Porch Group Reiterates $32m Q4’24 Adj EBITDA⁽¹⁾ Guidance and Shares Investor Day Highlights

Investor Relations Contact:
Lois Perkins, Head of Investor Relations
Porch Group, Inc.
Loisperkins@porch.com

Porch Group, Inc. (“Porch” or “the Company”) (NASDAQ: PRCH), a homeowners insurance and vertical software platform, held its Investor Day on December 5, 2024 where it reiterated Q4 and full year 2024 Adjusted EBITDA guidance and provided deeper insights into its transformative strategy to position itself as ‘A New Kind of Homeowners Insurance Company.’

Reiterated Q4 2024 Adjusted EBITDA Guidance¹

Porch announced it is on track to achieve or exceed the guidance mid-point of $32 million of Adjusted EBITDA in Q4 2024, as provided in the Q3 2024 earnings release in November. Additionally, Porch shared that its insurance carrier Homeowners of America (“HOA”) is expected to end 2024 with a surplus in excess of the $100 million previously communicated.

Long-Term Strategic Vision: Scaling Homeowners Insurance to Approximately $3bn² Gross Written Premiums (“GWP”)

The upcoming launch of the member-owned Porch Insurance Reciprocal Exchange (“PIRE”) and sale of HOA to PIRE, expected on or about January 1, 2025, marks a significant milestone for Porch Group. Under the Reciprocal model, Porch expects to significantly increase the gross margins and Adjusted EBITDA margins of its insurance operations, generating predictable and sustainable cash for Porch shareholders.

By scaling PIRE’s agency distribution network and other growth tactics, Porch announced plans to grow GWP to $500 million² in 2025, $600 million² in 2026, and outlined a path to scale to $3 billion² in approximately 10 years, which does not include areas that could provide additional upside such as expansion into new states, the launch of new products, or potential M&A.

Financial Targets: Adjusted EBITDA of $50 million^1,2,3 (2025) and $100 million^1,2,3 (2026)

Porch reiterated its Adjusted EBITDA targets of $50 million in 2025 and $100 million in 2026 and outlined its plans to achieve these results. Porch outlined its financial targets^1,2,3, including:

• Porch Shareholder Interest Revenue of $380 million in 2025 and $460 million in 2026
• A significant improvement in margins, including Porch Shareholder Interest Gross Profits of $297 million in 2025 and $365 million in 2026
• And $100 million of Adjusted EBITDA¹ in 2026, with Adjusted EBITDA margins reaching 22%

The Company announced plans to operate under new segments effective Q1 2025: the three segments that will impact Porch Shareholder Interests³ are Insurance Services, Software & Data, and Consumer Services. The financial targets in this release reflect expected segment changes. Porch outlined financial targets², including:

• Insurance Services: $200 million in revenue in 2025, scaling to $245 million in 2026, with 80% gross margins and 33% Adjusted EBITDA margins¹
• Software & Data: $105 million in revenue in 2025, scaling to $130 million in 2026, with 81% gross margins and 31% Adjusted EBITDA margins¹
• Consumer Services: $75 million in revenue in 2025, scaling to $85 million in 2026, with 76% gross margins and 24% Adjusted EBITDA margins¹

Corporate costs are targeted to continue to reduce from $61 million in 2023 to $53 million expected in 2024 to $45 million in 2025 and $40 million in 2026, through continued focus on operational efficiency, reduction in overhead expenses, and use of lower cost locations.

All assumptions include only mid-single digit improvements in housing market sales in 2025 and 2026, and modest revenue from Home Factors in 2025 and 2026.

Porch expects >20% long-term Revenue growth rate and >40% Adjusted EBITDA margins with clear growth opportunities from its high margin businesses.

Expanding the Competitive Advantage of Home Factors

Porch continues to leverage its data platform, providing unique insights into homes, homeowners and risks both to PIRE and third parties. Key highlights:

• Today, Home Factors has ~50 insights and targets to expand this to ~100 by the end of 2025
• The insurance data analytics TAM represents a significant opportunity
• The pipeline of potential carrier partnerships remains robust

“Our mission is to build a great, enduring and high-margin company. With the launch of PIRE and the focus on insurance at the core of the business, we are poised for profitable growth,” said Matt Ehrlichman, Chief Executive Officer. “We believe the opportunities before us are substantial, including the PIRE launch and growth, sales efforts with Home Factors, SaaS businesses growth potential and Consumer Services scalability. Success will come down to consistent execution, something we’ve demonstrated repeatedly in the past.”

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 more protection. The long-term competitive moats that create this differentiation come 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.

Forward-Looking Statements

Certain statements in this release may be considered forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. These statements are based on the beliefs and assumptions of management. Although we 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 financial outlook, guidance, and targets, including gross written premium and surplus, possible or assumed future actions, business strategies, corporate cost reductions, events, or results of operations, are forward-looking statements. Forward-looking statements in this presentation also include expectations regarding whether the reciprocal is the optimal structure for our insurance business and the benefits financial and otherwise thereof, including any expectations that the reciprocal will significantly increase the gross margins and Adjusted EBITDA margins of its insurance operations, generating predictable and sustainable cash for Porch Shareholders, and expansion into new states, the launch of new products such as auto insurance, or M&A. 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 future transactions that have not been completed as of the date of this filing, including the licensure and formation of the reciprocal, the sale of our insurance carrier subsidiary, Homeowners of America Insurance Company (“HOA”), to the reciprocal, and the commencement of the reciprocal’s operations. 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:

(1) expansion plans and opportunities, and managing growth, to build a consumer brand;

(2) the incidence, frequency, and severity of weather events, extensive wildfires, and other catastrophes;

(3) economic conditions, especially those affecting the housing, insurance, and financial markets;

(4) expectations regarding revenue, cost of revenue, operating expenses, and the ability to achieve and maintain future profitability;

(5) 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;

(6) 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;

(7) the possibility that a decline in our share price would result in a negative impact to our insurance carrier subsidiary’s, Homeowners of America Insurance Company (“HOA”), surplus position and may require further financial support to enable HOA to meet applicable regulatory requirements and maintain financial stability rating;

(8) 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

(9) 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 (including the discount associated with the shares contributed to HOA);

(10) the ability of the Company and its affiliates to consummate the sale of HOA to the reciprocal exchange and to commence operations of the reciprocal exchange;

(11) our ability to successfully operate its businesses alongside a reciprocal exchange;

(12) our ability to implement our plans, forecasts and other expectations with respect to the reciprocal exchange business after the completion of the formation and to realize expected synergies and/or convert policyholders from its existing insurance carrier business into policyholders of the reciprocal exchange;

(13) potential business disruption following the formation of the reciprocal exchange;

(14) 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;

(15) the ability to develop new, or enhance existing, products, services, and features and bring them to market in a timely manner;

(16) changes in capital requirements, and the ability to access capital when needed to provide statutory surplus;

(17) our ability to timely repay our outstanding indebtedness;

(18) 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;

(19) retaining and attracting skilled and experienced employees;

(20) costs related to being a public company; and

(21) other risks and uncertainties discussed in Part II, Item 1A, “Risk Factors,” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, as well as those discussed in Part II, Item 1A, “Risk Factors,” in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2024 and in subsequent reports 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 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 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 above 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.

Non-GAAP Financial Measures

This release includes non-GAAP financial measures, such as Adjusted EBITDA (Loss) and Adjusted EBITDA (Loss) margin. We define Adjusted EBITDA (Loss) as net income (loss) attributable to Porch stockholders 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; loss on reinsurance contract; 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. We define Adjusted EBITDA (Loss) margin as Adjusted EBITDA (Loss) divided by total revenue.

You should not consider the non-GAAP financial measures included in this release in isolation, as a substitute to or superior to financial performance measures determined in accordance with GAAP. The principal limitation of the non-GAAP financial measures included in this release 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 the non-GAAP financial measures included in this release, 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, the non-GAAP financial measures included in this release reflect the exercise of management judgment about which income and expense are included or excluded in determining the non-GAAP financial measures included in this release.

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.

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