Good afternoon, everyone, and thank you for participating in Porch Group's Third Quarter 2025 Conference Call. Today, we issued our earnings release and filed our related Form 8-K with the SEC. The press release can be found on our Investor Relations website at ir.porchgroup.com. I'd 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. Today's discussion, including responses to your questions, reflects management's views as of today, November 5, 2025. We do not undertake any obligations to update or revise this information. Additionally, we will make forward-looking statements about our expected future financial or business performance or conditions, business strategy and plans. These statements are subject to risks and uncertainties, which could cause actual results to differ materially from these forward-looking statements. Please refer to the information on this slide and in our SEC filings for important disclaimers. We will reference both GAAP and non-GAAP financial measures on today's call. Please refer to today's press release for reconciliations of non-GAAP measures to the most comparable GAAP measures discussed during the earnings call, which are also available on our website. As a reminder, this webcast will be available for replay along with the presentation shortly after this call on the company's website at ir.porchgroup.com. With that, joining us today here are Matt Ehrlichman, Porch's CEO, Chairman and Founder; Shawn Tabak, Porch's CFO; and Matthew Neagle, Porch's COO. With that, I'll now turn the call over to Matt for his key updates.

Good afternoon, everyone. Thank you for joining us. We are proud to report another excellent quarter where we once again exceeded expectations. Before diving into Q3 results, I would like to take a moment to reflect on the progress we've made this year. In December 2024, we held an Investor Day and told you all that we would deliver $50 million of adjusted EBITDA in 2025. I remember getting follow-up questions from investors asking why we're being that aggressive, and I understood where it came from. The year prior, we had posted a $45 million adjusted EBITDA loss and 2024 was tracking close to breakeven. I responded that we were confident in the go-forward model of the fundamental differentiation and margin advantage that our unique data provides to our insurance business and our ability to execute to get our desired results. Despite the low level of improvement it represented, we had ambitions to deliver more than the $50 million in adjusted EBITDA, and we thought that $70 million would be a fantastic outcome for the year. Here we are 3 quarters through 2025, and I am pleased to announce another strong quarter in which we delivered $21 million in adjusted EBITDA and $29 million in cash flow from operations for Porch shareholders. This means that in the first 9 months of 2025, we've already generated $53.1 million in adjusted EBITDA, surpassing that initial $50 million target. We're proud of the execution this year and the control we're demonstrating over the business as we now expect to deliver full year performance at that $70 million, which represents a 10x increase versus the prior year. Our shift to a simpler commission and fee-based model was designed to deliver straightforward, predictable and high-margin results for Porch shareholders. It has been a resounding success.…

Thank you, Matt, and good afternoon, everyone. Similar to Matt's overview, my comments will address performance of the Porch shareholder interest since generating cash for Porch shareholders is our ultimate goal. Under GAAP, we are consolidating the reciprocal exchange financials, which you can find throughout the press release and our 10-Q. Q3 performance was strong, driven by insurance services. Q3 2025 Porch shareholder interest revenue was $115.1 million, with an 82% gross margin, producing $94.2 million in gross profit. Adjusted EBITDA of $20.6 million was ahead of expectations, driven by insurance services. Cash flow from operations for Porch shareholders was $28.8 million. The Porch shareholder interest revenue of $115.1 million was comprised of insurance services at 64%, followed by software and data at 21% and the remainder from consumer services. Q3 Porch shareholder interest gross profit was $94.2 million with an 82% gross margin, led by our Insurance Services segment, which had an 84% gross margin. We are pleased with the high margin profile we are seeing across all of our businesses. Q3 adjusted EBITDA was $20.6 million with an 18% adjusted EBITDA margin overall. This was driven by our Insurance Services segment posting a 34% adjusted EBITDA margin and good profitability overall across our other 2 core segments despite a continued challenging housing market. Now let's move a little deeper into the segment results, starting with Insurance Services. Overall, we are pleased with the conversion rate of reciprocal written premium, or RWP, to Insurance Services adjusted EBITDA. In Q3, the rate accelerated to 18%, 200 basis points higher than Q2. We are seeing good operating leverage here and are focused on driving efficiency. In the quarter, RWP was $137.5 million, and insurance services revenue was $73.8 million, which is a premium to revenue conversion rate of 54%. As a…

Thank you, Shawn. I'll start by giving a brief business update and then dig into our KPIs. 2025 has been an important year where we generated substantial profitability and cash flow for shareholders and also positioned ourselves to scale premium sustainably in the years ahead. Reciprocal written premium is driven by quote volume and conversion rates. We are seeing strong level of top-of-funnel activity such as agent appointments and quote volumes. The conversion rate of RWP to adjusted EBITDA has exceeded our expectations, which has allowed us to deliver on our profit objectives while being patient in adjusting price. This has helped produce exceptional surplus generation results at the reciprocal year-to-date with more expected in Q4. Let's dive into the insurance KPIs. Reciprocal written premium in Q3 was $138 million, up 14% versus last quarter. Reciprocal policies written reflects the total number of new and renewal insurance policies written by the reciprocal during the period. We generate policy fee revenue directly from these policyholders. In the quarter, we wrote nearly 48,000 policies. RWP per policy written is calculated by dividing the reciprocal written premium by the total number of reciprocal policies written and represents the amount the customer is expected to pay. For the third quarter, we posted RWP per policy written of $2,884. As Matt highlighted earlier, one of the key reasons why we're well positioned to scale RWP is our top-of-funnel activity. These 2 charts provide some context. First, the chart on the left shows total agency appointments since 2024. As we have grown our agent recruiting and account management team significantly, we have seen the expected increase in the number of appointed agencies. While this is great progress, we continue to have a fraction of the agencies in Texas and across the country. We are just getting…

Thanks, Matthew. I'll wrap up by reinforcing the most important messages from today, stuff I'm most excited about. Again, once again, a strong quarter where we delivered Q3 adjusted EBITDA of $21 million and $29 million in Porch shareholder cash flow from operations. We're proud to report that year-to-date, we've already surpassed our initial 2025 adjusted EBITDA guidance, and we're tracking towards $70 million for the full year. Second, as we talked about, we're excited about the surplus health of the reciprocal. Our unique property data allows us to assess and price risk better than the industry, which creates more margin in the system. The gains we produced this year at the reciprocal not only create resiliency in the system, but we believe it set us up for years and years of strong profit growth ahead. With the surplus in place, we can scale RWP at the appropriate pace to achieve our desired outcomes for the next many years ahead. As Matthew mentioned, the top of the funnel metrics in insurance are growing nicely, setting us up well there also. The work we did over the last decade got our business positioned for success with sustainable advantages. The work we've done in 2025 demonstrates the power of the system we're building and how profitable it can be. The next few years are going to be a lot of fun. So thank you all for your time today. To my fellow shareholders, we appreciate your support, and we look forward to continuing to share this journey with you. With that, John, please go ahead and open up the call for questions.

[Operator Instructions] Our first question comes from the line of Dan Kurnos with Benchmark Company.

Matt, I just want to understand, this is going to be just one multipart question around reciprocal written premium, generally speaking. So we go into Q4, obviously, Shawn called out seasonality. But I think a lot of us were anticipating that you guys would sort of grow through seasonality just given how early you are in the process. And I know that you've got your kind of cadence and your targets on where RWP should end. So like kind of the 2 components, one, obviously, on the volumetric side as you continue to bring agencies back on, is there anything from a competitive standpoint or something else for a reason why in sort of the near term, there's not a little bit more gas being thrown on the fire. And then, obviously, you've got the P side of the equation where I don't know what you're underwriting for premium increases. But in your prepared remarks, you talked about the -- maybe pricing down. And again, maybe that goes to my competitive question. So maybe just your thoughts on how the P component of the equation looks as you guys scale into 2026. I know there's a lot, but kind of one thing.

It's the right place to start. I appreciate that. I mean you can get a good sense for what we're prioritizing this year and how we're thinking about the future. I've said this before, I'll say it again, if we wanted to go and grow premium exceptionally fast this year, we could do so very clearly. If we wanted to go and grow profit a lot faster this year, again, we could do so. What I really am focused on -- what we're really focused on is maximizing long-term shareholder value. And what we think about is, okay, what do we want to deliver in terms of EBITDA and cash flow for shareholders this year? And then what kind of growth do we want to produce next year and the year after that and the year after that? We want to be able to show this consistent and frankly, accelerating growth curve instead of growing fast and then slowing down over time. Yes, you could increase the value today, but really, what's going to drive the most value here. And I do believe that accelerating growth and accelerating and expanding adjusted EBITDA margins each year is going to create the most value overall. And so with that lens, we think about the target -- the adjusted EBITDA target we want to go and achieve this year that, again, I think we've made really great progress against. And like we said, within that constraint then, how do we go and maximize surplus generation at the reciprocal. And so clearly, we've just crushed it in terms of how much progress we've delivered over the last 6 months there. Now Matthew talked about it briefly, the elasticity curve in the insurance market is quite steep. And so you can be able to lower prices for good risks and be able to increase your conversion rate and grow faster. By definition, you're getting a lower price point on that particular cohort of customers. And so right now, for us, it's the balance of those things. But you can hear it coming through, hopefully, which is we feel really confident in our ability to grow this business and to control the growth of the premium at the right pace, which is -- for us, it's just really, really exciting because we think it's going to be, like I said, going to be a really fun set of years.

Do you have a view on what renewals around premium look like into '26?

Yes. I mean the underlying growth I don't share, but the underlying metrics look really good. And at some point, we'll do an Analyst Day, and we'll unpack, I would say, probably a lot of those underlying metrics. But clearly, we haven't disclosed that at this time. But the underlying metrics, it all shows the points really clearly to us being able to grow premium at a really, really nice clip here.

Your next question comes from the line of Jason Helfstein with Oppenheimer.

I just want to unpack like the fourth quarter guide a little more and like just think through the kind of relative performance versus 3Q. So you're calling out like housing as being maybe a headwind in 4Q. I mean, was there -- was housing at all a tailwind? I mean I think, look, we've seen some pretty good numbers from the real estate companies that we cover with 3Q. But I'm just -- I just think there's a surprise that like the flow-through is not flowing through the full year. So again, maybe like did you just have a better third quarter than you expected and then fourth quarter is looking a bit more normal on the insurance side? Just unpack that a little more.

Yes, sure. I'm happy to take that one. How is it going, Jason? I'll start with Q3 and the outperformance that we saw there. One of the things I mentioned is the conversion, I think Matt talked to it, too, the conversion rate of RWP to adjusted EBITDA was very strong in the quarter. It was 18%, a very strong operating leverage there in the business, and we are quite pleased with that. There's a lot of focus on driving efficiency. And so that's why you see that increase there. And that just means, obviously, every dollar of RWP translates into more adjusted EBITDA for Insurance Services segment. So that was the driver of the outperformance. You mentioned housing market. We haven't seen really a large change there. We continue to see low levels of housing activity. Our software and data and consumer services businesses, they both charge on a per transaction level. So we are waiting for the day it will be nice when the housing market does recover. It's not -- we're not reliant on it, but that will drive growth and margin accretion for us when that occurs, but we're not anticipating that in the short term.

Yes, Jason, I mean, like you saw with other housing companies, we saw toward the end of the third quarter some possible momentum, but there's been enough tees over the last few years that we're just going to stay cautious and conservative with kind of our go-forward forecast as it relates to housing until it really has played out consistently for a good period of time.

That makes sense. I guess, I mean, is there a reason to think that you're just taking your foot off the gas a little bit on growth in the fourth quarter?

I think that we are -- the way I would put it just overall is that we are -- we think right now with where our loss ratios are at, at the insurance business that we can continue to -- and we're positioned to be able to drive a lot of surplus growth. And as one does that, it is a huge advantage, and you can be able to use that capital really effectively as we look ahead to be able to create lots of value. And so I think it's more about just being patient given how much EBITDA we're generating this year and kind of at our goals and some really important numbers for us, just being patient with when do we really start to pull levers and it will create outcomes for us to just set us up really well.

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

This is Cal Bartyzal on for Jason. Just first on Home Factors, you kind of alluded on the call to some AI across the software offering. But just given how much data you're ingesting there, is there any learnings in applying AI to the platform and Home Factors becoming kind of a leading AI-enabled platform for insurance carriers?

I can take that. We're -- we see a lot of opportunity with our Home Factors product. We continue to build out additional Home Factors. And one of the places where AI is helping us is to speed up our ability to pull out the insights from the data. And there's whole sets of data such as visual data that before would have been very hard for us to pull insights from, but AI is making it possible. I also think the way the Home Factors product is set up, it's going to be very easy for partners to pull the data into their operations, into their workflows in which they can build, for example, AI-driven underwriting where they pull in our data. And so I certainly see some opportunity there. Where we see it today is in how we're accelerating the extraction of the insights from the data.

Great. Makes sense. And then just given how much room you have on the insurance side to expand into additional agencies, just curious how you think about the ability to unlock more agencies and get that convergence of more capital, more surplus and more agencies kind of converging in 2026.

Yes, I can take that one, too. We are building out our growth teams. That's the teams that work with agents. You can see it in the numbers. We've seen growth steadily over the last 6 months. And there is lots of room for that team to keep going and building out new agent appointments. And we've talked about how we built up surplus, which allows -- sets us up for growth in the future. I would say the other thing that we haven't necessarily taken our foot off the gas is around agent appointments. We've been continuing to build that team to get the largest distribution we can, but there's years of work for us to fully mature our distribution. And then as Matt said, there are some levers. There's incentives we can give to agents. There's the way we set pricing to target attractive low risk. I would say there's room for us still to pull some of those levers.

Your next question comes from the line of Adam Hotchkiss with Goldman Sachs.

I want to follow up on the insurance services business and reciprocal written premium. Just when we think about the sort of $500 million in premium that you had laid out at Investor Day last year, it seems like based on the seasonality commentary, you'll be a little light of that. And so maybe just highlight for us anything that's changed and anything -- and any impact that might have on 2026? And then just maybe what is the sort of driver of this concept that adding or accelerating premium, particularly given the attritional loss ratios that this business is operating at would or could negatively impact surplus. I'm just trying to understand why at this attritional loss ratio, that wouldn't actually incrementally benefit surplus to sort of ramp up the premium path given where loss ratios are today?

Yes. Thanks, Adam. I appreciate it. Maybe I'll take the second one first and maybe I'll comment and Shawn, if you want to layer on the first one, that's great. I mean the loss ratios at the insurance business continue to be really, really strong. It was 22% gross loss ratio in the third quarter, 17% attritional loss ratio in the quarter. So again, just to kind of reiterate from previous quarters, like these are industry-leading types of levels. Our unique data fundamentally -- when we talk about fundamentally, gives us the ability to price and underwrite more effectively and gives a margin advantage. I mean the proof continues to show up in those numbers there. So you have a choice, which is you can be able to maintain all of that margin, or you can be able to tick up those ratios slightly. This is what we're talking about in terms of managing the price point to the right low-risk customers and have a little bit higher loss ratios and grow premium faster. And again, the great thing is you really are in control because of the margin advantage that we have, you really are in control to be able to make those choices. It's really clear actually in terms of those choices. And so to your question -- your first question, Adam, yes, we've chosen just like we're talking about today to -- given where we are against adjusted EBITDA, to not do some of the actions that we would have thought we would 3 months or even maybe even 6 months ago in terms of starting to lower the price, continue to be able to maximize surplus generation here and really just take advantage of the types of results that we're seeing just because of how impactful that can be in terms of continuing to build that capital base. It's a big deal for us as we look and gives us lots of different choices as we look ahead. I don't know, Shawn, if there's anything else you would want to layer on to that.

Yes. I mean I would just say, as I mentioned earlier, the place where we really over exceeded our expectations was on that -- just the efficiency of the insurance services business operation. And as I mentioned, we saw the 200 basis points of leverage on RWP to adjusted EBITDA. And so that's what drove the additional earnings. And then to Matt's point, it becomes a strategic choice around when to pull the levers. And I think as we've talked about over several quarters now, we're going to remain focused and disciplined and grow to maximize shareholder value over the long term.

Yes. Two quick things, just to finish it off. Just I'm going to go back to it. I want to make sure it wasn't missed. I hit on a slide, which is -- I just wanted to communicate how impactful why we're making that choice. Adding $100 million of surplus combined with non assets, I talked about how given the ratios, what premium it can support, that supports the capacity to generate an extra -- an incremental $100 million of adjusted EBITDA annually, right? And so if you think about the long-term value impact to be able to add that much into the surplus in a given quarter, it's pretty extraordinary future value creation. And so really, Adam, that's what we're seeing. I'm seeing, which is, okay, like we can go and continue to be able to just make progress and you just are able to create a lot of fuel that set us up for a very long time. It's very powerful. You also -- I just want to be comprehensive, asked about 2026. Just to be clear, we're not commenting on 2026, but we feel really good about -- the tone, but feel really good about '26. So we're not indicating anything changing from '26 here, and then we'll provide guidance, obviously, next quarter.

Okay. That was really comprehensive and helpful. And then on the software and data business, maybe just give us an update where you are on sort of the data licensing opportunity in states you don't operate in.

The data licensing kind of our Home Factors?

Exactly.

Yes. So we see a lot of traction in engaging with carriers. What we've communicated in the past, which we'll communicate again today is the sales cycle will set us up to start seeing more revenue in 2026. But we do have an expanding pipeline. And for us, that means carriers who are actively involved in testing the data. And those that have completed the tests are indicating there is a strong ROI for those tests. And then we continue to bring out more insights. And so we're still full steam ahead on that part of our business and excited about starting to grow that business and impacting the bottom line more in 2026.

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

In terms of capital allocation, can you talk about the current appetite for M&A, especially with respect to the insurance business in terms of expanding both the product offering and geographic footprint. And given the excess capital position that the reciprocal has, if there's any unique way to leverage that for inorganic growth?

Well, Ryan, I'm not going to give you too much on that question, but I respect the question, nonetheless. I mean, well, you kind of hit it on the head, actually at the end of that question, Ryan, which is having more capital, when I say it gives you more choices, there's a variety of choices that it presents in terms of how you can be able to use the advantaged capital. And so as we're making those choices that we're talking about and being able to grow -- prioritize growing capital here, it sets us up to have lots of really good impactful choices. I have commented previously on M&A that we -- whatever it was, 6 months ago, 9 months ago, that we would be restarting the M&A process and beginning to look at different companies that would be good fits. No news to share, certainly, but it's something that we're thinking about.

Great. And then -- on the surplus creation, nice to see the solid growth. Can you just clarify how much of the $113 million of the increase was generated from the increase in the stock price from last quarter?

It was about 80-20 or so. A big chunk of it was from the stock price and the flywheel there continues to work exceptionally well. And also, the reciprocal generated really strong net income in the period, and that also contributed to the increase in the surplus. So both of those are having a positive impact and the flywheel, as I mentioned, continues to really work as intended and drive value.

Easiest rule of thumb for anybody out there that wants to just track that ongoing. There's 18.3 million shares that the reciprocal owns. And so at any point in time, you can be able to peg what the value is of the Porch stock that the reciprocals own.

The next question comes from the line of Timothy D'Agostino from B. Riley Securities.

For my first question in the Insurance segment, last quarter, you mentioned you were in 22 states. I was wondering if that number is still 22 or if you've gone into other states? And thinking about expanding into other states and writing more business, what does that process look like? And how long might it take?

Yes. We're still in 22 states, but we are -- we do see opportunity in additional states in 2026. The exact process does vary by state, but a lot of the infrastructure we have in place allows us to move into a new state. And so it's not a years-long process, but months-long process. It does then take time to build up a book within that state. The one thing we do have is we are now working with larger national agencies. And so we would have agencies that could start writing with us once we open up in a new state.

Okay. Great. Awesome. And then just a quick follow-up. I know Texas is majority of the reciprocals book. I was wondering if you could quantify maybe the percentage of how much reciprocal written premiums is coming from Texas.

It's around 60%, I believe. It will be in the Q filing when that comes out.

The next question comes from the line of Timothy Greaves with Loop Capital.

I guess my first question is on like Home Factors. You had a goal of 100 by the end of the year, I believe. How is that pacing? And are you still on pace to reach that goal?

We continue to add Home Factors. We've launched 8 just since the last time we met with you guys, bringing us up to 89. And we're still in the process of identifying new insights. And so I do think there is a lot of insights within the data. And what we have now is already very interesting. I mentioned briefly before, with AI, we're able to accelerate our ability to extract new insights. We're also interested in, over time, pulling insights from some of the visual data that we have. So there's still good room there for Home Factors in terms of product innovation. As a sign of two, we're also finding that there's additional use cases for the data. Again, I just think it's still early in that business with a lot of potential still.

Okay. Great. I guess my second question will be around the new policies. From the new policies, I think you said that you will get a percentage if the business comes from -- the lead generation comes from you guys. What percentage of like new is coming from leads that you guys provide versus the third parties on their own?

Yes. We don't break that down specifically. But I mean, obviously, the homebuyer leads that we get from third-party agencies when we have homebuyers coming for us are -- is part of our insurance services revenue, and it's part of our strategy. I mean we meet lots of homebuyers through our various channels introduced from inspectors or other types of companies that are out there. And we help them as they go through the move. And obviously, they need insurance is one of the things that they need. And so obviously, we help them with other services as well, security and TV Internet and moving services. But insurance is one of the things that we'll lead with clearly because of our strategy and our focus. So we haven't broken out the percentage, but it's an important part of our strategy.

At this time, we have no further questions. I will now turn the call back over to Matt Ehrlichman for closing remarks.

I'll just say thanks for spending time with us today. I mean we, as you can tell, are fired up about the year, and we're fired up about the next set of years. So we really do believe we're positioned to post some really cool numbers and make a lot of progress against our strategy. And with that, we will wrap up the call. Have a great rest of the day.

Ladies and gentlemen, that concludes today's conference call. We thank you for your participation. You may now disconnect.