate expenses and eliminations.

(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.

(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.