Porch Group Inc (PRCH) Q1 2025 Earnings Call Highlights: Strong Revenue Growth and Positive Net ...
Q : Can you clarify why the take rate was so high this quarter and discuss your willingness to accelerate growth given the strong start to the year? A : (Matt Ehrlichman, CEO) The reciprocal written premium converted to revenue at about 50%, which we expect to be the ongoing rate. This includes policy fees from policyholders and management fees from the reciprocal. The reciprocal is in a healthy spot with almost $200 million of surplus. We are investing in growth, focusing on agency distribution and new geographies, and leveraging our data for pricing sophistication. We see opportunities for price increases and are making midterm investments to scale towards our $3 billion premium target.
Porch Group Inc ( NASDAQ:PRCH ) is investing more aggressively, which may impact short-term profitability as it aims for faster growth in 2026 and beyond.
Q2 adjusted EBITDA is expected to be $5 million to $7 million lower than Q1 due to changes in reinsurance contracts.
The company faces potential mid-single-digit adjusted EBITDA impact from tariffs, although this has been factored into guidance.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
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Q: How does the replacement value increase due to tariffs or market changes affect your pricing strategy? A: (Matthew Neagle, COO) We regularly update replacement values, which can increase prices due to higher coverage. Our data advantage allows us to target lower-risk segments with attractive pricing. We believe our data and pricing sophistication will enable us to pass through premium increases effectively.
Q: What percentage of consumers in Texas are selecting HOA versus Porch Insurance, and how does this compare to expectations? A: (Matt Ehrlichman, CEO) We don't provide specific metrics, but we focus on segments like homebuyers and new construction, where we convert well. Our products are positioned for these segments, and we are seeing good growth in new business premium.
Q: Can you explain the surplus figures and how they relate to the reciprocal's financial health? A: (Shawn Tabak, CFO) As of March 31, 2025, the surplus combined with non-admitted assets was $198 million, the highest ever for the reciprocal. This includes some share value, and the statutory surplus is around $105 million. The surplus is expected to fluctuate due to weather claims but remains in a healthy position.
Q: What steps are needed for Porch to report GAAP financials without consolidating the reciprocal? A: (Shawn Tabak, CFO) The consolidation is due to the surplus note relationship. We are pleased with the current structure, including the 15% coupon surplus note. While we could sell the surplus note in the future, we are not in a rush to change the current setup.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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Forward-looking statements made in this news release include, but are not limited to, statements regarding ethe Company's Q4 and full year FY2025 results, statements under the heading "Fiscal Q1 2026 Expectation", including, but not limited to those related to revenue growth and adjusted gross margins, revenue in the plant propagation segment, and expectations for positive adjusted EBITDA and positive free cash flow, statements regarding the Company's continued commitment to strategic growth, operational excellence, and long-term sustained profitability, as well as statements regarding the Company's conference call to discuss results. These forward-looking statements are only predictions. Forward looking information or statements contained in this news release have been developed based on assumptions management considers to be reasonable. Material factors or assumptions involved in developing forward-looking statements include, without limitation, publicly available information from governmental sources as well as from market research and industry analysis and on assumptions based on data and knowledge of this industry which the Company believes to be reasonable. Forward-looking statements are subject to a variety of risks, uncertainties and other factors that management believes to be relevant and reasonable in the circumstances could cause actual events, results, level of activity, performance, prospects, opportunities or achievements to differ materially from those projected in the forward-looking statements. These risks include, but are not limited to, the magnitude and duration of potential new or increased tariffs imposed on goods imported from Canada into the United States, the ability to retain key personnel, the ability to continue investing in infrastructure to support growth, the ability to obtain financing on acceptable terms, the continued quality of our products, customer experience and retention, the development of third party government and non-government consumer sales channels, management's estimates of consumer demand in Canada and in jurisdictions where the Company exports, expectations of future results and expenses, the risk of successful integration of acquired business and operations (with respect to the Transaction and more generally with respect to future acquisitions), management's estimation that SG&A will grow only in proportion of revenue growth, the ability to expand and maintain distribution capabilities, the impact of competition, the general impact of financial market conditions, the yield from cannabis growing operations, product demand, changes in prices of required commodities, competition, and the possibility for changes in laws, rules, and regulations in the industry, epidemics, pandemics or other public health crises and other risks, uncertainties and factors set out under the heading "Risk Factors" in the Company's annual information from dated June 17, 2025 (the "AIF") and filed with Canadian securities regulators available on the Company's issuer profile on SEDAR+ at and filed with and available on the U.S Securities and Exchange Commision's EDGAR ("SEC")\ website at The Company cautions that the list of risks, uncertainties and other factors described in the AIF is not exhaustive and other factors could also adversely affect its results. 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Non-GAAP Measures This news release contains reference to certain financial performance measures that are not recognized or defined under IFRS (termed "Non-GAAP Measures"). As a result, this data may not be comparable to data presented by other licensed producers of cannabis and cannabis companies. Non-GAAP Measures should be considered together with other data prepared in accordance with IFRS to enable investors to evaluate the Company's operating results, underlying performance and prospects in a manner similar to Aurora's management. Accordingly, these non-GAAP Measures are intended to provide additional information and to assist management and investors in assessing financial performance and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The information included under the heading "Cautionary Statement Regarding Certain Non-GAAP Performance Measures" in the MD&A is incorporated by reference into this news release. 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Prior period comparatives were adjusted to include the adjustments for markets under development, business transformation costs and non-recurring charges related to non-core bulk cannabis wholesale to be comparable to the current period presentation. (5) Certain previously reported amounts have been adjusted to exclude the results of discontinued operations. (6) In connection with the audit of the annual consolidated financial statements as at and for the year ended March 31, 2025, the Company noted that inventory and lease obligation were misstated, impacting the condensed consolidated interim statements filed during the 2025 fiscal year. Certain balances in the condensed consolidated interim financial statements as at and for the three months ended June 30, 2024, September 30, 2024 and December 31, 2024 were adjusted as a result and the amounts shown above reflect such adjustments. Refer to discussion under "Historical Quarterly Results" section of this MD&A for further detail. Adjusted SG&A Adjusted SG&A is a Non-GAAP Measure and can be reconciled with sales and marketing and general and administrative expenses, the most directly comparable GAAP financial measure, as follows:Three months ended Twelve months ended ($ thousands) March 31, 2025 December 31, 2024(3) March 31, 2024(2) March 31, 2025 March 31, 2024(2) General and administration 28,552 23,687 25,418 97,257 91,325 Sales and marketing 15,459 13,077 14,530 56,281 51,910 Business transformation costs (5,837) (5,128) (6,862) (20,326) (22,590) Out-of-period adjustments — — (642) — (1,236) Non-recurring costs (1,487) (373) (1,093) (2,144) (3,768) Adjusted SG&A (1) 36,687 31,263 31,351 131,068 115,641 (1) Adjusted SG&A is a Non-GAAP Measure and is not a recognized, defined, or standardized measure under IFRS. Refer to the "Cautionary Statement Regarding Certain Non-GAAP Performance Measures" section of this MD&A. (2) Certain previously reported amounts have been adjusted to exclude the results of discontinued operations. (3) In connection with the audit of the annual consolidated financial statements as at and for the year ended March 31, 2025, the Company noted that inventory and lease obligation were misstated, impacting the condensed consolidated interim statements filed during the 2025 fiscal year. Certain balances in the condensed consolidated interim financial statements as at and for the three months ended June 30, 2024, September 30, 2024 and December 31, 2024 were adjusted as a result and the amounts shown above reflect such adjustments. Refer to discussion under "Historical Quarterly Results" section of this MD&A for further detail. Free Cash Flow The table below outlines free cash flow for the periods ended:Three months ended Years ended ($ thousands) March 31, 2025 December 31, 2024(3) March 31, 2025 March 31, 2025 March 31, 2024(3) Cash provided by (used in) operating activities from continuing operations before changes in non-cash working capital (2,928) 9,513 (10,074) 7,996 (47,625) Changes in non-cash working capital 6,947 20,107 (10,335) 10,210 (15,541) Net cash provided by (used in) operating activities from continuing operations 4,019 29,620 (20,409) 18,206 (63,166) Less: maintenance capital expenditures(1) (1,524) (2,256) (1,457) (8,290) (6,582) Free cash flow(2) 2,495 27,364 (21,866) 9,916 (69,748) (1) Maintenance capital expenditures are comprised of costs to sustain facilities, machinery and equipment in working order to support operations and excludes discretionary investments for revenue growth. (2) Free cash flow is a Non-GAAP Measure and is not a recognized, defined, or a standardized measure under IFRS. Refer to the "Cautionary Statement Regarding Certain Non-GAAP Performance Measures" section of this MD&A. (3) Certain previously reported amounts have been adjusted for a reclassification of restricted cash to cash and cash equivalents as at March 31, 2024, June, 30, 2024, September 30, 2024 and December 31, 2024. Refer to discussion under "Historical Quarterly Results" section of the MD&A for further detail. 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