Segment Information

3 Months Ended

Mar. 31, 2025

Segment Reporting [Abstract]

Segment Information

Note 2. Segment Information

Reportable segments were identified based on how the chief operating decision-maker (“CODM”) manages the business, makes operating decisions, and evaluates operating and financial performance. Our chief executive officer acts as the CODM and reviews financial and operational information for our reportable segments. Operating segments are components of an enterprise for which separate discrete financial information is available and operational results are regularly evaluated by the CODM for the purposes of making decisions regarding resource allocation and assessing performance.

Beginning in January 2025, there was a change in internal reporting provided to the CODM and a change in the lens through which the CODM makes decisions and allocates resources. As a result, our reportable segments, that are also our operating segments, changed from Vertical Software and Insurance prior to 2025 to Insurance Services, Software & Data, Consumer Services, and the Reciprocal Segment. Management references the Insurance Services, Software & Data, and Consumer Services segments, together with corporate expenses, as “Porch Shareholder Interest.” Our fourth segment, the Reciprocal Segment, is managed, but not owned, by Porch Group and is consolidated for reporting purposes.

The changes in reporting were driven by how the CODM views our target customer (e.g. primarily total premium in Insurance Services, primarily businesses in Software & Data, and primarily direct consumers in Consumer Services) and by the shift to a reciprocal exchange model where we are the manager rather than the owner. In connection with the formation of the Reciprocal on January 1, 2025, we sold our legacy homeowners insurance carrier, Homeowners of America (“HOA”), to the Reciprocal, shifting all premium and policyholders to the member-owned entity. As of January 1, 2025 the Reciprocal pays all claim costs, all reinsurance costs, and all agency commissions in addition to management fees to Porch. The Reciprocal is a VIE and represents a noncontrolling interest as discussed in Note 3.

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 non-catastrophic weather reinsurance support to improve capital efficiency for the Reciprocal.

Our 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.

Our Consumer Services segment provides warranty products through Porch Warranty and other warranty brands to protect the whole home. Our Consumer Services segment also provides moving related services such as movers, TV/Internet, and security.

The Reciprocal Segment includes HOA and its parent, Porch Reciprocal Exchange, which is a member-owned reciprocal exchange, owned by policyholder members rather than Porch Group, Inc. The Reciprocal Segment provides consumers with insurance to protect their homes, earning revenue primarily through premiums collected on policies.

Our segment operating and financial performance measures are gross profit and Adjusted EBITDA (Loss) for the Insurance Services, Software & Data, and Consumer Services segments. Adjusted EBITDA (Loss) is defined as gross profit less the following expenses associated with each segment: selling and marketing, product and technology, and general and administrative. Adjusted EBITDA (Loss) also excludes non-cash items or items that management does not consider reflective of ongoing core operations, such as depreciation, amortization, and stock-based compensation expense. The CODM uses gross profit and Adjusted EBITDA (Loss) to allocate resources for these segments (including employees, property, and financial or capital resources) predominately in the annual budget and forecasting process. Both of these measures are also used to provide guidance to investors.

Our segment operating financial performance measures for the Reciprocal Segment are gross profit and Net Income (Loss). The CODM uses Net Income (Loss) instead of Adjusted EBITDA (Loss) for this segment because he reviews interest expense on the surplus note created as part of the formation of the Reciprocal. Adjusted EBITDA (Loss), by definition, excludes interest expense.

As a result of the formation of the Reciprocal, beginning in 2025, we will allocate certain expenses to the Insurance Services segment that were historically considered Corporate costs. This allocation is meant to account for fees paid through Corporate shared services on behalf of the Insurance Services segment and related to its management of the Reciprocal. Because this change occurred as a direct result of the formation of the Reciprocal, the allocation is not recast to prior periods.

The following tables present revenue and significant expenses by segment that are regularly provided to the CODM. Other segment items that the CODM does not consider in assessing segment performance are presented to reconcile to each segment’s measure of profit or loss.

The “Corporate” column includes shared expenses that are not allocated to the reportable segments. These consist primarily of selling and marketing, certain product and technology, accounting, human resources, legal, general and administrative, and other income, expenses, gain and losses.

		Three Months Ended March 31, 2025
		Insurance Services		Software & Data		Consumer Services		Corporate	Reciprocal Segment		Eliminations	Total
Revenue	(1)	49,806		21,999		14,721		—	39,938		(21,719)	104,745
Cost of revenue		7,481		5,506		2,490		—	26,249		(2,429)	39,297
Gross Profit		42,325		16,493		12,231		—	13,689		(19,290)	65,448
Significant expenses:
Selling and marketing		15,527		9,169		9,798		408	7,411		(12,797)	29,516
Product and technology		2,451		4,288		1,131		4,196	1,135		—	13,201
General and administrative		4,377		2,508		3,301		12,701	7,603		(6,493)	23,997
Other segment items:
Depreciation and amortization	(2)	(91)		(3,479)		(885)
Stock-based compensation expense	(2)	(679)		(556)		(388)
Interest income on intercompany surplus notes		(3,674)		—		—
Change in fair value of contingent consideration		—		—		28
Restructuring costs		(45)		(19)		(84)
Other gains and losses	(3)	(1,320)		—		—
Acquisition and other transaction costs		(30)		11		—
Adjusted EBITDA (Loss)		$	25,809	$	4,571	$	(670)
Other income (expense):
Interest expense									(51)			(11,246)
Change in fair value of private warrant liability									—			(732)
Change in fair value of derivatives									—			6,673
Investment income and realized gains and losses, net of investment expenses									2,415			2,810
Other income									—			8,400
Interest income (expense) on intercompany surplus notes									(3,674)			—
Income tax expense (provision)									(889)			(903)
Net income (loss)									$	(4,659)		3,736
Net loss attributable to the Reciprocal												(4,659)
Net income attributable to Porch												$	8,395

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(1)Revenue includes intersegment revenues of $45.4 million in Insurance Services (which includes fees and commissions paid by the Reciprocal to Insurance Services), $2.0 million in Software & Data, and $(25.6) million in revenue offsets in the Reciprocal Segment.

(2)Depreciation, amortization, and stock-based compensation are included in Cost of revenue, Selling and marketing, Product and technology, and General and administrative lines above and are excluded from Adjusted EBITDA (Loss).

(3)Other gains and losses primarily includes investment income and some recoveries of reinsurance losses.

		Three Months Ended March 31, 2024
		Insurance Services		Software & Data		Consumer Services		Corporate	Reciprocal Segment		Eliminations	Total
Revenue	(1)	47,359		21,134		16,186		—	47,495		(16,731)	115,443
Cost of revenue		25,409		5,654		3,533		—	46,607		(2,837)	78,366
Gross Profit		21,950		15,480		12,653		—	888		(13,894)	37,077
Significant expenses:
Selling and marketing		16,018		10,002		8,377		647	12,798		(13,894)	33,948
Product and technology		362		4,215		927		5,320	1,468		—	12,292
General and administrative		1,643		4,538		3,599		13,470	2,255		—	25,505
Other segment items:
Depreciation and amortization	(2)	(993)		(3,792)		(1,091)
Stock-based compensation expense	(2)	(343)		(1,072)		(500)
Change in fair value of contingent consideration		—		(909)		(142)
Restructuring costs		(8)		(56)		—
Other gains and losses	(3)	(1,644)		—		—
Adjusted EBITDA (Loss)		$	6,915	$	2,554	$	1,483
Other income (expense):
Interest expense									(2,035)			(10,787)
Change in fair value of private warrant liability									—			(425)
Change in fair value of derivatives									—			1,483
Gain on extinguishment of debt									—			4,891
Investment income and realized gains and losses, net of investment expenses									2,924			3,644
Other income (expense)									—			22,678
Income tax benefit (expense)									—			(178)
Net loss									$	(14,744)		$	(13,362)

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(1)Revenue includes intersegment revenues of $44.1 million in Insurance Services, $0.3 million in Software & Data, and $(27.6) million revenue offsets in the Reciprocal Segment.

(2)Depreciation, amortization, and stock-based compensation are included in Cost of revenue, Selling and marketing, Product and technology, and General and administrative lines above and are excluded from Adjusted EBITDA (Loss).

(3)Other gains and losses primarily includes investment income and some recoveries of reinsurance losses.

The following table presents a reconciliation of segment profitability measures to consolidated net income (loss).

		Three Months Ended March 31,
		2025		2024
Segment Profitability Measures:
Insurance Services Adjusted EBITDA (Loss)		$	25,809	$	6,915
Software & Data Adjusted EBITDA (Loss)		4,571		2,554
Consumer Services Adjusted EBITDA (Loss)		(670)		1,483
Reciprocal Segment Net Income (loss)		(4,659)		(14,744)
Subtotal		25,051		(3,792)
Reconciling items:
Corporate expenses		(12,849)		(15,027)
Interest expense		(11,195)		(10,592)
Income tax provision		(14)		(178)
Depreciation and amortization		(5,024)		(6,310)
Gain (loss) on extinguishment of debt		—		4,891
Other income, net		7,162		23,342
Stock-based compensation expense		(4,910)		(5,368)
Mark-to-market gains		5,969		7
Restructuring costs	(1)	(319)		(157)
Acquisition and other transaction costs		(135)		(178)
Net income (loss)		$	3,736	$	(13,362)

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(1) Primarily consists of cost related to forming a reciprocal exchange.

The CODM does not review assets on a segment basis other than the assets of the Reciprocal Segment that are presented on the unaudited Condensed Consolidated Balance Sheets as required for VIE disclosure.

All of our revenue is generated in the United States except for an immaterial amount. As of March 31, 2025, and December 31, 2024, we did not have material assets located outside of the United States.