PRCH 10-K & 10-Q changes, risk factors and insider trading

•We face a variety of risks from our expansion into the insurance business, including as a result of higher than expected claims costs and other factors outside of the Company’sour control, which may result in an adverse impact on the Company’s financial condition.

•OurPorch Shareholder Interests and our future growth isare largely dependent in part on our ability to manage the operations of and grow the insurance business we manage and operate by limiting attritionattrition, and buildinggenerating surplus at the Reciprocal, and increasing our revenue by increasing the number of sales of home-related services per customer and consumer. We may not succeed in these efforts.

•The incidence, frequency and severity of weather events, extensive wildfires, and other catastrophes, particularly occurring where the Porch Reciprocal Exchange (the “Reciprocal”) has a concentration of homeowners insurance policyholders, or that adversely impact consumer confidence and spending behavior in the industries we serve, could have a material effect on our results of operations and financial condition.

•We may be unable to access the capital markets when needed, which could adversely affect the ability to take advantage of business opportunities as they arisearise. refinance our outstanding debt, and to fund operations in a cost-effective manner.

•We operate an insurance business through a reciprocal exchange, Porchthe Insurance Reciprocal Exchange (“PIRE”).Reciprocal. We do not own PIREthe Reciprocal but provide certain management services for which we receive compensation. The growth and financial health of PIREthe Reciprocal directly affect our operating revenue and the payment of interest and principal on surplus notes we hold is uncertain.

•If the management fee rate retained by Porch’s insurance services businesses is reduced or if there is a significant decrease in the amount of direct and assumedgross premiums written by PIRE,the Reciprocal, revenues and profitability of the Company could be materially adversely affected.

•PIREThe Reciprocal is dependent on the use of reinsurance.reinsurance, including reinsurance from our wholly owned reinsurance captive.

•We may change the structure of the reinsurance arrangement for PIREthe Reciprocal and our reinsurance captive in the future, which may impact our overall risk profile and financial and capital condition.

•Reinsurance may be unavailable at current levels and prices, which may limit PIRE’sthe Reciprocal’s ability to write new business. Furthermore, reinsurance subjects PIREthe Reciprocal to counterparty risk and may not be adequate to protect it against losses, which could have a material effect on results of our operations and financial condition.

•The performance of PIRE’sthe Reciprocal’s and our reinsurance captive’s investment portfolios is subject to a variety of investment risks.

•The financial strength ratings of PIREthe Reciprocal and Homeowners of America (“HOA”), its insurance company subsidiary, could be downgraded.

•Failure to maintain PIRE’sthe Reciprocal’s risk-based capital at the required levels could adversely affect its ability to maintain regulatory authority to conduct business.

•PIRE’sThe Reciprocal’s and our insurance captive’s loss reserves may be inadequate to cover actual losses.

•PIREThe Reciprocal and our reinsurance captive could be forced to sell investments to meet liquidity requirements.

•Our results of operations and financial condition may be adversely affected due to limitations in the analytical models or changes in accessibility to such models used to assess and predict PIRE’sthe Reciprocal’s exposure to catastrophic losses.

•ARegulatory factors could, and a sustained decline in the price of our common stock wouldwould, negatively impact HOAthe regulatoryReciprocal’s statutory surplus, which may require it to raise additional funds to enable HOAthe Reciprocal to adhere to regulatory requirements and maintain its financial stability rating.

•If the costs of providing services to PIREthe Reciprocal are not controlled, our profitability could be materially adversely affected.

•WePrior haveto the fourth quarter of fiscal 2024, we had a history of losses, and we may be unable to achieve or sustain profitability.

•We are subject to credit risk arising from the financial soundness of counterparties, including PIRE’sthe Reciprocal’s and our reinsurance captive’s reinsurers, which may have a material adverse effect on our business, financial condition, and results of operations.

•The insurance businesses we manage and operate are subject to state governmental regulation, which could limit the growth of the insurance businesses and impose additional costs on PIREthe Reciprocal and HOA.

•The indenture governing our 2028 Notes contains, and instruments governing any future indebtedness of ours would likely contain, restrictions that may limit our flexibility in operating our business, and any default on our 2028 Notes or other future secured indebtedness could result in foreclosure by our secured debtholders on our assets. In addition, servicing our indebtedness requires a significant amount of cash, and we may not have sufficient cash flow from our business to make such payments.

•We face risks associated with our independent contractors.contractors, including complying with applicable laws.

Our brands and businesses operate in home-related product and service industries, which include insurance, mortgage software, title insurance software, warranty, moving services, inspection software, home repair, data and analytics, and marketing, financial and other software for home services companies; all of which are competitive, evolving, and some of which are highly regulated. There are many existing competitors and a consistent and growing stream of new entrants, services and products. Some of our competitors are well-established, have greater functional and compliance maturity, or have better competitive positions with respect to certain geographical areas, consumer and service provider demographics, and/or types of services offered. Some of our competitors have stronger brand name recognition, better economies of scale, more developed software platforms or other intellectual property, and/or better access to capital. Additionally, the home and home-related services industries continue to undergo consolidation and vertical integration, which may make it more difficult to compete with existing competitors and new entrants. Any of these advantages could enable these competitors to reach more consumers and service providers than we reach, offer products and services that are more appealing to consumers and service providers than our products and services, and respond more quickly and/or cost effectively than we respond to evolving market opportunities and trends, any of which could adversely affect our business, financial condition and results of operations. Alternatively, our innovative business model and our limited track record as a public company may cause confusion in the market such that failures of our competitors or companies operating in similar or adjacent spaces may impact consumer or investor perceptions of the digital home services industry as a whole.

If we are unable to compete effectively against competitors, services or products or if we are unable to establish or maintain a consumer brand that resonates with customers and/or enhance our existing brands and the brands of our recentlyany acquired companies, or if we are unable to maintain high customer satisfaction or compete with the pricing offered by our competitors, the result could be decreases in the size and level of engagement of our consumer and service provider bases, any of which could adversely affect our business, financial condition and results of operations.

We face a variety of risks from our expansion into the insurance business, including as a result of higher than expected claims costs and other factors outside of the Company’sour control, which may result in an adverse impact on the Company’s financial condition.

In 2021, we expanded our insurance operations through the acquisition of HOA, a leading property and casualty insurance company focused on products in the residential homeowner space. Effective January 1, 2025, we sold HOA to PIRE,the Reciprocal, a newly formed reciprocal insurance exchange. Porch acts as the attorney-in-factoperator and managing general agent for PIRE,the Reciprocal, receiving commission and fees as compensation for services in our new Insurance Services segmentsegment, beginningwhich inbecame effective January 1, 2025. In addition, within our new Insurance Services segment, our wholly owned reinsurance captive insurance company, Porticus Re, provides reinsurance support to PIRE.the Reciprocal to increase capital efficiency at the Reciprocal and increase revenue and profit for Porch Shareholder Interest. As a result, we continue to be exposed to certain risks related to the insurance business, certainly in the first quarter of 2025 and, depending on the placement of third party reinsurance (which occurs on April 1 of each year), such risks could continue ongoing.business.

PIREThe Reciprocal bears the cost of paying insured claims. Claims costs may be adversely affected by increases in costs of home repair as a result of inflated material costs, supply chain shortages, increases in labor costs, and demand surge during catastrophic events. In addition, prices for raw materials, such as lumber and steel, are subject to market volatility. We cannot predict the extent to which PIREthe Reciprocal and our reinsurance captive may experience future increases in claims costs. To the extent such costs increase, PIREthe Reciprocal may be prevented, in whole or in part, from passing these cost increases through to our existing and prospective customers. Such increases in costs could have a material adverse impact on our consolidated business, financial position, results of operations, and cash flows.

PriorEffective toApril sale1, of HOA to PIRE, the Company used2025, our captive reinsurer toprovides supportreinsurance HOAcoverage for the Reciprocal for risks with twolow differentearnings reinsurancevolatility, programs:such aas non-catastrophic weather quota share to provide capital efficiency for the insurance entity while avoiding the variability and risk of large weather events at the reinsurer, and Excess of Loss reinsurance to provide protection for large weather losses where not provided by third parties.share. Our intent is to continue the non-catastrophic weatherthis quota share on April 1, 2025 and ongoing andas we believe this is a long-term strategy to create capital efficiency for PIREthe Reciprocal and attractive, lower-risk economics for Porch shareholders. Our intent is to not continue the participation of our captive reinsurer in providing Excess of Loss reinsurance as of April 1, 2025; however, we cannot be certain that PIRE will be able to fully place its excess of loss reinsurance needs with third party reinsurers and may need to utilize Porch's captive reinsurer if it is unable to do so. Under this arrangement, the captive owned by the Company serves as the reinsurer, and the consolidated books and tax returns of the Company reflect a liability consisting of the full reserve amount attributable to the reinsured business, which is significantly higher than previous years’ insurance related liabilities.business. The success of the Company’s captive reinsurance program is dependent on a number of factors outside the control of the Company, including, but not limited to, weather events, continued access to financial solutions, losses of the Reciprocal increasing unexpectedly, in particular, attritional losses, a favorable regulatory environment, and the overall tax position of the Company. If the captive reinsurance program is not successful, the Company’s financial condition could be adversely impacted. Additionally, capital held by the captive cannot be used elsewhere within the Company without applicable regulatory pre-approval. Whether PIREthe Reciprocal will continue to use the captive reinsurer going forward depends upon a number of circumstances, including the availability and pricing of reinsurance from third parties, the amount of capital it holds and regulatory requirements. If PIREthe Reciprocal were to cease using the captive, our access to its capital and assets would remain restricted while it has runoff reinsurance obligations.

PIREThe Reciprocal is highly dependent on maintaining successful relationships with third-party independent agents and agencies. Negative changes in such relationships could adversely affect its insurance business, including, but not limited to, reduced sales, the loss of existing policies, the need to lower prices, or the need to pay higher commissions. In addition, although such agents/agencies are appointed as independent contractors with the authority to solicit and bind insurance policies on PIRE’sthe Reciprocal’s behalf, any misconduct on their part could have an adverse effect on our business, financial conditions, reputation and results of operations.

OurPorch Shareholder Interests and our future growth isare largely dependent in part on our ability to manage the operations of and grow the insurance business we manage and operate by limiting attrition, buildinggenerating surplus at the surplus of PIRE,Reciprocal, and increasing our revenue by increasing the number of sales of home-related services per customer and consumer. We may not succeed in these efforts.

Our future growth is dependent in part on our ability to manage the operations of and grow the insurance business we manage. The insurance industry is highly competitive and regulated, and our growth depends on our ability to continue to obtain reinsurance at levels and pricing favorable to us, manage risk, limit policy attrition, obtain regulatory alignment on our business plans and financials, and continue to build thegenerate surplus ofat PIREthe Reciprocal to support additional growth, which may require raising capital if unable to grow organically. There can be no assurances we will be successful in these efforts.

The incidence, frequency and severity of weather events, extensive wildfires, and other catastrophes, particularly occurring where PIREthe Reciprocal has a concentration of homeowners insurance policyholders, or that adversely impact consumer confidence and spending behavior in the industries we serve, could have a material effect on our results of operations and financial condition.

In particular, severe weather events and the effects of climate change, including, tornado and hail events, hurricanes extensive wildfires, drought, storms, flooding, and other catastrophes, and the frequency of such events, as well as the impacts of future global pandemics and other health crises, may harm the insurance business we manage and operate and could result in additional capital being required at PIRE,the Reciprocal, whether from Porch or a third partythird-party investor. While we intend to managemitigate our risk via reinsurance, there can be no guarantee this will adequately reduce our exposure to losses due to various risks inherent in reinsurance generally and with our reinsurance program, including, but not limited to, the inability to negotiate reinsurance contracts at renewal at acceptable terms or at all, our limited number of reinsurance partners, large catastrophes that exceed aggregate reinsurance coverage limits, the inability or unwillingness of counterparties to pay reinsurance receivables we believe we are owed, multiple losses in a single year that exceed our ability to reinstate reinsurance contracts, and the potential for fraud or misrepresentation committed by our reinsurance partners. TheFurther, availability of reinsurance and its price are generally determined in the reinsurance market by conditions beyond our control and can be negatively impacted by such severe weather events and the effects of climate change, including, tornado and hail events, hurricanes, extensive wildfires, drought, flooding and other catastrophes, and the frequency of such events, as well as the impacts of future global pandemics and other health crises, may harm the insurance business we manage and operate. Additionally, a significant increase in insurance claims and the cost of the claims by consumers who purchase our insurance could reduce PIRE’s access to reinsurance. These events have in the past and couldif in the future negativelyPorch affectdecides to use its captive reinsurer to provide other reinsurance offerings to the economyReciprocal into general,benefit the Reciprocal or increase cashflow to Porch shareholders, unusual weather could impact the seasonality and thefinancial housingresults andof home services markets in particular.Porch.

Any of these events could negatively affect the home industries PIREthe Reciprocal serves and could adversely affect our business, financial condition and results of operations.

•Models underlying automated underwriting and pricing decisions may not be effective.effective or may subject us to other risks, including our ability to launch pricing models that benefit our businesses and increased regulatory scrutiny.

•Acquisitions may not be successfully integrated, resulting in substantial disruption, costs, or delays, and adversely affecting our ability to compete, and may also result in unforeseen liabilities or impact our credit ratings.ratings, and may add risk around our control environment.

•We may not be able to consistently replicate favorable results with the use of Home Factors in underwriting for carriers other than HOA,HOA and the Reciprocal, which may be due to carrier location, modeling capabilities, or business goals of other carriers.carriers, and we may also face risks with regulators impacting our ability to use Home Factors.

We rely on relationships with third partythird-party companies to provide us with information such as property insights. In the future, any of these third parties could sever its relationship with us, change its data sharing policies, including making them more restrictive, or alter its own data collection practices, any of which could result in the loss of, or significant impairment to, our ability to access, collect and use personal information about their customers or consumers.

We may be attacked by perpetrators of malicious technology-related events, including related to the use of AI, such as the use of botnets, malware or other destructive or disruptive software, distributed denial of service attacks, phishing, attempts to misappropriate user information and account login credentials, ransomware attempts, and other similar malicious activities including malicious activities from internal bad actors. The incidence of events of this nature is on the rise worldwide. While we continuously develop and maintain systems designed to detect and prevent events of this nature from impacting our systems, technology, infrastructure, products, services and users, have invested and continue to invest in these efforts and related personnel and training, and deploy data minimization strategies where appropriate, our efforts may not be successful. These efforts, which include developing and maintaining the systems of recently acquired companies, are costly and require ongoing monitoring and updating as technologies change and efforts to overcome preventative security measures are becoming more sophisticated. Despite these efforts, some of our systems have experienced past security incidents, none of which had a material adverse effect on our business, financial condition and results of operations, and we could experience significant events of this nature in the future. Any event of this nature that we experience could damage our systems, technology and infrastructure and/or those of our users, prevent us from providing our products and services, compromise the integrity of our products and services, damage our reputation, erode our brands and/or be costly to remedy, and may subject us to investigations by regulatory authorities, fines, claims for breach of contract or indemnity by third parties and/or litigation that could result in liability to third parties. Even if we do not experience such events firsthand, the impact of any such events experienced by third parties could have a similar effect. We sell or otherwise provide certain consumer personal information to third parties as part of our business. These third parties may be subject to similar cyberattacks and there can be no assurance that such third parties have adequate cybersecurity infrastructure to prevent breaches of the personal data sold to them by us.

Our businesses are sensitive to certain events and trends, such as a general economic downturn, health of the housing market, inflation or sudden disruption in business conditions, a recession or fears of a recession, consumer confidence, spending levels and access to credit, which could result in decreases in demand for insurance, home mortgages, warranty, moving and inspection services, home repair, and marketing, financial and other software for home services companies and providers. Any such decreases could result in turnover of our consumer and service provider base and/or adversely impact the breadth of services offered through our service market platform, our home-related services, and our warranty and insurance products.

Demand for certain of our products and services generally decreases as the number of housinghome purchasingpurchase and refinance transactions decreases. The housing market is seasonal, cyclical and affected by significant conditions beyond our control. The number of housing transactions in which certain of the Company’s products and services are purchased have been, and may continue to be, impacted by the following situations, among others:

If we are unable to deliver effective customer service, it could harm our relationships with our existing home services companies, consumers,customers, service providers and commercial partners and adversely affect our ability to attract new home services companies, consumers,customers, service providers and commercial partners.

Our business depends, in part, on our ability to satisfy our home services companies, consumerscustomers, service providers and servicecommercial providers,partners, both by providing services and software-based solutions to home services companies and commercial partners that address their business needs and providing access to services that address the needs of consumers and service providers and providingcommercial services and software-based solutions to home services companies that address their business needs.partners. Our customer support personnel also sell our products and services. If our sales efforts are not satisfactory, consumers may choose not to do business with us, or we may suffer reputational costs. Additionally, our home services companies, consumers andcustomers, service providers and commercial partners depend on our customer support personnel to resolve technical issues relating to the use of our products and services.services, which include any technical issues around the recently launched Porch Insurance, the Reciprocal’s new insurance product. We may be unable to respond quickly to accommodate short-term increases in demand for support services or may otherwise encounter a customer service issue that is difficult to resolve. If a home services company, consumer orconsumer, service provider or commercial partner is not satisfied with the quality or responsiveness of our customer service, we could incur additional costs to address the situation or the home services company, consumer, service provider, or consumerprovider (and commercial partners who provide us with their customers’ data) may choose not to do business with us or we may suffer reputational costs. As we do not separately charge our home services companies, consumers andcustomers, service providers and commercial partners for support services, increased demand for our support services would increase costs without corresponding revenue, which could adversely affect our business, financial condition and results of operations. In addition, regardless of the quality or responsiveness of our customer service efforts, home services companies, consumers,customers, service providers and commercial partners that are not satisfied with outcomes may choose to terminate, or not to renew, their relationships with us.

Certain parts of our business are highly dependent on the ease of use of our products and services and positive recommendations from our existing home services companies, consumerscustomers and service providers. Any failure to maintain high-quality or responsive customer service, or a market perception that we do not maintain high-quality or responsive customer service, could harm our reputation, cause us to lose home services companies, consumerscustomers or service providers and adversely impact our ability to sell our products and services to prospective consumers.customers.

We may be unable to access the capital markets when needed, which could adversely affect the ability to take advantage of business opportunities as they arise, refinance our outstanding notes,debt, and fund operations in a cost-effective manner.

Our ability to grow our business may depend in part on the ability to access capital when needed to strategically grow our operations, reduce leverage, and provide statutory surplus to grow the insurance business we manage and operate. Capital markets may become illiquid from time to time, and we cannot predict the extent and duration of future economic and market disruptions or the impact of any government interventions. We may not be able to obtain financing on acceptable terms, or at all. If we require capital but cannot raise it or cannot obtain financing on acceptable terms, our business, financial condition, and results of operations may be materially adversely affected, and we may be unable to execute our long-term growth strategy or, if necessary, obtain the capital necessary to refinance our outstanding notes.debt.

Increases in parts, appliance and home system prices and other operating costs could adversely impact our business, financial position,position and results of operations and cash flows.operations.

Our home warranty business line may be adversely affected by increases in the level of our operating expenses, such as refrigerants, appliances and equipment, parts, raw materials, wages and salaries, employee benefits,benefits healthcare,(including healthcare), contractor costs, self-insurance costs and other insurance premiums, as well as various regulatory compliance costs, all of which may be subject to inflationary and other pressures. Such increase in operating expenses, including contract claims costs, could have a material adverse impact on our consolidated business, financial position,position and results of operations and cash flows.operations.

Prices for raw materials, such as steel and fuel, are subject to market volatility and may be negatively affected by the application of tariffs on foreign goods. We cannot predict the extent to which our home warranty business line may experience future increases in costs of refrigerants, appliances and equipment, parts, raw materials, wages and salaries, employee benefits,benefits healthcare,(including healthcare), contractor costs, self-insurance costs and other insurance premiums, as well as various regulatory compliance costs and other operating costs. To the extent such costs increase, we may be prevented, in whole or in part, from passing these cost increases through to our existing and prospective customers, which could have a material adverse impact on our consolidated business, financial position,position and results of operations and cash flows.operations.

Under our agreements with consumerscustomers and service providers, our service providers, and not us, are responsible for the actions and omissions of our service providers. However, consumerscustomers may still bring claims against us for actions and omissions of service providers, and the service providers may deny responsibility for or be unable to pay any resulting liability. Additionally, certain agreements with our commercial partners obligate us to indemnify such commercial partners against third-party claims resulting from the actions and omissions of the service providers we engage to provide services to consumerscustomers referred to us by those commercial partners. These claims may be expensive and may divert management’s time away from our operations. We may not have adequate insurance coverage to compensate for losses resulting from these claims, and too many or certain types of claims may result in increased premiums or denial of coverage. In addition, we may be deemed, correctly or incorrectly, a contractor with respect to our service providers, which may subject us to licensure and/or bonding requirements and may subject us to penalties for past operations. Any of the foregoing could adversely affect our business, financial condition and results of operations.

In general, our consumerscustomers and our service providers agree to our customer terms and conditions by accessing our services online. However, some consumerscustomers or service providers who access our services only by phone, and consumerscustomers who come to us from third-party lead sources, may not click through to our terms and conditions. If consumerscustomers or service providers do not agree to our terms and conditions for any reason, we may face increased litigation risk, which could in turn adversely affect our business, financial condition and results of operations.

As consumers increasingly access products and services through mobile and other digital devices, we will need to continue to devote significant time and resources to develop new applications and functionalities to ensure that our products and services are accessible across these platforms. If we do not keep pace with evolving online, market and industry trends, including the introduction of new and enhanced digital devices, use of artificial intelligence (“AI”),AI, and changes in the preferences and needs of consumers and service providers generally, offer new and/or enhanced products and services in response to such trends that resonate with consumers and service providers, monetize products and services for mobile and other digital devices as effectively as our traditional products and services and/or maintain related systems, technology and infrastructure in an efficient and cost-effective manner, our business, financial condition and results of operations could be adversely affected.

We have and are continuing to incorporate AI, including machine learning and independent algorithms, in certain of our products, services and internal operations, which is intended to enhance their operation and effectiveness internally and for our customers, suppliers and consumers. AI innovation presents risks and challenges that could impact our business.business and competitive positioning. Our, or vendors’, AI algorithms may be flawed.flawed or our competitors may leverage AI more efficiently or quickly, including by creating new products or more quickly adopting new products. Our datasets or AI training algorithms may be insufficient or contain biased information. Additionally, many countries and regions have proposed new and evolving regulations related to the use of AI and machine learning technologies. The regulations may impose onerous obligations and may require us to unexpectedly rework or reevaluate improvements to be compliant. Use of AI technologies may expose us to an increased risk of regulatory enforcement and litigation. Moreover, some of the AI features involve the processing of personal data and may be subject to laws, policies, legal obligations, and codes of conduct related to privacy and data protection. AI development and deployment practices could subject us to competitive harm, regulatory enforcement, increased cybersecurity risks, reputational harm and other potential legal liability.liability for unintended misuse of data or information. Any of these risks could have a material adverse affect on our business, financial condition and results of operation.

Porch Group, Inc., together with its consolidated subsidiaries, (“Porch Group,” “Porch,” the “Company,” “we,” “our,” “us”) is a new kind of homeowners insurance company.company—one We differentiate and lookdesigned to winstand out in thea massive and growing homeownersmarket insurance opportunity by 1) advantaged underwriting utilizing unique property data, 2) being the best partner for homebuyers, and 3) providingof more homethan protection.$100 billion. Our strategy is built on three differentiators that set us apart.

AsBeyond insurance, Porch is a leader in the home software-as-a-service (“SaaS”) space, we’ve built deep relationships withserving approximately 2924 thousand companies thatacross areindustries keyessential to the home-buying transaction, such as process—home inspectors, title companies, mortgage providers, and mortgagemore. companies.Our deep relationships and proprietary data give us unique visibility into approximately 90% of U.S. homes, enabling superior risk assessment and competitive pricing.

WeOur aimmission is to be the best homeowners insurance partner for homebuyershomebuyers, by helping withoffering more than just insurance.coverage. WeThrough the Porch app, we provide moving services and offer a full moving concierge throughservice, thehelping Porchcustomers app. We help makewith moving easierlogistics and assistessential with other importanthome services such aslike security, TV/Internet,Internet setup, and more.

See “Item 1. Business,” Strategic Growth Pillars, for more information about our business and changes to our business in 2025.

The consolidated financial statements and accompanying notes include the accounts of Porch Group, Inc.,Inc. and its whollysubsidiaries as well as the Reciprocal, a variable interest entity (“VIE”) in which the Company is considered the primary beneficiary. The Reciprocal is managed, but not owned subsidiariesby, Porch and is consolidated at this time as a VIE for reporting purposes. These consolidated financial statements and accompanying notes were prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). All significant intercompany accounts and transactions are eliminated in consolidation.

We caution you that the foregoing list may not contain all the risks to forward-looking statements made in this Quarterly Report on Form 10-Q.Report.

You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends we believe may affect our business, financial condition, results of operations and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors, including those described above and elsewhere in this Quarterly Report on Form 10-Q.Report. We disclaim any obligation to update publicly any forward-looking statements, whether in response to new information, future events, or otherwise, except as required by applicable law.

We operate under four reportable segments that are also our operating segments. Three of these segments are owned by Porch — Insurance Services, Software & Data, and Consumer Services. We collectively call these three segments, along with corporate functions, the “Porch Shareholder Interest.” The fourth segment, the Reciprocal Segment, is managed, but not owned, by Porch and, at this time, is consolidated for reporting purposes as described in the basis of presentation section in Note 1 of the unaudited Notes to Condensed Consolidated Financial Statements.

Insurance Services — Our Insurance Services segment manages and operates the Reciprocal, providing services related, but not limited, to underwriting, policy renewal, risk management, insurance portfolio management, financial management, and setting investment guidelines in exchange for commissions and fees. The Insurance Services segment also holds the surplus notes issued by the Reciprocal and includes our captive reinsurer which provides reinsurance support to improve capital efficiency for the Reciprocal. Our captive reinsurer only provides reinsurance coverage for risks with low earnings volatility,volatility suchSoftware as& non-catastrophicData weather— quotaOur share.Software & Data segment provides, on a subscription and predominantly transactional basis, software to inspection, mortgage, title, and roofing companies and data products to insurance and other types of companies. This segment includes several strategically important businesses, including home inspection software, title and mortgage software, Home Factors (our unique property insights product), and mover marketing products.

PorchOur Shareholderoperating Interestresults is,are, in large part, tied to the growth and financial condition of the Reciprocal. If any events occurred that impaired the Reciprocal's ability to grow or sustain its financial condition, including but not limited to reduced financial strength ratings, disruption in the independent agency relationships, significant catastrophe losses, or products not meeting customer demands, the Reciprocal could find it more difficult to retain its existing business and attract new business. A decline in the business of the Reciprocal almost certainly could have as a consequence a decline in the total premiums paid and a correspondingly adverse effect on the amount of the management fees received by our Insurance Services segment.

The financial information herein should be read in conjunction with the consolidated financial statements for the year ended December 31, 2025, contained in our Annual Report on Form 10-K for the year ended December 31, 2025, and the unaudited Condensed Consolidated Financial Statements included in Item 1 of this Quarterly Report. Unless otherwise noted herein, all numbers are in thousands, except per share amounts. Additionally, certain financial amounts for the three and six months ended June 30, 2025, included in this Management’s Discussion and Analysis of Financial Condition and Results of Operations have been revised to correct certain immaterial prior period errors as discussed in Note 21, “Quarterly Financial Data (Unaudited),” to the consolidated financial statements included in Part II, Item 8, of our Annual Report for the year ended December 31, 2025.

The following key factors affected our operating results in the three and six months ended MarchJune 31,30, 2026:

•Top-of-funnel momentumexpansion continued in our insurance business with the number of producing third-party agency branch locations increasing by 181%148% and quote volumes rising by 69%87% from the same quarter last year. Activation translated into outcomes as the higher quote volume and stronger conversion drove 196% year-over-year growth in RWP from new customers.

•In Software and Data, we implemented a price increase in our title insurance software.software and sunset certain legacy software products that serve very small businesses to support our strategy to focus on larger customers.

•In Consumer Services, our warranty business experienced lower claims expense for the six months ended June 30, 2026, compared to the same period last year. While U.S. housing market conditions remain challenging, we are in the early-stages of expanding Movingplace.com and Securityplace.com.

•StatutoryCapacity continued to build: statutory surplus at the Reciprocal roseended Q2 2026 at $169.9 million, up 33% compared to $164.6 million as of March 31, 2026, an increase of $9.5 million from December 31,Q2 2025. CapacitySurplus continuescombined towith build,non-admitted assets ended at $376.5 million, supporting our ability to scale premiums while maintaining a healthy Reciprocal with $268.8 million of surplus combined with non-admitted assets as of March 31, 2026.Reciprocal.

Consolidated Quarter-to-Date Results

(41)Adjusted EBITDA (LossExcluding Reciprocal) is a non-GAAP measure. See Non-GAAP Financial Measures section for definition.

PorchAdjusted ShareholderEBITDA Interest(Excluding Reciprocal). Adjusted EBITDA (LossExcluding Reciprocal) improved by $2.8 million, for the three months ended MarchJune 31,30, 2026, comparedwas to$39.1 million, a $23.5 million improvement from $15.6 million for the priorsame period in 2025. The year-over year period. The increaseimprovement was primarily due to increasedan Adjusted EBITDAincrease in ourfee Insurancerevenue Servicesassociated segmentwith increases in RWP and Reciprocal Policies Written, and strong cost control across the business including lower legal and accounting professional fees. TheThese followingimprovements sectionswere providepartially moreoffset discussionby ofan individualincrease segmentin results.selling Porchand Shareholdermarketing Interestexpense resulting from higher ceded commissions at our captive reinsurer. Adjusted EBITDA (LossExcluding Reciprocal), is a non-GAAP measure. See Non-GAAP Financial Measures section for definition.

(1)Insurance Services Adjusted EBITDA, Insurance Services Adjusted EBITDA Margin, and Insurance Services Adjusted EBITDA % of RWP are non-GAAP measures. See Non-GAAP Financial Measures section.

For the three months ended MarchJune 31,30, 2026, Insurance Services segment revenue increased by $24.9$25.5 million, or 50%,38%, to $74.7$92.9 million compared to $49.8$67.4 million for the three months ended MarchJune 31,30, 2025. Our Insurance Services segment generates revenue in several ways: management fees from the Reciprocal based on a percentage of RWP, policy fees from policyholders based on the number of Reciprocal Policies Written, captive reinsurance premiums,premiums from the Reciprocal, and lead fees from third-party insurance agencies. TheFee 50%revenue represented approximately 29% of the increase inwhich Insuranceresulted Services segment revenue was primarily due to an increase in fee revenue associated withfrom the 18%16% increase in RWP and the 33%38% increase in Reciprocal Policies Written,Written drivenas by an increasediscussed in the numberfollowing Reciprocal Segment section. Reinsurance premiums from the Reciprocal represented 9% of agenciesthe andincrease improvedwhich conversion ratesresulted from quotes to written policies for new policyholders. In addition, we had increased revenue due to an increase in ceding from the Reciprocal Segment with the new reinsurance programs beginning on April 1, 2025.Segment.

For the three months ended MarchJune 31,30, 2026, Insurance Services segment gross profit wasincreased $63.8by million.40% Forcompared to the three months ended MarchJune 31,30, 2025, which is consistent with the 38% increase in revenue for the same period. The $23.3 million increase in Insurance Services segment gross profit was $42.3 million. The increase in gross profit resulted from the $24.9$25.5 million increase in revenue as described above.above Higherwith revenueonly wasa slightly offset by anslight increase in cost of revenue due to an increase in ceding activity withfrom the Reciprocal segment following updates to its reinsurance program on April 1, 2025.Segment.