Porch Group, Inc.

(1)Adjusted EBITDA (Excluding Reciprocal) is a non-GAAP measure. See Non-GAAP Financial Measures section for definition.

Revenue. Total consolidated revenue including the Reciprocal increased by $47.8 million, or 13%, from $358.1 million in the nine months ended September 30, 2025, to $405.9 million in the nine months ended September 30, 2026. Approximately 13% of the increase in revenue resulted from increased premium revenue, net of ceded premiums, and the remaining increase resulted from increased policy fees, both as a result of more Reciprocal Policies Written. These increases were slightly offset by our strategic shift to higher profit services, resulting in less revenue as we shutter lower-profit offerings in our Software & Data and Consumer Services Segments. See Key Performance Measures and Operating Metrics for definition of Reciprocal Policies Written and RWP per Policy Written metrics.

Cost of revenue. Total consolidated cost of revenue, including the Reciprocal, increased $5.7 million, or 5%, to $119.6 million for the nine months ended September 30, 2026, from $113.9 million for the nine months ended September 30, 2025. This increase reflects offsetting factors. A reduction in ceded losses at the Reciprocal drove the increase in cost of revenue as the Reciprocal retains a larger share of losses under the new reinsurance program effective April 1, 2026 (see Note 12, Reinsurance for the Reciprocal). This increase was partially offset by lower direct losses at the Reciprocal Segment due to improved prior period development and overall loss performance. As a percentage of revenue, cost of revenue represented 29% of revenue in the nine months ended September 30, 2026, compared with 32% in the nine months ended September 30, 2025.

Selling and marketing. Total consolidated selling and marketing expenses including the Reciprocal increased by $22.3 million, or 22%, from $102.5 million in the nine months ended September 30, 2025, to $124.9 million in the nine months ended September 30, 2026. The increase was driven by higher commission rates from the Reciprocal to third-party insurance agencies as well as an increase in the number of agencies earning commissions. This increase was partially offset by lower lead and consumer marketing costs in our Software & Data and Consumer Services segments, respectively. As a percentage of revenue, selling and marketing expenses represented 31% of revenue in the nine months ended September 30, 2026, compared with 29% in the nine months ended September 30, 2025.

Product and technology. Total consolidated product and technology expenses including the Reciprocal increased by $4.0 million, or 10%, from $39.7 million in the nine months ended September 30, 2025, to $43.6 million in the nine months ended September 30, 2026. The increase was driven by investments in new software for the Reciprocal and higher personnel-related costs. As a percentage of revenue, product and technology expenses represented 11% of revenue in the nine months ended September 30, 2026, compared with 11% in the same period in 2025, exhibiting change that is consistent with the change in revenue.

General and administrative. Total consolidated general and administrative expenses including the Reciprocal increased by $10.1 million, or 12%, from $81.9 million in the nine months ended September 30, 2025, to $92.0 million in the nine months ended September 30, 2026. Approximately $5.5 million of the increase relates to amortization of an intangible asset upon reassessment of its useful life (see Note 8, Intangible Assets and Goodwill, in the unaudited Notes to Condensed Consolidated Financial Statements). The remaining increase was driven by higher personnel-related costs.

Interest expense. Interest expense increased by $7.2 million, or 19%, from $37.3 million in the nine months ended September 30, 2025, to $44.5 million in the nine months ended September 30, 2026. The increase was driven by higher non-cash amortization of debt issuance costs and discounts associated with our convertible notes. The amount of amortization increases over the life of the notes as their carrying value accretes towards the principal amount at maturity. 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. We recognized a loss on change in fair value of the private warrant liability of $9.3 million in the nine months ended September 30, 2025. The private warrants expired in December 2025; therefore, there was no corresponding gain or loss in the current year.

Change in fair value of derivatives. The gain recognized for the change in fair value of the derivatives decreased in the nine months ended September 30, 2026, compared to the nine months ended September 30, 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.

Investment income and realized gains and losses, net of investment expenses. Total investment income and realized gains and losses, net of investment expenses, including the Reciprocal, were $10.2 million and $8.5 million in the nine months ended September 30, 2026 and 2025, respectively. The $1.8 million increase was attributable to a larger average investment portfolio and favorable market conditions, which resulted in higher investment returns during the nine months ended September 30, 2026.

Other income, net. Total consolidated other income, net, including the Reciprocal decreased by $7.4 million from $11.4 million in the nine months ended September 30, 2025, to $4.0 million in the nine months ended September 30, 2026. The decrease was driven by a non-recurring recovery on reinsurance contracts that occurred in the nine months ended September 30, 2025. See Note 14 in the unaudited Notes to Condensed Consolidated Financial Statements for detail of other income, net, for each period presented.

Income tax expense. Income tax provision of $1.4 million and income tax provision of $4.1 million were recognized for the nine months ended September 30, 2026 and 2025, respectively, and the effective tax rates for these periods were (77.2)% and 27.3%, respectively. The difference between the effective tax rate and the U.S. statutory rate of 21% was attributable to the impact of a full valuation allowance on our net deferred tax assets. Our consolidated effective tax rate decreased for the nine months ended September 30, 2026, compared to the same period in the prior year 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, and a sale of Porch common shares by the Reciprocal.

Net income attributable to Porch. Net income attributable to Porch increased by $13.0 million from $0.1 million in the nine months ended September 30, 2025, to $13.1 million in the nine months ended September 30, 2026. The increase was driven by growth in fee revenue associated with an increase in RWP and Reciprocal Policies Written. These increases were offset by higher ceded commissions at our captive reinsurer, higher interest expense, investments in new software for the Reciprocal, higher personnel-related compensation costs, a lower gain on the valuation of derivatives, and the absence of a $7.1 million recovery on reinsurance contracts that occurred in 2025. See the Key Performance Measures and Operating Metrics section for definitions of Reciprocal Policies Written and RWP per Policy Written metrics.

Adjusted EBITDA (Excluding Reciprocal). Adjusted EBITDA (Excluding Reciprocal), for the nine months ended September 30, 2026, was $103.3 million, a $50.2 million improvement from Adjusted EBITDA (Excluding Reciprocal) of $53.1 million for the same period in 2025. The year-over-year improvement was due to an increase in fee revenue associated with an increase in RWP and Reciprocal Policies Written, partially offset by an increase in operating expenses as described above. Adjusted EBITDA (Excluding Reciprocal) is a non-GAAP measure. See Non-GAAP Financial Measures section for definition.

INSURANCE SERVICES

(1)Insurance Services Adjusted EBITDA, Insurance Services Adjusted EBITDA Margin, and Insurance Services Adjusted EBITDA % of RWP are non-GAAP measures. See Non-GAAP Financial Measures section.

For the nine months ended September 30, 2026, Insurance Services segment revenue increased by $79.4 million, or 42%, to $270.4 million compared to $191.0 million for the nine months ended September 30, 2025. Our Insurance Services segment generates revenue in several ways: management fees from the Reciprocal based on a percentage of RWP, policy fees from policyholders based on the number of Reciprocal Policies Written, captive reinsurance premiums from the Reciprocal, and lead fees from third-party insurance agencies. Fee revenue represented 26% of the increase which resulted from the 17% increase in RWP and 38% increase in Reciprocal Policies Written as discussed in the following Reciprocal Segment section. Reinsurance premiums from the Reciprocal represented 12% of the increase which resulted from an increase in ceding from the Reciprocal Segment.

For the nine months ended September 30, 2026, Insurance Services segment gross profit increased by 45% compared to the nine months ended September 30, 2025, which is consistent with the 42% increase in revenue for the same period. The $73.7 million increase in Insurance Services segment gross profit resulted from the $79.4 million increase in revenue as described above with only a slight increase in cost of revenue.

Insurance Services segment gross margin slightly increased to 87% for the nine months ended September 30, 2026, compared to 85% for the nine months ended September 30, 2025, as gross profit increased at approximately the same rate as revenue as described above.

Insurance Services Adjusted EBITDA was $122.0 million for the nine months ended September 30, 2026, which increased by $51.3 million compared to prior year due to the $73.7 million increase in gross profit. The increase in gross profit was partially offset by a $26.6 million increase in selling and marketing expense resulting from higher ceding commission and increased ceding from the Reciprocal Segment following updates to its reinsurance program on April 1, 2026.

Insurance Services Adjusted EBITDA Margin increased to 45% for the nine months ended September 30, 2026, compared to 37% for the nine months ended September 30, 2025. This increase was driven by the increase in gross margin discussed above while fixed operating costs remained relatively stable.

RECIPROCAL SEGMENT

(1)See Key Performance Measures and Operating Metrics for definitions of metrics.

The Reciprocal is a separate legal entity, owned by its member policyholders, and is not owned, wholly or in part, by the Company. The Reciprocal is consolidated in our financial statements solely as a result of the Company's variable interest in, and status as primary beneficiary of, the entity. We include the Reciprocal's results in this discussion for explanatory and informational purposes only, to give our investors a complete understanding of our business and of the amounts reflected in our consolidated results. Because the Company does not own the Reciprocal, the Reciprocal's results of operations, net income (loss), and equity are attributable to its member policyholders and do not accrue to the Company's shareholders. Nothing in the discussion that follows should be read to suggest that the economic results of the Reciprocal are available to, or accrue to the benefit of, the Company or its shareholders.

For the nine months ended September 30, 2026, Reciprocal Segment revenue increased by $21.8 million, or 15%, to $169.0 million compared to $147.3 million for the nine months ended September 30, 2025. The 15% increase in revenue resulted from the 17% increase in RWP which rose because of the 38% increase in the number of Reciprocal Policies Written. This increase was driven by an increase in the number of agencies and improved conversion rates from quotes to written policies for new policyholders. Premiums paid by new policyholders are typically a bit lower than premiums on renewing policies; thus, the 15% decrease in RWP per Policy Written.

For the nine months ended September 30, 2026, Reciprocal Segment gross profit increased by 12% to $96.2 million. The increase in gross profit resulted from the increase in revenue.

Reciprocal Segment Net Income (Loss) was $(5.4) million for the nine months ended September 30, 2026, compared to $10.9 million for the nine months ended September 30, 2025. A $10.6 million increase in gross profit was offset by increased management fees to the Insurance Segment as a result of increased RWP. A $10.9 million gain on the sale of shares of Porch common stock (see Note 10, Stockholders' Equity, in the unaudited Notes to Condensed Consolidated Financial Statements) is also included in Reciprocal Segment Net Income (Loss) and is eliminated in consolidation.

SOFTWARE & DATA

(1)Software & Data Adjusted EBITDA and Software & Data Adjusted EBITDA Margin are non-GAAP measures. See Non-GAAP Financial Measures section.

For the nine months ended September 30, 2026, Software & Data segment revenue decreased by $3.3 million, or 5%, to $67.3 million compared to $70.6 million for the nine months ended September 30, 2025, gross profit decreased by $2.1 million, or 4%, and Software & Data Adjusted EBITDA decreased by $1.2 million, or 8%. The decrease in revenue reflects the change in Average Number of Companies which decreased by 17% compared to the same period last year as we sunset certain legacy software products that serve very small home service contractor businesses to better support our strategy to focus on larger, more profitable, customers. Annualized Average Revenue per Company increased due to this shift toward larger customers as well as price increases on some of our software products.

CONSUMER SERVICES

(1)Consumer Services Adjusted EBITDA and Consumer Services Adjusted EBITDA Margin are non-GAAP measures. See Non-GAAP Financial Measures section.

For the nine months ended September 30, 2026, Consumer Services segment revenue and gross profit remained relatively stable when compared to the nine months ended September 30, 2025.

Consumer Services Adjusted EBITDA improved by $2.7 million for the nine months ended September 30, 2026, when compared to the nine months ended September 30, 2025, due to a decrease in warranty claims expense, consumer marketing costs in our warranty businesses, and lower personnel-related costs, including increased capitalization of software development labor costs associated with internally developed software.

Consumer Services Adjusted EBITDA Margin increased to 13% for the nine months ended September 30, 2026, driven by decreases in warranty claims expense and personnel-related costs as described above. This decrease in cost led to an increase in Consumer Services Adjusted EBITDA that exceeded the decrease in revenue, leading to higher Consumer Services Adjusted EBITDA Margin.

UNALLOCATED CORPORATE EXPENSES

Corporate selling and marketing expense and product and technology expense for the nine months ended September 30, 2026, were consistent with the same period for 2025.

Corporate general and administrative expenses increased by $9.5 million for the nine months ended September 30, 2026, compared to the same period for 2025. The increase was due to increased payroll costs resulting from organizational realignment and consolidation of headcount from operating segments into Corporate and higher personnel-related compensation costs. These increases were partially offset by strong cost control across the business including lower legal and accounting professional fees.