Porch Group, a homeowners insurance and vertical software platform, has reported a net loss of $2.5mn in the fourth quarter of 2023, an improvement from $35.5mn in Q4 2022; with a total revenue of $114.6mn, which increased 79% compared to the prior year.
The company also reported a revenue less cost of revenue of $79.9mn, which amounts to 70% of total revenue, an increase of 82% compared to the $43.9mn, 69% of total revenue, reported in Q4 2022.
According to Porch, this Increase was driven by premium per policy increases, underwriting actions, and non-renewal of higher risk policies in the Insurance segment.
For the Insurance segment, Porch reported £31.2mn in revenue and $19.8mn in revenue less cost of revenue. In Q4 2023 the Insurance segment also saw gross written premiums of $112mn with approximately 310 thousand policies in force.
Porch also saw an improved gross loss ratio as it went from 56% in Q4 2022 to 36% in Q4 2023; and a combined loss ratio of 49%, an improvement from prior year driven by underwriting actions, non-renewal of higher risk policies, and the fourth quarter 34% increase in premium per policy.
The Company ended the fourth quarter of 2023 with cash, cash equivalents and investments of $397.6mn. Of this amount, Homeowners of America Insurance Company (HOA), Porch’s insurance carrier, held cash and cash equivalents of $207.6mn and investments of $102.8mn.
Excluding HOA, Porch held $87.2mn of cash, cash equivalents and investments.
As of December 31, 2023, the company’s outstanding principal for convertible debt was $558.3mn. This includes $333.3mn of the 6.75% Senior Secured Convertible Notes due October 2028 and $225mn of 0.75% Convertible Senior Notes due September 2026.
Matt Ehrlichman, Chief Executive Officer, Chairman and Founder: “We are excited to share our financial results, far exceeding the second half profitability target we provided around two years ago, with Adjusted EBITDA of $20.5 million in the second half 20231.
“I am proud of the achievements and execution of the team over the last year, which improved profitability in our insurance business, launched important new SaaS products for our customers, and maintained strong cost control. We remain focused on improving profitability and further executing our strategy in 2024.”
Porch also reported that following the period end, the company is expecting payments of approximately $25mn upfront and an expected approximately $5mn over the following four years from Aon.
These payments are the result of a business collaboration agreement between Porch and Aon Corp. and Aon Re, Inc. to provide a variety of services to Porch Group companies.
Porch added: “As part of this agreement, the parties also signed a release of claims arising from the Vesttoo fraud. Porch has not released any claims against non-Aon parties related to these matters and intends to vigorously pursue recovery.”
The company also completed the sale of EIG, its insurance agency, on January 31, 2024 for $12.2mn, subject to post-closing adjustments. EIG represented approximately $45mn of GWP placed with third party carriers in 2023, which generated approximately $4.7 million of annual commissions.
The Company repurchased $8mn aggregate principal amount of its 2026 Notes in a private transaction for $3mn in cash, or 37.5% of par. Following the close of the transaction, outstanding principal for the 2026 Notes reduced to $217mn.
