• Adjusted EBITDA (Q4 2024): $42 million, a record for the company.
• Net Income (Q4 2024): $30 million.
• Revenue (Q4 2024): $100.4 million, a 12% decrease from the prior year.
• Revenue Guidance (2025): $400 million at the midpoint.
• Gross Margin (2025 Guidance): Approximately 80% expected.
• Adjusted EBITDA Guidance (2025): $60 million at the midpoint, with a 15% margin.
• Gross Written Premium (Q4 2024): $112 million, broadly flat compared to the prior year.
• Insurance Revenue (Q4 2024): $72 million, with 29% organic growth trends.
• Vertical Software Revenue (Q4 2024): $29.3 million, a 6% increase from the prior year.
• Corporate Expenses (Q4 2024): $12 million, $8 million lower than the prior year.
• Cash and Investments (End of 2024): $70 million, excluding HOA.
• Surplus Note Balance (January 2025): Increased to $106 million.
• Gross Loss Ratio (Q4 2024): 21%, down from 36% last year.
• Gross Combined Ratio (2024): 79%, an improvement from 88% in the prior year.

• Warning! GuruFocus has detected 4 Warning Signs with PRCH.

Release Date: February 25, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Porch Group Inc (NASDAQ:PRCH) achieved its goal of adjusted EBITDA profitability for the full year 2024, delivering $7 million, which was better than guidance.
• The company reported a record adjusted EBITDA of $42 million in Q4 2024, with net income reaching $30 million.
• Porch Group Inc (NASDAQ:PRCH) provided an optimistic outlook for 2025, with adjusted EBITDA guidance of $60 million at the midpoint, representing a significant increase over 2024.
• The transition to a commission and fee-based model is expected to result in approximately 80% gross margins in 2025, indicating a more profitable and predictable business model.
• The formation of the Porch Insurance Reciprocal Exchange (PIRE) and the sale of the Homeowners of America Insurance Carrier into PIRE are expected to transform financial results, making them more predictable and higher margin.

Negative Points

• Total revenue in Q4 2024 decreased by 12% from the prior year, impacted by nonrecurring items and the sale of EIG, the legacy in-house agency.
• There was a $5 million nonrecurring year-end adjustment in Q4 2024, which reduced revenue and adjusted EBITDA.
• Gross written premium was flat compared to the prior year, affected by the divestiture of the legacy insurance agency, EIG.
• The Reciprocal approval and formation took longer than anticipated, delaying growth initiatives.
• The company is facing ongoing litigation related to the Vesttoo matter, which could impact future financial outcomes.

Q & A Highlights

Q: Can you provide more color on the enthusiasm for the 2025 guidance increase, particularly in specific segments or trends? A: Matt Ehrlichman, CEO, explained that the plan has come together as intended, with the formation of the Reciprocal and the sale of HOA proceeding as planned. They are seeing strong execution and growth in the insurance segment, with a high conversion of premium to revenue and strong gross profit margins. Shawn Tabak, CFO, added that the insurance segment is showing strong early progress, which supports the increased guidance.

Q: How are agencies responding to the reactivation of growth plans, and what are the initial thoughts on surplus and take rate? A: Matthew Neagle, COO, noted that agencies are excited about PIRE and the Porch insurance product. They have reopened geographies, adjusted commission plans, and invested in growth teams. A new leader from Farmers has been hired to engage with agents, and there is positive momentum with new policies and active agencies.

Q: With PIRE closed, how is Porch leaning into growth, and what proactive steps are being taken to drive business growth? A: Matthew Neagle, COO, emphasized reactivating the agent channel and ensuring the right incentives are in place. They are also benefiting from natural rate increases and investing in sales and marketing, particularly in Consumer Services and software. The goal is to reach $500 million in gross written premium this year and $3 billion over the next 5 to 10 years.

Q: Why not raise the 2026 guidance despite the 2025 increase? A: Matt Ehrlichman, CEO, stated that while they are seeing great progress, they want to avoid getting ahead of themselves. The $100 million adjusted EBITDA target for 2026 remains important, and they will update guidance as they get closer to that year. Shawn Tabak, CFO, added that they prefer to update guidance annually rather than quarterly.

Q: Can you provide more details on the Home Factors product and its growth trajectory towards 2026? A: Matthew Neagle, COO, mentioned that Home Factors is performing well in underwriting and pricing. They are engaged with multiple carriers for testing and use, and are continuously adding new factors. While revenue assumptions for 2025 are minimal, they expect growth in 2026 and beyond, focusing on executing and expanding the product's reach.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.