PRCH - Earnings call 3 2023 | Porch Group, Inc.

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Lois Perkins

Good afternoon, everyone, and thank you for participating in Porch Group's Third Quarter 2023 Conference Call. Today, we issued our third quarter earnings release and related Form 8-K to the SEC. The press release can be found on our Investor Relations website at ir.porchgroup.com.Joining me here today are Matt Ehrlichman, Porch Group's CEO, Chairman and Founder; Shawn Tabak, Porch Group's CFO; and Matthew Neagle, Porch Group's COO.

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. Today's discussion including responses to your questions reflects management's views as of today, November 7, 2023. any update undertake information. revise not do obligations or to this We

plans, for we about current are or to actual business and statements make expectations our conditions, could cause risks the expected strategy Additionally, are forward-looking subject or and our assumptions.These will risks based reciprocal the exchange future statements financial business and to including on which risks forward-looking these the risk statements. application We uncertainties -- results to SEC you performance our the materially other in risk these as from encourage factors slides information, consider filings and cause could from for to materially that our and information well differ in expectations. described current additional differ as factors results uncertainties, including factor

both discussed measures to We call. this refer reconciliations GAAP call. Please release financial measures today's measures of non-GAAP and GAAP today's during non-GAAP to comparable on press for earnings most will the reference

available shortly a for at turn As will to Matt. with the Porch company's Chairman Founder Group. call you, this Matt ir.porchgroup.com.I'll of on after the to Over website now and over reminder, the along replay CEO, call Ehrlichman, this webcast be presentation

Matt Ehrlichman

everyone. strong million profit afternoon, for Good Lois. EBITDA our positive had as a in you Thanks, adjusted We quarter a joining. of company, Thank $X highest with including the quarter.

up job. fired and guidance significantly. you EBITDA I'm adjusted The with excited delivering are revenue the done and our on an has increasing We guys. to news incredible are targets team share and

will dive a take minutes presentation. share we thoughts I'd few and to like we the then in, X dive Before into to

early the keen XX market, business driving effectively cost focus softening hold.Over with deductible are adjusted returns actions, increases exclusions as areas dramatically, market challenging in our premium we last on insurance headwinds throughout a we've that increases increased changed our including underwriting expected rates initiatives costs business, housing to price the interest capital executed policy with to generating months, in in the and market new warranty software reduction XX modules, when these risk drive per coupled these businesses, allocation our and and took strong months XX increases, profitability. and reinsurance launching EBITDA in like So

foresee our macro there other Vesttoo, execute and we're by of unexpected effectively this shown against environment what at everything couldn't reinsurance a challenging fraud certain us we global insurance thrown our period, control. same this While at headwinds cause, focused time, business.During we've historically events were partners would for challenges we stay the weather and widespread including about, one

actions we is up that have profit, I'm price consumer insurance will use focus It Premium suggests expect a and our to results is and capital and nonrenewals continues today our select retaining and insurance others. moving second about through per combined ratios in get here. unique data and information combined interested in the quarter unprofitable, the quarter increases, for almost this homeowners continued our X. showed will and we've data Revenue then increase profit the Adjusted communicated to strength taken and quarter, revenue actions revenue.Further, to and to data, well million business. policy that squarely XX% significant a results. end to proven XX% milestone are can QX definitively $X confirm demonstrate our the in gross and to million. that homeowners positive have $X on including of and third We adjusted are the our grew cost our was achieving taken insurance in getting unprofitable detail our in that not utilizing to time million to and the another around same weather XXXX. net that our demonstrate share of The catastrophic Best proactively was the Carolina. cost revenue quarter of these for XX% achieving that and EBITDA, $X have XX% our All the In XXXX revenue target. A.M. million In the report. our and in lock in for policies lowering to million third drove top we're carefully, market other the carriers. costs, and our this for profitability better weather the managing In Hurricane profitability demand is and loss Texas base XXXX, $XX company $XXX South than a unique other to shared continue expected up a for time surprised actions quarter, not bear our way year. in better our ratios be policies, ability this discretion, our tier rolled we've we property less impacts.So $XX Revenue we've our areas hailstorm EBITDA growing QX profitability. was address loss pristine historically the of massive we property million Georgia the actions fruit. substantial on to less than goal can EBITDA strategy I loss risk this this better loss and third to year-over-year, in nonrenewing ratio that as despite Slide is in execution though, half know ratio. there XX% bad it data Idalia customer at million. when of to to for than we adjusted material XX% million XXXX. our power QX including ability our The we increased is products prior events. In A grow we is that unique the price market, in and better a than is $XX excited now $XXX dynamic worse, premiums posted weather-related clear, driving a that but We with written with be volatility.If more previously making gross expectation required takeaway profitability share Matthew point now even and grew at tremendous we're talk here, are we was that's of and on not that discipline, weather focused large March posted Shawn ratio underwriting

a over to turning call Shawn. updates Lastly, key before few the

on July X. terminated larger of As we previously X, former shared, reinsurance serviced third the in August our effective agreement allegations Vesttoo, one the against platforms, quarter. the We

some Porch's last a supervision from good expeditiously after all strength HOA which after, the supports supervision a mentioned quickly. from enabled that sooner out plan, HOA, the review homebuyers carrier, the placed last than their played temporary and worked the historically the to process.As a on of connect we was week this HOA's in the to our been announce TDI of rather Their of pleased insurance with And to began performance under supervision operating lifted the quarter, efforts, produce their plan. this, agencies of by with part own. finances and data our go-forward respond TDI.We tremendous move to questions I to want focused give third-party in go-forward results HOA who underwriting detailed are TDI QX a to our unique strong team ecosystem who's advantages, our to credit and

able progressing to a Here, nicely well. overall lower we rates These partnerships are conversion and see performing are higher with cost structure.

the software new launch to to deal products and with with our a continue expanding businesses We're industries XX% our software in these QX. Our declined margin drive market, year-over-year relationships time improving housing which when customers. continue to cross-selling during

Shawn. sales guidance. more versus than business hand now over financial increased an inspection performance As our in to XX% Shawn QX Over to and unit our XXXX.I'll to cover it you, example,

Shawn Tabak

cost $X.X year, basis software nonrenewal year.Both by driven target. is Thanks, we important Matt, vertical of control. well, toward on segment the by was the segment year, be faster premium our and relocations focused good was associated the million of policies over and increase driven by expectations particular, compared on and QX of Revenue businesses. in revenue rate Revenue was year-over-year over $XX.X a Overall, nonrenewals, in mix products as by the ceding X resulting software XX% removing had rolling cost to the with XXX headwinds. other impacted less prior industry-wide we segment. insurance of margin decline.Our to declines a million, afternoon, third and strong higher-margin industry, to percentage in adjusted we million, revenue in in at of premium driven points market. declined and results $XX.X and year, with EBITDA million, XX% XX insurance prior than manage segment Adjusted written moving with price from this the in million, half partially with business risk driven in segment and the Vesttoo lower per driven policies, by a strong higher a coupled data XXXX, in was XX% policy insurance and continues over primarily primarily and driven per remain per quarter increases of In the to increase the improvement termination. risk less point the in growth. second in continued modeling revenue was approximately Gross group better by software ratio the third underwriting $X business, margin, of in revenue the profitability which out vertical was policy.Looking vertical EBITDA by loss Approximately of is insurance year revenue, interest premiums XX% software targeted prior revenue ahead actions, XX% of EBITDA gross an the moving with year. of premium margin, services offset the of $XXX.X managing was a up insurance ceding. housing risk growth housing percentage our third environment to a of profitable and over segment revenue million increase our quarter, support growth driven year, our was point us everyone. segment In improvement the segment, expense an a less the half revenue be well were increases adjusted increase insurance setting by increases market in soft achieve adjusted $XXX prior deemed prior XXXX, policy, higher million, EBITDA through an segments shift market increase a Overall, the segment, $XX.X are performing the which by reinsurance new a XX% housing consistent from quarter our $XX.X by future related our services profile quarter, offset Vertical unprofitable XX. our in relatively XX% in due the the to in the business. by Slide In in decrease million, the increase XXX% to the prior prior corporate revenue of increase segment

third adjusted segments segment, adjusted both adjusted EBITDA delivered third $XX segment quarter. Insurance was to margin. EBITDA by Moving XXXX, a the in the quarter of XX% positive EBITDA million in

some cost Our loss EBITDA fixed I benefiting from improvements insurance was the in of control the segment, a majority actions of adjusted adjusted $XX.X business homeowners of revenue certain in $X.X accounting gross mentioned. software Vertical XX% driven were to million, this incurred in drove margin expenses year, in offsetting revenue be EBITDA control balance the decline. that X% strong prior to with and of the will ratio sheet. XX% expense fourth third total the other Corporate quarter, and reducing quarter.Moving the the to from million which timing expenses, by the

This unrestricted investments. reciprocal As XX, at $XXX and of cash when includes investments million million approved had to to HOA, launched. which of transfer of we September $XXX expect cash the we and and

million. $XX increased Total QX, unrestricted investments by flow $XXX Excluding operations cash HOA, million held of cash cash. million and unrestricted Porch in from approximately with of $XX

In million, Vesttoo well some the at due capital cash when million QX, by as operations driven the cash the of EBITDA of $X.X working terminated was we also that adjusted flow addition withdrew to timing of of from which from to made trust $XX relationship. as be will we HOA payments, in

plus term although announced, XX-year of subject with subsidiary. cash based In of payment million TDI Porch investments, on million Group In XXX our insurance our our million intercompany levels interest addition, a return, businesses.As $XX.X surplus company, restricted of previously note, and Group SOFR Porch for Porch rate third a points. at million and Group This quarter, $XX primarily held invested captive HOA. in the and $XX surplus approval an to is $XX.X HOA, received parent an note carrier warranty is in wholly-owned

discussed Porch Group was all investment to $XX a from addition, Vesttoo XX, it provide level, Last In for from healthy we committed Vesttoo reinsurance industry. to restores acquired many quarter, its that in HOA's This update its HOA. the surplus impacting capital. claims million.I and fraud an September the a and on Federal Court wanted Vesttoo's also financial impact related Vesttoo contract filed that perspective. which to arranged since rights and had at in HOA has fraud team for bankruptcy U.S. admitted a massive a

force, maximize managing contract to firm costs of -- is funds. includes currently learned with recovering a order. to cover task tier help HOA firm recovery committee We creditors these our X-member contingent and others recoveries. the fee creditor also supervision appointed was law trustee As to beginning team Matthew, funds, are while TDI associated.We pursue the charged a Matt, all pursuits issues, replacing and addressing law a myself, and empowered and as the approach engaged investigate our the have the soon quickly the which will of and that assembled mobilized assess by contingent This and U.S. top terminate situation, seek recovery. Vesttoo, bankruptcy reinsurance we banks

law litigation anticipate time, firm, At our will going companies we information We reinsurance pursue pursuing that and more claims the enforce be which intending with broker and the with specific vigorously currently on and right will all are the to provide rights damages. we forward. we working

on million related approximately the increase not therefore impact the are will today. guidance.So less at million pursuing like increase this we time. increase seeing XXXX we and a in a that. are increasing that ceded QX, -- QX will at this comment look resulting and share start in in continue will effective million about $X the approximately of in premium, the positive more increase other financial business terminating Today, We in By we Vesttoo also of substantial estimated I'd This revenue, recovery, year here. discussed $XX avenues impact revenue I of which results portion reflecting revenue the less our XXXX guidance, contract further of to approximately cost driving from the let's are we at EBITDA. adjusted in take the QX, strong impact trends full $XX

an year Claims historic are suggests I catastrophic revenue increasing ratio for well We million, adjusted changes guidance. are gross increasing line outlook continues XXXX, $X our from million reflecting ceding revenue EBITDA business, premium loss long-term loss outlook This average for increases. million, outperformance reinsurance mentioned, XX% in with of which cost as Similarly, adjusted million of of excluded are $XXX impact policy revenue excess the experiences. of in historical organic as fourth per our positive $XX to the including also our with of of to in we just quarter the the $XXX assume the in across EBITDA a QX. the to less weather

We are to cumulative and of XXXX profitability EBITDA full in on and adjusted on year second the basis beyond. this deliver track year a for half

business over hand $XXX our gross I'll guidance of for updates. and time reiterating written your KPIs today, to are now and We cover to million.Thank you premium all Matthew other

Matthew Neagle

was year Slide XX% increased headwinds. to Quite of the the to we'll as moving. third versus with update quarter and continue XX,XXX Shawn. Average on quarter, revenue housing due continued company predominantly monetize market headwinds I'll XXXX opportunity XXX,XXX $X,XXX to QX of number we in $XXX Thanks, today, a We month had to quarter, relocation in a broadly update The in. similar so average our last prior right on KPIs. in corporate decrease effectively. dive and the insurance more housing monetized per to bit XX, quickly in XX%, per On services companies

was the to the at XXX,XXX broadly Gross the now year in quarter. third Finally, XXX% insurance force services $XXX service up in in year KPIs. as average our warranty.Looking insurance flat per such versus prior premium was prior higher versus $XXX, written monetized due million, and from revenue value growth policies

fewer ratio data, these lower identify managing increases premium largely that executing previously policies our XX,XXX the would are huge a is and was are per nonrenewals. able we on wanted and which the prior likely reinsurance volatility, third our policies flat We fact and our $X,XXX, of results. be focus the policy team our to premium those higher against offsetting an not this impact was that you premium to are lower in that doing increases XXX% $XXX is profitability retention policies targets. quarter renewing policy revenue to our gross risk from most unprofitable. our to underwriting per see implementing our in with mentioned costs effectively, boost requirements. risk policy targets with manage effectively lower win.With with risks increase And premiums execute plan and an against Annualized for we to to year. to per are our loss job changes from of able the The We ratio. corresponding can capital loss excellent Premium weather impact The the year

prior increase loss rates in XX% year, quarter. gross carrier of in insurance take XXXX.Our the of to more and had almost even ratio a per This versus an third annualized the useful more believe understand policy insurance policy, $X,XXX the quarter, was we've our to added of economics Premium per which way premium unit in third XX% a quarter, expect we we is business.

cost quarter. quarter in a $XXX to gross per EBITDA claims As the policy is XX% target of approximately ratio, loss which Shawn equivalent assumes said, adjusted our profitability average XXXX fourth

$XXX to compare fourth quarter have announced average claims you X-year due profitability previously cost start having is insurance our changes the underwriting that for progress the into policy. results. Part per see we of the You flow can against to to

Our there reinsurance and above Texas was catastrophic end $X mostly XX% to XX% non-cat gross ratio to million were of due cat-related quarter X% loss in the historic relating hail. trends, our which losses relating to mentioned, consists of the in quarter, quarter weather. Matt of in the net

substantial shines in XX%, the prior data year. see combined can versus how of You only XX risks.We've makes XX% and have XX% a year. our loss This really identifying our other are on team showing prior versus non-cat highlight. lower demonstrates There ratio ratio unique the changes on percentage-point included working also like loss I improvement been to a of key the would which impact

use our in We use continue for the proprietary XX, of to pricing. now more where states, we expand data it

We minimum X% value a to X% home have hail of the of other deductible meaningfully with perils. deductibles increased and or wind

losses will per increases claims well as We in implement further which claim. decrease as XXXX will deductible rate

we implement geographies exclusions including Additionally, coverage will certain for in wind.

We are of the Georgia. state exiting

us to we targets, stewards avoiding higher as where being about are risk our the does was losses are profitability, profitability when as prioritize hit nonrenewals, state here, strong rates signal implement and a our of we We that executing will capital.And we are they the serious not need true discussed, policies. to data XX,XXX allow previously on

in focus nonrenewing positioned be lower on geographies. XXXX to then well are these continue additional to will ahead. for actions, growth through, we as particularly We policies gross in volatility. will expect strategically profitable profit, written After our look capital,and more lower manage look in Through premium actions high-risk to we we at rolled XXXX,

making last reaching measures. macro would execute a XX I over tasked year. process, coming running activity continuing an quality we our saw $XX advisers, in reducing for we an and roles reduction review.Through we hand annualized audit when Matt. spend management update this now HX opportunity there vendors contractors, in through the XXXX, reduced have cost million, forward.Thanks, unit and impact communicated to to HX I'll cost it that maintain In profitability our reduction approximately have reviewed an spend have business total, leaders cost back XXX ago, substantially. force executed have and our a share months firm, while This process is to this by to approximately driven cost headwinds eliminated includes we Finally, on everyone. like reductions. and new We efforts where XXXX RFP an in

Matt Ehrlichman

Shawn. Thanks, Thanks, Matthew.

to we points. Before I'll move Q&A, make some final just

said positive and appreciate XXXX patience second we half we target. our adjusted EBITDA. we're as results of track shareholder adjusted EBITDA I First, our today, base on of profitability $X of our are QX the excited for about million

has to restart on year lifted, look the XXXX. continue Second, weather that forward now a in approval next target operating TDI been be I with to we reciprocal to model. able application will fee-based, less sensitive supervision

other expand profitability. to actions significant property to use continue insights. roll underwriting in out with to and data we we've unique and look more driving of states our Third, new further This mentioned are the

we Going and deliver reiterating balancing that, significant important a from right toward in strategic go exciting ratio remarks. times and shareholders.So open the XX%, operator. XX% with for for one.Finally, next this We'll the obviously, to months non-cat value. down pass the with to growth big shares business Q&A. many increasing demonstrating strong our vision company against wrap call Please be quarter, place will a and at to others momentum ahead strong our us more million we'll in profitability is [ a opportunity. have goals. a prepared believe team last updates, loss X in over market the than we the I the for X.X I belief purchased model We're look to and These call my have during time ], the the forward and long-term with the and eye open

Operator

with Daniel from question Benchmark. take Kurnos [Operator Instructions] We'll our first

Daniel Kurnos

reciprocal just to 'XX? at I headed than you that? want said your don't XXXX. look process? understanding reevaluating quickly the get a you're mean, happens. could of I Are Great. just reason any the think there Matt, you Is on what TDI I early that know I gotten just where target not books kind that's have on an process, just closer why

Matt Ehrlichman

Yes.

cap amount process First, take out of to coming the tip moment to just quickly to quality us they the tough the they of after give the a the respect but that of appropriate we partnership, work able way. a just really, to work tremendous company in just people, very out Vesttoo sometimes team fair, of or how TDI with, really the I'll of us but appreciation with appropriate of move were have very and problem. for review the kind -- fair, and they help move supervision I the the

to up-to-date to incomplete and supervision In we and just focus HOA application reciprocal, of TDI terms obviously, breath, in then be frankly, have able we're the will unit going on to be the to They able XXXX that.And take into now, us understandably, in an turn, released process. solely get we'll Dan, on on week. year, the able be focused is supervision as we currently that to and that just out we be update we're to as go year. pending -- was We of update in a status weren't to on able expect focused supervision. next which so, business in I'd provide able while were the last remain timing and wanted through that

Daniel Kurnos

the I written profitable. if the in to or here All started terms reciprocal going to better talked guys revenue less handle next obviously, right, exposure opportunity, if it talking more just be do right. you are last you concept. market then a tremendous year scales? risk? underpinning like of you've chime -- in a you down, mean, quickly know gen risk And if Matthew, want reinsurance impact your And too, And Fair you How down enough. in the manage we you also to like on have to think -- willingness third-party on, agency. about or to this the cat the your either more which lead I the think I you third-party take how got stuff quarter premiums about managing gross is about feel

Matthew Neagle

in, Matt, on. jump Yes. I can you can layer and,

that, The coverage, all we fulfillment all the agencies, leads benefit take first the have. for a course, those excited that interested risk, their point around third-party panels of about through are and really get on to don't diverse the have and of we expertise. and more having of network And, of we carrier of we any

those of we so us a for more provide agencies over our for time can think doing to that And products. sell can be play and also incentives smart

and closely, focused I we profitability. think We're are with very GWP grow as can very needed. managing it on We GWP confident.

have actions that see changes we've business, bunch through a to to We changes we want that increases, deductibles, price including roll to of the more taken exclusions.

will think for we that us of of All position lot a long-term growth.

Matt Ehrlichman

others own structure for fee Shawn the separate less of structure next less our reinsurance then into us from generally mean, That like last manage here industry. that's signal going the And the don't carry we here is and carry that bearing note commission risk. or now than has would part a it's one like risk third-party right place, and entity that Dan, and our the the the it more better generally. launching -- performed, book -- perspective.We that less kind able did good and attractive able to reinsurance be end well Obviously, risk forward. to expect reciprocal and substantially that think next to know given risk to vehicle opportunity our strategy to year, renewals question I would taking we can in get we we year, we in XXXX. the so the completely your entity we then transferring captive so be up last to less a then, add, would your thing up of and on would come how Between use to I really we in to on creates for this as

Operator

next We'll Stephens. from question with take our Campbell John

John Campbell

quarter. apologize, good have a late Congrats for And little I to I results Very a snapback here. guys. on you good on did jump

maybe unpack insurance that you already was have you or or you can severity actions policies that how don't maybe best talk much the better combined know was the better to losses, the bad as as to activity can kind if tell, can that strategic maybe guys addressed -- losses this. as of ratio I versus just But hoping just the of things, for taken of just the less well maybe you loss the guys as side generally data? you So I you've -- avoiding higher less proprietary risk policies if on

Shawn Tabak

$XX actions take that segment overall, is of premiums one. that increased insurance gross per can increasing I the policy. that Look, from the I the EBITDA we've million improving Yes. taken around Yes. adjusted year-over-year. ratio think significant driver loss The

but saw we respect ratio as XX loss XX, to continue we think year-over-year. which -- Matt getting did are XX, those that, data that more, to job the loss out great.As significantly that team to market nonrenewing from and really with leverage really you our loss ratios. we'll and talked decile do XXXX, Our significant risk a reports, year, the underwriting already we policies. talked higher on about said inspection of ahead that were benefits changes improve pages we we the policies a specifically we're see of that more leveraging we that the data gross taken top some various last results, And be to benefit through quite actions today we've the think non-cat I to decreasing data other of underwriting continuing in And ratio. the with thing I today, continue The that about, there. have and seeing great that And our performer

Matt Ehrlichman

John, business. would team's -- ratio, just good just certainly I'll ratio the there add the But our X of And combined -- of combined proud done we across reduction, combined from nice say business where also. answer. a is obviously helps quick things for expenses quick a I -- out feel that's XX% happened is which other really very kind just the round managing X I other the that's job you, One, ratio at. been also things to has the of cost mean, overall.

in comment you net losses, on all that each and be missed note large to the in credit of results of toward team to for from end hail combined, the case meaningful work -- I things the weren't -- primarily want into weather those it from is that pristine so that really events. that for to $X was weather that we end out XX% the I up And to builds very also. there we the it place together, executing things would to Last unusual which related event which really certainly the combined And team comments note will those know from quarter. is of the what of has of did specifically the just it's that changes true, quarter, call I be it, But to there million particularly the meaningful catastrophe ratio. is, this put in account operational wanted

John Campbell

know of of the growth stemmed reinsurance a you better great And point. but, don't question the are just this quarter percent ceding? like to that. or understand A pricing similar just unpacking kind just the revenue the trying agency? today, much renewal Yes, that's kind P&C of better broadly, then of how able less from I is the roughly, Thanks for what drivers, of versus book HOA insurance versus book to disclose, guys clarifying kind here, if

Matt Ehrlichman

Shawn, first why and I'll take second? one you the the don't take

Shawn Tabak

Yes, sounds good.

the the increased of premium ceding was mentioned remaining and And termination. contract year-over-year, just growth of prices. driven Vesttoo XX% we the is well segment that general as half half did, by increased out revenue team also market as as the the I insurance per So by policy ahead then the about driven it year-over-year the for got less

key So that to the components increase those are there. revenue the of -- of

Matt Ehrlichman

Yes.

in less. in from ceding agency no of break second, tied -- and terms John. carrier. percent the policies ceding, million, the John, don't $XX The then to quarter change from about policies, the So of out or We

John Campbell

rising Okay, I directionally, just little bit may mix? a the that's helpful. in agencies guess But be

Matt Ehrlichman

clearly fewer the clearly both I like the to parts we clearly very manage premium we mean, written Matthew well. it are, results But indicated, therefore, are obviously much, would I tried fewer target much which we specific business, saw. premium said, then flat level. year-over-year Like quarter, drove written to risks, policies in with and a gross to say say, those managing in business, carrier would I of we the the performing of insurance basically

Operator

Helfstein take We'll our from question next Jason with Oppenheimer.

Jason Helfstein

$XX $X XX, Just in the the the and million just of quarter, to $XX that from I million correct? clarify million on to was impact want Vesttoo, Slide third

Shawn Tabak

correct. That's

Jason Helfstein

Okay.

to Is effectively, yourself -- of not until so quarter reinsurance mean, approval of manage have idea And in I then? you'll sign I of until because you're the company up you're that the taking reciprocal, risk another going you're not the just kind and mean, -- correct? a the fourth it XXX%

Shawn Tabak

question. It's can a question. I'll I thanks for clarify. the good Maybe maybe -- Jason,

was impact So the I then did procure go think referenced, $XX Vesttoo reinsurance. I that We obviously of contract. out the from million terminating specifically the and net

in it Now it. is different bought buy when -- than we typically August, when which obviously we

to cetera, terminating to risks sure contract, impact But So the have And the line, of really $XX perils, million the didn't from we cost was bottom of QX, we geographies, thought when much and million EBITDA. million it's that revenue about, get revenue. then coverage about you business It the to the obviously, impact. an there. adjusted of revenue, ceding in we Vesttoo $XX of remaining to the specific make that have et net to it $X specific specific have appropriate less less the

So that QX specifically. impact was the to

QX. pretty much you You could of same would type double for for the thing that expect

Matt Ehrlichman

it's some topic. about make down, the in Yes, job. and made sure did press clear And double releases included the just to was this excellent this previous we me an let in notes. just But team

Vesttoo tier, market loss reinsurers to excellent post termination other top third-party did refilling team A program. out and bringing that the reinsurance into grade an our the reinsurance stack excess going of Our and job

we rebuilt a place program are so that and while make in for had that we have fully sure And have to protected. that now

you get partner place. others reinsurers in then other not been to like We we go to terminated using able and So feel want I particular reinsurance. high-quality that are certainly or don't

Jason Helfstein

this you in status approval fourth until quarter the framework -- -- current is if pieces this the place? say, are get of guide, the reciprocal so be all will So the basically which led to the the, let's

Matt Ehrlichman

Yes.

for core reinsurance cycle. for Xst, in We next us program. the our cycle have reinsurance place April the renewal be The would partners

structured So would this that And use then, obviously, would launches. we placements then to to yes, now reciprocal continue entity, between we'll obviously, those to is approach to reinsurance for but how until partners. will manage look present and continue the Even be this and the renew then. reciprocal continue will help

Jason Helfstein

the a flat a given given you've kind follow-up, year, of of to kind the next to implied or of next there just EBITDA, we're better business about kind think the gross the think EBITDA thinking next ratios company of us how about we then for insurance premium way written get mean, positive as in half, target I kind be expenses million know would And revenue is year. given back corporate of like that, year maybe run about that and the to would about we rate? for $XX

Shawn Tabak

how a EBITDA on has is the to at a We've focus talked deliver in our XX think Yes, profitability about obviously of ago, a to become this we strong the in adjusted say question. of nonrenewing that taken insurance months and in also, to also general, the we've think way important And book EBITDA for actions $X second And -- in we're we about really Jason, to of QX. and for control happy of half addition as half policies it's we're well ever adjusted business, really million talked lot like I foremost, We about year about that year. that. beyond. this things profitability second and how profitability much first I'd the a target mentioned is -- Matt expenses. good and

XXXX update. more we specifics on in March color back XXXX So on our next do when we'll more and with come

floor now, pedals bring that adjusted to QX to and and team the EBITDA for here execute profitability. home For the us in

Operator

take with from We'll question Josh our Siegler next Cantor Fitzgerald.

Joshua Siegler

Yes.

on to wanted ratios. start your data how advantage I the impacts loss First, and it

utilizing the this in rollout you're would was XX more in look states like with to So same I initiative unique leverage moving states. live data forward? what wondering

Matthew Neagle

on of couple it dimensions. I would think about a

started all additional policies don't write is But our in rolling the to mind, is for leveraging first dimension getting a in states. The just we data in pricing. it states. carrier, out XX Keep other as we're

And out perils. also to same our for inspection so room apply of from of analysis data reports. additional there's for to pull more type types the opportunities us There's still us on

to is file a the actively approved working all got then, we're of And get roll out, to process rating there's on things. you accuracy we those so little possible. so it improvements, And course, it what's we're improvements and pricing a of we're and the far, a have of lag early models, there. excited bit measurable so risk to in real feel our But and we

Joshua Siegler

if arrived benefit it. leverage business could Okay. forward? post business, about was If you especially at. back, this little moving the Got operating And talk of the million about bounces leverage I this thinking wondering already you the a of how macro are that bit you've $XX the

Shawn Tabak

Yes.

to I Matt economics, and lot that businesses strong be driving returns. capital we And perspective, that, we take the as a fundamental that think a strong investing strong about think, one. mean, allocation, in could said, part I stewards from look are I of think unit as I of capital.

diligent. approach be to And that so we'll continue and take

March that I around a guidance I said, expense processes been operate we in we back. there's that strong that's to in As But that drive focus we'll when think ingrained have provide business, lot of to will we control a the that And clearly, more come in continue manner. business. the of

Matt Ehrlichman

about are these as incremental are, units across I margins can to our a flow the cost would less what Yes. revenue margins EBITDA businesses results. something here. it really frankly, quite we sharing talk we We more detail Josh, their bit more That's in say, business what is to about revenue today. Porch, that forward, and look how plan not that invest of for through

yet, next year. but here looking this that information something talking about more we is it that are shared haven't We forward to

Joshua Siegler

Excellent. really more in Yes. looking future. hearing to about forward I'm the that

Operator

with question Craig-Hallum We'll next Capital Jason take Group. from Kreyer our

Jason Kreyer

Great.

to wanted some Just focus the on KPIs. of

on reinsurance, comes that that So, ceding try taking of terms pretty that Vesttoo go an the where in in figure. the organic to comes per rate, at more from of of here? if out can much that settlements, how impressive much how from from Wondering revenue policy just and from it lower from basis of look will strip contribution the obviously, growth we

Matt Ehrlichman

to operational of less and the revenue probably then just came came from et ceding. the half quarter. easiest the revenue growth Jason, the in segment rest at that of changes, way that the Again, million from of kind the $XX the do of quarter, from insurance the the all is balance revenue Yes. from in to approximately increases, Again, look cetera. price

be to applying that right KPI. the that proxy you're use So if would into that

Jason Kreyer

be software. then. that one dissect as rates. further the well outlook just continues Maybe to bit on for vertical challenged housing try to We'll Obviously, little by more interest a Okay. high

return your there? Just curious perspective stability growth to what for you or as or opportunities see the

Matthew Neagle

Yes. The that. take -- I'll

that really year-over-year, speaks been the portion and products X to then The lines. businesses those Q you hard. first XX% There's tied almost of hit segment, business that services. there's a our when the just value the thing to But market post are kind a this of resiliency that in and able business, more software move lot decline. housing our say our software basically market. I flat, move at been headwinds.It's is the vertical can market you the to despite would the they've of detail that really move and overcome really look has The there's And is see in software services

number they Some and But of remote businesses, closely it housing now. is just a focus -- less. being tied working I of the is all right of of -- to that to of people sales, some with relocated those lot have work changes

to I going the growth positioned. even when stays if am going we're But well be market flat. back, certainly, And find they're the very, market very to to so that be able optimistic turns

Operator

next take our KBW. question We'll Vijay from with Nikhil

Nikhil Vijay

for This is Nikhil Vijay on Tomasello. Ryan

Do and referral have comes One thinking commission have you especially could any often be might around fluid disrupted. opportunities how you impact changes adjacent that up potential about arise the service I to thoughts any guys time Firstly, Porch, in spent story the any provide line. debate could source topic wanted to for if share? agents providers that that is how just you the time check buyer that structure could that industry's initial

Matthew Neagle

So I can that. take

agents certainly is estate have kind there the rate too calling is NAR, the high of with in essentially for We it into structure question and landmark real commission which U.S. noticed the case the

are consumer and core and well in are And services agents agents that to may themselves. potentially is, services to scale we home going sorts through they and their We us going going to to that stand more and could could really consumers provide lower, provide, more worry all fewer be look between the from there services industry wraparound there's and to sellers. put looking think commission as make the commissions interested Agents And purchase take going that to that really have ways are be have doing out. real on and through estate that. that sellers some the if do thesis and estate plays We buyers looking One life to be going the partner internally. makes agents and for at if agents with flow place are can for well. about ways to of it with to they easier for what are that our agent agents. a efficient actually competitive, talked it's going step about with.The more have to to fewer get to -- second it not and that be in agent partner a and real negotiation it to the scrutiny it estate buyers in time them where real lead and stressful more of we is, benefit to The gets

agents value obviously, to things going things I But be unfold. more want it's of our competitive, lots are So to well cause early, prop. plays think to that to

Matt Ehrlichman

would all allows into focused that be -- is that for benefit, able warranties and available more there's bundled the home affordable, more dealing that again, for a more industry if more consumers, not So with be we core market, a those to a we lower are that commissions help right? there'll be just us. sale that a to much on benefit, happen transaction home not that's that that us Generally, home clearly, that with, businesses. help If consumer warranty channel and them get inspections, would for our to have and good are leaves things really transactions And title because that transactions that Yes. housing to our business.

Nikhil Vijay

segment. more very on types discuss current customer vertical then and environment? I and seeing the have traction are Can what demand products software also That's in you you And a follow-up helpful.

Matthew Neagle

customer and types What products?

Nikhil Vijay

Yes.

segment. software Within the vertical

Matthew Neagle

Yes. Yes.

different So we -- mean, we have we I operate -- there. in multiple segments

that innovation -- we has our save part obviously fairly speaking, we We're can broadly well right? headwinds. either up so focused despite to help think those feature. our or of has money business, And looking grow held ways business type businesses their been to I of at that of a the lot that on

and workflows the driven that course, title example, doing cost in additional stuff now rolling a products title things throughout to we're save move money the reduces the several make the money that to service happen out the of through So can fees a new there's, same process the they help the they essentially the space, offer.And automating that -- doing of to we in mortgage consumer little for some we're of companies. that inspectors more we're of space out at get for essentially There's time. upfront and the inspection close, allow bit then,

need And role help are to really businesses very so be And a efficient to more we businesses for at time ideas. these those open lean can now and play the revenue. really help customers to generate it's be more those emphasize that us, they these

of these need more like, generate efficient some to do a because to people more isn't this I traction things these nice are some gaining So or are have, be of products revenue. but actually to

Operator

and disconnect. that And you now presentation. you for your Thank may conclude today's you. does Thank participation today,

Matt Ehrlichman

all. Thanks,

Porch (PRCH) 7 Nov 232023 Q3 Earnings call transcript