PRCH

Good afternoon, thank you for participating in Porch Group's first quarter 2026 conference call. Earlier today, we issued our earnings release and filed our related Form 8-K with SEC. The earnings release and today's presentation are available on our investor relations website at ir.porchgroup.com. Before we begin, I'd like 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 views as of today, April 28th, 2026. We undertake no obligation to update or revise these remarks. We will make forward-looking statements that involve risk and uncertainties, and actual results may differ materially. Please refer to the information on this slide in our SEC filings for additional detail. We will also reference certain Non-GAAP financial measures.

Reconciliations are included in today's earnings release. Also a replay of this webcast is gonna be available shortly after the call on our investor relations site. Joining me here today are Matt Ehrlichman, Porch's CEO, Chairman and Founder; Shawn Tabak, Porch's CFO; and Matthew Neagle, Porch's COO. With that, I'll turn the call over to Matt for his key updates.

Thank you, John. Good afternoon, everyone. We are pleased to report a strong start to 2026. Q1 results exceeded expectations, and we're raising our full year guidance for Porch Shareholder Interest revenue, gross profit, and adjusted EBITDA. Porch is now a simpler, higher margin fee and commission-based business, one that's built to compound premium and cash flow over time without the earnings volatility often associated with risk-bearing insurance carriers. Last year, we proved out the profitability of our business model. 2026 is the first year with tangible year-over-year comparables for Porch Shareholder Interest results, and we demonstrated significant and sustainable growth, especially in Insurance Services, which delivered 50% year-over-year revenue growth in the quarter.

From here, our strategy is straightforward: scale rapidly and with discipline and continue to invest in the differentiated assets that strengthen our moat, our data advantage, our underwriting and pricing capabilities, and our differentiated products for consumers. Okay. For the first quarter, we delivered results for Porch Shareholder Interest that reflected continued strength in Insurance Services and continued discipline across the business. Specifically, you can see here reciprocal written premium, or RWP, was $114 million, up 18% year-over-year. Revenue was $109 million, up 29% year-over-year. Q1 gross profit was $91 million, resulting in an 83% gross margin. Q1 adjusted EBITDA was $20 million, an 18% margin. Earlier I said we intend to scale rapidly and with discipline.

The clearest way to see that is through our insurance growth engine: capacity, top of funnel, and conversion, as well as the latest underwriting results. Over the next four slides, you'll see the progress we've made, and importantly, after seeing these drivers in sequence, I think it becomes clear why we're confident in continued RWP growth acceleration. First here, capacity. Statutory surplus is the key guidepost, and you can see the progress over the last year. Growth of 59% and $61 million year-over-year. The takeaway is that the capital foundation is far stronger today and supports our growth plans, not just this year, but well into the future. Q1 statutory surplus of $165 million supports north of $800 million in premiums, well above our $600 million RWP target for this year.

When including incremental non-admitted assets of a little north of $100 million, the reciprocal has the ability to support more than $1.25 billion of premium. The reciprocal's reinsurance program is in place to protect this capital across cycles. On April 1st, the reciprocal wrapped up a very successful renewal of its reinsurance program. Similar to prior years, this included a panel of 40-plus A-rated partners offering catastrophic weather protection. We're happy to report that the reciprocal will benefit from an approximately 20% decline in costs for excess of loss reinsurance, driven by strong underwriting results and improved risk performance, which further bolsters its surplus and overall margin in the system. With capacity in place, the next driver is distribution, and this starts with agency growth. Think of this as a land and expand strategy.

We're growing our agency footprint and expanding production across our existing partners' locations. That's why we highlight producing agency branch locations. It's a metric we use internally to gauge distribution depth. As we expand reach at existing agencies, this translates to quote volumes. For Q1, you can see here producing agency branch locations increased 181% year-over-year, while quote volumes grew 69% year-over-year and improved on an absolute basis for the sixth straight quarter. All in, the funnel's expanding, and we're increasing the pool of potential new customers. Moving down the funnel, conversion is the lever that turns quote volumes into new customers and premium.

The reciprocal's stellar pricing and underwriting results means we have more margin in the system than other carriers. Given that and our understanding of the elasticity of the conversion rate curve, we can take targeted actions like those we started in November to bring in more low-risk consumers and grow premium at our targeted rates while maintaining the reciprocal's exceptional underwriting outcomes and profitability. In the chart here, you can see the clear step up in conversion that began in Q4 following the activation actions. That improvement continued into Q1, and year-over-year conversion rates have almost doubled. Note that we've only seen a 5% year-over-year decline in premium per new customer while producing these Q1 gains. At the start of 2026, we launched Porch Insurance in Texas.

Over time, Porch Insurance will serve as another tailwind for conversion as its product differentiation helps open us up to new segments of consumers. Now the results, this is probably the most important message today. When capacity, top of funnel, and conversion improve together, it shows up in new customer growth. As this chart shows, RWP from new customers stepped up meaningfully, approximately tripling year-over-year, which is the clearest proof that the growth engine is working. We're certainly excited about continuing this momentum. We've reached an inflection point for growth, what's notable is the way we are driving this growth. In Q1, total policies written across new and renewal grew 33% year-over-year. Another clear proof point that the growth engine is on track. Matthew will cover this in more detail later in the call.

All right, so we just walked through the premium drivers, and now and how the system's designed to deliver rapid growth. Now we move into the discipline and sustainability side of it, which you can see through the reciprocal's underwriting results. These charts depict the 2025 AM Best annual market share data. The takeaway is simple. The reciprocal continues to perform among the best in its peer set. Top quartile nationally and in Texas for the combined ratios. Here's what's so exciting about these combined ratios. This includes all of the margin paid via fees to Porch Group as part of the reciprocal's expenses. In 2025, Porch's Insurance Services segment saw a margin of adjusted EBITDA to RWP of 21%. You can do the math.

If you were to reduce the expenses and thus the combined ratio by this amount, it truly is exceptional combined ratio results. Putting all this together, our goal is simple. We aim to drive compounded Porch shareholder interest earnings growth while maintaining strong health at the reciprocal. As we deliver on those two key objectives, we can scale this business rapidly and profitably for decades to come. With that, I'll turn it over to Shawn to cover the financials and guidance.

Thank you, Matt. Good afternoon, everyone. I'll start off with a high-level summary of our financials. Overall, we're pleased with our first quarter results, which exceeded expectations across reciprocal written premium, revenue, gross profit, and adjusted EBITDA. Insurance Services delivered strong Q1 results, particularly in RWP, driven by new customer additions. The team continues to add agencies and quotes, and we saw higher quote-to-bind conversion rates, as Matt noted. Two quick housekeeping items before we dive deeper into the results. First, as a reminder, we launched the reciprocal on January 1st, 2025, and we updated our segment reporting at that time. As a result, this Q1 2026 represents the first period with tangible year-over-year comps for RWP, as well as Porch Shareholder Interest and Insurance Services financials.

Second, related to that, Q1 2025 was the final quarter of the legacy captive reinsurance terms that benefited the prior year quarter by $16 million. While adjusted EBITDA still grew nicely this quarter, Q1 2025 is our last tough comp. Okay. Similar to Matt's remarks, my comments focus on Porch Shareholder Interest since generating cash for Porch shareholders remains our ultimate objective. Under GAAP, we consolidate the reciprocal exchange financials, which are included in the press release and our 10-Q. Q1 2026 Porch Shareholder Interest revenue was $109 million. Insurance Services contributed 68%, Software and Data 20%, with the remainder from Consumer Services. Associated gross profit was $91 million with an 83% gross margin, driven by Insurance Services' 85% gross margin.

Adjusted EBITDA was $20 million, ahead of expectations with Insurance Services delivering a 37% adjusted EBITDA margin. Okay. Now let's move a little deeper into the segment results, starting with Insurance Services. Insurance Services revenue was $75 million, growth of 50% over the prior year and exceeding expectations driven by higher fee-based revenue with higher RWP volume and new customer additions. As Matt highlighted, premium for new customers almost tripled year over year, and we saw a 33% increase in total reciprocal policies written. Gross profit was $64 million, delivering a strong 85% gross margin. Adjusted EBITDA was $27 million or a 37% margin.

While we continue to see strong incremental adjusted EBITDA margins from revenue growth, particularly the fee revenue that has a relatively fixed cost base, the year-over-year margin decline simply reflects the changes to our captive reinsurance terms that I mentioned. Overall, adjusted EBITDA as a percentage of RWP was 24% in Q1, reflecting a strong margin as we scale RWP and continued operating leverage in Insurance Services. On a trailing twelve-month basis, adjusted EBITDA as a percentage of RWP was 20%. Shifting to Software and Data. As a reminder, most of our vertical software businesses charge per transaction. Results do remain tied to U.S. housing activity, which continues to be at near cyclical trough levels. We do expect tailwinds as housing recovers. In the first quarter of 2026, results were relatively flat year-over-year.

Software and Data revenue was $22 million. Gross profit was $17 million with a 75% gross margin. adjusted EBITDA was $4.6 million. Consumer Services also reflects softer housing conditions. Segment revenue was $15 million, increasing slightly over the prior year. Gross profit was $13 million, an 87% gross margin, and up 390 basis points year-over-year, driven by mix shift to higher quality revenue. Finally, adjusted EBITDA was approximately breakeven. Moving now to the balance sheet. We ended Q1 with cash plus investments of $134 million, up $13 million from December 31st, 2025. Porch Shareholder Interest cash flow from operations was $20 million in the quarter. As a reminder, cash flow timing is seasonal.

We pay interest on our notes in the second and fourth quarters of each year. In March, we exhausted the share repurchase authorized by the board and repurchased 334,000 shares for $2.5 million, or an average of $7.48 per share. As a reminder, this was the maximum amount allowed by our 2028 notes indenture. Our 2026 notes have a remaining balance of $7.8 million, which we expect to settle at maturity on September 15th, 2026, with cash from the balance sheet. Shifting to our 2026 guidance for Porch Shareholder Interest. Our 2026 target of $600 million organic RWP represents 25% year-over-year growth.

Given the strong start to the year, we are raising our guidance for revenue, gross profit, and adjusted EBITDA. We are raising our revenue guidance to a range of $495 million-$507 million, representing 20% year-over-year growth at the midpoint, up 400 basis points versus prior guidance. We are raising our gross profit guidance to a range of $401 million-$413 million, still with an 81% gross margin at the midpoint. We are raising our adjusted EBITDA guidance to a range of $103 million-$109 million, still a 21% adjusted EBITDA margin at the midpoint.

From a modeling perspective, we continue to expect trough-like U.S. housing conditions and thus flattish year-over-year results in Software and Data and Consumer Services, with the guidance increase attributable to strength in Insurance Services. I'll now hand over to Matthew to provide a strategic update and a KPI review.

Thank you, Shawn. I'll start by giving a brief business update and then dig into our KPIs. I first want to touch briefly on AI, both how we're using it and why we believe it strengthens rather than threatens our position. Across Porch, AI is meaningfully improving our engineering velocity and our operations. Our engineers are shipping faster and with higher quality, we are seeing productivity gains that are fundamentally changing how we build software. In customer support, AI is now handling a significant share of initial customer contacts, reducing costs and improving response times. We are seeing real productivity gains across the business. On the disruption question, let me be clear. In insurance, AI does not change the fundamental nature of what we do. Insurance is a balance sheet promise. It is regulated, capital intensive, and requires real financial backing.

AI will make underwriting claims and customer interactions more efficient, and we are investing aggressively to lead there, but it does not alter the structure of the industry or eliminate the need for the product. We think we are well-positioned here. Why do we think our vertical software businesses are well-positioned in an AI world? Well, these are systems of records built on decades of real transaction data inside regulated industries where compliance, audit trails, and security are non-negotiable. They are the bones of a home purchase or a refinance transaction, and are not optional tools. Our customers rely on them deeply, which shows up in high NPS scores, and we wrap meaningful services around the software itself. For inspectors, that includes payment processing, warranties, recall check monitoring, and a call center, making us much harder to displace than a standalone SaaS product. We are not standing still.

We are investing and innovating faster than we ever have. In our inspection software, we are using AI to improve report quality and speed, defect detection, narrative assistance embedded directly into the workflow inspectors already use. In Rynoh, our title insurance software, we are applying AI to high-stakes workflows like reconciliation, verification, and fraud monitoring, where accuracy and auditability are everything. In Floify, our mortgage point-of-sale platform, we are moving toward letting a borrower generate a pre-approval letter from their phone in just a few clicks. Lender customers are expressing real excitement and willingness to pay for this as a premium feature. Finally, we believe AI will disproportionately benefit companies with unique data assets like ours. Underlying our entire business is our data platform, with proprietary data covering approximately 90% of U.S. residential properties and early insight into 90% of home buyers each month.

Simply put, AI is additive to Porch's long-term position. Let's move to Q1 insurance KPIs. Reciprocal written premium was $114 million, ahead of expectations, and up 18% versus prior year. Reciprocal policies written was nearly 48,000 policies, up 33% year-over-year, and continuing the momentum we saw in Q4. RWP per policy written was $2,386. This was down on a year-over-year basis, I wanna be clear on what's driving this. It is largely a function of mix shift, not competition or price. The premium per new customer is always less than premium per renewing customer. As new customer growth has accelerated, they represent a larger share of the mix, which pulls the average down.

To put a number on it, premium per new customer was only 5% lower on a year-over-year basis, meaning that we have been able to increase conversion rates without meaningful decreases in price or profitability. In total, when you pair the top of funnel strength with the conversion rate improvements we've put in place, you arrive at a very strong outcome in new customer RWP, which was 3 times higher versus the prior year. Moving to Software and Data, the housing market remains challenging, That's not slowing our pace of innovations. At the start of the new year, we launched Rynoh Product Hub, a new central home for all Rynoh products and services. In March, Floify released Dynamic Apps 2.0 to allow mortgage teams to tailor borrower applications.

We continue to see strong interest in Home Factors, in compelling new data customers, and we'll share more here when we are able to. In terms of Software and Data KPIs, in Q1, we served approximately 22,000 companies with annualized revenue per company of $3,918. As a reminder, as part of our strategy to focus on larger customers, we sunset certain legacy software products that serve very small contractors, which is expected to lead to a few million-dollar revenue headwind, but a slight positive effect to segment profitability. For Q1, the wind down resulted in roughly 1,800 less companies in the quarter. As you can see from the 8% year-over-year increase in annualized average revenue per company, there was a fairly limited effect on segment revenue.

In Consumer Services, our Moving Group focus is twofold: Drive better monetization per move today, and build a scalable demand engine for the next leg of growth. In Q1, Moving Group's upsell and cross-sell efforts drove a 9% year-over-year increase in average revenue per move. On the demand side, we're investing in exciting new partnerships, direct-to-consumer expansion, and the MovingPlace platform. Like Software and Data, we feel our targeted investments and lean cost structure positions us well for when the housing cycle turns. As for the KPIs in Q1, we had 69,000 monetized services with annualized revenue per monetized service of $220. I'll now pass it back to Matt to wrap us up.

Thank you, Matthew. Before closing the call, I do wanna comment briefly on the macro environment. It's useful to re-anchor on why the homeowners insurance industry remains durable across cycles and why our operating model is built for the long term. First, demand is structurally embedded. The majority of U.S. households have a mortgage where homeowners insurance is required by the lender, regardless of the economy. More broadly, homeowners insurance is carried by nearly 90% of U.S. homes on an annual basis. Not surprising, given the home is often a family's largest financial asset. Second, the homeowners insurance premium pool has grown through cycles. You can see on the chart on the left, it makes it clear. It has natural tailwinds. Inflation tends to scale premiums over time, and if the weather gets worse, it only means the homeowners insurance industry will grow faster.

In the current environment, there's talk of a softening market and competition, but we're really not seeing that in any meaningful way, and our Q1 results and strengthening funnel demonstrate that. Third, what's important for Porch is our model. We're able to participate in that growing industry premium pool while separating Porch's financial results and profitability from weather volatility and risk. Lastly, like Matthew just talked about, we don't see AI disruption risk as it relates to the foundational elements of the insurance industry. Again, insurance is a balance sheet promise, not a workflow, while regulation and capital requirements create real moats. We see AI enhancing the advantages for companies with unique data, and we've built our entire business around our data platform. I wanna wrap up by briefly reinforcing the most important messages from today. First, we're off to a strong start in 2026.

There's no doubt. Second, we've raised our outlook meaningfully for the year. Third, we're seeing momentum because the insurance growth engine is working. Capacity, distribution, conversion are all moving in concert and in the right direction. Overall policy count is growing rapidly, as is premium from new customers, and we're accomplishing this while maintaining some of the top underwriting results in the entire homeowners insurance industry. This creates differentiated margins and, as a result, a stronger growth engine as we look ahead. Thanks everybody for your time today. I also wanna thank, in particular, my fellow shareholders for their support and belief in our organization. We can't control market volatility, but we can, we will control our focus, strategy, and execution. In just a little over a year, we've transformed Porch into a simpler, high-margin, cash-generated business. We've built the foundation, and now we scale profitably and fast.

With that, John, please open the call for questions.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. At this time, I would like to remind everyone, in order to ask a question, please press star followed by 1 on your telephone keypad. If you would like to withdraw your question, simply press star 1 again. We kindly ask everyone to limit themselves to 1 question and 1 follow-up. Our first question comes from the line of Daniel Kurnos with StoneX. Please go ahead.

Awesome. Thanks. The results obviously speak for themselves, guys. It's a hell of a quarter. I guess the kind of questions I just wanna anchor to Matt a little bit, either Matt or Matthew, is there any thoughts on kind of the RWP guide for the year? Is that a little bit higher now just given the increase in revenue and given what you guys put up in Q1? To sort of unpack what you guys are talking about, and I appreciate the color on the premium per new policy written. Obviously, we've all been excited for Porch Insurance to kind of get launched into the market.

If your blended policy, premium per policy is down because of mix and Porch Insurance is kind of a higher price point, and obviously you guys can correct me if I'm wrong on that, do we think that, like, the initial start to this year is actually driven by real strength in the legacy products, even across agents as you turn them back on, and Porch Insurance is then going to be incrementally on top of that, and we should see the premium per policy start to blend up as that comes into the market? Or am I thinking about that wrong?

Yeah, I'll just take the second one first. It's a good question. The Porch Insurance will make a bigger and bigger impact as we go throughout the year and just ongoing as we have more and more agencies activated and turned on, you know, using it. I do think as you look forward, yes, the Porch Insurance, you know, product, you know, designed to be give or take 10% higher all-up price than the Homeowners of America, you know, product, and that includes a lot more value for the consumer, right? The warranty, the moving services, and then actually higher commission as well for the agencies to have additional incentive. As an aside, it does also create more margin. You're right.

As Porch Insurance becomes, you know, just continues really through its journey, we're very excited about what's ahead there. Yes, I think that can create tailwinds to your question, you know, Dan, on the premium per new policy. Overall, though, I, obviously you heard us emphasize it, we are very pleased with the gains in conversion rates, and how, you know, we've been able to just drive, you know, premium growth without meaningful decreases in the, you know, premium per new customer. That's, you know, a big deal. Again, it just emphasizes, you know, that we're gonna be able to continue to grow margin and across the system, you know, in really attractive ways. Second question.

On the first one, you know, Shawn, maybe you can take the RWP, you know, guide, you know, question.

Yeah. Yeah, I mean, I'd say a couple things. First of all, Dan, thanks for the remarks. You know, I'd say a couple things. One, it's early in the year, so I'll just note that. Two, I'd say we were quite pleased with the funnel performance in the first quarter. I think as we talked about throughout each of the metrics.

Agents, quotes, conversion, we saw outperformance. That gives us confidence. Now, we did today increase the revenue guidance, 4 percentage points of growth at the midpoint. Now the revenue guidance is a 20% year-over-year growth. Again, that's all driven by just adding, continuing to add in new customers and the increased confidence that we see there. Yeah, sorry. Maybe I'll just leave it there, and yeah.

Thanks, Dan.

That's fine, Shawn. Thanks. Yep, thanks, guys. I appreciate it. Matt, I think the point I was trying to make is that you guys did this without really Porch Insurance filtering into the market yet.

Correct.

You know, obviously stellar results to start the year. Thank you.

Yeah. Thank you. We appreciate it.

Our next question comes from the line of Jason Kreyer with Craig-Hallum Capital Group. Please go ahead.

Great. Thank you, guys. I'll echo congrats on an excellent quarter here. Wondering if you could talk about loss ratios or combined ratio trends for Q1 and just how that compares to historic quarters?

Yeah, I mean, we continue just to perform exceptionally well. Gross loss ratios in Q1 was 24%. Attritional loss ratios, which, as a reminder, for those on the call, is losses not including catastrophic weather, that was 19%. You know, just exceptional results. Actually, you know, the team had gone and looked. You know, we're in the top handful, you know, across the country and Texas in terms of top performers as it relates to loss ratios. Actually, a little tidbit, Jason, that was interesting to us. Some years, you know, carriers will have, you know, attractive loss ratios, and they'll have really bad loss ratios, you know, the next year as it bounce around, you know, with some volatility.

We are the only, you know, company in the homeowners insurance industry that's been in the top handful each of the last several years. We think that's really telling. You know, just there's that consistency of having just exceptional loss ratio and attritional loss ratio results.

Impressive stuff. Thank you. When you look at the levers that you can pull, just in terms of of price and promotion, agency commission, stuff like that, wanted to ask, you know, about those levers in terms of existing customers. You know, any changes to the strategy of the existing customer base and any changes to the trend as far as retention or attrition rates?

I can speak to that. you know, we've taken a number of steps across our distribution strategy and our product strategy to position ourselves for growth. As Matt said in his remarks, we think we have a growth engine built, and now it's time to scale. We are still early in building out our distribution when you consider the number of agents that we have and the number of agents that are available. We always have the lever to tweak price to drive up conversion rate. I do think there's room there when you look at our cost and our margin structure. We haven't had to be that aggressive so far to be able to hit our growth numbers. As Dan mentioned earlier, we are excited about what Porch Insurance could do.

In terms of the biggest product strategy, being able to have a premium product in the market that has higher commissions, that has the wraparound value of a warranty and moving services and other things to the consumer, we think gives us another lever to drive growth.

Let me just layer one thing on just to make sure that it landed clearly just on this topic. Fundamentally, what the whole advantage comes down to is that we have more margin across the entire system, you know, than other carriers do. It's because we have unique insights about properties which allow us to be able to, you know, win more low-risk customers and not win higher-risk customers. They're gonna have lots of losses. Fundamentally, those insights, you know, allow us to create more margin, and you can see that showing up in both the profit margins at Porch Group, plus how much surplus is growing at the reciprocal 'cause, you know, the margin is the combination of those two things.

That's a big deal because like Matthew Neagle just noted, because you have more margin in the system, if we wanted to, we could tweak, you know, pricing down, still create tremendous margin and be able to grow conversion rate and premium faster. Right now, we're very pleased with the outputs that we're seeing in terms of premium growth, but it is certainly nice to be in that position and have those controls.

Great. Thank you, guys.

Our next question comes from the line of Jason Helfstein with Oppenheimer. Please go ahead.

Hey, everybody. How's it going? I guess two questions. Just, they'll start with the less exciting one. So, like, the reciprocal looks like it burned, I guess, cash flowing for operations, like, about $7 million in the quarter. How do you think about, like, where that kind of potentially shakes out, I guess, annually and, you know, just, like, broadly, I guess the point is, like, over time, right? Obviously, you've plenty of cushion, but that should number become positive over time. Then any update on Home Factors? We kinda haven't really heard you talk about it in a little while. Is it still a business opportunity, or are you more focused on using the data for first-party underwriting? Thanks.

Why don't, Shawn, you take the first one and Matthew, maybe the second?

Yeah.

Yeah.

Cash flow timing for the reciprocal is just seasonal. It's just working capital, inflows and outflows. The thing I would point to there is the statutory surplus at the reciprocal increased $10 million from the end of Q4 to the end of Q1. That's with the value of the Porch shares coming down. The operating profit from the reciprocal was in the mid-teens there, in terms of millions of dollars. That's a big deal in Q1 for the reciprocal. Typically, you know, we're around breakeven in the first quarter, obviously Q2 is when many of the claims come. To generate incremental statutory surplus in Q1 is a great result for the reciprocal.

It means that the statutory surplus is even stronger, to support, you know, growth in future years. We feel, you know, well-positioned, from that perspective. As a reminder, since I'm talking about the reciprocal surplus, Q2 is typically when we see most of the weather, just as a reminder, and that results in more claims, and puts some pressure on stats. We do expect that, and we plan for it, and if it doesn't come, that's great. We do diligently plan for and expect that.

Jason, that would be ongoing. I'd be more focused on that stat surplus and the cash. There's lots of cash, you know, in the reciprocal, but really we're focused on that stat surplus number, like Shawn's noting there.

Over $300 million of cash and investments at the reciprocal. It's definitely in cash rich, I would say.

On Home Factors, you know, you pointed out two opportunities for us. One is how we leverage it internally and then being able to commercialize it externally. Firstly on internally, we are using it and do see significant impact, and you're seeing that showing up in our results. We are bullish on the midterm opportunity. The thing that I would point to that gives us confidence, we have a very active and increasing pipeline of carriers who are in the testing process, and the test results are showing an ROI. I think what we're seeing, which is what we expected, is just that the sales cycle, because you have to go through testing and procurement in some of these carriers, that it will take time to be able to bring those into a formal contract and revenue.

With all that said, we remain optimistic that we can build up a business tied to Home Factors. What we've said in the past remains true, which is we do expect modest early-stage revenue contribution in 2026. That's on track, and then we expect it to build over time. The last thing that I would just mention is there are faster ways we could go to market, you know, so we could partner with certain providers in the space. We've intentionally chosen not to take that route because we're convicted in the long-term opportunity of being able to go direct, and we wanna make sure we maintain kinda control over how that data is distributed in the market.

Thank you.

Thank you.

Our next question comes from the line with Adam Hotchkiss with Goldman Sachs. Please go ahead.

Great. Thanks for taking the questions. Matt or Shawn, I would love to just go back to price. Matt, I know you took some pricing action, I think, late last year and possibly again in the beginning of this year. You know, obviously the conversion rates have improved. Could you maybe parse out for us how much of the conversion rate improvement was things like agency branch location increases and the 181% year-over-year increase that you showed versus the pricing action? Maybe just any learnings from the pricing action itself and its and the sort of visibility that gives you into the conversion curve, that would be helpful.

Yeah. I mean, the growth in agencies really doesn't impact, you know, the conversion rate. I mean, certainly as you build and deepen your relationships with those agencies, yes, they will, you know, lead with you more. It does have influence. I would say the largest impact in terms of conversion rate is, you know, being able to, you know, take certain actions to be able to be more attractive for, you know, for the right customers. That's, that's really the key is, you know, through our data and through our insights into the, into where the conversion rate curve is steep and where are those attractive sets of customers, you can be, you know, surgical with being able to increase conversion rate, you know, for the right customers that we want.

You saw the results, and we can do that without having meaningful changes, you know, in the price, you know, per new customer overall. Again, like we highlighted, it's a big deal because, you know, the system's gonna be very, very healthy, very, very profitable, you know, and we doubled conversion rate, you know, year-over-year. Yeah, those actions that we've taken have been the primary drivers, I would say, you know, tied to conversion rate. All the work that the distribution team's done with agencies certainly has been a tailwind and has helped there.

Okay. Yeah, that's really helpful color. Shawn, just on RWP seasonality, the $600 million does imply that things do accelerate a bit year-over-year into the last three quarters. Sort of what gives you confidence there? When we think about just premium seasonality through the last three quarters, should we expect that curve to look a lot like last year? Or any changes that you would expect? Appreciate it.

Yeah. The seasonality of RWP, some of that is, a lot of that is driven by when customer homeowners buy their homes, and therefore either buy homeowners insurance or in subsequent years renew their homeowners insurance. Obviously, most folks are buying their homes, therefore homeowners insurance and renewals in Q2 and in Q3. In, I'd say from there, probably Q4, and then least amount in Q1, actually. I guess seasonally adjusted, this is, you know, the lowest quarter Q1 is. What gives us confidence in the ramp is the funnel. We talked about, you know, in Q1, we were pleased that really we exceeded expectations, our own expectations even, throughout each metric in the funnel. We, you know, agency additions, was, you know, really strong.

That's driving quotes, and there, and conversion. All of those things also bolster future quarters', RWP. That's a key thing, you know, that we saw in Q1.

Okay, great. Thank you very much.

Thank you.

Our next question comes from the line of Ryan Tomasello with KBW. Please go ahead.

Hey, everyone. This is Juan on for Ryan. Thanks for taking the questions and congrats again on the print. Thanks for walking through the productivity gains from AI earlier and how the insurance itself is insulated from AI disruption. What do you think about that potential top-of-funnel disruption from AI on the insurance side? You know, on the one hand, these tools could affect that great high-intent funnel that you have at closing. On the other, it also could help expand distribution to a broader audience. Do you see Porch as like a net AI beneficiary here?

Yeah, it for us, it doesn't really matter where the consumer is buying homeowners insurance. You know, we wanna be plugged in, you know, to those channels. You know, if, you know, digital agencies or, you know, our existing agency partners as they will, you know, get integrated into, you know, the various AI systems, that's great. We're just one of the options that's there for the consumers. Because we have more insights about that consumer, so if it's a lower risk consumer, we're gonna be a very attractive option, you know, for them.

You know, we are focused on partnering, you know, with all of these different great agencies, you know, that are out there, having really deep relationships and partnerships with them, being a great partner for them in helping these agencies to grow their business. We believe, you know, insurance, you know, is a product that is a complex product to buy and that consumers, you know, need and want a licensed agent to work with them. If consumer behavior changes, you know, we're gonna be where those consumers are, you know, whether it's digital agencies, you know, or other. You know, being the actual insurance product, you know, for us in this, in this role is a great place to be.

You know, being an insurance product that has differentiated data and therefore differentiated pricing, is a really great place to be because at the end of the day, consumers need insurance, and we're gonna be a really good option for them.

Got it. That makes a lot of sense. Are there any changes in your appetite to deploy the excess surplus at the reciprocal for M&A?

Perhaps. I mean, we mentioned last quarter that actually, we really mentioned several quarters ago that, you know, we're turning on the M&A engine and starting to build the pipeline. Certainly, you know, we're executing against that part of the strategy. We do expect, you know, over time that when there is the right opportunity, you know, that we will take advantage of it. Certainly, the capital exists, as we talked about today, at the reciprocal to be able to execute against, you know, the right opportunities. You know, we're excited about that. We're excited about our capabilities to do some really good things there.

We're gonna be, you know, very disciplined and, you know, pragmatic about it and make sure that, you know, the first things we do are right down the middle of the fairway. Yeah, I do, it's certainly an opportunity, and we'll share more when it's the right time.

Got it. Thank you.

Thank you.

Our next question comes from the line of Timothy D'Agostino with B. Riley Securities. Please go ahead.

Yeah. Hi. Thanks for the commentary and congrats on the quarter. I just want to touch back on the rollout of the Porch Insurance product, and you all have provided really helpful commentary. I guess at the start of Q2, so, you know, in the sample timeline, compared to January when it originally rolled out, could you maybe provide some more color to us on, you know, are you seeing more agents interact with it? Are you getting better feedback? Just overall color?

Yeah.

You know, as we enter the second quarter with this product, you know, what agents are saying and maybe what homeowners are saying. That'd be great color. Thank you.

Sure. We remain excited about the Porch Insurance offering that we just rolled out here a little while ago to agents.

What I would say is, there's a lot of excitement from the agents. We're learning a lot from having the product in market. We do expect it to ramp over time, both as we get new policies in and then we get renewal policies there. Some of what agents are excited about, you know, it is the only product in the market that has a warranty attached to it. It is also a product that is designed for homebuyers in that we provide free moving services and a moving concierge. Agents are also excited about the premium commission that we can afford to pay as part of the Porch Insurance product. All of that has generated energy and excitement in the industry. I think it will just take time as we build up our book.

You know, the HOA book we've built up over, you know, 15 years now. We, we're gonna start building, and that has already started to happen.

Okay, great. I just wanted to turn to Software and Data and Consumer Services. I know there was some color about kind of the go-forward plan there. I guess, you know, when we do start to see an unthawing in the housing market, should we expect these, like, the annualized average revenue per company and revenue per monetized transaction to continue to increase? Just kind of getting a better understanding of how we should think about these KPIs, you know, when we get to a point when the housing market starts to unthaw a little bit. Thank you.

Sure. I'll separate from Software and Data KPIs versus Consumer Services. The Software and Data is more closely tied to transaction volumes in the housing market. As Shawn mentioned in the comments, most of those software services are priced on a per transaction basis. So we do expect that as housing market activity picks up, you would see an increase in the average revenue per company because each of those, on average, those companies will do more transactions. We have taken steps over the last couple of years as the market has been slow to position those companies for growth. So we've invested in innovation, we've invested in pricing. So we do believe that as the housing activity picks up, we will see top-line growth and that most of that top-line growth can flow to the bottom.

On the Consumer Services side, there are some parts of that business that are tied to housing market activity, most notably our Moving Group. You would see some tailwind in moving as housing activity picks up. We'd see that in the number of transactions, not necessarily in the revenue per transaction.

Okay, great. Thank you so much for taking my questions. Thanks. Congrats on the quarter again.

Appreciate it.

Our next question comes from the line of Matt VanVliet at Cantor. Please go ahead.

Yeah, good afternoon. Thanks for taking the question. If you wanted to narrow in on the forward trajectory of the metric around agency branch locations. I know that was a big driver over the last several quarters to build that number. Where are we at in terms of saturation in your key markets? How much more room does that have to grow as a near-term driver?

Yeah. I'll take that, and Matt, you can add on if there's anything there. I would say we're still relatively early. You know, we have invested in building out the distribution team. It's only been fairly recently that we've been at the kind of the full capacity as we've built up that team. We've also invested in senior leadership there. We can foresee, you know, several years of runway, you know, with the team that we have. Some of that is still in our core market of Texas, but there's a lot of room in the geographies outside Texas. You also have to think that over time, we can expand into additional geographies beyond the ones where we are today. I don't see any near-term constraints on our ability to grow agent distribution.

I'm gonna just double down on the last point to make sure it stuck, which is Texas, our largest, most mature market, still has a long way to go. Like, we have just a fraction of the total agencies. The other states that are newer has, you know, is very, you know, early in the number of agencies versus the total. Then, you know, like Matthew just talked about, there's lots of other states we want to expand into. We're getting to that point where we can start to be able to reopen more states, and that'll be an exciting time certainly for us 'cause that just opens up, you know, big new pools of opportunities. But, you know, there's, you know, give or take, almost 40,000, I think it is, independent agents.

There's a lot of opportunity, you know, out there.

All right. Very helpful. You drove very nice growth in the conversion rates and sounds like that was a big driver in the quarter. You mentioned to one of the questions earlier that you really haven't necessarily used some of the levers you have there to drive maybe even greater quote and then conversion rates. What would you wanna see in the market? What would you wanna hear from maybe the agents to start using that lever a little bit more aggressively, whether that's through commission rates or just pure pricing or policies. You know, curious on what you're watching and when or if that might be a greater lever to pull.

Yeah. I mean, I think the key thing there. It's a really good question. The key thing there is that, you know, I'll speak for we and just personally me, I just wanna do this for a long, long time. This is the last thing I'm gonna do. To your question, it's a good one. Could we grow much faster this year? Yes. I mean, there's plenty of capital, there's plenty of quote volume, plenty of margin in the system. We could grow much faster, you know, this year. We really want to be able to stack year after year after year after year of really attractive growth, expanding margins, you know, each year at Porch Group, you know, for shareholders, and then also continuing to grow statutory surplus.

For us to be able to grow like we are while also growing statutory surplus and seeing the margin expansion, you know, that we're gonna be demonstrating, you know, here this year, that combination, we believe if you just stack those years, it becomes really, really valuable, you know, here over time. We'll just, you know, prove, you know, through the results, you know, that we're able to go and deliver that. For us, we think that's, you know, that turns into a really exceptional and very sustainable, you know, outcome, you know, over time. That's really what we're trying to solve too. Yes, we could grow much faster. Yes, there may be opportunities in the market where we would pull that lever harder.

Right now, I mean, you can see, you know, we're certainly pleased with kind of the type of growth without really having to move the price per new customer that much, you know, and be able to get the kind of results that we are.

All right. Very helpful. Thank you.

Thank you.

At this time, we have no further questions. That concludes our Q&A session. I will now turn the call back over to Matt Ehrlichman for closing remarks.

I'll just say I appreciate, first of all, the questions. Thank you all. Appreciate those that are, you know, along this journey, you know, with us. This is an exciting time for the company. You know, the, you know, the feel at the company is fantastic. The energy is great. I do think the teams are executing really well, and are excited about where we're going. It's clear to us, you know, these next several years are gonna be really fun years. Appreciate those that are, that are with us on that ride. Have a great day, everybody.