Q4 2023 Porch Group Inc Earnings Call

Unknown Executive: Good afternoon, everyone, and thank you for participating in Porch Group's fourth quarter 2023 conference call. Today we issued our fourth quarter earnings release and related Form 8K to the FEC. The press release can be found on our investor relations website at ir.porchgroup.com. Joining me here today are Matt Ehrlichman, Porch Group CEO, Chairman, and Founder; and Shawn Tabak, Porch Group CFO. Matthew Nagel, Porch Group's COO, and Jim Weld, GM of Rhino, Porch's title software company.

Good afternoon, everyone and thank you for calling in postpaid forecast 2023.

Today, we issued our fourth quarter earnings.

Form 8-K.

Thanks.

So they can be found on our Investor Relations website IR <unk>.

Stockholm.

Joining me here today are not adequate unfortunate CEO chairman and founder.

Tibet.

Hi, Matthew.

Mackie Nagel Fortunately.

And Jim well GM of Rhino poaching.

Okay Ty for yourself by something.

Unknown Executive: Before we go further, I would like to take a moment 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's views as of today, March 7th, 2024. We do not undertake any obligations to update or revise this information.

Before we go further I would like to take a moment to review the company's safe Harbor statement within the meaning of the private Securities Litigation Reform Act of 90 to 95, which provides important cautions regarding forward looking statements.

Today's discussion, including responses to your questions reflects management's views as of today March seven 2024.

We do not undertake any obligations to update or revise this information.

Unknown Executive: Additionally, we'll make forward-looking statements about our expected future financial or business performance or conditions, business strategy, and plans, including the application for the reciprocal exchange, based on current expectations and assumptions. These statements are subject to risks and uncertainties, which could cause our actual results to differ materially from the four different statements. We encourage you to consider the risk factors and other risks and uncertainties described in our FEC filings, as well as the risk factor information in these slides, for additional information, including factors that could cause our results to differ materially from current expectations. We will reference both GAAP and non-GAAP financial measures on today's call. Season 3rd today is a press release for reconciliations of non-GAAP measures to the most comparable GAAP measures discussed during this earnings call, which are available on our website. The financial information provided today is preliminary and audited and subject to revision upon completion of the closing and audit process.

Additionally, we will make forward looking statements about our expected future financial or business performance will condition.

Fashion plan, including the application.

Changed based on current expectations and assumptions.

The statements are subject to risks and uncertainties, which could cause our actual results to differ materially from these forward looking statements.

We encourage you to consider the risk factors and other risks that you described in our SEC filings as well as the risk factors information on the slides.

Additional information concerning factors that could cause our results to differ materially from currently.

Spectation.

We will reference both GAAP and non-GAAP financial measures on today's call.

In fact, today's press release for reconciliations of non-GAAP measures will most comparable GAAP measures discussed during this earnings call, which are available on our website.

All financial information provided today preliminary unaudited and subject to revision upon completion of the closing and audit processes.

Unknown Executive: As a reminder, this webcast will be available for replay along with the presentation shortly after this call from the company's website at ir.porchgroups.com. I'll now turn the call over to Matt Ehrlichman, CEO, chairman, and founder of Porch Group. Thank you, Matt. Thanks, Lois. Good afternoon, everybody.

As a reminder.

Webcast will be available for replay along with the presentation. Shortly after this call on the Companys website at <unk> Dot Dot com.

I'll now turn the call, Matt Eichmann, CEO, Chairman and founder portrayed and Tina.

Thanks, Laura.

Matthew Ehrlichman: Thanks very much for joining us. I couldn't be more proud of the achievements and execution of the porch team over the last year. Despite a sharp increase in interest rates over the last couple of years, higher costs of reinsurance and claims, contraction in the real estate market, and historically challenging weather events, the team stuck together, stayed focused, and performed.

Good afternoon, everybody, thanks, very much for joining.

I couldnt be more proud of the achievements and execution of the <unk> team over the last year.

Despite a sharp increase in interest rates over the last couple of years.

Higher cost of reinsurance and claims.

And the real estate market and historically challenging weather events the team stuck together stay focused and performed.

Matthew Ehrlichman: We implemented our insurance profitability actions, which are here throughout today's presentation. This includes enhancing underwriting activities, increasing premiums for policies, and non-renewing higher risk policies. We launch Porch Warranty and new products for our software customers, increasing pricing while maintaining our high customer retention, and we reduce costs across our business while continuing investment across key growth initiatives. And as a result of the work we've done, financial results were strong and exceeded expectations. Revenue in the fourth quarter grew 79% to $115 million, $15 million above our prior guidance. Revenue less cost of revenue grew 82% to $80 million, $20 million above guidance. And Q4 adjusted EBITDA profit was $12 million, an increase of $25 million compared to the fourth quarter of 2022 and $8 million above guidance. In every measure here, it was a great force. A few other key updates for the fourth quarter before we dive into the presentation, when we handily beat the second half 2023 profitability target we set two years ago, with second half adjusted EBITDA of $21 million. Next, we had no material weaknesses.

We implemented our insurance profitability actions, which you'll hear throughout today's presentation.

This includes enhancing underwriting activities, increasing premium per policy and non renewing higher risk policies.

We launched <unk> guarantee and new products for our software customers, increasing pricing, while maintaining our high customer retention.

And we reduced costs across our business, while continuing investment across key growth initiatives.

And as a result of the work we've done financial results were strong and exceeded expectations.

Revenue in the fourth quarter grew 79% to $115 million $15 million above our prior guidance.

Revenue less cost of revenue grew 82% to $80 million $20 million above guidance.

In Q4, adjusted EBITDA profit was $12 million, an increase of $25 million compared to the fourth quarter of 2022 and $8 million above guidance.

And every measure here it was a great quarter.

A few other key updates for the fourth quarter before we dive into the presentation.

One we handily beat the second half of 2023 profitability target, we set two years ago.

With second half adjusted EBITDA of $21 million.

Next we had no material weaknesses.

Matthew Ehrlichman: Huge thanks to Shawn and the team for their expertise and leadership. This was a top priority for us as we completed system implementations and improved our control environment. A truly great achievement and well done, team.

Huge thanks to John and the team for the expertise and leadership. This was a top priority for us as we completed system implementations and improved our control environment, a truly great achievements and will then team.

Matthew Ehrlichman: Next, our business continues to make meaningful progress across many areas. In Q4 alone, we launched a new Rhino product for title companies. We landed a new utilities partnership, released a new HVAC micro-warranty, and a CRM product for smaller inspectors. Our moving business is executing a local full service offering, expanding on our leadership position and providing moving labor to consumers. This product increases the size of our market opportunity and provides a higher-margin offering. Next, we released our first ESD report, which is available on our IR website.

Next our business continues to make meaningful progress across many areas in Q4 alone we launched a new rhino products for title companies.

We landed a new utilities partnership released a new HVAC micro warranty and the CRM product for smaller inspectors.

Our moving business is executing a local foodservice offering expanding on our leadership position in providing moving labor to consumers.

This product increases the size of our market opportunity and provides a higher margin offerings.

Next we released our first ESG report, which is available on our IR website, and we look forward to sharing more on this in the future and finally, we were admitted to Deloitte technology fast 500 for 2023.

Shawn Tabak: We look forward to sharing more on this in the future. And finally, we were admitted into Deloitte Technologies' FAST 500 for 2023. Now over to you, Shawn, on the financials. Thanks, Matt. And good afternoon, everyone.

Now over to you Shaun on the financials.

Thanks, Matt and good afternoon, everyone.

Shawn Tabak: As Matt mentioned, we are extremely pleased to accomplish our second half 2023 adjusted EBITDA target despite market headwinds. I wanted to thank our teams for their contribution and hard work to achieve this critical milestone. Moving to slide nine here to get into the financials, revenue was $114.6 million in the fourth quarter of 2023, growth of 79% over the prior year, driven by our insurance act, which grew 179%, partially offset by the vertical. Revenue less cost of revenue was $79.9 million, resulting in a margin of 70% of revenue, which is a 120 basis point increase over the prior year, driven by Insurance Profitability and Software Price. Adjusted EBITDA was $11.7 million, a 10% margin, and a $25 million increase over the prior year, driven by the insurance segment and strong cost. The gross written premium was $112 million.

As Matt mentioned, we are extremely pleased to accomplish our second half 2023, adjusted EBITDA target despite market headwinds.

Wanted to thank our teams for their contribution and hard work to achieve this critical milestone.

Moving to slide nine here to get into the financials.

Revenue was $114 6 million in the fourth quarter of 2023 growth of 79% over the prior year driven by our insurance segment, which grew 179% partially offset by the vertical software sector.

Revenue less cost of revenue was $79 $9 million, resulting in a margin of 70% of revenue, which is a 120 basis point increase over the prior year.

Driven by the insurance profitability actions and software price increases.

Adjusted EBITDA was 11 $7 million, a 10% margin and a $25 million increase over the prior year.

Driven by the insurance segment and strong cost control.

Gross written premium was $112 million.

Shawn Tabak: A decrease compared to the prior year as we focus on profitability and reducing risk through non-renewals and new business restrictions and higher-risk ZIP codes. This is partially offset by an increase in premium. The insurance segment was 76% of total revenue in the fourth quarter, an increase from 49% in the prior year. Revenue from our insurance segment was $86.9 million, growth of 179% over the prior year, driven by a 34% increase in premium for policies and lower reinsurance fees. Approximately one-third of the growth was from increases in premium for policies and two-thirds from the lower seeding, partially offset by attrition with the non-renewable. Vertical software revenue was $27.7 million, a decline compared to the prior year, driven by the housing market headwind, which particularly impacts moving services, along with lower demand for corporate relocation.

A decrease compared to prior year, as we focus on profitability and reducing risk through non renewals and new business restrictions and higher risk Zip codes.

This was partially offset by an increase in premium per policy.

The insurance segment was 76% of total revenue in the fourth quarter, an increase from 49% in the prior year.

Revenue from our insurance segment was $86 9 million growth of 179% over the prior year.

Driven by a 34% increase in premium per policy and lower reinsurance ceding.

Approximately one third of the growth was from increases in premium per policy and two thirds from the lower ceding partially offset by attrition with the Nonrenewals.

Vertical software revenue was $27 7 million a decline compared to the prior year driven by the housing market headwinds.

Which particularly impacts moving services, along with lower demand in corporate relocations.

Shawn Tabak: SAS Revenue Remain Resilient. Moving to adjusted EBITDA by segment, insurance segment adjusted EBITDA was $31.6 million in the fourth quarter of 2023, a 36% margin, driven by insurance profitability, which drove a lower gross loss ratio compared to the prior year. Vertical software adjusted EBITDA loss was $300,000, with continued market pressure and moving service.

SaaS revenue remained resilient.

Moving to adjusted EBITDA by segment insurance segment, adjusted EBITDA was $31 6 million in the fourth quarter of 2023.

A 36% margin driven by insurance profitability actions, which drove a lower gross loss ratio compared to the prior year.

Vertical software adjusted EBITDA loss was $300000.

With continued market pressure and moving services.

Shawn Tabak: Corporate expenses were $19.7 million, 17% of total revenue, a 600 basis point improvement compared to the prior. Moving now to the balance sheet. We ended the year proud we are proud to have issued, and generated $34 million of operating cash flow in fiscal year 2020. We generated $43 million of operating cash flow in the second half of the U.S. You can see here that we ended the year with $398 million of cash, cash equivalents, and investments, and excluding the $310 million at HOA, Porch held $87 million. In addition, Porch Group held $39 million of restricted cash, primarily for our captive and warranty business, as well as a $49 million surplus note from HOA. The HOA surplus at December 31st was a healthy $52 million.

Corporate expenses were $19 7 million or 17% of total revenue, a 600 basis point improvement compared to the prior year.

Moving now to the balance sheet.

We ended the where we are proud to have.

Issued have generated $34 million of operating cash flow in fiscal year 2023.

We generated $43 million of operating cash flow in the second half.

Of the year.

You can see here that we ended the year with $398 million of cash cash equivalents and investments.

And excluding the $310 million at HOA ports held $87 million.

In addition ports group held $39 million of restricted cash primarily for our captive and warranty businesses as well as a $49 million surplus note from HOA.

HOA surplus at December 31 was a healthy $52 million.

Shawn Tabak: In the first quarter of 2024, there have been four items that I would like to bring to your attention. First of all, we signed a strategic business agreement with Aon, who will support us in securing reinsurance and other services in 2024 and the next several years. We release them from any Vestu-related claims, although we'll continue to pursue other non-Aon partners.

In the first quarter of 2024, there've been four items that I would like to bring to your attention.

First of all we signed a strategic business agreement with Aon, who will support us in securing reinsurance and other services in 2024 and the next several years.

We released them from any <unk> related claims, although we will continue to pursue other non aon partners.

Shawn Tabak: We received approximately $25 million in upfront cash in January 2024 and expect to receive approximately $5 million over the next four years. Second, as previously discussed, we tested connecting homebuyers with third-party insurance agencies to compare conversion and profitability versus EIG, our in-house agency. Our unit economics and profitability improved substantially in these steps. Given the cost associated with running the, Therefore, we sold EIT for $12 million cash in January of this year. EIG was a small business for us, with annual commissions from third party carriers of approximately $5 million, and an adjusted even loss of approximately $3 million in 2020. Well, we'll continue to prioritize selling our own insurance products, like HOA and eventually porch insurance, to relevant homebuyers. And when we do connect consumers to agency partners and they sell a third-party carrier product, we'll receive back high-margin revenue.

We received approximately $25 million upfront cash in January 2024, and.

And expect to receive approximately $5 million over the next four years.

Second as previously discussed we tested connecting homebuyers with third party insurance agencies to compare conversion in profitability versus AIG, our in House agency.

Our unit economics and profitability improved substantially in these tests.

The costs associated with running the agency.

Therefore, we sold the IGT for $12 billion cash in January of this year.

Okay.

<unk> was a small business for us with annual commissions from third party carriers of approximately $5 million and an adjusted EBITDA loss of approximately $3 million in 2023.

While we will continue to prioritize selling our own insurance products like HOA and eventually ports insurance to relevant homebuyers. When we do connect consumers to agency partners and they sell a third party carrier product will receive back high margin revenue.

Shawn Tabak: Overall, this divestiture increases profitability in 2024 and ongoing and improves our balance. And importantly, as part of the strategy around forming a reciprocal, we want as much premium as possible sold into our own insurance product and for Porch Group to be the operator of the reciprocal with lower volatility and higher market cap. Tighter alignment with third-party agencies can incent them to drive more of their customers to us. Third, in February, we repurchased $8 million of the par value of our unsecured notes for $3 million cash at 37.5% of par, reducing our 2026 debt maturity to $217 million. And finally, we expect to file a Form S-3 shelf registration statement with the SEC soon, around the timing of our 10k, which gives us the flexibility to raise various forms of capital over the next three years. We do not currently have any imminent plans to raise capital.

Overall, this divestiture increases profitability in 2024, and ongoing and improves our balance sheet and.

And importantly, as part of the strategy around forming a reciprocal exchange we want as much premium as possible sold into our own insurance products and for ports group to be the operator of the reciprocal with lower volatility and higher margins.

Tighter alignment with third party agencies can incent them to drive more of their customers to our carrier.

Third in February we repurchased $8 million par value of our unsecured notes for $3 million cash at 37, 5% of par, reducing our 2026 debt maturity to $217 million.

And finally, we expect to file a form S. Three shelf registration statement with the SEC soon.

Around the timing of our 10-K.

Which gives us the flexibility to raise various forms of capital over the next three years.

We do not currently have any imminent plans to raise capital. However, this is a good corporate practice, we provide several options to reduce our 2026 notes over the next two years.

Shawn Tabak: However, this is a good corporate practice and provides several options to reduce our 2026 notes over the next two years. Shifting now to our full year 2023, revenue was $430 million. A 56% growth over the prior year, driven by 152% growth in our insurance sector. Revenue less cost of revenue was $210 million, a 25% increase over the prior year. There was a change to margins year over year due to a mix shift between insurance and vertical software segments and a change in our reinsurance programs within reinsurance. The adjusted EBITDA loss was $44.5 million, a $5 million improvement over the prior year.

Shifting now to our full year 2023 revenue was $430 million, a 56% growth over the prior year driven by 152% growth in our insurance segment.

Revenue less cost of revenue was $210 million or 25% increase over the prior year.

There was a change to margins year over year due to mix shift between insurance and vertical software segments and a change in our reinsurance programs within reinsurance within insurance.

The adjusted EBITDA loss was $44 $5 million a $5 million in.

Improvement over the prior year.

Shawn Tabak: Driven by improvements in insurance profitability actions, we discuss an offset by higher reinsurance costs in 2023 and historically challenging hail events in Texas in the second half. Gross written premiums were $525 million, relatively flat compared to the prior year, with non-renewal of higher risk policies offset by increases in premiums for policies. These changes drove a notable improvement in profitability, building momentum in the second half of the year. And with that backdrop, now let's take a look at our 2024 guide. Today, we are providing our full year 2024 guide. For 2024, we expect revenue of $450 to $490 million.

Driven by improvements in insurance profitability actions, we discussed and offset by higher reinsurance costs in 2023, and historically challenging hail events in Texas in the second quarter.

Gross written premiums were.

<unk> $525 million relatively flat compared to the prior year with non renewal of higher risk policies offset by increases in premiums for policy.

These changes drove notable improvement in profitability building momentum in the second half of the year.

And with that backdrop now, let's take a look at our 2020 for guidance.

Today, we are providing our full year of 2024 guidance for.

For 2024, we expect revenue of $450 million to $490 million growth of 5% to 14% driven by the insurance segment.

Shawn Tabak: Growth of 5% to 14% driven by the insurance segment, with relatively flat revenue in the software. We expect revenue revenue less cost revenue of $225 million to $240 million. We expect overall margins to be relatively flat in 2023, as increases in vertical software margins are offset by a mix shift toward higher growth but lower margin insurance. We've assumed a 63% gross loss ratio for the full year, in line with our five-year waited. Overall, we expect an adjusted EBITDA profit of $1 million to $10 million. The year on year and year on year improvement is predominantly driven by continued execution of the insurance profitability actions we discussed today, price increases in our SAS businesses, and ongoing cost management efforts. We expect operating expenses to decrease more than 10% compared to 2000.

On relatively flat revenue in the software segment.

We expect revenue revenue less cost of revenue of $225 million to $240 million.

We expect overall margins to be relatively flat with 2023.

As increases in vertical software margins are offset by mix shift towards higher growth, but lower margin insurance segment.

We've assumed a 63% gross loss ratio for the full year in.

In line with our five year weighted average.

Overall, we expect adjusted EBITDA profit of $1 million to $10 million a year on year on year on year improvement is predominantly driven by continued execution.

Against our insurance profitability actions, we discussed today.

Price increases in our SaaS businesses and ongoing cost management efforts.

We expect operating expenses to decrease more than 10% compared to 2023.

Shawn Tabak: We expect gross written premiums of $460 million to $480 million. For reference, EIG's written premium from third-party carriers was approximately $45 million in 2023. So our guidance implies managing to roughly flat on an apples-to-apples basis, as third party carrier written premium will be excluded under the new agency. This includes executing further non-renewals of higher risk policies, exiting the state of Georgia, where we're unable to get the rate needed to achieve our profit targets, and being selective around bringing in attractive new business. Overall, at approximately a flat premium, we are reducing our projected risk of exposure by approximately 22% in 2024, which follows the approximately 26% reduction between 2022 and 2023. This drives lower expected reinsurance and losses.

We expect gross written premiums of $460 million to $480 million.

For reference Aig's written premium from third party carriers was approximately $45 million in 2023, so our guidance implies <unk> to roughly flat on an apples to apples basis as third party carrier written premium will be excluded under the new agency model.

This includes executing further non renewals of higher risk policies exiting the state of Georgia, where we're unable to get the rate needed to achieve our profit targets.

And being selective around bringing in attractive new business.

Overall add approximately flat premium.

We are reducing our projected risk exposure by.

Approximately 22% in 2024, which follows the approximately 26% reduction between 2022 and 2023.

This drives lower expected reinsurance and loss costs.

Shawn Tabak: We believe our insurance profitability actions in 2022, 2023, and 2024 set us up well for sustainable, profitable growth in 2025 and beyond. It's going to be an exciting time for the company.

We believe our insurance profitability actions in 2022, 2023, and 2024 set us up well for sustainable profitable growth in 2025 and beyond.

It's going to be an exciting time for the company.

Now to adjusted EBITDA seasonality, we've historically experienced higher insurance claims in the first and second quarters.

Shawn Tabak: We've historically experienced higher insurance claims in the first and second quarters. Therefore, as this illustrated chart shows, in 2024, we expect adjusted EBITDA to be negative in Q1, more negative in Q2, followed by profitability in Q3 and Q4. Overall, the midpoint of our 2024 adjusted EBITDA guidance is a $50 million increase compared to 2023. In 2024, we expect adjusted EBITDA to improve by approximately $10 million to $15 million in each quarter compared to the same quarters in the prior year. We are continuing to roll out additional price and deductible increases over the first half of 2024, which benefits the second half. And finally, given our progress and strong results, we secured an additional kind of reinsurance product to protect the balance sheet and reduce our exposure to weather. Earlier in 2024, we purchased $30 million of aggregate severe convected storm protection, which includes hail protection.

Therefore, as this illustrative chart shows in 2024, we expect adjusted EBITDA to be negative in Q1 more negative in Q2, followed by profitability in Q3 and Q4.

Overall, the midpoint of our 2024 adjusted EBITDA guidance is a $50 million increase compared to 2023.

In 2024, we expect adjusted EBITDA to improve approximately $10 million $15 million in each quarter compared to the same quarters in the prior year.

We are continuing to rollout additional price and deductible increases over the first half of 2024, which benefits the second half.

And finally, given our progress and strong results, we secured an additional kind of reinsurance product to protect the balance sheet and reduce our exposure to web.

Earlier in 2024, we purchased $30 million of aggregate severe convective storm coverage, which includes tailed protection.

Matthew Neagle: This means if we see a series of smaller storm or hail-related losses, similar to what we saw in Q1 and Q2 of 2023, we would have coverage added to what we already have for larger events. Generally, if hail events were to drive worse than expected claims volumes in 2024, we are now much better protected, increasing our confidence in the upcoming and our typical reinsurance renewals will occur in April. Thank you all for your time today. And I'll now hand over to Matthew to cover our KPIs and other business. Thank you, Shawn. Hello everyone.

This means if we see a series of smaller storm or hail related losses similar to what we saw in Q1 and Q2 of 2023.

We would have coverage, adding to what we already have for larger events.

Generally it hail events were to drive.

Worse than expected claims volumes in 2024, we are now much better protected increasing our confidence in the upcoming year.

And our typical reinsurance renewals will occur on April <unk>.

Thank you all for your time today, and I'll now hand over to Matthew to cover our Kpis and other business updates.

Thank you, Sean Hello, everyone I will start with our Kpis. The average number of companies was 30000 in the fourth quarter broadly similar to last quarter and prior year with continued housing market headwinds.

Matthew Neagle: I will start with our KPIs. The average number of companies was 30,000 in the fourth quarter, broadly similar to last quarter and prior year, with continued housing market volatility. Average revenue per company per month increased 84% to $1,277, versus $693 in Q4 2022, as we continue to monetize the insurance opportunity more effectively. We have 220,000 monetized services in the court, an increase of 3% despite the headwinds in the housing market and decline in corporate relocation.

Average revenue per company per month increased 84% to one $277 versus $693 in Q4 2022.

As we continue to monetize the insurance opportunity more effective.

We had 220000 monetize services in the quarter, an increase of 3% despite the headwinds in the housing market and decline in corporate relocations.

Matthew Neagle: Finally, average revenue per monetized service was $440, up 105% versus the prior year due to the growth in our higher value services, such as insurance and more. I want to take a moment to highlight our SaaS revenue within the vertical software segment. Industry home sales declined 18% in 2022, and another 19% in 2023.

Finally average revenue per monetize service was $448 up 105% versus prior year due to the growth in our higher value services, such as insurance and warranty.

I wanted to take a moment to highlight our SaaS revenue within the vertical software segment.

Industry home sales declined 18% in 2022.

In additional 19% in 2023.

Matthew Neagle: Despite this, our software and subscription revenue have remained broadly consistent over that period. While we are not assuming any improvement in the housing market in 2024, when the housing market recovers, it will be a tailwind for our business. Looking now at the insurance segment KPIs, which includes HOA or insurance carry. Our Warranty Business, And as of December 31st, it also included EIT. Gross rent premium was $112 million from 310,000 policies enforced in the fourth quarter. Policies in force declined 20% compared to the prior year, while GWP decreased 14%.

Despite this our software and subscription revenue have remained broadly consistent over that period.

While we are not assuming any improvement in the housing market in 2024, when the housing market recovers it will be a tailwind for our businesses.

Looking now at the insurance segment, Kpis, which includes HOA our insurance carrier.

Our warranty business and as of December 31. It also included <unk>.

Gross written premium was $112 million from 310000 policies in force in the fourth quarter.

Policies in force declined 20% compared to prior year, while GW P decreased 14%.

Matthew Neagle: This is due to non-renewals of higher risk policies being partially offset by increased premium per policy. Annualized revenue per policy increased to $1,120, driven by premium per policy increases and lower seating. Focusing now on HOA, our insurance carrier, annualized premium for policies increased 34% to $1,861, and premium retention was 96%, approximately 10 percentage points lower than prior year, driven by the non-renewals we.

This is due to non renewals of higher risk policies being partially offset by increased premium per policy.

Annualized revenue per policy increased to $1120 driven by premium per policy increases and lower ceding.

Focusing now on HOA, our insurance carrier.

Annualized premium per policy increased 34% to $1861.

Premium retention was 96%.

Approximately 10 percentage points lower than prior year, driven by the Nonrenewals we discussed.

Matthew Neagle: Our growth loss ratio was 36% in the fourth quarter, and I'll provide more insight on that on the next slide. We welcome comparisons of our gross loss and combined ratios to all other property centers. As I said, the gross loss ratio for Q4 was 36%, and for the full year 2023, it was 69. And that's even with a tough weather environment.

Our gross loss ratio was 36% in the fourth quarter and I'll provide more insight on that on the next slide.

We welcome comparisons of our gross loss and combined ratios to all other property century carriers as I said the gross loss ratio for Q4 was 36%.

And for the full year 2023, it was 69%.

And thats, even with a tough weather environment.

Matthew Neagle: Our combined ratio in the fourth quarter was 49%, and for the full year 2023, it was 88%. Here on slide 21, you can see the detail from the last two years, including the split between catastrophic weather and non-cat parents. You can see seasonality in the cat gross loss ratio, with the first and second quarters being the worst weather quarters, as well as the non-cat gross loss ratio improving throughout the 2023 year to 30% in the fourth quarter. This clearly demonstrates our ability to identify and price risk. You can see the year-over-year improvement of our gross combined ratio from 77% in Q4 2022 to 49% in Q4 2020. The point to highlight here is our unique data improves our ability to underwrite policies effectively, as we focus on the problems.

Our combined ratio in the fourth quarter was 49% and for the full year 2023, it was 88%.

Here on Slide 21, you can see the detail from the last few years, including the split between catastrophic weather and non cat perils you can see seasonality in the cash gross loss ratio with the first and second quarters being the worst weather quarters as well as the non cat gross loss ratio improving.

Throughout the 2023 year to 30% in the fourth quarter.

This clearly demonstrates our ability to identify and price risk you can see the year over year improvement of our gross combined ratio from 77% in Q4 2022 to <unk>, 49% in Q4 of 2023.

The point to highlight here is our unique data improves our ability to underwrite policies effectively as we focus on profit.

Matthew Neagle: We provide discounts to lower-risk policies and surcharges to higher-risk policies. Over time, the makeup of our book will lean towards lower-risk customers, as we incentivize those customers to come to us and as we avoid loss making. We continue to make great progress in leveraging this competitive advantage across the 22 states we write in and across different factors, but we are not done yet with key underwriting changes. In 2024, we have already filed an 18% increase in, and we will implement additional increases in states where we are further increasing our Overall, the rate changes we have made, that you can see on the left-hand side of this slide, have delivered a 30% CAGR in premium per policy between 2021 and 2021.

We provide discounts to low risk policies and surcharges to higher risk.

Over time, the mix shift of our book will lean towards lower risk customers as we incentivize those customers to come to us.

And as we avoid lossmaking.

We continue to make great progress in leveraging the competitive our competitive advantage across 22 states, we write in and across different factors and parents.

And we are not done yet with key underwriting changes in 2024, we have already filed an 18% increase in Texas, we will implement additional increases in states where appropriate.

And our further increasing our deductibles.

Overall the rate changes we have made that you can see on the left hand side of this slide have delivered a 30% CAGR premium per policy between 2021 and 2023, you can see on the right.

Matthew Neagle: You can see how, and given the 2024 rate increases, we expect the premium per policy to continue to rise. As we have said before, we believe the homeowner's insurance base is highly attractive, given how significantly we expect the TAM to grow for many years. Now, on to these guys. Malcolm Conner, our Warranty Business GM, shared insights into how we are well-positioned to become a leader at our last earnings in Q2. We have a lower cost of customer acquisition, offer a variety of products which are distributed through unique partners, and have unique advantages over the Porch platform.

And given the 2024 rate increases we expect premium per policy to continue to grow.

As we have said before we believe the homeowners insurance space is highly attractive given how significantly we expect the tam to grow for many years.

Now onto deep.

Deep dives Malcolm Connor, our warranty business, Jim shared insights into how we are well positioned to become a leader at our last earnings in Q2.

We have lower cost of customer acquisition offer a variety of products, which are distributed through unique partners and have unique advantages that the <unk> platform provides.

Matthew Neagle: Our warranty strategy is producing strong results. We entered the warranty space with the acquisition of American Home Protect in 2021, when it had $12 million in revenue. We achieved our 2023 revenue target, delivering $37 million in revenue and $7 million in adjusted EBIT. Noting 2023 adjusted EBITDA would have been even better but included certain remaining acquisitions. We expect warranty revenues to continue to grow as we expand distribution, with a 2024 revenue target of approximately $46 million. The business has improved its profitability substantially and anticipates approximately $16 million in adjusted EBITDA at a 35% adjusted EBITDA margin. Looking ahead, we target 2028 revenue of approximately $100 million, which equates to a 22% CAGR, with a 40% adjusted EBITDA margin as we invest in growth with attractive unit economics. Thank you, everyone. I'll now hand over to Jim. Thanks, Matthew. And hello, everyone.

Our warranty strategy is producing strong results, we entered into the warranty space the acquisition of American home protect in 2021, when it had $12 million of revenue.

We achieved our 2023 revenue target delivering $37 million in revenue and $7 million adjusted EBITDA.

Noting 2023, adjusted EBITDA would have been even better but included certain remaining acquisition costs.

We expect <unk> revenues to continue to grow as we expand distribution with a 2024 revenue target of approximately $46 million.

The business improved its profitability substantially and anticipates approximately $16 million and adjusted EBITDA at 35% adjusted EBITDA margin.

Looking at.

We get 2028 revenue of approximately $100 million.

Which equates to a 22% CAGR.

With a 40% adjusted EBITDA margin as we invest in growth with attractive unit economics.

Thank you everyone ill now handover to Jim.

Thanks, Matthew and Hello, everyone I'm, Jim World General manager of Rhino.

Jim Weld: I'm Jim Weld, general manager of RINO, and I have 15 years of title industry leadership experience. Prior to leading RINO, I spent more than three years as president of Zillow's title and escrow business. I was a client of Rhino and got to experience firsthand how important and impactful this software is. Rhino was built over many years around a single product called Rhino Live that is very popular in the title industry. After the 2021 acquisition by Porch, Rhino successfully transitioned from a one-hit wonder to a platform. Rhino is a leading provider of SaaS solutions for clients who are title and escrow agents, who collect and disperse funds during a real estate closing.

And I have 15 years of title industry leader experience prior to leading Rhino I spent more than three years as president.

Zillow as title and escrow business I've been a client of Rhino and got to experience firsthand, how important and impactful. This software is.

<unk> was built over many years around a single product called Rhino live that is very popular in the title industry.

After the 2021 acquisition by porch Rhino successfully transition from a one hit wonder to a platform.

Rhino is a leading provider of SaaS solutions for our clients, who are title and escrow agents, who collect and disburse funds during a real estate closing.

Jim Weld: Rhino's clients operate in a highly complex and regulated environment. Therefore, Rhino is critical to their control environment. Since inception, RINO has protected 24 million closings, with disbursements of about $8 trillion.

Rhino as clients operate in a highly complex and regulated environment.

Therefore, rhino is critical to their control environment.

Since inception, Rhino has protected 24 million closings, having disbursements of about eight trillion dollars.

Jim Weld: Back in 2021, more than 30% of all US residential purchases and home refinances were protected by Rhino software. Today, that number is approaching 40%. Our priorities are to build products that add value, save time, drive cost savings and efficiencies, and reduce the potential for error. Our four core modules on this one platform support this streamlined workflow and are outlined here on slide 27. Rhino Live is a module that automates bank transactions daily and alerts if payments fail to clear or do not reconcile to the accounting system.

Back in 2021 more than 30% of all U S residential purchases and home refinances were protected by Ryan of software.

Today that number is approaching 40%.

Our priorities are to build products that add value save time drive cost savings and efficiencies and reduce the potential for errors.

Our four core modules on this one platform support this streamlined workflow and are outlined here on slide 27.

Brian alive as a module that automates bank transaction daily and alerts if payments fail to clear or do not reconcile to the accounting system.

Jim Weld: Rhino A Sheet was launched last year, which identifies funds that remain in escrow after closing and streamlines processes to either return or a sheet funds to maintain regulatory compliance. Rhino OpEx integrates with many accounting systems and platforms and performs daily account reconciliation and alerts for a more expansive group of clients. And we recently released a major new product called RhinoVerify, which helps protect clients from fraudulent payment schemes. The real estate industry experienced almost $400 million in losses from various forms of fraud in 2022, and we can help reduce this risk. In 2023, our client retention was 93% with a net promoter score of 85 and an LTV to CAC of 10.6 times, all metrics we are very proud of and highlight the opportunity ahead. Rhino charges a transaction fee for every home and refinance closing that our clients perform.

Brian No a sheet was launched last year, which identifies funds that remain in escrow after closing and streamlined processes to either return or a sheet funds to maintain regulatory compliance.

Brian No opex integrates with many accounting systems and platforms and performs daily account reconciliation and alerts for.

For a more expansive group of clients.

And we recently released a major new product called Rhino verify which helps protect clients from fraudulent payment schemes.

The real estate industry experienced almost $400 million of losses from various forms of fraud in 2022, and we can help reduce this risk.

In 2023 or client retention was 93% with a net promoter score of 85, and an LTV to CAC of $10 six times.

All metrics, we are very proud of and highlights our opportunity ahead.

Brian Eno charges, a transaction fee for every home and refinance closing that our clients perform.

Jim Weld: Overall industry transaction volumes declined 62% since 2021, with refinance volumes declining more than 85% and home purchase volumes declining around 30%. Being primarily transaction driven, you might think RINO's revenues would have similarly decreased 62%. But during these last two and a half years, we've grown revenue and profits with a very bright future. You can see the overall declines in transaction volume through the Rhino platform over the last few years, from 4.3 million transactions in 2021 to 2.2 million transactions in 2023, a decline of 50%, even as our percentage of industry volumes has improved. As we roll out new products, we increase prices commensurate with the improved value we are providing. For example, the 2024 price increase of almost 30% was implemented with the launch of RhinoVerify in January this year. As you can see on the graph, as we delivered more value, prices increased by 97% between 2021 and 2023, more than offsetting transaction volume decline. Back in 2021, Rhino was acquired for $36 million.

Overall industry transaction volumes declined 62% since 2021 with refinance volume producing more than 85% and home purchase volumes declining around 30%.

Being primarily transaction driven you might think rhinos revenues would have similarly decreased 62%.

But during these last two and a half years, we have grown revenue and profits with a very bright future.

You can see the overall declines in transaction volume through the Rhino platform over the last few years from $4 3 million transactions in 2021.

The $2 2 million transactions in 2023 and declined to 50% even as our percentage of industry volumes has improved.

As we rollout new products, we increased prices commensurate with the improved value we are providing for.

For example, the 2020 for price increase of almost 30% was implemented with the launch of Brian will verify in January this year.

As you can see on the graph as we delivered more value prices have increased by 97% between 2021 and 2023 more than offsetting transaction volume declines.

Back in 2021, Rhino was acquired for $36 million, and we had announced and noted an expectation of it being a breakeven business after investments in product and marketing.

Jim Weld: And we'd announced and noted an expectation of it being a breakeven business after investments in product and marketing. We were able to greatly exceed that expectation, even as market transactions were cut in half. In 2023, we delivered $11 million in revenue and almost $6 million of adjusted EBITDA. The 52% adjusted EBITDA margin. Given the new product launch and impact on pricing, we expect Rhino to deliver $14 million of revenue and a 60% adjusted EBITDA margin, or $8 million, in 2024. This assumes 2024 has flat home sales and refinance volumes compared to 2023. We target medium-term revenue of approximately $60 million and approximately $35 million in adjusted EBITDA, which assumes industry transactions should broadly double while we double pricing through the continued execution against our product roadmap. So thanks, everyone. I'll hand it back over to Matt to wrap things up. Thanks, Jim. I appreciate it.

We were able to greatly exceed that expectation, even as the market transactions were cut in half.

In 2023, we delivered $11 million in revenue and almost $6 million of adjusted EBITDA.

52% adjusted EBITDA margin.

Given the new product launch and impact on pricing, we expect rhino to deliver $14 million of revenue.

And Ah, 60%, adjusted EBITDA margin or $8 million in 2024.

And this assumes 2024 has flat home sales in refinance volumes compared to 2023.

We target <unk>.

Medium term revenue of approximately $60 million and approximately $35 million and adjusted EBITDA, which assumes industry transaction should broadly double.

While we double pricing through the continued execution against our product roadmap.

So thanks, everyone I'll hand, it back over to Matt to wrap up.

Thanks, Jim I appreciate it.

Matthew Ehrlichman: We do hope that today's one-off targets and disclosures on our Rhino and Warranty Businesses business units are helpful. I just know that these are just two of our many successful businesses at Porch that leverage our platform to differentiate and grow and then contribute back to expanding Porch Group's advantages. Before closing, I want to take a step back and share our financial progress since we became a public company in December of 2020. Our business has grown more than six times over the last four years. We've increased revenue at a 60% rate, and guidance is approaching $500 million in revenue in 2024. This is driven by our insurance segment, which has grown from virtually nothing to over $300 million in revenue in 2023, and what was then a central part of our vision has certainly become a reality.

We do hope that today's one off targets and disclosures on our Rhino and warranty businesses business units are helpful. I. Just note that these are just two of our many successful businesses a porch that leverage our platform to differentiate and grow and then contribute back to expanding ports groups advantages.

Before wrapping up I want to take a step back and share our financial progress since we became a public company in December of 2020.

Our business has grown more than six times over the last four years.

We've increased revenue and a 60% CAGR and guidance is approaching $500 million in revenue in 2024.

This is driven by our insurance segment, which has grown from virtually nothing to over $300 million of revenue in 2023, and what was then a central part of our vision has certainly become a reality.

Matthew Ehrlichman: Similarly, Revenue Less Cost of Revenue is expected to grow to $233 million in 2024, a 44% four-year kegger. And finally, as we've said before, our Just Adiba dot guidance for the full year is $6 million at midpoint, a key milestone for the company to be profitable on a full year basis, and the $21 million of second half 2023 adjusted EBITDA, which was a $45 million improvement from the same six months in the prior year, shows that we are well positioned for significant profit growth potential. And, I'll remind you So just to the team, sincerely well done.

Similarly revenue less cost of revenue is expected to grow to $233 million in 2020 for a 44% four year CAGR.

And finally, as we've said before our adjusted EBITDA guidance for the full year is $6 million at the midpoint.

Key milestone for the company to be profitable on a full year basis.

And the $21 million in the second half of 2023 adjusted EBITDA.

Which was a $45 million improvement from the same six months in the prior year shows that we are well positioned for significant profit growth potential ahead.

And.

I'll remind you this amount of progress has been made during a time when the housing market contracted significantly so.

So just to the team sincerely well done and as you know we are just getting started.

Matthew Ehrlichman: And as you know, we are just getting started. Finally, after looking back on the last four years, I want to take a moment here to look ahead and provide an update on our strategy and why we're so bullish about the opportunity to build a truly great and enduring company. As you know, Porch powers software platforms that a large portion of the home inspectors, title agents, and loan officers use to run their business, which provides us with valuable introductions to consumers and insights into properties, creating long-term competitive modes.

Finally.

Looking back the last four years I want to take a moment here to look ahead and provide an update on our strategy and why we're so bullish about the opportunity to build a truly great and enduring company.

As you know a porch power software platforms, which a large portion of the home inspectors final agents and loan officers use to run their businesses, which provides us valuable introductions to consumers and insights into properties, creating long term competitive moats.

Matthew Ehrlichman: We believe we can build a large homeowners insurance company structured optimally to have lower volatility and higher margins. We'll update on the reciprocal exchange later this year, but today we'll share our three differentiators, which you can see here in yellow. First is advantaged underwriting.

We believe we can build a large homeowners insurance company structured optimally to have lower volatility and higher margins.

We'll update on the reciprocal exchange later this year, but today, we will share our three differentiators you can see here in yellow.

First is advantaged underwriting.

Matthew Ehrlichman: So, it was about two years ago, our insurance business, HOA, started using our unique property data to create a pricing advantage for well-maintained homes and increase prices for higher risk. We've made steady progress unlocking data and rolling out price increases across states to create value and improve our risk accuracy. We've seen measurable results with much opportunity ahead. Second, we want to be the best insurance partner for homebuyers. We offer insurance customers and homebuyers more than just insurance. Consumers can use our app or moving concierge service to make their move easy, including coordinating movers, utility set-up, security, home warranty, and TV and internet with the ability to compare reviews and prices.

So it was about two years ago, our insurance business HOA started using our unique property data to create a pricing advantage for well maintained homes and increased prices for higher risk loans.

We've made steady progress unlocking data and rolling out price increases across states to create value and improve our risk accuracy.

We have seen measurable results with much opportunity ahead.

Second we want to be the best insurance partner for homebuyers.

We offer insurance customers and homebuyers more than just insurance.

Consumers can use our app or moving concierge service to make their move easy, including coordinating movers utility setup security home warranty in TV and internet with the ability to compare abuse and prices.

Matthew Ehrlichman: It all adds up to a game-changing experience for a consumer to make what's typically a stressful time easier. We want to become known as the clear and best choice for home buyers needing insurance. And third, we provide consumers with whole home protection. This means offering homeowners insurance, a home warranty for everyday breakdowns, and a home app to provide appliance recall check monitoring.

It all adds up into a game changing experience for a consumer to make what's typically a stressful time easier.

We want to become known as the clear and best choice for homebuyers needing insurance.

And third we provide consumers with full home protection.

This means offering homeowners insurance home warranty for everyday breakdowns and the home app to provide appliance recall check monogram.

Matthew Ehrlichman: We can be there for the whole home journey, from move in to move out, with a variety of products designed to make sure our consumers' largest asset is protected. We're excited about the fantastic second half of 2023. We expect 2024 to be a very successful and fun year.

We can be there for the whole home journey from move in to move out with a variety of products designed to make sure our consumers largest asset is protected.

We're excited about the fantastic second half of 2023, we expect 'twenty 'twenty four to be a very successful and fun year, we have a clear and differentiated strategy. The right team a strong culture and a proven ability to execute consistently.

Matthew Ehrlichman: We have a clear and differentiated strategy, the right team, a strong culture, and a proven ability to execute consistently. With that, we'll wrap up the prepared remarks and pass the call to the operator. Please go ahead and open up the call for Q&A. At this time, I would like to remind everyone that in order to ask a question, press star, then the number one on your telephone keypad. Your first question comes from a line from Dan Kernels from Benchmark Company.

With that we'll wrap up the prepared remarks and pass the call to the operator. Please go ahead and open up the call for Q&A.

At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad.

Your first question comes from the line of Dan <unk> from Benchmark Company. Your line is open.

Daniel Louis Kurnos: Your line is open. Great, thanks. Obviously, really strong into the year. So congrats on the quarter, guys. Matt, I know you're not going to talk about the reciprocal or update us later, but can you at least just give us a sense of if you've gotten the filings done or the audit done on that front? Shawn, you can update me on some of the filings and all, but just let me quickly on reciprocity. Happy to talk about it, actually, Dan. It's just we don't yet have the timing.

Okay.

Great. Thanks, obviously really strong end to the year. So congrats on the quarter guys.

Matt I know youre not going to talk about the reciprocal or update US later, but can you at least give us a sense on if you've gotten a filing thunder.

<unk> done on that front.

John you can update on on some of filing cannot but just let me quickly on reciprocal happy to talk about it actually Dan is just we don't yet have timing.

Matthew Ehrlichman: As we talked about previously, we will update this as we go through the year, but we continue to have a close working relationship with our friends at TDI. We just continue to do a really nice job, and we're excited about it. We continue to be very confident that that's the right structure for the business and that it will happen here in due course. Yeah, with respect to Dan, I think your question is about the financials for the insurance entity, which is kind of part of that. That's on track.

As we've talked about previously we will update here as we go through the year, but we continue to have close working relationship with our friends of the DDI or just continue to do a really nice nice job.

And we're excited about it we continue to be <unk>.

Confident that thats, the right structure for the business and that that will happen here in due course.

Yeah with respect to that I think your question is about the financials for the insurance entity, which is kind of part of that.

Shawn Tabak: We're on top of it. And, you know, we'll do that in due course here in the month of March, which is when we'll, Got it. Thanks.

That's on track we're on top of it.

And we will do that in due course here in the month of March which is what we typically do it.

Got it thanks.

Matthew Ehrlichman: Um, so Matt, kind of, Shawn gave some really good numbers about risk reduction. And now that you've got the additional convective storm coverage and incremental, what looks like data expansion, I know you've guided to a, let's call it, PLATEX-CIG gross written premium this year. But, you know, what's your thought process now that you've de-risked the model so much on, you know, maybe getting a better understanding of, you know, you're waiting for the reciprocal, but just thinking about getting a little bit more aggressive on adding policy, especially with the rate you're getting right now? Yeah, I mean, it's, you know, it's an exciting time, as you know, as folks that have followed us know, and our, you know, our long-term investors know that certainly the focus for the second half of last year and for 2024 is profitability, right, we wanted to be able to make sure that we really demonstrated, you know, profits. Obviously, for 2024, we want to make sure that we're, it And so, you know, we've made the moves that we needed to make.

So Matt.

Hey, Sean gave some really good numbers about about risk reduction.

And now that you've got the additional convective storm coverage and incremental but looks like data expansion I know you've guided to let's call. It flat ex AIG gross written premium this year, but.

What's kind of your thought process now that you've de risked the model so much on maybe getting understanding you're waiting for the reciprocal, but just thinking about getting a little bit more.

Breath of on adding.

Policy, especially with the rate Youre getting right now.

Yeah I mean.

<unk>.

It's an exciting time as you know as folks that have followed us know our our long term investors know the certainly the the focus for the second half of last year focus for 'twenty 'twenty four is profitability right. We wanted to be able to make sure that we really demonstrated profits obviously for <unk> 'twenty 'twenty four we want to make.

Sure that were clearly seeing that we are profitable.

As a company on a full year basis, and so we've made the moves that we need to make now clearly you can see on the insurance underwriting results.

Matthew Ehrlichman: Now, clearly, you can see, you know, in the insurance underwriting results, that we are positioned, you know, to be able to grow, you know, with, we believe, very strong ongoing profitability. We think we've made the moves. And so while we've been in this period where we've been, you know, very specifically restricting your growth in certain geographies, you know, certainly, as we noted this in the prepared remarks, you know, we do expect to start unlocking some of those, some of those restrictions, you know, over the course of 2024, really setting up 2025 to be growing at a nice clip, you know, again, so that is in front of us And then Dan, on the first part of your question on risk reduction, just to make sure I emphasize a couple of points.

That we.

We are positioned to be able to grow.

We believe very strong ongoing profitability and we think we've made the moves and so while we've been in this period, where we've been very specifically restricting our growth in certain geographies certainly has been and we noted this in the prepared remarks.

We do expect to start unlocking some of those some of those restrictions.

Over the course of 'twenty 'twenty, four really to set up 2025 to be to be growing at a nice clip against that is in front of us.

And then Dan on the first part of your question on the risk reduction just to make sure I emphasize a couple of points.

Matthew Ehrlichman: You know, it is an important part of this because we have been able to, you know, even while maintaining, you know, we've been managing to roughly flat, you know, premium, year over year, which is kind of what we've been targeting. We've been able to significantly reduce, you know, the pool of risks that we have and just, you know, overall, the total amount of risks.

It is an important part of this because we.

<unk>.

Been able to even while maintaining <unk>.

We've been managing that roughly flat premium year over year is kind of what we've been targeting and we've been able to significantly reduce the pool of risks that we have and just overall the total amount of risks and so 23% is actually I think the final and precise number on what we reduce risk Yo here in 2020.

Shawn Tabak: And so, you know, 23% is actually, I think, the final and precise number on what we reduce risk, you know, here in 2024 versus 23. And 27%, you know, so that's a big shift in total risk. And that doesn't include, you know, the aggregate purchase that we've made of additional reinsurance around severe convective storms and hail, you know, that new $30 million purchase. And so our business just becomes much more, you know, much more predictable, much better protected, much lower risk, even as we have these, you know, these we think are clear and strong goals in front of us. Got it. Shawn, just maybe one quick one for you. 23 was a bit noisy from an event standpoint.

Four versus <unk>, 23, and 27% so.

That's a big shift in total risk.

And that doesn't include.

The aggregate purchase that we made of additional reinsurance around around severe convective storms and hail that new $30 million purchase and so our business just becomes much more much more predictable and much better protected much lower risk even as we have these these we think are clear and strong goals in front of us.

Got it.

Sean just maybe one quick one for you 23 was a bit noisy from an event standpoint, I'm just trying to get a handle on how we should be thinking about either operating or free cash in 2024.

Shawn Tabak: I'm just trying to get a handle on how we should be thinking about either operating or free cash in 2024. Yeah, so we were pleased to deliver for the full year at $34 million of operating cash in 2023. We ended the year with around $400 million of cash, cash equivalents, and investments, which is a very strong position, you know, HOA, our carrier had 52 million in surplus, Matt's point, that's a great basis for that business to be at with future profitability and the strong momentum we mentioned in the second half of the year. With respect to cash flow in 2024, the way to think about that is, First and foremost, most importantly, we From there, the other bits to think about: for us, we don't have a lot of CapEx. Historically, it's been, you know, less than $10 million. Taxes are very, you know, little for us.

Yes. So we were we were pleased to deliver for the full year at $34 million operating cash flow in 2023, we ended the year with around $400 million of cash cash equivalents and investments, which is a very strong position HOA.

Our carrier had $52 million of surplus to Matt's point, that's a great basis for.

For that for that business to be at with future profitability and the strong momentum we mentioned in the second half of the year.

With respect to cash flow in 2024, the way to think about that is.

First of course first and foremost most importantly, we guided to positive adjusted EBITDA for the full year around $6 million at the midpoint.

There are the other bits to think about for US we don't have a lot of capex.

Historically, it's been less than $10 million.

Taxes are very little for us.

Shawn Tabak: And, you know, we do have around just over $20 million of interest expense on the coupon. So those are the other factors that kind of play into it. You know, we have seen a big driver of that cash flow in 2023 is that we've seeded less. And so that drives better working capital. When you seed less, and we're able to seed less, obviously, because the book is that much more profitable, and so that provides a lot of that work and capital benefit because we're hanging on to the cash from the policyholders instead of you know giving it to the reinsurance partner. So, you know, I think we were starting 2024 in a really strong way. Yeah, we see the springboard, I guess, is what I'm getting at here.

<unk>.

We do have around just over $20 million of interest expense.

On the coupon. So those are the other factors that kind of play into it.

We have seen a big driver of that cash flow in 2023 is we've seeded less.

So that drives better working capital.

When you see less and we're able to cede less obviously because the book is that much more profitable.

And and so that that provides a lot of that working capital benefit because we're hanging on to the cash from the policyholders instead of.

Giving it to the to the reinsurance partner so.

I think we are starting 2024, and a really strong position.

Got it yes, we see the springboard I guess is what I'm getting at here. So alright, thanks, guys I appreciate it I'll step off.

Shawn Tabak: So, all right. Thanks, guys. I appreciate it. I'll step off.

Daniel Louis Kurnos: Thank you, Dan. I appreciate it. Your next question comes from a line John Campbell from Stevens. Your line is open. Hey guys, good afternoon.

Thank you Dan appreciate it.

Your next question comes from the line of John Campbell from Stephens. Your line is open.

Hey, guys. Good afternoon, congrats on a great quarter.

John Robert Campbell: Congratulations on a great quarter. Thanks, John. So on the extras, yeah, for sure. On the extra disclosures around warranty and Rhino, that was great. Those are solid businesses. If you guys hit the 2024 targets for warranty and Rhino, and then, obviously, you just sold EIG. So that's going to add back another 3 million in losses. That's 27 million in EBITDA. Obviously, you've got the corporate segment. If you take that out, I mean, you're going to basically need about 40 million outside of warranty and Rhino.

Thanks, John.

So on the extra yes for sure on the extra disclosures around warranty and Ryan No that was great. Those are solid businesses. If you guys hit the 'twenty 'twenty four targets for warranty and Rhino and then obviously just sold so that's gonna add back another $3 million of losses, that's $27 million.

EBITDA, obviously, you've got the corporate segment, if you take that out I mean, youre going to basically need about $40 million outside of warranty and Rhino.

Shawn Tabak: So a few quick questions here. First, on the bigger picture, are you largely done with the cost actions within corporate and how we should maybe think about that this year? And then, secondly, did it get to help us unpack that remaining 40 million? Is that mostly just HOA and an improved gross loss ratio versus last year? Yeah, I can take that one.

Quick questions here first on.

Just bigger picture are you largely done with the cost actions within corporate and how we how we should maybe think about that this year and then secondly, if you can help us unpack that remaining $40 million is that mostly just HOA and improve gross loss ratio versus last year.

Yes, I can take that one has some good questions in there.

Shawn Tabak: Some good questions in there. First, I'll say on the corporate cost actions: those have already been, those are done. But, you know, the benefits of the P&L will show in 2024 as those, as it annualizes, as opposed to, you know, 2023 was a partial year, but the actions themselves are, are done. With respect to insurance profitability, one of the things I think Matt mentioned in his prepared remarks is that in the second half of the year, which was really when the insurance profitability actions we talked about really kicked in, we were $45 million better And there's, you know, more, more of that that has already been set to come in 2024. So that just kind of maybe sets the tone a little bit.

First I'll say on the corporate cost actions.

Those are already those are done.

But.

The benefit to the P&L will show in 2024 as those as an annualize.

As opposed to 2023 was partial year, but the actions themselves are are done.

With respect to insurance profitability, one of the things I think Matt mentioned in his prepared remarks in the second half of the year, which was really when the insurance.

Profitability actions, we talked about really kicked in for $45 million better this year EBITDA than we were in the second half of 2022.

There is more and more of that.

That I've already been to come in 2024.

So thats kind of maybe set the tone, a little bit and then.

Shawn Tabak: And then, you know, the other, you know, some other drivers of profitability in our software businesses; we continue to roll out products and increase prices. As we, you know, create more value for our customers there, that'll, that'll benefit profitability. And a lot of those have already been launched, is the other thing.

The other the other.

Some other drivers of profitability in our software businesses, we continue to rollout products and increased prices.

As we are.

Create more value for our customers there.

That'll that'll benefit profitability and a lot of those have already been launched.

Shawn Tabak: It's just now we need to see it kind of roll through. The second thing I'll mention is, you know, we are also continuing to increase premium per policy. I think we mentioned today some Texas filings that we have done there. So those are the main drivers that get us to the profitability improvement. Okay, that's very helpful.

The other thing its just now we need to see it kind of roll through the second thing I'll mention is we are also.

To increases premium per policy.

We mentioned today, some Texas filings that we have done there so.

Those are those are the main drivers that get us to the profitability improvement.

Yes.

Okay. That's very helpful. And then kind of staying on that line of questioning you mentioned the 63% gross profit.

Shawn Tabak: And then kind of stay on that line of questioning. You mentioned the 63% loss ratio for this year, that's going to be based on the past five years. I think you said the weighted average. I'm guessing 2020 was lower than normal. But you know, the last two years have been pretty tough. It seems like it was way outside of the norm.

Loss ratio.

For this year, that's going to be based on the past five years I think you said weighted average I'm guessing.

In 2020 was lower than normal, but the last two years have been pretty tough it seems like what you all thought about.

The norm and then you've also got the new storm coverage, but the question here is how does that 63% gross loss ratio compared to the historical average beyond the past five years.

Shawn Tabak: And then you've also got the new storm coverage. But the question here is, how does that 63% gross loss ratio compared to the historical average beyond the past five years look? So the, A couple of things on the gross loss ratio. One is that we are, we think, set up quite well actually with that, given what we've done with reinsurance. So for example, last year, John, you know, was a tough weather year in terms of hail, particularly in Q2, and some weather in Q1.

So the.

Couple of couple of things on the gross loss ratio.

One is that we are.

We think set up quite well actually with that given what we've done with reinsurance. So for example last year John.

Tough weather year in terms of hail, particularly due to some weather in Q1, if that same year happened again this year again with this new tool.

Shawn Tabak: If that same year happened again this year, again, what this new pool of reinsurance provides us is aggregate cover. So while we typically and continue to get reinsurance for large event protection, we now have protection against a series of small events. We actually would have gotten the $30 million back in additional cover, you know, if last year were to happen again.

Hello reinsurance provides us is an aggregate cover so while we typically and continue to get reinsurance for large event production. We now have protection against a series of small events, we actually would have gotten gotten the $30 million backup of additional cover of last year were to happen again, and so thats certainly just lowers our risk for the <unk>.

Shawn Tabak: And so that certainly just lowers our risk for the similar type, you know, of weather. As we look further back in time, you know, whether it was more than five years ago, and the gross loss ratio was consistently around this type of a level, but I would note that things have changed quite a bit. So when we put in place higher deductibles, So this last year, there was a 2% when inhaled deductible that's been raised to 3% when inhaled.

<unk> type of weather as we look further back in time, whether more than five years ago and the gross loss ratio was.

Was.

<unk>.

Consistently around this type of a level, but I would note the things have changed quite a bit so when we put in place higher deductibles.

Last year, there was a 2% wind and hail deductibles.

Raised a 3% when we held deductible that.

Shawn Tabak: That's important in terms of what impact it makes on a gross loss ratio and perhaps underappreciated. And so, you know, that certainly is a driver that helps us this year. Yeah, I think the other thing that we're seeing in the book here is improvements in underwriting and risk selection. And so I think, as, you know, five years ago, obviously HOA wasn't using porch data at that point in time.

That's important.

In terms of what impact it makes on a gross loss ratio and perhaps underappreciated.

And so that certainly is a driver that helps us helps us this year.

Yes, I think the other thing that we're okay very helpful.

I was just can add that yes. The other thing that we're seeing in the book here.

Improvements in underwriting and risk selection.

And so I.

I think as you know.

Yes.

Five years ago.

Obviously HOA wasn't using ports data at that point in time and so.

Shawn Tabak: And so and then, you know, as well as some of the other things that Matt mentioned there. So, you know, really the combination of the things we talked about, increases in premiums, you know, underwriting actions, deductible, various exclusions, you know, non-renewing certain policies, I think have set us up really well for this year on that front. Okay, thank you guys. Thanks, John. Your next question comes from a line of Josh Siegler from Cantor Fitzgerald. Yeah, hi, guys. Good afternoon.

And then.

Well as some of the other things that Matt mentioned there so.

Really the combination of the things we talked about increases in premiums underwriting actions deductible.

This exclusion.

Non renewing certain policies.

I think I have set us up really well.

For this year on that front.

Okay. Thank you guys.

Thanks, Sean.

Your next your next question comes from the line of Josh <unk> from Cantor Fitzgerald Your line.

No.

Yes, hi, guys. Good afternoon. Thanks for taking my question and congrats on a really strong quarter here.

Joshua Michael Siegler: Thanks for taking my question. Congratulations on a really strong quarter here. First, I just wanted to dive into, you know, with near-term profitability on the horizon, how are you really thinking about future capital allocation? And could M&A really be on the table as we progress through 2024 and 2025? I'll take the M&A one first.

First I just wanted to dive into it you know.

With near term profitability on the horizon.

Or are you really thinking about future capital allocation and M&A really be on the table as we progressed through an important plant.

I'll take the M&A, one burst I would not expect any M&A or material amount of M&A here in the 2024 year, we have one more year in front of us of just really being heads down focused on making sure we execute.

Matthew Ehrlichman: I would not expect any, you know, M&A or a material amount of M&A, you know, here in the 2024 year. We have, you know, one more year in front of us of just really being heads down, focused, you know, making sure we just execute flawlessly and produce a really solid, clean year. So that's where we're at. Now, does M&A open up again, you know, for us ahead? We do think that's a capability that we have as a company. And we're looking forward to the right time to be able to turn that engine back on.

Flawlessly and produce a really solid clean year.

So that's where we're at now does M&A open up back up for US ahead, we do think Thats key.

Capability that we have as a company and we're looking forward to the right time that we'll turn that engine background.

Shawn Tabak: Yeah, with respect to capital allocation, you know, I think the good news is that I think we have a lot of great places to deploy capital and earn a very attractive risk-adjusted return. First and foremost, you know, the growth of the business in and of itself, I think, is driving very strong returns. And then we also have, you know, the unsecured debt, which is due in a couple of years. I think we have a number of options for that one in particular and plenty of time to take care of it. But and then, you know, other opportunities as well. I won't go into them further today.

Yeah with respect to capital allocation.

The.

Good news is I think theres, a lot of great places to deploy capital and earn a very attractive risk adjusted return.

First and foremost the.

The growth of the business.

And of itself.

I think as.

As.

Is driving very strong returns.

And then we also have the unsecured debt, which is due in a couple of years I think we have a number of options for that one in particular.

And plenty of time to.

Take care of it.

But and then other other opportunities as well I will go into further today, but from a capital allocation perspective, I think we do have a number of very attractive.

Matthew Ehrlichman: But from a capital allocation perspective, I think we do have a number of very attractive opportunities, and Beth, I appreciate the color there. And then I also wanted to dive a little bit deeper into the cross-sell opportunity between, you know, the software side and the insurance side and kind of how you're thinking about that evolving, especially as the macro starts to ease a bit. Sure, I can tell you that we're excited about the access that our software businesses give us to help homebuyers. We're also excited about the focus of our insurance strategy around helping homebuyers. We're also excited about the app and the way it can bring together a really nice experience.

Investments.

We are looking at there.

Got it appreciate the color there and then I also wanted to dive a little bit deeper in the cross sell opportunity between you know the software bottoming occurring side and kind of how youre thinking about that evolving, especially as the macro starts to ease a bit.

Sure I can I can take that.

We're excited about the access that the our software businesses gives us to help homebuyers were also excited about the focus of our insurance strategy around helping homebuyers were also excited about the apps in the way of the App can bring together really nice experience.

Matthew Ehrlichman: And so that's core to what we're doing. We continue to see year-over-year improvements and kind of the things that we measure around that strategy. And then, as was mentioned here, the market has declined, and that does impact our ability to cross sell because there are fewer people who are buying homes.

And so that's that's all core to what we're doing we continue to see year over year improvements in kind of the things that we measure around that strategy.

And then as if it was mentioned here that the market has declined and that does impact our ability to cross sell because there is fewer people who are who are buying homes.

Matthew Ehrlichman: As of now, we're not anticipating growth this next year, but we do expect growth to come, and that's going to be, Okay, thanks, guys. And congrats. Thank you. Your next question comes from a line by Jason Helfstein from Oppenheimer. Your line is open, and on. So we just have two questions, one, give us anything on January's House Trends and how much that would help software. Is that a point you can give?

As of now we're not anticipating growth. This next year, but we do expect growth to come in thats going to be a tailwind for our business.

Okay. Thanks, guys and congrats again on the result.

Thank you.

Your next question comes from the line of Jason <unk> from Oppenheimer. Your line is open.

Hey, this is Steve on for Jason.

We just have two questions. One can you give us anything on.

January in terms of improving housing trends and how much that would help the software business, maybe maybe those without a data point you can give and then secondly on rate increases I know you talked about them with Texas for example.

Jason Stuart Helfstein: Secondly, on rate increases. I know you talked about them with tax. Is there any metric you can give on how many users?

There any metric you can give on how many users.

Matthew Ehrlichman: Written premium or geography, on prices this year or thus far. Sure, can we repeat the first question? Yeah, I'll take it. I already have it. So we were just wondering. I got it. It's good.

Gross written premium or geographies or you've increased on prices. This year, thus far thank you.

Sure Charles.

Sorry, the first can we repeat the first question.

Yes, I'll take it I got it so we were just wondering.

Matthew Ehrlichman: So in January, specifically, you know, obviously, anytime there's more, you know, housing sales is going to help our business. But again, just to reiterate what we are expecting and what our guidance represents is flat year over year, we think that it'll bounce around a little bit month to month, the market's still kind of, you know, settling in. We're not obviously seeing deterioration at a market level, you know, you know, year over year at this point, but certainly it helps whenever we have months that our home sales pick up. I wouldn't know just one other January macro question. I'm sure people are curious about just, you know, here more recently, just around the Texas related wildfires and tied to your Texas question. Texas. Obviously, our hearts go out to the people in Texas and Oklahoma affected by the recent wildfires.

Alright got it got it it's good.

So on January specifically.

<unk>.

Obviously anytime theres more housing sales that can help our business, but again just to reiterate what we are expecting and what our guidance represents as we expect flat year over year, we think that it'll bounce around a little bit from month to month, the market still kind of settling in and we're not obviously seeing deterioration in at a market level.

Year over year at this point, but but certainly it helps whenever we have months that where home sales picks up I would note just one other January macro question that I'm sure people are curious about here more recently just around the Texas Road wildfires and tied to your Texas question.

Texas.

Obviously, our hearts go out to the people in Texas and Oklahoma by by the recent wildfires I would want to note that we have not.

Matthew Ehrlichman: I want to note that we have not seen any claims, actually zero claims to date, and we do not expect that will be a meaningful event for us. I think it continues to demonstrate our ability to select risks effectively. As we think about Texas broadly, Texas is our largest state, so when we have an 18% rate increase, we've mentioned before that it's actually meaningfully our largest state.

Seen any claims actually zero claims to date and we would not expect there will be a meaningful event for us I think it continues to demonstrate our ability to select risks effectively.

As we think about <unk>.

Texas broadly, Texas, our largest state so when we have an 18%.

No rate increase we've mentioned before that it's actually meaningfully our largest state that does that does show up in the overall results.

Matthew Ehrlichman: That does show up in the overall results. Your next question comes from the line of Danny Pfeiffer from JP Morgan. Your line is open.

Yeah.

Your next question comes from the line of Dani <unk> from JP Morgan Your line is open.

Unknown Executive: Hey guys, thanks for the questions. For the first, the sale of EIG, do you maybe see any further opportunity with pruning other non-core assets within the Porch portfolio? Or maybe this was more of a one-off transaction and then there would be a follow-up?

Hey, guys. Thanks for the questions for the first.

The sale of AIG do you, maybe see any further opportunity with pruning other noncore assets within the porch portfolio.

Or maybe it was just more of a one off transaction and then I have a follow up thank you.

Matthew Ehrlichman: Let's think about it as more of a one-off transaction will always be pragmatic, you know, and thoughtful, you know, in our strategy, both, you know, on acquisitions or divestitures. I suppose I don't expect to see, you know, many divestitures because we really like our businesses and are excited about where they're at. EIG was a special case where we could, you know, we could sell a business, you know, and it was very aligned with our strategy. So in terms of divestitures, that's how I would see that. And then on the second committee, sorry about that. No, no, please go ahead.

Yeah.

So think about it as more of a more of a one off transaction will always be.

<unk> and thoughtful in our strategy both.

On acquisitions or divestitures I suppose I don't expect to see see many divestitures, because we really like our businesses and are excited about where they're at where they're at.

<unk> was a special case, where we could.

We could sell a business.

And it being very aligned with our with our strategy. So.

In terms of the divestitures thats, how I would see that.

Yeah.

And then on the second can you maybe.

Sorry about that.

Shawn Tabak: Yeah, so for the second, can you maybe unpack the seasonal first half 24 just to give you a bit of loss guidance and maybe how much the Aeon Reinsurance Agreement and the severe storm coverage you purchased are kind of helping there? Yeah, I can cover that. So in the presentation today, in the preliminary marks, I think I showed a slide which shows the typical seasonality of our adjusted EBITDA. And that's mainly driven by, you know, historically higher claims in the second quarter. We talked about some of the things we did this year to further protect that with, you know, different types of reinsurance cover that would have protected, in particular, the hailstorms we saw in 2023. And then I think I also mentioned the prepared marks on a year over year basis.

Please go ahead.

Yes, so for the second can you maybe unpack seasonal first half 'twenty four adjusted EBITDA loss guidance, maybe how much is the reinsurance agreement and the severe storm covered you purchased just kind of helping there.

Yeah, I can cover that too in the presentation today in the prepared remarks, I think I showed a slide which shows the typical seasonality.

Our adjusted EBITDA, and that's mainly driven by historically higher claims in the second quarter.

<unk> talked about some of the things we did this year to further protect that with <unk>.

Different types of <unk>.

Reinsurance reinsurance cover that would have protected the in.

In particular, the Hailstorms we saw.

In 2023.

And then I think as I also mentioned in prepared remarks on a year over year basis. If you were just compare for example, Q1 last year or two what we're expecting for Q1. This year same thing for Q2 in each of the quarters, we're expecting between $10 million to $15 million.

Unknown Executive: If you just compare, for example, Q1 last year to what we're expecting for Q1 this year, same thing for Q2 and each of the quarters, we're expecting between a $10 to $15 million improvement year over year. And most of that is driven by the, you know, the things we talked about today, which are the, you know, profitability actions and insurance, which is driving really strong run-rate profitability in that insurance business. Again, that's the $45 million year over year that we saw in the second half of 2023, as well as the price increases and, you know, more of the cost, you know, management items rolling through in 2024. Um, you know, uh, so those are the main drivers of those as opposed to like the AON or other things like that.

Improvement year over year.

And most of that is driven by the things we talked about today, which are.

The.

Profitability actions in insurance, which is driving really strong run rate.

Profitability in that insurance business again, thats, a $45 million year over year that we saw in the second half of 2023 as well as the price increases and more of that cost.

Management items rolling through in 2024.

So those are the main drivers of those as opposed to like the Aon.

There are other things like that the Aon just as it is.

Shawn Tabak: The AON just is, it'll be over a period of time, um, uh, because that's a, a long-term agreement we have, uh, with our partners at AON. Gotcha. Thanks.

It will be over a period of time.

Because that's a long term agreement, we have with our partners at Aon.

Yes.

Got you thanks.

Ryan John Tomasello: Thank you. Your next question comes from a line by Ryan Tomasello from KBW. Your line is open. Hi, everyone.

Thank you.

Our next question comes from the line of Ryan Tomasello from K B W. Your line is open.

Hi, everyone. Thanks for taking the question.

Ryan John Tomasello: Thanks for taking the questions. Just following up on the capital structure, Shawn, maybe you could just discuss some of the paths you have to efficiently address the 2026 convert maturity. You know, obviously, you bought back a little bit here at a discount.

Just following up on the capital structure, Sean maybe just discussed.

Some of the past and how to efficiently addressing the 2026 convert maturity.

Obviously, you bought back a little bit here at a discount thats something that youll.

Shawn Tabak: Is that something that you'll continue to opportunistically chip away at? And also, just remind us from a corporate structure perspective, if you would have any access to, a sizable chunk of liquidity in each way, to help with those maturities depending on how the reciprocal walls work, just to try to understand all the moving pieces here. Yeah, for the capital structure. Yeah, yeah, thanks for the question. So I would say, first of all, as I mentioned, we ended the year in a strong position with about $400 million in cash and Cash Equivalents, and within that, there was also a roughly $50 million surplus note between HOA and Porch Group.

Continued opportunity Opportunistically chip away at.

And also just remind us from a corporate structure perspective.

If you have any access to.

The sizeable chunk of liquidity at each way.

To help with those maturities depending on how the reciprocal evolves just trying to understand all the moving pieces here.

For the capital structure. Thanks, Yes.

Yeah, Yeah. Thanks for the question.

So I would say first of all as I mentioned, we ended the year in a strong position with about $400 million.

Cash cash equivalents and investments.

Within that there is also a roughly $50 million.

Shawn Tabak: That provides a coupon and an intercompany payable back to Porch Group. The other thing, obviously, we just talked about AON and EIG; those deals collectively contributed an additional $35 million of cash in January of 2024 that we'll see on the Q1-24 balance sheet. So I think, and then finally, I guess the last point there is that HOA is in a really healthy position with $52 million of surplus at the end of 2023. So, and then, you know, we talked about generating adjusted EBITDA and profitability actions in 2024, so you know that that's also driving it north, you know, going forward. With respect to taking care of the debt, I'm not going to get into, you know, any specifics.

Surplus note between HOA and poor true.

That provides a coupon.

<unk>.

And then our company payable back to ports group.

The other thing obviously, we just talked about Aon and AIG those deals collectively contributed an additional $35 million of cash and January of 2024 that we will see on the.

Q1, 'twenty four balance sheet.

So I think and then finally I guess the last point there is that HOS.

<unk> is in a really healthy position with $52 million of surplus at the end of 2023.

And then.

We talked about generating adjusted EBITDA and profitability actions in 2024 so.

That's also driving it north.

Going forward.

With respect to taking care of the debt I am not going to get into any specifics, but I think what I would just say is I'll leave it at.

Shawn Tabak: I think what I would just say is, you know, we have a number of options in how to take care of that. And, you know, we sitting here today, we have, you know, over two years to do that. So, plenty of time on our side there as well. Okay, great. Thanks for that color.

A number of options in how to take care of that and we sitting here today, we have over two years to do that so plenty of time on our side there as well.

Okay.

Okay, great. Thanks for that color and then.

Ryan John Tomasello: And then, I mean, in terms of the 24 guide, you know, given all the noise this year, the past year from Vestu and lower revenue in the back half. You have the resale, the insurance, and the sale of the insurance agency this year. Just trying to understand like what level of organic revenue growth the 2024 guidance applies as we kind of normalize for those different factors. Yeah, I mean, I it's all organic. I would label it as all organic.

In terms of the 24 guide just given all the noise this year past year from <unk> and lower ceding on revenue in the back half.

You have the resale the insurer.

The sale of the insurance agency. This year I'm, just trying to understand like what level of organic revenue growth.

With 2024 guidance implies if we kind of normalize for.

Those different factors if that makes sense.

Yes.

All I would label it as all of our organic I mean I think.

Shawn Tabak: I mean, I think with what we're doing with our insurance book, where we're seeding less quota share, in particular. Quota share is the element of reinsurance that we've cut back, And we're able to do that because we have significantly increased the profitability of the book. So I mentioned the, you know, risk, which is, you know, the probable maximal loss of the insurance term for it, will have increased, and will have gotten better by 50% collectively almost between 2022 and 2024. And that, along with the profitability actions, go hand in hand. And that's what, you know, puts us in a position where we could have less quota share reinsurance on the book.

With what we're doing with our insurance book, where were ceding less quota share in particular quota share is the element of reinsurance that we've cut back on.

And we're able to do that because we have significantly increased the profitability of the book So I mentioned.

Yes.

Risk, which is the <unk>.

Probable maximum loss of the insurance term for it.

Will it increase.

Gotten better by 50% collectively almost between 2022 and 2024.

And that along with the profitability actions go hand in hand, and Thats what.

Puts us in a position where we could have less quota share reinsurance in the book.

Shawn Tabak: And that will continue to some extent in 2024 as well as the price increases that we mentioned, the premium for policies. So that's how I would think about it. I think all the levers kind of come together when we're thinking about the insurance business and its profitability and, you know, what that means in terms of reinsurance.

And that will continue to some extent in 2024 as well as the price increases that we mentioned the premium per policy increases.

That's how I would think about it I think its all all the levers kind of come together when we're thinking about the insurance business and the profitability.

What that means in terms of reinsurance as well.

Shawn Tabak: Thanks for taking the question. Thank you. Your next question comes from a line of Jason Kreyer from Craig Hallam. Your line is open. Great, thank you guys. I wanted to ask about property data. I know you've been using that for the last two years now.

Got it thanks for taking the question.

Thank you.

Your next question comes from the line of Jason <unk> from Craig Hallum. Your line is open.

Great. Thank you guys I just wanted to ask on property data I know <unk> been using that for the last two years now I'm. Just wondering if you can give an overview of where you've seen that data to provide more of a pricing edge or any numbers around how frequently that data being used in quoting and then if you can give any indications of where you plan to use that.

Matthew Ehrlichman: Just wondering if you can give an overview of where you've seen that data provide more of a pricing edge or any numbers around how frequently that data is being used in quoting, and then if you can give any indications of where you plan to use that more going forward. Thank you.

More going forward. Thank you.

Sure I can take that.

Matthew Ehrlichman: You know, we're excited about the advantages that data can provide, and we're already seeing measurable results in our own underwriting. And it's going to be a key ongoing opportunity for us. There's a variety, actually, of ways that we can use the data. We have actually done a number of filings in multiple states using the data. Um, you know, and it's, it's things that you would expect if you were to start to imagine what you would want to know, right? So it's things tied to the age and condition of the roof. It's tied to the type of plumbing.

We're excited about the advantages that the data can provide.

And we're already seeing measurable results and our own underwriting and it's going to be.

Key ongoing opportunity for us.

There is a variety actually.

Ways that we can use the data we have actually done a number of filings in multiple states using the data.

It's things that you would expect if you were to start to imagine what would you want to know right. So it's things tied to.

Age and condition on the roof.

Tied to the type of plumbing, it's tied to.

Matthew Ehrlichman: It's tied to, you know, where the water heater is located so that in the event something happens, what type of damage is going to take place. We think we're early in our ability to take advantage of this data. There are still a lot of data points that we think we can get about the interior of the home, and we're excited about it. And we have run out of time for our question and answer period. I will now pass the call over to Matt for his closing remarks. Well, first, thanks, everybody, for the questions at the time. Thanks, everybody, for being here. Mostly, I just want to thank the Porch team for their efforts and for the truly significant progress that's been delivered. Also, to our long-term investors, you know, who do see the vision and where we are and all that's ahead for us. We look forward to speaking with you all again at our Q1 earnings in May. Until then.

Whereas.

The water heater located so that in the event something happened what type of damage is going to take place.

We think we're early in our ability to take advantage of this data there is still a lot of data points that we think we can get about the interior of the home.

And we're excited about that.

And we have run out of time for a question and answer period I will now pass the call over to Matt for closing remarks.

Well first thanks, everybody for the for the questions and the time, thanks, everybody for being here.

Mostly I just want to thank the <unk> team for their efforts and for the truly significant progress that's been delivered.

Also.

Through our long term investors, who do see the vision and where we are and all of that is ahead for US. We look forward to speaking you all with you all again in our Q1 earnings in May until then.

Yeah.