Porch Group, Inc.

Good afternoon, everyone, and thank you for participating in Forge Group's second quarter 2022 conference call. Today, we issued our second quarter earnings press release and related Form 8K to the SEC. The press release can be found in our investor relations website at ir.forgegroup.com. Joining us today are Matt Ehrlichman, Forge Group's CEO, Chairman, and Founder, Marty Heiminger, Forge Group's CFO, Matthew Nagel, Forge Group COO, and Joshua Steffen, VP and Group GM for our inspection real estate team. Before we go further, I'd like to take a moment to read the company's safe harbor statement within the meaning of the Private Securities Litigation Reform Act of 1995, which provides important cautions regarding forward-looking statements. As today's discussion included an including responses to your questions, reflects management views as of today, August 9th, 2022. We do not undertake any obligations to update or revise this information. Additionally, we'll make forward-looking statements about our future financial or business performance or 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 uncertainties which could cause actual results to differ materially from these forward-looking statements. We encourage you to consider the risk factors described in our SEC filings for additional information. We'll reference both GAAP and non-GAAP financial measures on today's call. Please refer to today's press release for reconciliations of non-GAAP measures to the most comparable GAAP measure discussed during this earnings call. 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 ir.forgegroup.com. And the slide presentation will follow the presenter's commentary and can also be found on the website. Today, in addition to covering second quarter 2022 results, updated 2022 guidance, and KPIs, Joshua Steffen, GM of our inspection and real estate software division, will join us to provide an update on our progress in the home inspection industry and several near and long-term strategic initiatives. And with that, I'll turn the call over to Matt Ehrlichman, chairman, CEO, and founder of Forge Group.

Matt? Thank you, Emily. Good afternoon, everybody.

Thanks for joining us for our second quarter 2022 earnings call. We had an exciting second quarter at Porch Group and reported revenues of $70.8 million, a 38% increase from the same period last year. Despite inflationary headwinds and a 14% year-over-year housing market decline through June 30th, worse than what we had originally anticipated, we're continuing to grow nicely. As we've stated, given our current strategy and strong recurring revenue, We expect to continue to grow rapidly right through a harder housing market, setting ourselves up well for the future. In Q2, our teams made great progress with integrations and SOX internal control work. Our insurance business continued to expand, including in the three new states. We released new software modules, such as in the title industry, and we completed a bolt-on acquisition of a home inspection software company, which I anticipate will be the final M&A deal for the foreseeable future. Josh will provide more of an update on this acquisition later. So a few thoughts before I pass the baton. I want to start by acknowledging the continued pressure in the stock market for Porch and other growth software, insurance and housing related companies like ours. We certainly understand the shift that's happened in the market environment toward an increasing focus on near term EBITDA profitability. We're continuing to make thoughtful decisions designed to create long-term shareholder value, but with acknowledgement of this new market reality. We're very confident in our strategy and the progress we're seeing. I love our team and what's ahead for Porch. As has been disclosed previously and given my conviction, I personally have purchased a meaningful amount of Porch stock over the last several months, as have other directors on our board and members of management. The most timely update for today is that we have executed a mutual termination agreement on the acquisition of CSE insurance, effective immediately, with the CSE parent company, Covea. While we're disappointed that we won't be working with this team at CSE, given the current economic and regulatory environment, and given the importance of the capital light aspect of our business model, we're confident that this is the correct path forward. The capital markets have hardened since we first announced this acquisition agreement in Q3 2021, and the cost of capital has increased. Our management team is now able to consider other attractive ways to deploy the approximately $50 million of capital previously allocated to the CSC acquisition. Note, we will continue to operate in California, but now solely via our insurance agency. Our plans to bundle auto insurance with homeowners insurance in 2022 will be delayed past this year, as we had planned to leverage CSE's auto products to launch rapidly. Given our confidence at the time of signing the CSE acquisition that it would be closed by the middle of 2022, we have included the revenue from both the CSE business and revenue synergies from bundling auto insurance within HOA into our previous 2022 financial guidance. And so as a result of removing this from guidance and other factors we'll discuss, we are adjusting both our full-year revenue and EBITDA targets for 2022. So you can see here the updated guidance on slide six. So that's adjusting our full-year 2022 revenue guidance from $320 million to $290 million, which would represent 51% year-over-year growth. We now expect adjusted EBITDA to be negative $30 million for the year, assuming no severe weather events. Removal of CSE and corresponding auto insurance revenue represents the majority of these adjustments. Also included in our updated guidance is the latest forecast declines in the housing market, a reduction in spending on new growth initiatives, including the elimination of approximately 80 open roles in order to pull forward our adjusted EBITDA profitability. And lastly, it also includes one-time SOX control and testing-related costs in the mid single-digit millions this year. We've seen really good progress to date and are ahead of where we had anticipated related to the second half of 2023 profitability guidance we communicated last quarter. So with the increase in unrestricted cash by approximately $50 million, given the CSE termination, It reinforces the opportunity to strategically deploy capital for the benefit of shareholders. We're continuing to look at this very closely and continue, including both share or convertible note repurchase opportunities and more, and looking to do that and consider that at the right time and in the right manner to create the most value. In the meantime, we'll continue to focus our energies on what we can control, which is execute and building our business and demonstrating over time with performance how the company should be valued. And we believe, and I believe, the long-term value of our business will be significant. As we fully roll out the app to inspection consumers, and as we embed insurance into our mortgage software Flowify, we expect to gain more access to many more homebuyers to grow our business of insurance, warranty, and more. As we expand our insurance operations into more states, as we use more of our proprietary data to price more effectively and find ways to make our insurance products even more capital light, we believe we can build one of the fastest growing and most advantaged insurance companies. We really are just getting started. For those new to Porch, slide seven outlines our unique strategy that I'll hit on quickly. We provide software and services to select strategic verticals to help companies grow. And by doing so, we generate B2B recurring software revenue, as well as gain early and ongoing access to homebuyers who we help to improve their homeownership journey and generate consistent revenues with their purchase of important services such as insurance and warranty. Starting from the top of slide eight, our priorities for 2022 remain the same as presented at the end of the first quarter. One, sell vertical software to more companies or core go to market where we become deeply embedded. 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, which leads to three, extending our experiences, our digital tools and our app to consumers. The more we can support homeowners with our unique services, the happier they are with their experience. Four, continue to grow our insurance and warranty businesses both rapidly and profitably and continue in launching new products and in new geographies. Five, continue to building out our data platform and leveraging Porch's unique insights to improve pricing for our insurance and warranty products. And then lastly, related to M&A, our focus over the next year will be on the continued integration and growth of past acquisitions. So with that, I'll turn it over to Marty Heinbigner, our CFO, to discuss our second quarter results. Marty, to you.