Porch Group, Inc.

of 1995, which advised important cautions regarding forward-looking statements. Today's discussion, including responses to your questions, reflects management's views as of today, February 25th, 2025. We do not undertake any obligations to update or revise this information. Additionally, we will make forward-looking statements about our expected future financial or business performance or conditions, business strategy and plans. These statements are subject to risks and uncertainties, which could cause our actual results to differ materially from these forward-looking statements. Please refer to the information on this slide and in our SEC filings for important disclaimers. We will 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 measures discussed during this earnings call, which are available on our website. As a reminder, this webcast will be available for replay, along with a presentation shortly after this call on the company's website at ir.forgegroup.com. Joining me here today are Matt Ehrlichman, Porch Group CEO, Chairman and Founder, Sean Tabak, Porch Group CFO, and Matthew Nagel, Porch Group COO. Thank you. I'll now turn the call over to Matt for his key updates.

Good afternoon, everyone. Thank you for joining us. We demonstrated exceptional progress this last quarter toward our objective of being a new kind of homeowners insurance company differentiated by, one, advantaged underwriting with unique data, two, early access to home buyers, and three, a customer experience that makes the move and home simple. Our vertical software powers 40% of the home inspection industry, 40% of title transactions, and operates in key sectors, including mortgage and roofing. Our data platform now includes home factors for 90% of US properties, and early insights into 90% of US home buyers. We are a leader nationwide in providing moving labor and expanded long-term partnerships with the major moving companies, utilities, insurance agencies, and more. With these advantages, we aim to build one of the largest and most profitable homeowners insurance companies. I believe this update today will demonstrate we're on our way to doing so. So now onto the key highlights, and there are a number of them that I'm excited to share. Three years ago, we set an important goal to hit adjusted EBITDA profitability for the second half of 2023 and the full year 2024. I am proud to share that we achieved that goal, delivering $7 million in adjusted EBITDA for the full year 2024. This means that in the fourth quarter, profitability was meaningfully better than guidance. adjusted EBITDA was a record $42 million, net income was $30 million. The progress we've made is even more clear as we look ahead. For full year 2025, we are providing adjusted EBITDA guidance of $60 million at the midpoint, a 15% adjusted EBITDA margin, and more than a $50 million increase over 2024. More, we are increasing our outlook for revenue, gross profit and adjusted EBITDA for 2025. 2025 revenue guidance is $400 million at the midpoint. Going forward, our revenue is much higher quality given our transition away from holding weather risk toward a simpler commission and fee based higher margin model. Case in point, we are guiding to approximately 80% gross margins in 2025. At our December investor day, we highlighted our 2026 target of $100 million of adjusted EBITDA. Given this is our first earnings call since our investor day, I do want to confirm that we are on track and remain confident in achieving this goal. Importantly, we expect Porch to generate cash for shareholders this year. We expect to deliver positive adjusted EBITDA every quarter going forward. This is an exciting time for the company. So the end of 2024 marked an important moment for Porch. On January 1st, 2025, we completed the formation of the Porch Insurance Reciprocal Exchange, which we may refer to as PIRE, and the sale of our Homeowners of America insurance carrier into PIRE. This transforms the financial results for Porch Group shareholders to be more predictable and higher margins. The member-owned design of the reciprocal means both Pyre and HOA will operate as a separate entity outside of Porch Group. Porch will receive commission and fees for operating Pyre, benefiting from higher margins and more predictable earnings. I do want to zoom out here just for a second and provide some context on our journey. In the last few years, we have focused on profitability, and certainly I'm pleased with the progress. We've now entered this next chapter, one focused on growing rapidly while simultaneously expanding margins. Now that we've completed the optimal structuring of our insurance business, we've reopened geographies and reactivated distribution partners. We've already seen substantial growth in new business premium here in Q1. Thank you to our employees for your work to get us here. Thank you to our shareholders for your support. We are excited to deliver spectacularly for you all. Now, Sean, over to you to provide the financial details.

Thank you, Matt, and good afternoon, everyone. As a reminder, Q4 2024 revenue has a tough comparison due to two items. First, in the fourth quarter of 2020, in the fourth quarter, excuse me, of 2023, revenue was $26 million higher due to lower reinsurance seating following the Vestu matter. And second, in the first quarter of 2024, we sold EIG, our legacy in-house agency. With that consideration, total revenue in the fourth quarter of 2024 was $100.4 million, a $14.2 million, or a 12% decrease from the prior year. In addition, in the fourth quarter of 2024, there was a $5 million non-recurring year-end adjustment, which reduced revenue and adjusted EBITDA related to the wrap-up of some legacy reinsurance complexity and light investment. Absent these non-recurring items, the business performed well and has strong 20% organic growth trends led by the insurance sector. Revenue-less cost for revenue was $89.3 million, an 89% margin. Q4 adjusted EBITDA was $41.8 million. That's a $30.1 million increase over the prior year and ahead of our expectations, driven by strong execution, risk selection, capital allocation, and cost control. I want to take a second to show appreciation and highlight the performance of the team. This is quite a significant improvement in adjusted EBITDA year over year. Gross written premium was $112 million, broadly flat compared to the prior year with premium per policy increases offset by the divestiture of our legacy insurance agency EIG in the first quarter of 2024. The reciprocal approval and formation took a bit longer than originally anticipated, but we reopened for growth late last year. Matthew will talk through the progress shortly. Now looking at our results by segment. In insurance, revenue was $72 million. The items I discussed above for total revenue all apply to the insurance segment. Absent these non-recurring items, the insurance segment performed well and has strong 29% organic growth trends, driven by increases in premium per policy. In vertical software, revenue was $29.3 million, a 6% increase from the prior year, driven by SaaS price increases. Moving on to adjusted EBITDA. Insurance adjusted EBITDA was $48.8 million, a $17.2 million increase over the prior year, driven by our insurance profitability actions and advantage underwriting, which have helped us select the right risks to insure. Vertical software adjusted EBITDA was $5 million, a $5.3 million increase over the prior year, driven by the SaaS price increases and strong cost control. There was a 500 basis point increase in revenue less cost revenue margin in this segment. Finally, corporate expenses were $12 million, $8 million lower than the prior year as we continue to manage costs and see the benefit of the actions we've taken. Now let's take a step back and look at our full year performance. Total revenue for the full year 2024 was $437.8 million. a 2% increase over the prior year driven by the insurance segment. As a reminder, in the prior year, the best-do-matter resulted in approximately $55 million of incremental revenue in the 2023 comparative period. Revenue-less cost of revenue was $212.2 million, representing a margin of 48%. Adjusted EBITDA was $7.2 million for the full year. better than our expectations, driven by strong execution across all segments. This was an increase of $51.7 million over the prior year. Gross rent and premium decreased from the prior year, driven by the divestiture of EIG in Q1. Otherwise, we managed HOA gross rent and premiums to our plan of roughly flat compared to the prior year.