PRCH - Earnings call transcript Q4 2023

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Lois Perkins

Good afternoon, everyone, and thank you for participating in Porch Group's Fourth Quarter 2023 Conference call. Today, we issued our Fourth Quarter Earnings Release and Related Form 8K 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; Matthew Neagle, Porch Group's COO; and Jim Weld, GM of Rynoh, Porch's Title Software Company.

Before we go further, I would like to take a moment to review 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. to X, reflects XXXX. responses of views including March today, discussion, your management's questions, as Today's We update information. or not revise do undertake this any obligation to

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

both refer call, to most financial audited reference measures today will available to provided GAAP the during on comparable financial press measures website. our subject on processes. and of are measures is information reconciliations audit revision earnings this closing today's and We upon for of discussed completion the to preliminary call. non-GAAP non-GAAP Please which GAAP and The and today's release

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

Matt Ehrlichman

over the here, second This profitability a to we the the key higher in And couple dive guidance. of of the contraction quarter. done, cost rates Revenue proud the the grew much and guidance. prior key increase afternoon, weather Despite work Revenue growth beat few EBITDA $XXX I historically Good today's includes market be expectations. compared and events, joining. estate was claims, and a reinsurance $XX we $XX the Porch continuing XXXX the our customers, stuck XX% fourth across QX, premium we for and other revenue updates target financial handily the and years result increasing was cost while Warranty million business profit million enhancing last costs more you'll higher actions, half A quarter it X every above into high of of challenging over $XX a results per quarter our We year. $X XX% presentation. and above second new guidance. hear an as million, of fourth million our $XX measure nonrenewing of underwriting customer set fourth EBITDA team strong policy Lois. adjusted In XXXX half launched the less adjusted ago presentation. and software and interest profitability Thanks the great of implemented for with quarter increase sharp achievements initiatives. million. to before which together, We stayed the maintaining years, million we've grew very across to million, execution exceeded reduced insurance $XX in were real and last we in In $XX above activities, million, When while of of for investment products performed. focused throughout Thanks, policies. everybody. our Porch team couldn't retention, risk pricing increasing our

environment, completed great done improved Huge and priority thanks to a weaknesses. for team. our well and system us achievement expertise leadership. truly Next, Shawn no the we and control team for the top This we was material had a as and implementations

for product smaller alone, warranty QX meaningful product continues HVAC partnership, to for new business landed the new title and new companies. a progress we micro We across many In our areas. inspectors. launched CRM make released Rynoh Next, utilities a a

local moving a our consumers. opportunity a the is Our product business higher position size and expanding moving This provides providing market full-service executing increases margin and offering, on of leadership offering. labor to our

released we our Fast for our sharing look finally, admitted Deloitte ESG we Next, the on forward website, IR report, and available first we to were is XXXX. in which XXX in And more this on Technology's future.

Now you, over on the financials. Shawn, to

Shawn Tabak

good and Matt, everyone. afternoon, Thanks,

XXXX As Matt their [indiscernible]. this mentioned, for accomplish our achieve extremely wanted I to work milestone. market adjusted EBITDA are despite half to our to critical target teams contribution we pleased second thank hard and

get and premium to year. margin business $XX.X fourth the restrictions price here with per reducing increase and the year, partially written with $XXX from $XXX.X which year, offset a the of software in Adjusted corporate basis the moving XX% cost policy. prior Revenue Vertical our driven was and in strong in reinsurance from increase increase EBITDA the was revenue $XX.X the a was decrease attrition $XX.X over the a code. year, year is decline premium is of Approximately in sector, remained X demand margin million by insurance segment prior by the of profitability by grew we on our insurance to lower control. XX% million, $XX insurance the lower XX% fourth XX% increases. the vertical XXX% over risk year, a segment actions services, relocations. million, housing million, XX% which risk million prior Revenue a by resulting as lower cost Revenue quarter, by compared the higher market to prior compared XXXX, prior and focus particularly driven for offset slide by driven increase along by driven over total growth in to segment. a growth the million, into less profitability revenue revenue in policy XX% software a which was per was and of the the XXX% the increase partially nonrenewals. financials. nonrenewals was partially from over new and point $XX.X prior was of segment and and of premium Gross revenue of in Moving an of X/X seating, driven XXX quarter resilient. revenue, This X/X by an Insurance in The impacts seating. growth was premium prior Insurance SaaS offset the zip policy from per Software increases million, headwinds, year,

basis EBITDA Moving loss the ratio segment. actions, profitability to driven EBITDA lower Insurance was adjusted the Software with XXXX, by expenses XX% improvement drove a million compared moving gross a the market insurance in segment or margin, Vertical were $XXX,XXX to was EBITDA $XX.X revenue, year. pressure adjusted loss total of million year. prior prior in fourth to a XXX quarter $XX.X continued of adjusted compared by services. which point XX% Corporate

we in $XX the ended the -- fiscal issued in of proud We have cash cash year year. sheet, balance XXXX. million the now have Moving million half the we of -- operating generated to $XX flow are generated operating to flow of second

can and equivalents at of year Porch $XXX $XX million million see million. the investments excluding with we here You HOA ended $XXX and cash, held cash the that

the XX million captive million. would X XXXX, well businesses $XX surplus HOA. bring to held first a and of from In $XX quarter million been as there a for at was to as restricted warranty Group healthy like your HOA note have Porch addition, that items $XX cash, of December In primarily our surplus attention. I

the we non-Aon years. and parties. million in approximately and $X securing Vesttoo-related $XX claims, upfront several XXXX other next although to and all, We X other XXXX next released pursue expect from million business the of who We reinsurance First received to will in we'll January signed cash over a services with continue approximately any receive them in agreement Aon, strategic support us years.

Second, in-house and as third-party previously homebuyers tested conversion agency. compare EIG, to we profitability agencies discussed, our versus with insurance connecting

carriers $X in Our of costs approximately small these an unit improved substantially loss year. in third-party from agency. of of Therefore, XXXX. million and was IG this with EIG given annual us the and the in for economics cash million running the EBITDA $X commissions January million business tests, we with $XX sold a associated approximately adjusted for profitability

drive into their of alignment the our of insurance HOA And increases partners profitability Porch they when to carrier and consumers agency and product, products continue this exchange, and strategy connect be own we'll incent homebuyers, with and to eventually we divestiture them we'll reciprocal forming a While margins. in as third-party much care. do our a Group own want higher third-party like ongoing Overall, prioritize insurance and part sell sold our with possible products insurance selling for sheet. as relevant to to customers revenue. balance receive to and of lower XXXX to our importantly, high-margin operator around volatility back Tighter improves can the more reciprocal Porch premium agencies we the as

our do imminent around us forms the not value $XXX the And Third, any raise in a with Form We par, maturity SX XXXX have February, plans of our gives debt statement various finally, $X million next soon to flexibility unsecured our the currently years. SEC shelf at par cash which expect at registration we of raise timing the to we reducing capital. XX.X% to file X million. a notes of repurchased $X to million for XXK, over capital

backdrop, increase over adjusted second insurance full nonrenewal premiums in prior costs over segments insurance. providing year was options reinsurance in to Insurance notes next due offset with higher million were $XXX to year-over-year between to X guidance. look Shifting However, building in by change good policy. offset a $XXX XXXX of Texas of our at this hail reinsurance change in driven to in premiums provide a driven with the our a million, to events are momentum was actions growth year, vertical EBITDA improvements our XXX% for prior take growth and margins The in the years. prior in was and half and year, year, XXXX less a million, that guidance. a changes improvement revenue discussed within policies XXXX drove we year year. mix year. XXXX in by let's and now reinsurance, prior by we the and quarter. in segment. loss profitability written the a of relatively the There profitability, the full Revenue million, revenue is cost Gross over within higher $X These our risk several $XX.X challenging Today, was now increases programs million, corporate historically the XX% $XXX compared shift And notable XXXX XX% second a the by practice reduce software flat over improvement our our insurance

software the $XXX $XXX we insurance in the of to expect of segment. to segment X% million, million flat revenue with For relatively by driven growth XX% XXXX, revenue

$XXX We of revenue million. less expect post revenue to million $XXX

expect million. Overall, XX% cost insurance but $XX vertical overall We've X-year flat line driven is full to XXXX profit insurance offset of margins we relatively increases with weighted against lower by mix The as EBITDA shift in gross actions expect segment. continued higher SaaS in assumed be to a today, margin year-on-year ongoing $X execution We increases our in are improvement margins software ratio year, average. loss price profitability our and we for the with growth management million efforts. adjusted by our discussed businesses predominantly toward

more than XX% expenses XXXX. compared operating expect to decrease to We

$XXX million gross million. premiums $XXX of expect written We to

reference, in XXXX. carriers million $XX third-party premium from written was For approximately EIG's

between be third-party implies model. of includes further So will new managing business. to the carrier nonrenewals to XXXX, we're an It's insurance approximately our up time XXXX, profitability projected This which being going and to XXXX. basis XXXX are as higher sustainable, in beyond. selective costs. and for follows flat to We and flat written believe under agency premium drives lower approximately reduction approximately This loss XXXX we profit exciting expected unable us be the guidance exiting in on premium, XX% an reducing in exposure apples-to-apples executing achieve company. risk excluded our well in at get reinsurance roughly our around needed new rate XX% Overall, XXXX of bringing by and attractive targets our actions risk where policies, the set for growth Georgia, profitable and state the XXXX, the

prior experienced historically second have in to we expect chart in in first of our XXXX, QX, in in EBITDA midpoint the $XX illustrative Therefore, compared shows, profitability we In approximately QX, this as in the and adjusted a to and QX. is compared seasonality, EBITDA followed the million adjusted year. adjusted quarters Overall, same claims be negative EBITDA to by negative guidance in we insurance adjusted increase higher XXXX, more XXXX. quarters. QX EBITDA million to to quarter XXXX Now expect $XX the $XX each improve million,

to We hand in and are will half. sheet our smaller increases XXXX, renewals to half progress reduce your million results, much and to kind other over we we and our storm events of for exposure reinsurance cover means losses, XXXX, now now of claims protected, and which what the occur XXXX, worse-than-expected April deductible increasing finally, And secured to hail-related have to first of what strong similar additional of were price larger the XXXX, additional protection. roll confidence Matthew time already have to KPIs Thank to an year. are better given QX includes on for today, Generally, product drive see continuing second storm we of adding which business all And X. events. $XX out benefits we reinsurance the typical we volumes coverage, hail balance in I'll we saw purchased aggregate and web. QX the our we or over updates. coverage, the would series hail Earlier to severe and in our This a you conducted if upcoming our in protect

Matt Ehrlichman

our Shawn. to fourth quarter the XX% QX the opportunity prior to was Average number $XXX we companies start broadly per you, month continue company in as quarter, effective. $X,XXX everyone. monetize Hello, insurance with similar more revenue headwinds. with Thank in I increased will to last The continued KPIs. XXXX average XX,XXX market housing versus per year of and

We decline have quarter, market the X% headwinds and the in services of the relocations. despite monetized in increase XXX,XXX corporate housing an in

due I highlight consistent take in an our in to the XXXX. Industry moment value revenue remained average our XXXX, service year Finally, $XXX, to period. to revenue was SaaS warranty. have monetized want revenue segment. XXX% sales and our the Software prior per higher growth such as XX% up additional services, XX% home versus this, broadly Vertical within subscription a that in and Despite declined software over insurance

not our are in assuming XXXX, it we when market tailwind market improvement housing a businesses. While recovers, the will in any be the housing for

fourth revenue XX% partially being compared our force as now year, in lower is which was XXX,XXX XX%, HOA, premium policies premium policy to nonrenewals Policies insurance in EIG. Looking and by percentage force segment, in by now we due retention Insurance driven $X,XXX increased the prior also annualized $X,XXX. Premium carrier, increased was the our KPIs, XX, increases lower GWP December written at discussed. $XXX premium by than This included decreased and Gross of includes Posting policies policy carrier, policy risk of HOA, warranty while nonrenewals points it offset insurance premium per from business prior increased the year, quarter. XX% seating. per Annualized per XX XX%. our per policy. to driven approximately to on million declined to higher

XX% welcome was other more of the on and that comparisons combined to I'll the property-centric We on insight gross next ratio loss ratios provide in loss and slide. carriers. gross all Our our fourth quarter,

the said, and gross was I XXXX, As that's weather a was year loss QX the with XX% full XX%. for ratio And tough it even for environment.

ratio was combined the it for was XX%. the Our full in year quarter XX%. And XXXX, fourth

between split payrolls. the including you XX, from Here the see on the catastrophic X years, last non-cat and detail slide can weather

year to This loss second the You quarters the identify can ratio demonstrates our as throughout gross the the weather cat quarters as ratio and improving in with in risk. fourth worst being loss clearly ability price non-cat and see a gross to seasonality the XX% quarter. well XXXX first

customers those lean to to discounts loss-making us as risk towards gross from The and we provide QX our lower to in will Over see ratio focus combined we surcharges XXXX XXXX. to higher to can unique improvement in QX effectively XX% customers. our the customers lower-risk XX% underwrite is shift our and You as We on incentivize policies to here come mix ability point to highlight profit. book policies of avoid the data we our year-over-year as of risk ones. time, improves

continue we XX% different great We and competitive changes. leveraging And in In to we in key factors write are we states the already have across underwriting progress XXXX, XX this increase [indiscernible]. not done Texas. filed yet in across advantage in with make an

We the of side implement left a will premium see in to additional deductibles. in where delivered and increases policy right. appropriate between increasing on continue premium Overall, per grow. slide, CAGR you made given And this the XXXX states XXXX, changes we can see per are the our rate on have further to you have XXXX increases, policy that XX% hand rate expect the and can we

believe base we to expect at. given have As the we is homeowners grow said highly before, TAM significantly we how the many for years insurance attractive,

on Now, we how to QX. are deep Conner, GM, a leader Malcolm earnings in business dives, into our to well Warranty last become at our positioned shared insights

of which unique a Porch We through products are have cost that lower of customer partners offer distributed acquisition and variety the platform provides. have unique advantages

strategy have XXXX EBITDA. entered strong $X into remaining $XX XXXX million of revenue. warranty when achieved target results. space, been producing Protect adjusted but We million in costs. warranty revenue We revenue delivering Noting even American the the adjusted acquisition acquisition it in XXXX and is million included $XX better Home Our our of would certain EBITDA had

improved continue EBITDA anticipates profitability at adjusted expand of approximately grow million business a to its and revenues in adjusted with distribution we XX% target revenue wanting as million. $XX expect We substantially margin. The to EBITDA XXXX $XX approximately

in adjusted XX% everyone. EBITDA I'll economics. over Looking XX% XXXX with million, margin with equates hand $XXX as which of Jim. revenue now we approximately unit you, target invest to we attractive a CAGR growth ahead, Thank a to

Jim Weld

and X Weld, and a hello, and highly XX industry everyone. I are environment. Zillow's years Therefore, inception, a have business. estate I've Jim collect to a closings a their projected in more been operate million and Escrow Rynoh, I is got firsthand XX% number than is as General After complex Rynoh leading Rynoh that leader and to years XX%. title Escrow how and our many Prior clients around purchases software. of years Since real who and called funds protected SaaS Thanks, to of control and President in leading Rynoh's experience in a Porch, Rynoh solutions over Rynoh, of Manager product of experience. is platform. disbursements about I'm title to title regulated spent of RynohLive $X title a client during that one-hit XXXX transitioned approaching Rynoh clients from successfully agents by provider wonder a and software Rynoh impactful trillion. very for XXXX, built closing. is. of Rynoh who important critical residential Rynoh the all disperse more acquisition the having industry. has was this single Matthew, XX were of is than refinances home US Today, by Back environment. popular

that reduce savings and cost to drive potential the and are efficiencies build priorities add Our time, value, save products for errors.

year, payments schemes. And a escrow Our module almost protect regulatory account remain after of and automates RynohLive streamlines to new or support last and client with sheet LTV to risk. proud fraud released funds RynohVerifi, losses not the home Net highlights was all to we a Promoter XXXX, processes integrates transactions ahead. transaction can metrics fee opportunity an from funds experienced bank core of for was XX% a our XX. a that Rynoh outlined charges major every and forms system. in we alerts home launched daily compliance. group and help X with bright reduce real are industry accounting in if fail industry is clients return platform expansive of years, daily closing XXXX, with XX%. revenues which do and that identifies since XX retention XX.Xx, a our from various XXXX, declining workflow that very and would have product more helps than here $XXX many XX% our around purchase fraudulent perform. CAC a streamlined In million refinance on Score on are grown this a clients sheet might Being performs closing estate last and Rynoh think and of to one driven, modules XX%. and of to revenue for reconcile Overall this clear reducing in alerts But volumes this slide clients. The X.X profits which volumes platforms we more similarly refinance recently primarily Rynoh's RynohOpX we systems decreased transaction called declined either and future. have transaction reconciliation very accounting you and maintain during XX% with payment or and volumes these

XXXX, in overall the over years transaction industry improved. has of few to the transactions our million You volume transactions as XX% can through decline declines percentage in from X.X the million of platform last a volumes X.X see Rynoh in XXXX even

the new are implemented roll the the commensurate for products, was value of this price providing, XXXX increased we As of year. in improved launch RynohVerifi example, with XX% out January we almost prices with increase we

by acquired and after in you expectation see we delivered adjusted for and an product XX% as transaction expectation even business margin. $XX on exceed declines. as volume almost delivered were adjusted XXXX, than breakeven XXXX, to revenue market graph, between $X had marketing. $XX announced in million more more Back we As EBITDA, value, of increased million EBITDA was million, Rynoh being in half. the a we XX% it We prices and greatly of In can noted XXXX were XXXX, investments cut and have and the in that able transactions a offsetting

in medium-term through we our road on this which against impact double revenue double sales $XX refinance adjusted and flat and XXXX. volumes deliver map. or the revenue EBITDA compared expect to transactions $XX new continued while approximately pricing target execution $XX home pricing, broadly industry We and XXXX in product of assumes million XXXX. margin of adjusted has the EBITDA, XX% Given a And we to approximately million million Rynoh should launch and product assumes million $X

everyone. I'll to over to it So Matt back thanks, hand wrap up.

Matt Ehrlichman

today's Appreciate leverage on just are our do one-off of businesses platform Rynoh and differentiate and many then X at just Thanks, that it. advantages. back note Jim. hope targets these units to grow I are expanding Group's business successful our and to We that disclosures and warranty that contribute our Porch helpful. Porch

take Before wrapping, to I step want we and our progress became XXXX. company back a share in of since a December public financial

significantly. this part in months I'll million central and XXXX, revenue XXXX ahead. are same your as $XXX has has less to of profit shows to vision million a positioned X And over was Our grow potential certainly is market a business contracted been which last revenue basis. $X revenue over in $XXX EBITDA become of our time in CAGR. before, in is a $XX our the housing reality. company in year EBITDA, a improvement than grown million the in you, remind $XXX of expected CAGR said of million on the full has to well This a during XX% adjusted the for driven profitable that key more the to from Similarly, Xx X progress for $XX what segment, made full at years. Insurance midpoint, million year, adjusted and grown be prior a of guidance XXXX. a our We've at is the significant which second increased a the we million amount revenue XX% was when the the nothing XXXX cost year is for revenue growth approaching And from then by has finally, And half virtually guidance we've for milestone

done. we And know, getting just So just sincerely are you to started. team well the as

after and take we're back here to our opportunity looking to and bullish truly a update about great I on look years, want enduring so the provide why an Finally, the build to X last and company. strategy ahead at a moment

use know, creating agents businesses, home Porch officers valuable structured moats. We'll differentiators, long-term lower into can us share power We provides homeowners inspectors, vital a our margins. you and large loan the introductions see update portion believe on in to are large which software reciprocal competitive their a of we to insights run you build optimally consumers properties, to and As the year, and which we'll but insurance have here can exchange this higher X later company yellow. today, volatility platforms,

underwriting. advantaged First, is

was it HOA accuracy. create and pricing advantage made about ahead. steady X prices seen value well-maintained homes. unique using our risk data create and to started improve risk data our years and price for unlocking a property rolling increases ago, much We've business our insurance for states across higher out So homes opportunity progress with to measurable We've increased results

utility make Second, setup, than homebuyers. move-in the easy, want security, coordinating stressful ability their best to clear for home a half sure more asset We're be into about XXXX. and including to prices. compare make all journey protection. protected. second best home to fantastic insurance. products appliance the from there This homebuyers is excited consumers offering check move-out as to consumers' largest breakdowns variety with to and means time offer service Consumers up we customers Internet monitoring. with adds needing the homebuyers the insurance gain partner a We a for consumer and third, home And movers, It choice of can home warranty typically to known our the TV with what's for and a easier. just be to make whole want experience can and and to designed app app home insurance. we and insurance warranty We reviews use We a provide whole become our for changing move or moving concierge of homeowners for recall provide insurance, everyday

to successful very a be year. We expect fun and XXXX

and that, team, Please clear With and A. call Q a and remarks prepared We the the operator. wrap ability have up and execute pass strong and the differentiated call culture the strategy, for proven consistently. we'll a ahead a to to right the go open

Operator

Company. Kurnos Your of from line the comes first Instructions] from [Operator Daniel Benchmark question

Daniel Kurnos

into Great. the Obviously, really year. strong

you're us sense on later, the gotten know not or front? going if give the you've So least filings can congrats Matt, done about on the to quarter, audit at you that us on just I reciprocal done or a guys. but update talk the

Matt Ehrlichman

update actually, yet can you happy let on about on the of filings to Shawn, talk but some we have timing. Dan, just I'm don't me and quickly reciprocal. on, it is just

As really about But relationship TDI talked continue as with close continue a previously, to we we it. do through nice update year. will at our go a we working have job, friends just here the the excited to we're or about and we

confident structure to be for that's the course. the happen We business very will due here and that, in that continue right

Shawn Tabak

question Yes. your Dan, do of which March, to typically course financials on is of it, kind for We're That's it. we'll the in With which insurance of entity, of that is part in month here I the and is on the do about all track. due respect top think that. we

Daniel Kurnos

Got it.

now let's expansion, especially So getting kind right reciprocal, on you've much waiting guided that thought [indiscernible] this on of but numbers of like so convective that now you've really premium written the getting aggressive little maybe just Matt, your call the some about but a policy, for risk got bit just incremental what's And rate about getting you've model it, kind more thinking to, reduction. x good adding derisked understanding, the you're looks what process you're now? know Gross coverage flat and data additional I the CIG storm year, with

Matt Ehrlichman

last exciting for right? and seen it's followed Obviously, a that sure investors wanted we're are year, our the focus that second that year that profitable as an long-term is profitability, for XXXX, you of we've time, have to we focus for XXXX on clearly Yes. I as know, profits. really know now, to company a We certainly, us it's mean, folks -- sure able be to full as basis. make want we demonstrated make half

And we we've so need the moves made to make. that

we've Now think insurance to the underwriting are clearly, you results believe, we able with, the We be very positioned can profitability. made see ongoing grow strong moves. that on we to

be some unlocking we this XXXX, to -- in restrictions to expect restricting set as certainly where at been we've XXXX those we've prepared the while nice course of so in very of in we specifically up to period clip, geographies, the and a remarks, over really growth again. And growing noted start this do certain been

is -- it down that kind just maintaining emphasize a of the question is risks. first what risk the on sure of while to and to been of of the we flat because significantly pool have even your year-over-year important of reduction roughly been to targeting. managing is And we've of been able then overall, -- we've front that We've part we risks an in couple been make the So premium amount of total reduce this on points, us. I part able just have a

XXXX And I the XX so on XX% is XX%. actually, reduce think, number and and precise in risk versus here what we final

that additional a the include that's So that doesn't $XX million aggregate reinsurance in and big purchase. shift severe we've and purchase total that made conducting storms risk of around hail, new

clear And of we and what as so more becomes just think risk us. goals predictable, strong even are much these front our much we protected, have much business in better lower

Daniel Kurnos

to Got quick 'XX it. XXXX. either free for a handle about event from trying was a cash thinking we operating maybe on one just in standpoint. get noisy bit or I'm how just an should one Shawn, be you.

Shawn Tabak

Yes.

the and guided million been of expense XXXX, first bits little Taxes the EBITDA around our way million point, us, interest adjusted for equivalents deliver positive HOA, about, cash, the a strong full most is to and we So XXXX. importantly, us. half million cash of mentioned surplus. for very the midpoint. in the we business To ended have be year, respect around second profitability is CapEx. that had operating we Matt's less Historically, $XX strong of to basis flow with about of of at carrier million. we very think the the on do $XX pleased that's position. year coupon. a $X investments, just cash to which the cash foremost, With of we $XX think for have that $XXX than and don't the momentum lot a great other million to million in $XX for over full future in there, for to From year. flow at the We with to around it's are year were of And

it. play into So those kind are of that the factors other

less. seen flow have that big cash a We is we've driver of in XXXX seeded

when to so is and book obviously, that see you working less that drives we're profitable. because able capital less, better see more And the much

working that the provides to of partner. And lot of that a so the we're to reinsurance giving on instead the capital benefit hanging because cash policyholders it from

position. really I So a strong XXXX starting think we're in

Daniel Kurnos

I'm getting Got guess, the is I here. We springboard, at see what it.

I'll So I appreciate off. step it.

Operator

Stephens. next Campbell Your John from the comes line from question of

John Campbell

On a great quarter.

-- Yes, So on for the sure.

great. the disclosures warranty that extra solid Rynoh, are around On businesses. Those was and

guys targets EIG. just and obviously, If for XXXX Rynoh then, the and warranty hit you you sold

segment. So That's EBITDA. $X of got to that's the add losses. $XX going in Obviously, million million corporate you've back another

If you're outside need to you I basically warranty going out, of about and that $XX take million Rynoh. mean,

questions few a here. So

we can on think that is within actions if are year? just help remaining that ratio secondly, and this should HOA loss done about gross million, with the First just last versus largely bigger $XX year? you picture, corporate maybe And you mostly that unpack and cost how then improved us

Shawn Tabak

can take one. I Yes, that

Some in there. good questions

come think it on the the say, P will to there's which were annualizes in. as actions, the actions in million benefit but XXXX the are than of the have things we themselves were second those I'll to profitability kicked prepared this of year, talked already And With second profitability, as when have actions XXXX. are already been about more is to XXXX. half partial those those to respect the show the But done. of year, XXXX First, as in half L corporate the mentioned in done. Matt remarks, We -- in EBITDA one opposed was I and we really cost is in of than year really his that insurance the $XX better insurance

profitability. more create kind It's a of been value for is need just kind continue prices to of and we maybe benefit out our as we products in to And then our customers the tone already through. -- lot those launched there. sets roll we other businesses, some increase see That the software profitability have now So little thing. that bit. the of drivers it other roll will other And of a just

I'll per premium increase The is are we this thing also mention to second policy. continuing

that I think we done we have mentioned filings there. today some Texas

get drivers us to So year-over-year. profitability the those main are the improvement that

John Campbell

And Okay. of then on staying kind That's very helpful. line of questioning.

going have guessing You mentioned last normal, but was based pretty lower X loss It to you've been X you I'm of the past like the year. this then X-year got gross average weighted years, XX% said the here loss historical the That's the the past ratio average. question tough. way to than the the seems But XXXX we've outside been that years is, look? on I be new And beyond think XX% norm. also compared ratio does coverage. storm how for

Shawn Tabak

So the we've One loss think well is the -- we are actually quite what given set that gross that, with reinsurance. a with done couple ratio. of we on things up

same an happened what example, year was cover. this that weather again for So particularly reinsurance some hail, us of aggregate last provides Again, of in a it year, John, tough this If pool year. QX, new is year terms QX. weather in

event for we while a we and typically series get have against events. large continue now So small of reinsurance protection protection, to

additional year So of $XX we cover gotten would the actually to again. million last of back happen have were

certainly just of that lowers for risk our similar a type so weather. And

this X quite gross But was the that of I consistently changed look note loss a things type ratio have and bit. we in As years ago time, back further weather a would around level. more than

in electable, ratio put terms X% higher X% underappreciated. impact perhaps inhale it makes we deductible year, when when there was deductibles, last what of to on wind gross a place that's so in a been important So that's raised and loss

year. this is driver a certainly that so And that helps us

John Campbell

that the thing Yes. we're. And think other I

Shawn Tabak

seeing add risk just here thing to Yes, going other improvements is the we're book in selection. underwriting, that right, that. was the in I and to

at And so in as data Porch X ago, think I time. obviously, using HOA years wasn't point that

and so as the Matt mentioned as And then -- things other that of there. well some

things premiums that we combination the I well front. really, for of think year various have certain nonrenewing increases really in So underwriting policies, actions, this deductible, up set exclusions, the us on about, talked

Operator

from Your comes Siegler from question Cantor Fitzgerald. next line of the Josh

Joshua Siegler

here. quarter strong a really On

into thinking about So with I to on be future as just the dive table the M horizon, capital could profitability really progress A we wanted XXXX? are through and you near-term And on really allocation? how

Matt Ehrlichman

I'll would and of any amount first. take M the here not in XXXX expect M A and the and A year. I A M one material or

us heads of just focused, being produce flawlessly of a have and really year. sure We execute one clean solid just more in making down, we really year front

So at. that's where we're

that's to ahead. have able time up a we open we're as Now back A capability the us does for to forward think and do that M be up back on. that to company, engine right and looking turn We a

Shawn Tabak

the of capital Yes. With risk-adjusted is think lot earn allocation, attractive respect and to think places capital news to have I I good we great deploy a return. very a

a in First due we very returns. have also is couple and debt, And which I business unsecured foremost, itself, think driving growth of strong of in is the the then of and the years.

-- a I that number go and it. allocation today. we well. time a But perspective, I then of from opportunities think into to as particular, think But number have in plenty investments we have for do care attractive of one we options I are very take looking and that a won't of of other capital through. further

Joshua Siegler

to I how the Got a macro it. I then a wanted little opportunity the the evolving, appreciate starts color insurance as and dive there. and thinking deeper also about into side bit you're the between software ease especially of cross-sell And that to bit? kind side the

Jim Weld

our excited businesses app excited helping a really software the focus excited take about nice experience. about We're also access home bring give together Sure. buyers. strategy insurance help about We're us our of to that and the the I that. around the can -- the also We're home the buyers. app can way

And so that's what doing. all we're core to

because of we kind in the that the here, was improvements then to fewer declined, measure impact our year-over-year homes. are who people and see that mentioned buying as ability around to continue there's things And has does that market We cross-sell strategy.

of be As our and business. growth this year, come, next going we're to tailwind a not for expect now, growth anticipating we that's but to do

Joshua Siegler

[indiscernible] Okay.

Operator

Helfstein from Jason of line Oppenheimer. the from comes question next Our

Steve

Steve on for Jason. is This

questions. how written So on anything you them you know you we talked of can I how software can Texas, this give January help on and maybe house just metric the that of business, data us much with Is can for you've would thus or improving users increases, give geographies many year example. terms And on prices have trends rate X gross in One, on about then there give? point kind increased far? premium any secondly, you or

Shawn Tabak

Sure.

The the first repeat we first question? -- can

Matt Ehrlichman

it. Yes, it. I got take I'll

Steve

just were we wondering. So

Matt Ehrlichman

got I it. it. got It's I good.

that's to So year-over-year. our what But by are wildfires, meaningful our not attend would what help are to want that reiterate, Oklahoma claims, on go X think any flat one hearts it curious January we'd we specifically, just not macro more again, just to sure expecting recent there's we obviously, is We January represents have guidance claims sales I the wildfires date, expect we month. to us. around and But at just little not picks have going question. seen deterioration our business. be your a seeing sales that to housing expect recently, in actually note up. year-over-year will bounce bit home other event the Whenever at this out to market in helps. question. will settling from month people The that in. and the point. Texas not for kind market a to certainly, and obviously still a tied We're we months obviously, people just is it here would of Texas, around where Texas I level and I'm about more Texas-related

effectively. our think I risks continues ability it to to select demonstrate

we largest Texas our As broadly, Texas think state. about is

results. rate largest show up the we've state, that have increase, it's before XX% when overall does we meaningfully in our that an So actually mentioned

Operator

JPMorgan. next question from from Danny comes Pfeiffer Your of line the

Danny Pfeiffer

portfolio? first, follow-up. the a And or this And maybe further more was of assets see any do the of maybe Porch For you I one-off EIG, other pruning noncore within sale a then the have with transaction? opportunity

Matt Ehrlichman

We our EIG they're think We'll divestitures, where we I like really be a we more both I are see sell about strategy. business case on aligned it don't transaction. strategy, because our excited one-off always in divestitures and where to our and could expect many being thoughtful as about was or at. pragmatic very and businesses of acquisitions with a a special suppose.

that's I terms see would in of So that. divestitures, how

terms of. In

Danny Pfeiffer

-- And you then on be about that. the second, sorry may can

Matt Ehrlichman

ahead. go Please

Danny Pfeiffer

Yes.

for you you much severe seasonal second, is can And storm half unpack coverage purchase maybe the agreement reinsurance maybe first helping 'XX EBITDA Aon of the the is the adjusted kind guidance? how loss So and there?

Shawn Tabak

cover Yes, I can that.

the as and the year-over-year for So XXXX and half in this of typical insurance, the higher second driven I which claims between the year in the did to million the the I is year, of rate I same for which just improvement basis, further profitability by mainly well we $XX through a that's the that are is think we by for management on expecting cost of actions seasonality you most the more presentation -- we're shows the in EBITDA, showed about driving also a QX rolling think Again, second insurance And prepared million really in what we historically the of QX cover today our items I different that's in in protected in we're saw the prepared quarters, things example, run slide talked to quarter. increases We that which remarks, types last year-over-year. strong then of in and talked each XXXX. compare, this QX the mentioned business. XXXX.And driven the that of million adjusted would year thing of protect to reinsurance some $XX remarks, that about in storms things would saw if today, year-over-year with that have the particular, as in hail $XX price we profitability expecting

have at as opposed period -- long-term will time as the be main that. over we are partners things Aon a a The because now. or like agreement those So just other our drivers that's to those it of of like with the Aon

Operator

line from comes Your Tomasello of Ryan question KBW. next from the

Ryan Tomasello

some And at? back sizable away the us, remind access evolves? maturity. HOA just if Obviously, you a discount. to if would also reciprocal to to at depending the the structure capital help structure. fisher path on with that all at to maybe of have the the opportunistically little any how you following to the for you chip the continue something bit addressing Just convert capital understand liquidity maturities corporate that moving from you'll on Shawn, bought a chunk those perspective, trying XXXX Just structure, up could a have of efficiently here just you Is discuss

Shawn Tabak

Yes. Thanks for the question.

investments. a intercompany roughly that, all, million say, Group. strong group. ended HOA was mentioned, I a cash now equivalents I we between as So the million an about year of in of there back with to cash, Ports Porch payable first and position $XXX and also Within coupon and $XX surplus would provides That a

The we contributed see XXXX of about that sheet. just and $XX additional collectively Aon on obviously, other EIG, deals an talked million thing, 'XX of those we'll in January balance cash QX the

and So $XX the guess million position at of HOAs finally, surplus is last I with healthy there then a I end that XXXX. in point think -- the really of

generating about and in -- talked XXXX. and adjusted So we profitability then actions EBITDA

With north any to that's the going respect specifics. forward. care into driving I'm also to of debt, not taking get it going So

I'll is say just would that. I leave what think it I at

-- have years sitting We of number take X a we today, to we that. have do And how that. over in to here of options care

as plenty So there on well. side our of time

Ryan Tomasello

seating given in Vesttoo the mean the the noise the all insurance I this you the then terms sale have revenue of year And in the in resale, Great. the on guide, of just this half, agency from Okay. insurance, 'XX the lower back year, year. past

like understand for if kind that growth, sense? what we revenue factors, different organic to makes XXXX the level trying normalize of as of Just guidance implies those

Shawn Tabak

all Yes. And mean the share, because have quota it's we've to of the reinsurance able increased particular, seeing with it would we're book. I quota element we're we what the that label back I mean book, of I with share all we're cut where -- our doing insurance think less do I is organic. is significantly on. profitability in that

as We'll is XXXX. by as better quota we'll premium that's with -- what profitability that insurance book. XXXX And in the XX% it. that, And in could that price which the we I to puts per actions less loss hand. and in the of collectively some gotten go we reinsurance share So the us And for hand a in between where probable increases the along well almost continue policy mentioned, the extent will have risk, increases. mentioned XXXX have position maximum the

So would that's it. I how think about

when the of I all the of well. kind think as what -- levers together means reinsurance we're thinking come the it's insurance in profitability all about and business terms and that

Operator

from comes Craig-Hallum. line Kreyer question the of Your next Jason from

Jason Kreyer

ask property for that you've X know data. using I the last wanted to been on now. years I

in wondering plan overview provide can that used or use give of any give you've how any of And data seen more frequently of you where around pricing more data Just numbers that can if forward. a being that is an where if you quoting? indications then to you going edge

Jim Weld

can provide, of advantages seeing the excited already data. Sure. about the to ways that going be I we're actually key it's a data own the a our for opportunity There's of use can can in We're measurable and underwriting. take that. we ongoing us. results And variety

expect want It's is tied And of data. So filings tied imagine age it's states It's things have to things plumbing. to what would condition start to We using tied roof. know, right? to and done to the of where you actually type the were the multiple in a you number it's think would a points of the that the if take of to what located get the is to data. the about place. can and in damage them. of happened, about water in type that heater interior this There data early of our so excited we We event of advantage home, the take something think going still lot we're we're we that is to ability you

Operator

period. will question run to out I And for remarks. over the closing we now our of call have Matt for time answer pass and

Matt Ehrlichman

to truly efforts their for here. Well, for who everybody, and been first, QX Most for everybody, ahead with do the all May and delivered. the then. see us. team thank we and Porch just the are the investors the until earnings -- to for I for vision Also long-term to want our in questions you that's progress where look again in significant and Thanks, to speaking We all you thanks, that's being forward time. our

Porch (PRCH) 7 Mar 242023 Q4 Earnings call transcript