Porch Group, Inc.

Good afternoon, everyone. Thank you for participating in Forge Group's first quarter 2022 conference call. We issued our first quarter earnings press release today in furniture related 8K to the SEC. The press release can be found on our investor relations website at ir.forgegroup.com. Joining us today are Matt Ehrlichman, Forge Group's CEO, Chairman, and Co-Founder, Marty Heim-Bigner, Forge Group's CFO, Matthew Nagel, Forge Group's COO, and Adam Kornick, President of our InsurTech Division. Before we go further, I would like to read the company's safe harbor statement in the meeting of the Private Securities Litigation and Reform Act of 1995 that provides important cautions regarding foreign-looking statements. Today's discussion, including responses to your questions, reflects the management's view as of today, May 10, 2022 only. We do not undertake any obligations to update or revise this information. Additionally, we will make forward-looking statements about our future financial or business performance conditions, business strategy and plans, and anticipated impacts from pending or completed acquisitions based on current expectations and assumptions. These statements are subject to risk and uncertainty, which could cause our actual results to differ materially from these forward-looking statements, and we encourage you to consider the factors described in our SEC filings for additional information. On today's call, we will reference both GAAP and non-GAAP financial measures. For reconciliations of non-GAAP measures to the most comparable GAAP measures discussed during this earnings call, please refer to today's earnings press release. To submit a question during today's presentation, please log into the webinar and submit it through the chat function. Management will do its best to take all questions within the amount of time. As a reminder, this webcast will be available for replay shortly after the conclusion of this presentation on the investor relations section of the company's website at porchgroup.com. The slide presentation will also follow along with the presenter's commentary and can be found on the company's website. Today, in addition to covering first quarter 2022 results, 2022 guidance, and KPIs, the team provided deep dive into our insurance business. With that, let me turn the call over to Matt Erichman, CEO, Chairman, and Founder of Porch Group.

Matt? All right. Thanks, Walter. Appreciate it. Good afternoon, everybody. This marks Porch Group's sixth quarter so far in the public markets. Once again, we're announcing strong quarterly financial results, meaning company revenue and profit expectations. These results should give confidence and certainly has us affirming our previously disclosed guidance. and highlight the strong performance across the business and the continued success of our unique strategy in insurance and home services. Before we get started, I'm going to take a few minutes to share my thoughts. We'll then provide financial results and KPIs for the first quarter, and later dig a little deeper into some of the initiatives that will strengthen our competitive position. In particular, Adam Kornick, the president of our InsurTech group, has joined today to provide an update on our insurance segment. which includes and continues to perform well and is expected to contribute 40% of 2022 revenues. I'll kick off by noting that we are not blind to what's been happening in the market over the last five months, nor to the challenges others are seeing related to the housing and reinsurance markets. Clearly, we've gotten lumped into broad-based selling. The good news to report, the business is performing and the strategy is working. We continue to perform against near-term expectations while simultaneously making strategic progress against this massive opportunity that's in front of us. Case in point, year over year in Q1 2022, revenue was up 134% and adjusted EBITDA margins were improved by a full 25 percentage points, with us today affirming our full year 2022 revenue and EBITDA guidance. At the same time, we're excited to announce that we have filed and received official approval from three states to start using specific porch property data in pricing of insurance with more to come. As we noted, our business is not as susceptible as others to a housing decline. Approximately 70% of our revenue this year is expected to come from B2B SAS fees and insurance, both of which create a strong recurring revenue engine and neither of which would be expected to be impacted at material level by shifts in the housing market. Yes, parts of our business feel the impacts of a slowing housing market, and yes, we would be growing even faster if more homes were being sold. But as we've said, the slowing market we've seen thus far was built into our assumptions and guidance. Given we are so early in our journey with a large opportunity ahead, and given our unique strategy presents many levers to drive growth, we're performing right through this slower housing market and expect to continue to do so. For those that are new to Porch, slide six here outlines a unique strategy to win in these large home service industries. We provide software and services to businesses and select strategic verticals to help those companies grow. By doing so, we generate B2B recurring revenue from software, B2B software fees. as well as gain early and ongoing access to consumers. We help improve their home buying and home ownership journey. In this consistent stream of home buyers, we generate B2B2C, transactional revenues, by helping with the purchase of essential services. Insurance and home warranty are the services we focus on most, given when we sell them to consumers, we can create ongoing recurring revenue and a durable relationship. Here with insurance, we operate this business in a capital light manner, ceding the vast majority of premiums to third-party reinsurers who carry the bulk of the risk, volatility, and the capital requirements within expected risk levels, allowing us to get to scale both rapidly and more predictably. So starting here on the top of slide seven, our priorities for 2022 remain the same with one tweak to number six. So number one, sell vertical software to more companies, our core go-to-market. Two, embed key services and consumer experiences into our software products in a variety of ways to get in front of more consumers and increase our B2B2C transactions. We've just launched insurance embedded within our Flowify mortgage software, providing an entirely new and expanded home buyer audience to delight. Three, we extend our experiences, our digital tools, and our app to consumers we get unique and early access to in order to increase conversion rates on our B2B2C transactions. We've also advanced our consumer app and intend to provide it to every home buyer working with one of our partner inspectors. This is not only a way for us to increase conversion rates, but also to get access to far more consumers. Number four, to continue to grow our insurance business both rapidly and profitably, including launching new products and in new geographies. As you may remember, when we had first acquired HOA a little over a year ago, they were operating in six states. With our most recent announcement of expansion into Nebraska and Wyoming, we now offer our own insurance products in 17 states. We're also integrating home warranty and maintenance services to create a full home protection plan. Number five, we'll continue to build out our data platform. and start to leverage Porch's unique insights to improve pricing for our insurance and warranty products. I'm excited about what Adam will cover later on here in the insurance section. Again, we filed and received approval to use this first key data in our insurance pricing in select states. Lastly, number six, a change as it relates to our M&A priority. As we discussed last quarter, given the shift in the cost of capital, the importance of prioritizing scaling our systems, and the relative public to private market valuation gaps that can exist, we do view 2022 as a lighter year of M&A, and one where a larger focus is going to be on the integration of prior acquisitions and financial controls over our financial reporting. Certainly remain excited about how our platform can accelerate growth for the right acquired companies, and we would look to focus more effort in capital here in the future once the market normalizes. So with that, I'll turn it over to Marty Heimwigner, our CFO, to discuss our first quarter results. Marty.

Thanks, Matt. And good afternoon, everyone. As Matt mentioned, our business is performing very well and was able to report another strong quarter, putting us in an excellent position for the remainder of 2022 and is keeping us on track to achieve great results for our shareholders, including breakeven adjusted EBITDA for the second half of 2023. In parallel, we have accelerated key hires across the accounting and IT organizations to address internal controls and compliance with our obligations under the Sarbanes-Oxley law. Looking at slide nine, the year-over-year comparison of our first quarter results is impressive. For the first quarter of 2022, Porch Group's total revenue grew 134% to $62.6 million, an increase of $35.9 million from the prior year, same quarter, and ahead of expectations. In addition to the strong revenue performance, revenue, less cost of revenue, was 66% in line with our expectations. An adjusted EBITDA margin was a negative 11%, a 25 percentage point improvement from the prior year. Adjusted EBITDA loss was approximately $7 million in Q1, a nice year-over-year improvement. Gross written premium was a healthy $102 million in Q1, which is our seasonally low quarter. We provided annual guidance about eight weeks ago when we already had good visibility into Q1. We are certainly pleased with the performance of our business so far this year, and are affirming our full-year 2022 guidance, with revenue guidance of $320 million, up 66% year-over-year, and revenue, less cost of revenue, what we use as a measure of gross profitability, of $210 million, up 57% year-over-year. 2022 EBITDA guidance also remains unchanged. approximately a 400 basis points year over year margin improvement, which produces close to negative 9% adjusted EBITDA margin and improved full year adjusted EBITDA dollar performance. We continue to invest in strategic growth initiatives as well as acquisition integrations to address our internal control environment. Because much of our cost structure is fixed and the underlying margins of our business are strong, we are able to manage the growth of these expenses and to be confident in achieving our medium-term goal of breakeven for the second half of 2023 and our long-term target of 25% adjusted EBITDA margins. Additionally, we are pleased with what we expect to be our $600 million gross written premium insurance business, and we'll share more about progress here later in the presentations. Given the strong Q1, we are excited about the ongoing performance and momentum at Porch. With that, I'll turn it over to our Chief Operating Officer, Matthew Nagel, to discuss our operating segments and KPIs.