Porch Group, Inc.

(1)Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by Porch Shareholder Interest Revenue. Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP measures. See Non-GAAP Financial Measures section for definitions.

Revenue. Total consolidated revenue including the Reciprocal increased by $16.4 million, or 16%, from $104.7 million in the three months ended March 31, 2025, to $121.1 million in the three months ended March 31, 2026. The increase in revenue resulted from more Reciprocal Policies Written, partially offset by a slight reduction in RWP per Policy Written. See Key Performance Measures and Operating Metrics for definition of Reciprocal Policies Written and RWP per Policy Written metrics. Revenue related to the Porch Shareholder Interest was $109.4 million in the three months ended March 31, 2026, as detailed in the following table.

Cost of revenue. Total consolidated cost of revenue including the Reciprocal decreased by $9.0 million, or 23%, from $39.3 million in the three months ended March 31, 2025, to $30.3 million in the three months ended March 31, 2026. The decrease was primarily the result of lower direct losses in the Reciprocal Segment. As a percentage of revenue, cost of revenue represented 25% of revenue in the three months ended March 31, 2026, compared with 38% in the three months ended March 31, 2025. Cost of revenue related to Porch Shareholder Interest was $18.3 million in the three months ended March 31, 2026, 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 $10.5 million, or 36%, from $29.5 million in the three months ended March 31, 2025, to $40.1 million in the three months ended March 31, 2026. The increase is primarily driven by higher commission rates to third-party insurance agencies. As a percentage of revenue, selling and marketing expenses represented 33% of revenue in the three months ended March 31, 2026, compared with 28% in the three months ended March 31, 2025. Selling and marketing expense related to Porch Shareholder Interest was $52.5 million in the three months ended March 31, 2026, 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.

Interest expense. Interest expense increased by $3.4 million, or 30%, from $11.2 million in the three months ended March 31, 2025, to $14.6 million in the three months ended March 31, 2026. 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 derivatives. The gain recognized for the change in fair value of derivatives decreased in the three months ended March 31, 2026, compared to the three months ended March 31, 2025. The fair value of derivatives 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.

Other income, net. Total consolidated other income, net, including the Reciprocal, decreased by $7.0 million from $8.4 million in the three months ended March 31, 2025, to $1.4 million in the three months ended March 31, 2026. The decrease is primarily due to non-recurring recovery on reinsurance contracts that occurred in the three months ended March 31, 2025. Other income, net, related to Porch Shareholder Interest was $4.9 million in the three months ended March 31, 2026. Porch Shareholder Interest other income, net, is greater than the consolidated amount because it includes interest income on surplus notes with the Reciprocal, which is eliminated during the consolidation process. Porch Shareholder Interest Other Income is a non-GAAP measure. See Non-GAAP Financial Measures section for definition.

Income tax expense. Income tax provision of $1.8 million and income tax provision of $0.9 million were recognized for the three months ended March 31, 2026 and 2025, respectively, and the effective tax rates for these periods were 48.2% and 19.5%, respectively. The difference between our effective tax rates for the three months ended March 31, 2026 and 2025, and the U.S. statutory rate of 21% was primarily attributable to the impact of a full valuation allowance on our net deferred tax assets. Our consolidated effective tax rate increased for the three months ended March 31, 2026, compared to the same period in the prior year primarily due to a change in the mix of income between the Reciprocal and Porch, which are treated as separate reporting entities for income tax accounting purposes.

Adjusted EBITDA. Adjusted EBITDA (Loss) for the three months ended March 31, 2026, was $19.7 million, a $2.8 million improvement from Adjusted EBITDA (Loss) of $16.9 million for the same period in 2025. The year-over year improvement in Adjusted EBITDA (Loss) was primarily due to an increase in fee revenue associated with increases in RWP and Reciprocal Policies Written, increased reinsurance premiums from increased ceding from the Reciprocal Segment with the new reinsurance programs beginning on April 1, 2025, and strong cost control across the business including lower legal and accounting professional fees. These increases were offset by a increase in selling and marketing expense resulting from higher commission rates and increased ceding from the Reciprocal Segment following updates to its reinsurance program on April 1, 2025. 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.

(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.

(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.