Porch Group Reiterates $32m Q4'24 Adj EBITDA(1) Guidance and Shares Investor Day Highlights
SEATTLE--(BUSINESS WIRE)--December 09, 2024--
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 Guidance(1)
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 $3bn(2) 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 million(2) in 2025, $600 million(2) in 2026, and outlined a path to scale to $3 billion(2) 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:
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Porch Shareholder Interest Revenue of $380 million in 2025 and $460
million in 2026
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A significant improvement in margins, including Porch Shareholder
Interest Gross Profits of $297 million in 2025 and $365 million in 2026
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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 Interests(3) are Insurance Services, Software & Data, and Consumer Services. The financial targets in this release reflect expected segment changes. Porch outlined financial targets(2) , including:
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Insurance Services: $200 million in revenue in 2025, scaling to $245
million in 2026, with 80% gross margins and 33% Adjusted EBITDA margins1
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Software & Data: $105 million in revenue in 2025, scaling to $130
million in 2026, with 81% gross margins and 31% Adjusted EBITDA margins1
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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:
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Today, Home Factors has 50 insights and targets to expand this to 100
by the end of 2025
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The insurance data analytics TAM represents a significant opportunity
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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."
1) See Non-GAAP Financial Measures section for the definition. Porch Group
is not providing reconciliations of expected Non-GAAP financial measures
for future periods to the most directly comparable measures prepared in
accordance with GAAP because the Company is 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 the Company's
control.
2) Porch is providing targets based on current market conditions,
assumptions, and expectations as of the date of this presentation.
Actual results may vary due to various risks and uncertainties and there
is no guarantee that we will be able to achieve these results. Please
refer to the Forward-Looking Statements safe harbor for further detail.
3) Financial targets represent Porch Shareholder Interests following the
expected launch of PIRE and sale of HOA to PIRE in January 2025. For the
avoidance of doubt, the targets do not include the future results of
PIRE or HOA; while we expect to consolidate their results into Porch
GAAP financial statements, the PIRE and HOA results will be allocated to
non-controlling interests and not to Porch shareholders, and will
therefore be excluded from Adjusted EBITDA.
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;
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