false000178453500017845352024-03-072024-03-07

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 7, 2024
PORCH GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware001-3914283-2587663
(State or other jurisdiction
of incorporation)
(Commission File Number)
(IRS Employer
Identification No.)
411 1st Avenue S., Suite 501
Seattle, Washington
98104
(Address of principal executive offices)(Zip Code)
(855) 767-2400
(Registrant’s telephone number, including area code)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading
Symbol(s)
Name of each exchange
on which registered
Common stock, par value $0.0001PRCHThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o


Item 2.02. Results of Operations and Financial Condition.
On March 7, 2024, Porch Group, Inc. (the “Company”) issued an earnings release announcing financial results for its fourth quarter and full year ended December 31, 2023. The full text of the press release issued in connection with the announcement is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 7.01. Regulation FD Disclosure.
On March 7, 2024, the Company will host an earnings call at 5:00 p.m. Eastern time to discuss its financial results for the quarter ended December 31, 2023. Live and archived webcasts of the presentation will also be available on the Company’s investor relations website at https://ir.porchgroup.com.
On March 7, 2024, the Company posted supplemental investor materials on its investor relations website. The Company uses its investor relations website as a means of disclosing material non-public information, announcing upcoming investor conferences and for complying with its disclosure obligations under Regulation FD. Accordingly, investors should monitor the Company’s investor relations website in addition to following the Company’s press releases, SEC filings and public conference calls and webcasts.
The information in Items 2.02 and 7.01 of this Current Report on Form 8-K and Exhibit 99.1 attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits.
(d)Exhibits.
Exhibit
No.
Description
99.1
104Cover Page Interactive Data File (embedded within the Inline XBRL document)


SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
PORCH GROUP, INC.
By:/s/ Shawn Tabak
Name:Shawn Tabak
Title:Chief Financial Officer
Date: March 7, 2024


Exhibit 99.1
Porch Group Reports Fourth Quarter 2023 Results

Porch Delivers Strong Fourth Quarter Earnings, Ahead of Expectations
SEATTLE, March 7, 2024 (BUSINESS WIRE) – Porch Group, Inc. (“Porch Group” or “the Company”) (NASDAQ: PRCH), a homeowners insurance and vertical software platform, today reported fourth quarter results ended December 31, 2023, with total revenue of $114.6 million, which increased 79% compared to the prior year. GAAP net loss of $2.5 million, an improvement from $35.5 million GAAP net loss in the prior year and Adjusted EBITDA of $11.7 million, which increased $25.0 million compared to the prior year.
CEO Summary
"We are excited to share our financial results, far exceeding the second half profitability target we provided around two years ago, with Adjusted EBITDA of $20.5 million in the second half 20231. I am proud of the achievements and execution of the team over the last year, which improved profitability in our insurance business, launched important new SaaS products for our customers, and maintained strong cost control. We remain focused on improving profitability and further executing our strategy in 2024,” said Matt Ehrlichman, Chief Executive Officer, Chairman and Founder.
Fourth Quarter 2023 Financial Results
•Total revenue of $114.6 million, an increase of 79% or $50.5 million compared to prior year (fourth quarter 2022: $64.1 million), driven by the Insurance segment.
•Revenue less cost of revenue of $79.9 million, 70% of total revenue, an increase of 82% compared to prior year (fourth quarter 2022: $43.9 million, 69% of total revenue). Increase driven by premium per policy increases, underwriting actions, and non-renewal of higher risk policies in the Insurance segment.
•GAAP net loss of $2.5 million, compared to $35.5 million for the fourth quarter of 2022.
•Adjusted EBITDA of $11.7 million, a $25.0 million increase from the prior year (fourth quarter 2022: loss of $13.3 million), driven by the Insurance segment and cost control actions.
•Gross written premium for the quarter in our Insurance segment was $112 million with approximately 310 thousand policies in force.
•$397.6 million cash, cash equivalents and investments at December 31, 2023.
Fourth Quarter 2023 Operational Highlights
•36% gross loss ratio and 49% combined loss ratio, an improvement from prior year driven by underwriting actions, non-renewal of higher risk policies, and the fourth quarter 34% increase in premium per policy.
•Approved in 13 states to use Porch's unique property data in insurance pricing which improves risk accuracy to provide better priced policies for customers.
•Launching new products continues, with an important new title software product, HVAC micro-warranty and back office software for small inspection companies introduced and additional a new utilities partnership.
•Moving business executing a local full-service offering, which is higher margin and a larger market opportunity.
•Released first ESG report, sharing the foundation for its ESG journey.
•Admitted into Deloitte's Technology Fast 500 2023.


____________________________________________
(1)Adjusted EBITDA of $20.5 million includes Q3 2023 Adjusted EBITDA of $8.8 million and Q4 2023 Adjusted EBITDA of $11.7 million. See Non-GAAP Financial Measures section for the definition and Adjusted EBITDA (loss) table for the reconciliation to GAAP net income (loss).
1

The following tables present financial highlights of the Company’s fourth quarter and full year 2023 results compared to the fourth quarter and full year results of 2022 (dollars are in millions):
Fourth Quarter 2023 (unaudited)InsuranceVertical SoftwareCorporateConsolidated
Revenue$86.9 $27.7 $— $114.6 
Year-over-year growth179 %(16)%— %79 %
Revenue less cost of revenue$57.9 $22.0 $— $79.9 
Year-over-year growth192 %(9)%— %82 %
As % of revenue67 %79 %— %70 %
GAAP net loss$(2.5)
Adjusted EBITDA (loss) (1)$31.6 $(0.3)$(19.7)$11.7 
Adjusted EBITDA (loss) as a percent of revenue(2)36 %(1)%— %10 %
Fourth Quarter 2022 (unaudited)InsuranceVertical SoftwareCorporateConsolidated
Revenue$31.2 $33.0 $— $64.1 
Revenue less cost of revenue$19.8 $24.1 $— $43.9 
As % of revenue64 %73 %— %69 %
GAAP net loss$(35.5)
Adjusted EBITDA (loss) (1)$0.7 $1.1 $(15.1)$(13.3)
Adjusted EBITDA (loss) as a percent of revenue(2)2 %3 %— %(21)%
Year Ended December 31, 2023 (unaudited)InsuranceVertical SoftwareCorporateConsolidated
Revenue$305.2 $125.1 $— $430.3 
Year-over-year growth152 %(19)%— %56 %
Revenue less cost of revenue$114.7 $95.4 $— $210.1 
Year-over-year growth95 %(13)%— %25 %
As % of revenue38 %76 %— %49 %
GAAP net loss$(133.9)
Adjusted EBITDA (loss) (1)$12.3 $4.3 $(61.1)$(44.5)
Adjusted EBITDA (loss) as a percent of revenue(2)4 %3 %— %(10)%
Year Ended December 31, 2022 (unaudited)InsuranceVertical SoftwareCorporateConsolidated
Revenue$121.0 $154.9 $— $275.9 
Revenue less cost of revenue$58.8 $109.6 $— $168.4 
As % of revenue49 %71 %— %61 %
GAAP net loss$(156.6)
Adjusted EBITDA (loss) (1)$(5.5)$14.7 $(58.8)$(49.6)
Adjusted EBITDA (loss) as a percent of revenue(2)(5)%9 %— %(18)%
____________________________________________
(1)See Non-GAAP Financial Measures section for the definition and Adjusted EBITDA (loss) table for the reconciliation to GAAP net income (loss)
(2)Adjusted EBITDA (loss) as a percent of revenue is calculated as Adjusted EBITDA (loss) divided by Revenue
2

The following table presents the Company’s key performance indicators (1).
Three Months Ended December 31,
20232022% Change
Gross Written Premium (in millions)$112 $131 (14)%
Policies in Force (in thousands)310389(20)%
Annualized Revenue per Policy (unrounded)$1,120 $347 223 %
Annualized Premium per Policy (unrounded)$1,861 $1,391 34 %
Premium Retention Rate96%107%
Gross Loss Ratio36%56%
Average Companies in Quarter (unrounded)29,91930,860(3) %
Average Monthly Revenue per Account in Quarter (unrounded)$1,277 $693 84 %
Monetized Services (unrounded)219,657212,9923 %
Average Quarterly Revenue per Monetized Service (unrounded)$448 $219 105 %
_____________________________________
(1)Definitions of the key performance indicators presented in this table are included on page 10 of this release.

3

Balance Sheet Information (unaudited)
(dollars are in millions)December 31,
2023		December 31, 2022Change
Cash and cash equivalents$258.4 $215.1 20 %
Investments139.2 91.6 52 %
Cash, cash equivalents and investments$397.6 $306.7 30 %
The Company ended the fourth quarter of 2023 with cash, cash equivalents and investments of $397.6 million. Of this amount, HOA, Porch's insurance carrier, held cash and cash equivalents of $207.6 million and investments of $102.8 million. Excluding HOA, Porch held $87.2 million of cash, cash equivalents and investments.
As of December 31, 2023, outstanding principal for convertible debt was $558.3 million. This includes $333.3 million of the 6.75% Senior Secured Convertible Notes due October 2028 (the “2028 Notes”) and $225.0 million of 0.75% Convertible Senior Notes due September 2026 (the “2026 Notes”).
Post Balance Sheet Events
Following the period end, the Company signed a business collaboration agreement with Aon Corp. and Aon Re, Inc. ("Aon") to provide a variety of services to Porch Group companies, resulting in payments to Porch of approximately $25 million upfront and an expected approximately $5 million over the following four years. As part of this agreement, the parties also signed a release of claims arising from the Vesttoo fraud. Porch has not released any claims against non-Aon parties related to these matters and intends to vigorously pursue recovery.

The Company completed the sale of EIG, its insurance agency, on January 31, 2024 for $12.2 million, subject to post-closing adjustments. EIG represented approximate $45 million of GWP placed with third party carriers in 2023, which generated approximately $4.7 million of annual commissions. In 2023, EIG's Adjusted EBITDA loss was approximately $3 million. This divestiture follows testing with third party agencies to compare conversion rates and profitability against EIG. Unit economics and profitability improved as costs associated with running the agency are removed and leveraging partners national footprint.

The Company repurchased $8.0 million aggregate principal amount of its 2026 Notes in a private transaction for $3.0 million in cash, or 37.5% of par. Following the close of the transaction, outstanding principal for the 2026 Notes reduced to $217.0 million.
4

Full Year 2024 Financial Outlook
Full year 2024 guidance is as follows:
Full Year 2024 Guidance
Revenue
$450m to $490m
Growth of 5% to 14%
Revenue Less Cost of Revenue
$225m to $240m
Adjusted EBITDA1
$1m to $10m
Gross Written Premium2
$460m to $480m
1Adjusted EBITDA is a non-GAAP measure.
22024 gross written premium (“GWP”) guidance is stated as the expected full-year GWP for 2024 and is the total premium written by our licensed insurance carrier(s) (before deductions for reinsurance) and premiums from our home warranty offerings (for the face value of one year’s premium). Note, 2023 GWP includes approximately $45 million from EIG placed with third party carriers.
Porch Group provides full year 2024 guidance based on current market conditions and expectations. The Company reiterated its Adjusted EBITDA profitability target for 2024 and future years on a full year basis. Guidance assumes a 63% gross loss ratio for the full year 2024, in line with the 5-year weighted average.
Porch Group is not providing reconciliations of expected Adjusted EBITDA for future periods to the most directly comparable measures prepared in accordance with GAAP because the Company is unable to provide these reconciliations without unreasonable effort because certain information necessary to calculate such measures on a GAAP basis is unavailable or dependent on the timing of future events outside of the Company’s control.
5

Conference Call
Porch Group management will host a conference call today March 7, 2024, at 5:00 p.m. Eastern time (2:00 p.m. Pacific time). The call will be accompanied by a slide presentation available on the Investor Relations section of the Company’s website at ir.porchgroup.com. A question-and-answer session will follow management’s prepared remarks.
All are invited to listen to the event by registering for the webinar, a replay of the webinar will also be available. See the Investor Relations section of the Porch Group’s corporate website at ir.porchgroup.com.
About Porch Group
Porch Group, Inc., ("Porch") is a homeowners insurance and vertical software platform. Porch's strategy to win in homeowners insurance is to leverage unique data for advantaged underwriting, provide the best services for homebuyers, and protect the whole home. The long-term competitive moats that create this differentiation comes from Porch's leadership in home services software-as-a-service and its deep relationships with approximately 30 thousand companies that are key to the home-buying transaction, such as home inspectors, mortgage, and title companies.

To learn more about Porch, visit ir.porchgroup.com.
Investor Relations Contact:
Lois Perkins, Head of Investor Relations
Porch Group, Inc.
Loisperkins@porch.com
6

Forward-Looking Statements
Certain statements in this release may be considered “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. These statements are based on the beliefs and assumptions of management. Although we, Porch Group, Inc., believe that our plans, intentions, and expectations reflected in or suggested by these forward-looking statements are reasonable, we cannot assure you that we will achieve or realize these plans, intentions, or expectations. Forward-looking statements are inherently subject to risks, uncertainties, and assumptions. Generally, statements that are not historical facts, including statements concerning our possible or assumed future actions, business strategies, events, or results of operations, are forward-looking statements. These statements may be preceded by, followed by, or include the words “believe,” “estimate,” “expect,” “project,” “forecast,” “may,” “will,” “should,” “seek,” “plan,” “scheduled,” “anticipate,” “intend,” or similar expressions.
Forward-looking statements are not guarantees of performance. You should not put undue reliance on these statements which speak only as of the date hereof. Unless specifically indicated otherwise, the forward-looking statements in this release do not reflect the potential impact of any divestitures, mergers, acquisitions, or other business combinations that have not been completed as of the date of this release. You should understand that the following important factors, among others, could affect our future results and could cause those results or other outcomes to differ materially from those expressed or implied in our forward-looking statements:
•expansion plans and opportunities, and managing growth, to build a consumer brand;
•the incidence, frequency, and severity of weather events, extensive wildfires, and other catastrophes;
•economic conditions, especially those affecting the housing, insurance, and financial markets;
•expectations regarding revenue, cost of revenue, operating expenses, and the ability to achieve and maintain future profitability;
•existing and developing federal and state laws and regulations, including with respect to insurance, warranty, privacy, information security, data protection, and taxation, and management’s interpretation of and compliance with such laws and regulations;
•our reinsurance program, which includes the use of a captive reinsurer, the success of which is dependent on a number of factors outside management’s control, along with reliance on reinsurance to protect against loss;
•the uncertainty and significance of the known and unknown effects on our insurance carrier subsidiary, Homeowners of America Insurance Company (“HOA”), and us due to the termination of a reinsurance contract following the fraud committed by Vesttoo Ltd. (“Vesttoo”), including, but not limited to, the outcome of Vesttoo’s Chapter 11 bankruptcy proceedings; our ability to successfully pursue claims arising out of the fraud, the costs associated with pursuing the claims, and the timeframe associated with any recoveries; HOA's ability to obtain and maintain adequate reinsurance coverage against excess losses; HOA’s ability to stay out of regulatory supervision and maintain its financial stability rating; and HOA’s ability to maintain a healthy surplus;
•uncertainties related to regulatory approval of insurance rates, policy forms, insurance products, license applications, acquisitions of businesses, or strategic initiatives, including the reciprocal restructuring, and other matters within the purview of insurance regulators;
•reliance on strategic, proprietary relationships to provide us with access to personal data and product information, and the ability to use such data and information to increase transaction volume and attract and retain customers;
•the ability to develop new, or enhance existing, products, services, and features and bring them to market in a timely manner;
•changes in capital requirements, and the ability to access capital when needed to provide statutory surplus;
•our ability to timely repay our outstanding indebtedness;
•the increased costs and initiatives required to address new legal and regulatory requirements arising from developments related to cybersecurity, privacy, and data governance and the increased costs and initiatives to protect against data breaches, cyber-attacks, virus or malware attacks, or other infiltrations or incidents affecting system integrity, availability, and performance;
•retaining and attracting skilled and experienced employees;
•costs related to being a public company; and
•other risks and uncertainties discussed in Part I, Item 1A, “Risk Factors,” in our Annual Report on Form 10-K (“Annual Report”) for the year ended December 31, 2022; in Part II, Item 1A, “Risk Factors,” in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023; in Part II, Item 1A, “Risk Factors,” in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2023; in Part II, Item 1A, "Risk Factors," in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, and in subsequent reports, including our Form
7

10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission (“SEC”), all of which are available on the SEC’s website at www.sec.gov.
We caution you that the foregoing list may not contain all of the risks to forward-looking statements made in this release.

You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this release primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors, including those described in Item 1A, “Risk Factors,” and elsewhere in this release. We disclaim any obligation to update publicly any forward-looking statements, whether in response to new information, future events, or otherwise, except as required by applicable law.

8

Non-GAAP Financial Measures
This release includes non-GAAP financial measures, such as Adjusted EBITDA (Loss) and Adjusted EBITDA (Loss) as a percent of revenue.
We define Adjusted EBITDA (Loss) as net income (loss) adjusted for interest expense; income taxes; depreciation and amortization; gain or loss on extinguishment of debt; other expense (income), net; impairments of intangible assets and goodwill; provision for doubtful accounts related to reinsurance, or related recoveries; impairments of property, equipment, and software; stock-based compensation expense; mark-to-market gains or losses recognized on changes in the value of contingent consideration arrangements, earnouts, warrants, and derivatives; restructuring costs; acquisition and other transaction costs; and non-cash bonus expense. Adjusted EBITDA (Loss) as a percent of revenue is defined as Adjusted EBITDA (Loss) divided by total revenue.
Our management uses these non-GAAP financial measures as supplemental measures of our operating and financial performance, for internal budgeting and forecasting purposes, to evaluate financial and strategic planning matters, and to establish certain performance goals for incentive programs. We believe that the use of these non-GAAP financial measures provides investors with useful information to evaluate our operating and financial performance and trends and in comparing our financial results with competitors, other similar companies and companies across different industries, many of which present similar non-GAAP financial measures to investors. However, our definitions and methodology in calculating these non-GAAP measures may not be comparable to those used by other companies. In addition, we may modify the presentation of these non-GAAP financial measures in the future, and any such modification may be material.
You should not consider these non-GAAP financial measures in isolation, as a substitute to or superior to financial performance measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude specified income and expenses, some of which may be significant or material, that are required by GAAP to be recorded in our consolidated financial statements. We may also incur future income or expenses similar to those excluded from these non-GAAP financial measures, and the presentation of these measures should not be construed as an inference that future results will be unaffected by unusual or non-recurring items. In addition, these non-GAAP financial measures reflect the exercise of management judgment about which income and expense are included or excluded in determining these non-GAAP financial measures.
You should review the tables accompanying this release for reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measure. We are not providing reconciliations of non-GAAP financial measures for future periods to the most directly comparable measures prepared in accordance with GAAP. We are unable to provide these reconciliations without unreasonable effort because certain information necessary to calculate such measures on a GAAP basis is unavailable or dependent on the timing of future events outside of our control.
9

The following tables reconcile Net loss to Adjusted EBITDA (Loss) for the periods presented (dollar amounts in thousands):
Three Months Ended December 31,Year Ended December 31,
(unaudited)
2023202220232022
Net loss$(2,486)$(35,473)$(133,933)$(156,559)
Interest expense10,598 2,219 31,828 8,723 
Income tax provision588 574 622 842 
Depreciation and amortization5,914 6,356 24,415 27,930 
Mark-to-market losses (gains)774 1,585 (1,003)(21,364)
Gain on extinguishment of debt— — (81,354)— 
Impairment loss on intangible assets and goodwill— 4,329 57,232 61,386 
Impairment loss on property, equipment, and software— 535 254 637 
Stock-based compensation expense432 6,396 20,709 27,041 
Loss (gain) on reinsurance contract (1)
(5,159)— 36,042 — 
Other income, net(368)(608)(3,893)(571)
Restructuring costs (2)
1,226 647 4,015 647 
Acquisition and other transaction costs144 104 552 1,687 
Non-cash bonus expense— — — — 
Adjusted EBITDA (Loss)$11,663 $(13,336)$(44,514)$(49,601)
Adjusted EBITDA (Loss) as a percentage of revenue10 %(21)%(10)%(18)%
______________________________________
(1)Loss on reinsurance contract relates to one reinsurer.
(2)Primarily consists of costs related to forming a reciprocal exchange.
Three Months Ended December 31,Year Ended December 31,
(unaudited)
2023202220232022
Segment Adjusted EBITDA (Loss)
Vertical Software$(292)$1,078 $4,307 $14,678 
Insurance31,648 704 12,320 (5,499)
Subtotal31,356 1,782 16,627 9,179 
Corporate and other(19,693)(15,118)(61,141)(58,780)
Adjusted EBITDA (Loss)$11,663 $(13,336)$(44,514)$(49,601)
The following table presents Segment Adjusted EBITDA (Loss) as a percentage of segment revenue for the periods presented:
Three Months Ended December 31,Year Ended December 31,
2023202220232022
Segment Adjusted EBITDA (Loss) as a Percentage of Revenue
Vertical Software(1.1 %)3.3 %3.4 %9.5 %
Insurance36.4 %2.3 %4.0 %(4.5)%
Key Performance Indicators
In the management of these businesses, we identify, measure and evaluate various operating metrics. The key performance measures and operating metrics used in managing the businesses are discussed below. These key performance measures and operating metrics are not prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and may not be comparable to or calculated in the same way as other similarly titled measures and metrics used by other companies.
10

Gross Written Premium — We define Gross Written Premium as the total premium written by our licensed insurance carrier(s) (before deductions for reinsurance); premiums from our home warranty offerings (for the face value of one year’s premium); and premiums of policies placed with third-party insurance companies for which we earn a commission.
Policies in Force — We define Policies in Force as the number of in-force policies at the end of the period for the Insurance segment, including policies and warranties written by us and policies and warranties written by third parties for which we earn a commission.
Annualized Revenue per Policy — We define Annualized Revenue per Policy as quarterly revenue for the Insurance segment, divided by the number of Policies in Force in the Insurance segment, multiplied by four.
Annualized Premium per Policy — We define Annualized Premium per Policy as the total direct earned premium for HOA, our insurance carrier, divided by the number of active insurance policies at the end of the period, multiplied by four.
Premium Retention Rate — We define Premium Retention Rate as the ratio of our insurance carrier’s renewed premiums over the last four quarters to base premiums, which is the sum of the preceding year’s premiums that either renewed or expired.
Gross Loss Ratio — We define Gross Loss Ratio as our insurance carrier’s gross losses divided by the gross earned premium for the respective period on an accident year basis.
Average Companies in Quarter — We define Average Companies in Quarter as the straight-line average of the number of companies as of the end of period compared with the beginning of period across all of our home services verticals that (i) generate recurring revenue and (ii) generated revenue in the quarter. For new acquisitions, the number of companies is determined in the initial quarter based on the percentage of the quarter the acquired business is a part of Porch.
Average Monthly Revenue per Account in Quarter — We view our ability to increase revenue generated from existing customers as a key component of our growth strategy. Average Monthly Revenue per Account in Quarter is defined as the average revenue per month generated across all home services company customer accounts in a quarterly period. Average Monthly Revenue per Account in Quarter is derived from all customers and total revenue.
Monetized Services — We connect consumers with home services companies nationwide and offer a full range of products and services where homeowners can, among other things: (1) compare and buy home insurance policies (along with auto, flood and umbrella policies) and warranties with competitive rates and coverage; (2) arrange for a variety of services in connection with their move, from labor to load or unload a truck to full-service, long-distance moving services; (3) discover and install home automation and security systems; (4) compare internet and television options for their new home; (5) book small handyman jobs at fixed, upfront prices with guaranteed quality; and (6) compare bids from home improvement professionals who can complete bigger jobs. We track the number of monetized services performed through our platform each quarter and the revenue generated per service performed in order to measure market penetration with homebuyers and homeowners and our ability to deliver high-revenue services within those groups. Monetized Services is defined as the total number of services from which we generated revenue, including, but not limited to, new and renewing insurance and warranty customers, completed moving jobs, security installations, TV/Internet installations or other home projects, measured over the period.
Average Quarterly Revenue per Monetized Service — We believe that shifting the mix of services delivered to homebuyers and homeowners toward higher revenue services is an important component of our growth strategy. Average Quarterly Revenue per Monetized Service is the average revenue generated per monetized service performed in a quarterly period. When calculating Average Quarterly Revenue per Monetized Service, average revenue is defined as total quarterly service transaction revenues generated from monetized services.

11

PORCH GROUP, INC.
Consolidated Balance Sheets (Unaudited)
(all numbers in thousands)
December 31,
20232022
Assets
Current assets
Cash and cash equivalents$258,418 $215,060 
Accounts receivable, net24,288 26,438 
Short-term investments35,588 36,523 
Reinsurance balance due83,582 299,060 
Prepaid expenses and other current assets13,214 11,293 
Deferred policy acquisition costs27,174 8,716 
Restricted cash and cash equivalents38,814 13,545 
Total current assets481,078 610,635 
Property, equipment, and software, net16,861 12,240 
Goodwill191,907 244,697 
Long-term investments103,588 55,118 
Intangible assets, net87,216 108,255 
Long-term insurance commissions receivable13,429 12,265 
Other assets5,314 5,847 
Total assets$899,393 $1,049,057 
Liabilities and Stockholders’ Equity (Deficit)
Current liabilities
Accounts payable$8,761 $6,268 
Accrued expenses and other current liabilities59,396 39,742 
Deferred revenue248,683 270,690 
Refundable customer deposits17,980 20,142 
Current debt244 16,455 
Losses and loss adjustment expense reserves95,503 100,632 
Other insurance liabilities, current31,585 61,710 
Total current liabilities462,152 515,639 
Long-term debt435,495 425,310 
Other liabilities37,429 28,755 
Total liabilities935,076 969,704 
Commitments and contingencies (Note 16)
Stockholders’ equity (deficit)
Common stock, $0.0001 par value:
10 10 
Authorized shares – 400 million and 400 million, at December 31, 2023 and 2022, respectively
Issued and outstanding shares – 97.1 million and 98.5 million, at December 31, 2023 and 2022, respectively
Additional paid-in capital690,223 670,537 
Accumulated other comprehensive loss(3,860)(6,171)
Accumulated deficit(722,056)(585,023)
Total stockholders’ equity (deficit)(35,683)79,353 
Total liabilities and stockholders’ equity (deficit)$899,393 $1,049,057 


12

PORCH GROUP, INC.
Consolidated Statements of Operations (Unaudited)
(all numbers in thousands except per share amounts)
Three Months Ended December 31,Year Ended December 31,
2023202220232022
Revenue$114,612$64,113$430,302$275,948
Operating expenses:
Cost of revenue34,67720,170220,243107,577
Selling and marketing36,95028,031144,307113,848
Product and technology14,61115,11958,50259,565
General and administrative25,92529,835103,192109,814
Provision for (recovery of) doubtful accounts
(4,931)42437,180805
Impairment loss on intangible assets and goodwill—4,32957,23261,386
Total operating expenses107,23297,908620,656452,995
Operating income (loss)
7,380(33,795)(190,354)(177,047)
Other income (expense):
Interest expense(10,598)(2,219)(31,828)(8,723)
Change in fair value of earnout liability44134413,822
Change in fair value of private warrant liability(1,064)95(444)14,486
Change in fair value of derivatives(1,821)—(4,261)—
Gain on extinguishment of debt——81,354—
Investment income and realized gains, net of investment expenses3,7933998,2851,174
Other income, net3686083,893571
Total other income (expense)(9,278)(1,104)57,04321,330
Loss before income taxes(1,898)(34,899)(133,311)(155,717)
Income tax provision
(588)(574)(622)(842)
Net loss$(2,486)$(35,473)$(133,933)$(156,559)
Net loss per share - basic and diluted$(0.03)$(0.36)$(1.39)$(1.61)
Shares used in computing basic and diluted net loss per share96,89698,36696,05797,351
The following table summarizes the classification of stock-based compensation expense in the unaudited consolidated statements of operations.
Three Months Ended December 31,Year Ended December 31,
2023202220232022
Selling and marketing$323 $1,263 $3,351 $4,855 
Product and technology154 1,547 4,804 5,435 
General and administrative(45)3,586 12,554 16,751 
Total stock-based compensation expense$432 $6,396 $20,709 $27,041 
13

PORCH GROUP, INC.
Consolidated Statements of Cash Flows (Unaudited)
(all numbers in thousands)
Year Ended December 31,
20232022
Cash flows from operating activities:
Net loss$(133,933)$(156,559)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities
Depreciation and amortization24,415 27,930 
Provision for doubtful accounts37,180 805 
Impairment loss on intangible assets and goodwill57,232 61,386 
Gain on extinguishment of debt(81,354)— 
Change in fair value of private warrant liability444 (14,486)
Change in fair value of contingent consideration(5,664)6,944 
Change in fair value of earnout liability and derivatives4,217 (13,822)
Stock-based compensation20,709 27,041 
Non-cash interest expense20,756 2,270 
Other1,057 3,590 
Change in operating assets and liabilities, net of acquisitions and divestitures
Accounts receivable1,030 (4,886)
Reinsurance balance due179,436 (70,644)
Deferred policy acquisition costs(18,458)(4,716)
Accounts payable2,491 (697)
Accrued expenses and other current liabilities(1,386)(6,519)
Losses and loss adjustment expense reserves(5,129)38,683 
Other insurance liabilities, current(30,125)21,686 
Deferred revenue(21,583)66,254 
Refundable customer deposits(13,925)6,537 
Other assets and liabilities, net(3,481)(8,533)
Net cash provided by (used in) operating activities33,929 (17,736)
Cash flows from investing activities:
Purchases of property and equipment(851)(2,350)
Capitalized internal use software development costs(9,245)(8,100)
Purchases of short-term and long-term investments(91,015)(52,506)
Maturities, sales of short-term and long-term investments46,832 21,906 
Acquisitions, net of cash acquired(1,974)(38,628)
Net cash used in investing activities(56,253)(79,678)
Cash flows from financing activities:
Proceeds from line of credit— 5,000 
Proceeds from advance funding319 18,643 
Repayments of advance funding(4,133)(22,746)
Proceeds from issuance of debt116,667 10,000 
Repayments of principal(10,150)(5,150)
Cash paid for debt issuance costs(4,694)— 
Income tax withholdings paid upon vesting of restricted stock units(1,240)(3,108)
Repurchase of stock(5,608)(1,813)
Other(210)401 
Net cash provided by financing activities90,951 1,227 
Net change in cash, cash equivalents, and restricted cash$68,627 $(96,187)
Cash, cash equivalents, and restricted cash, beginning of period$228,605 $324,792 
Cash, cash equivalents, and restricted cash end of period$297,232 $228,605 
14
v3.24.0.1
Document and Entity Information
Mar. 07, 2024
Cover [Abstract]  
Document Type 8-K
Document Period End Date Mar. 07, 2024
Entity Registrant Name PORCH GROUP, INC.
Entity Incorporation, State or Country Code DE
Entity File Number 001-39142
Entity Tax Identification Number 83-2587663
Entity Address, Address Line One 411 1st Avenue S.
Entity Address, Address Line Two Suite 501
Entity Address, City or Town Seattle
Entity Address, State or Province WA
Entity Address, Postal Zip Code 98104
City Area Code 855
Local Phone Number 767-2400
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common stock, par value $0.0001
Trading Symbol PRCH
Security Exchange Name NASDAQ
Entity Emerging Growth Company false
Amendment Flag false
Entity Central Index Key 0001784535
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