Fair Value

12 Months Ended

Dec. 31, 2024

Fair Value Disclosures [Abstract]

Fair Value

Note 4. Fair Value

The following tables summarize the fair value measurements of assets and liabilities that are measured at fair value on a recurring basis.

	Fair Value Measurement as of December 31, 2024
	Level 1		Level 2		Level 3		Total Fair Value
Assets
Money market mutual funds	$	111,950	$	—	$	—	$	111,950
Debt securities:
U.S. Treasuries	27,102		—		—		27,102
Obligations of states, municipalities and political subdivisions	—		11,872		—		11,872
Corporate bonds	—		70,896		—		70,896
Residential and commercial mortgage-backed securities	—		60,774		—		60,774
Other loan-backed and structured securities	—		12,107		—		12,107
	$	139,052	$	155,649	$	—	$	294,701
Liabilities
Contingent consideration - business combinations (1)	$	—	$	—	$	83	$	83
Private warrant liability (2)	—		—		460		460
Embedded derivatives (3)	—		—		22,262		22,262
	$	—	$	—	$	22,805	$	22,805

	Fair Value Measurement as of December 31, 2023
	Level 1		Level 2		Level 3		Total Fair Value
Assets
Money market mutual funds	$	165,744	$	—	$	—	$	165,744
Debt securities:
U.S. Treasuries	43,696		—		—		43,696
Obligations of states, municipalities and political subdivisions	—		17,420		—		17,420
Corporate bonds	—		50,041		—		50,041
Residential and commercial mortgage-backed securities	—		24,601		—		24,601
Other loan-backed and structured securities	—		3,418		—		3,418
	$	209,440	$	95,480	$	—	$	304,920
Liabilities
Contingent consideration - business combinations (4)	$	—	$	—	$	18,455	$	18,455
Private warrant liability (5)	—		—		1,151		1,151
Embedded derivatives (5)	—		—		28,131		28,131
	$	—	$	—	$	47,737	$	47,737

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(1)The Consolidated Balance Sheets include less than $0.1 million in accrued expenses and other current liabilities and less than $0.1 million in other liabilities as of December 31, 2024, for contingent consideration related to business combinations.

(2)Private warrant liability is included in accrued expenses and other current liabilities in the Consolidated Balance Sheets as of December 31, 2024.

(3)Embedded derivatives balance is included in other liabilities in the Consolidated Balance Sheets as of December 31, 2024.

(4)The Consolidated Balance Sheets include $14.8 million in accrued expenses and other current liabilities and $3.7 million in other liabilities as of December 31, 2023, for contingent consideration related to business combinations.

(5)Private warrant liability and embedded derivatives balances are included in other liabilities in the Consolidated Balance Sheets as of December 31, 2023.

Financial Assets

Money market mutual funds are valued at the closing price reported by the fund sponsor from an actively traded exchange. As the funds are generally maintained at a net asset value which does not fluctuate, cost approximates fair value. These are included with U.S. Treasuries as Level 1 measurements in the table above. The fair values for available-for-sale fixed-maturity securities are based upon prices provided by an independent pricing service and included as Level 2 measurements in the table above. We have reviewed these prices for reasonableness and have not adjusted any prices received from the independent provider. Level 2 securities represent assets whose fair value is determined using observable market information such as previous day trade prices, quotes from less active markets or quoted prices of securities with similar characteristics. There were no transfers between Level 1 and Level 2.

Contingent Consideration – Business Combinations

As part of the acquisition of Floify, LLC (“Floify”) in October 2021, we issued shares as partial closing consideration to the sellers of Floify and guaranteed that the value of those shares would equal or exceed 200% of such price on or prior to December 31, 2024 (the “True-Up Obligation”). The True-Up Obligation could be settled at our option in cash, Porch common stock, or a combination thereof. On March 27, 2024, we entered into a settlement agreement and mutual release of claims with the sellers of Floify to settle a post-closing dispute. As part of the of this agreement, the sellers of Floify agreed to terminate the True-Up Obligation in full and released from restriction approximately $0.9 million of escrowed cash to us. We estimated the fair value of the True-Up Obligation as of the settlement date using the Monte Carlo simulation method. The fair value is based on the simulated market price of our common stock over the maturity date of the True-Up Obligation. As of March 27, 2024, the key inputs used to determine the fair value of $14.9 million included the stock price of $4.13, strike price of $36.00, discount rate of 23.6% and volatility of 95%. Subsequent to the valuation, we recognized a gain on settlement in other income, net, in the Consolidated Statements of Operations and Comprehensive Loss equal to the fair value of $14.9 million. As of December 31, 2023, the key inputs used in the determination of the fair value of $14.0 million included the stock price of $3.08, strike price of $36.00, discount rate of 27.9% and volatility of 90%.

We estimated the fair value of other business combination contingent consideration based on specific metrics related to the acquisition of Residential Warranty Services (“RWS”) in April 2022, using the discounted cash flow method. The fair value is based on a percentage of revenue over the maturity date of the contingent consideration. As of December 31, 2024, the key inputs used to determine the fair value of $0.1 million were management’s cash flow estimates and the discount rate of 14%. As of December 31, 2023, the key inputs used to determine the fair value of $4.4 million were management’s cash flow estimates and the discount rate of 17%.

Private Warrants

We estimated the fair value of the private warrants using the Black-Scholes-Merton option pricing model. As of December 31, 2024, the key inputs used to determine the fair value included exercise price of $11.50 per share, expected volatility of 67%, remaining contractual term of 0.98 years, and stock price of $4.92 per share. As of December 31, 2023, the key inputs used to determine the fair value included exercise price of $11.50 per share, expected volatility of 95%, remaining contractual term of 1.98 years, and stock price of $3.08 per share.

Embedded Derivatives

In connection with the issuance of senior secured convertible notes in April 2023 (see Note 7, Debt, for more information) and in accordance with ASC 815-15, Derivatives and Hedging – Embedded Derivatives, certain features of the senior secured convertible notes were bifurcated and accounted for separately from the notes. The following features are recorded as derivatives.

•Repurchase option. If more than $30 million aggregate principal amount of the 2026 Notes remains outstanding on June 14, 2026, the 2028 Note holders have the right to require us to repurchase for cash on June 15, 2026, all or any portion of their 2028 Notes, in principal amounts of one thousand dollars or an integral number thereof, at a repurchase price equal to 106.5% of the principal amount of the 2028 Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the repurchase date.

•Fundamental change option. If we undergo a fundamental change, as defined in the indenture governing the 2028 Notes and subject to certain conditions, holders of the 2028 Notes have the right to require us to repurchase for cash all or any portion of their 2028 Notes, in principal amounts of one thousand dollars or an

integral multiple thereof, at a repurchase price equal to 105.25% of the principal amount of the 2028 Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the repurchase date. A fundamental change includes events such as a change in control, recapitalization, liquidation, dissolution, or delisting.

•Asset sale repurchase option. If we sell assets and receive net cash proceeds of $2.5 million in excess of the Asset Sale Threshold (as defined below) (such excess net cash proceeds, the “Excess Proceeds”), we must offer to all holders of 2028 Notes to repurchase their 2028 Notes for an aggregate amount of cash equal to 50% of such Excess Proceeds at a repurchase price per 2028 Note equal to 100% of the principal amount thereof, plus accrued and unpaid interest to, but excluding, the relevant purchase date, if any. “Asset Sale Threshold” means $20.0 million in the aggregate, provided that on and after the date on which the cumulative net cash proceeds received by the Company and its restricted subsidiaries from the sale of assets after April 20, 2023 exceeds $20.0 million in the aggregate, the “Asset Sale Threshold” means $0. As of December 31, 2024, our remaining Asset Sale Threshold was $9.1 million (See Note 12).

The inputs for determining fair value of the embedded derivatives are classified as Level 3 inputs. Level 3 fair value is based on unobservable inputs based on the best information available. These inputs include the probabilities of a repurchase, a fundamental change, and qualifying asset sales, ranging from 3% to 50%.

Level 3 Rollforward

Fair value measurements categorized within Level 3 are sensitive to changes in the assumptions or methodology used to determine fair value, and such changes could result in a significant increase or decrease in the fair value.

The changes for Level 3 items measured at fair value on a recurring basis using significant unobservable inputs are as follows:

	Contingent Consideration - Business Combinations		Embedded Derivatives		Private Warrant Liability
Fair value as of December 31, 2023	$	18,455	$	28,131	$	1,151
Additions	—		—		—
Settlements	(14,930)		—		—
Change in fair value, loss (gain) included in net loss(1)	(3,442)		(5,869)		(691)
Fair value as of December 31, 2024	$	83	$	22,262	$	460

	Contingent Consideration - Earnout (2)		Contingent Consideration - Business Combinations		Embedded Derivatives		Private Warrant Liability
Fair value as of December 31, 2022	$	44	$	24,546	$	—	$	707
Additions	—		—		23,870		—
Settlements	—		(427)		—		—
Change in fair value, loss (gain) included in net loss(1)	(44)		(5,664)		4,261		444
Fair value as of December 31, 2023	$	—	$	18,455	$	28,131	$	1,151

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(1)Changes in fair value of contingent consideration related to business combinations are included in general and administrative expenses in the Consolidated Statements of Operations and Comprehensive Loss. Changes in fair value of the earnout contingent consideration, private warrant liability, and embedded derivatives are included in other income, net in the Consolidated Statements of Operations and Comprehensive Loss.

(2)The earnout contingent consideration period ended December 23, 2023, and the remaining liability was subsequently written off.

Fair Value Disclosure

As of December 31, 2024 and 2023, the fair value of the 2026 Notes (see Note 7, Debt, for more information) was $137.7 million and $73.1 million, respectively. As of December 31, 2024 and 2023, the fair value of the 2028 Notes (see Note 7, Debt, for more information) was $278.3 million and $196.7 million, respectively. The fair value of other notes approximate the unpaid principal balance. All debt, other than the convertible notes which are Level 2, is considered a Level 3 measurement.