Q4 2024 Porch Group Inc Earnings Call
Web site at IR coarse grades don't come.
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, expects management to be used as of today, February 25, 2025. We do not undertake any obligation to update or revise this information.
Additionally, we will make forward-looking statements about our expected future financial or business performance or conditions, business strategy and plans. These statements are subject to risk and uncertainty, which could cause our actual results to differ materially from these forward-looking statements.
Please refer to the information on this slide and in our SEC filings for important disclaimers. We will reference both GAAP and non-GAAP financial measures on today's call. Please refer to today's press release for reconciliations of non-GAAP measures to the most comparable GAAP measures discussed during this annual call, which are available on our website.
As a reminder, this webcast will be available for replay, along with a presentation shortly after this call, on the company's website at ir.horseshoes.com.
Speaker Change: Joining me here today are Matt Ehrlichman, Sports Group CEO, Chairman and Founder, Shawn Tabak, Sports Group CFO, and Matthew Neagle, Sports Group COO. Thank you. I'll now turn the call over to Matt for key updates.
Good afternoon, everyone. Thank you for joining us.
Speaker Change: We demonstrated exceptional progress this last quarter toward our objective of being a new kind of homeowner's insurance company differentiated by one advantaged underwriting with unique data
Speaker Change: Two, early access to homebuyers, and three, a customer experience that makes the move and home simple.
Speaker Change: Our vertical software powers 40% of the home inspection industry, 40% of title transactions, and operates in key sectors including mortgage and roofing.
Speaker Change: Our data platform now includes home factors for 90% of U.S. properties and early insights into 90% of U.S. homebuyers.
Speaker Change: We are a leader nationwide in providing moving labor and expanded long-term partnerships with the major moving companies, utilities, insurance agencies, and more.
Speaker Change: With these advantages, we aim to build one of the largest and most profitable homeowners insurance companies. I believe this update today will demonstrate we're on our way to doing so.
Speaker Change: So, now on to the key highlights, and there are a number of them that I'm excited to share.
Speaker Change: Three years ago, we set an important goal to hit adjusted EBITDA profitability for the second half of 2023 and the full year 2024. I am proud to share that we achieved that goal, delivering $7 million in adjusted EBITDA for the full year 2024.
Speaker Change: This means that in the fourth quarter, profitability was meaningfully better than guidance, adjusted EBITDA was a record $42 million, net income was $30 million.
Speaker Change: The progress we've made is even more clear as we look ahead. For full year 2025, we are providing adjusted EBITDA guidance of $60 million at the midpoint, a 15% adjusted EBITDA margin, and more than a $50 million increase over 2024.
Speaker Change: More, we are increasing our outlook for revenue, gross profit, and adjusted EBITDA for 2025.
Speaker Change: 2025 revenue guidance is $400 million at the midpoint. Going forward, our revenue is much higher quality, given our transition away from holding weather risk, toward a simpler commission and fee based, higher margin model.
Speaker Change: Case in point, we are guiding to approximately 80% gross margins in 2025.
Speaker Change: At our December Investor Day, we highlighted our 2026 target of $100 million of adjusted EBITDA. Given this is our first earnings call since our Investor Day, I do want to confirm that we are on track and remain confident in achieving this goal.
Speaker Change: Importantly, we expect FORGE to generate cash for shareholders this year. We expect to deliver positive adjusted EBITDA every quarter going forward.
This is an exciting time for the company.
Speaker Change: So the end of 2024 marked an important moment for PORCH. On January 1st, 2025, we completed the formation of the PORCH Insurance Reciprocal Exchange, which we may refer to as PIRE, and the sale of our Homeowners of America insurance carrier into PIRE.
Speaker Change: This transforms the financial results for poor group shareholders to be more predictable and higher margins.
Speaker Change: The member-owned design of the reciprocal means both PYR and HOA will operate as a separate entity outside of Porch Group. Porch will receive commission and fees for operating PYR, benefiting from higher margins and more predictable earnings.
Speaker Change: I do want to zoom out here just for a second and provide some context on our journey. In the last few years we have focused on profitability and I certainly I'm pleased with the progress. We've now entered this next chapter, one focused on growing rapidly while simultaneously expanding margins.
Speaker Change: Now that we've completed the optimal structuring of our insurance business, we've reopened geographies and reactivated distribution partners.
Speaker Change: We've already seen substantial growth in new business premium here in Q1.
Speaker Change: Thank you to our employees for your work to get us here. Thank you to our shareholders for your support. We are excited to deliver spectacularly for you all. Now, Shawn, over to you to provide the financial details.
Thank you, Matt, and good afternoon, everyone.
Shawn Tabak: As a reminder, Q4 2024 revenue has a tough comparison due to two items. First, in the fourth quarter of 2020, in the fourth quarter, excuse me, of 2023, revenue was $26 million higher due to lower reinsurance seating following the Vestu matter.
Speaker Change: And second, in the first quarter of 2024, we sold EIG, our legacy in-house agency.
Speaker Change: With that consideration, total revenue in the fourth quarter of 2024 was $100.4 million, a $14.2 million, or 12% decrease from the prior year.
Speaker Change: In addition, in the fourth quarter of 2024, there was a $5 million non-recurring year-end adjustment, which reduced revenue and adjusted EBITDA, related to the wrap-up of some legacy reinsurance complexity in life events.
Speaker Change: Absent these non-recurring items, the business performed well and has strong 20% organic growth trends led by the insurance sector.
Speaker Change: Revenue less cost for revenue was $89.3 million, an 89% margin.
Q4 Adjusted EBITDA was $41.8 million.
Speaker Change: That's a $30.1 million increase over the prior year and ahead of our expectations driven by strong execution, risk selection, capital allocation, and cost control.
Speaker Change: I want to take a second to show appreciation and highlight the performance of the team. This is quite a significant improvement in the Justity Bida'a year-over-year.
Speaker Change: Gross written premium was $112 million, broadly flat compared to the prior year, with premium per policy increases offset by the divestiture of our legacy insurance agency, EIG, in the first quarter of 2024.
Speaker Change: The reciprocal approval and formation took a bit longer than originally anticipated, but we reopened for growth late last year.
Matthew will talk through the progress shortly.
Speaker Change: Now looking at our results by segment. In insurance, revenue was $72 million. The items I discussed above for total revenue all apply to the insurance segment.
Speaker Change: Absent these non-recurring items, the insurance segment performed well and has strong 29% organic growth trends, driven by increases in premium per policy.
Speaker Change: In vertical software, revenue was $29.3 million, a 6% increase from the prior year driven by SAS price increases.
Moving on to adjusted EBITDA.
Speaker Change: Insurance adjusted EBITDA was $48.8 million, a $17.2 million increase over the prior year, driven by our insurance profitability actions and advantage underwriting, which have helped us select the right risks to insure.
Speaker Change: Vertical software adjusted EBITDA was $5 million, a $5.3 million increase over the prior year, driven by the SAS price increases and strong cost control.
Speaker Change: There was a 500 basis point increase in revenue less cost revenue margin in this segment.
Speaker Change: Finally, corporate expenses were $12 million, $8 million lower than the prior year as we continue to manage costs and see the benefit of the actions we've taken.
Speaker Change: Now let's take a step back and look at our full-year performance.
Speaker Change: Total revenue for the full year 2024 was $437.8 million, a 2% increase over the prior year driven by the insurance segment.
Speaker Change: As a reminder, in the prior year, the Vestu Matter resulted in approximately $55 million of incremental revenue in the 2023 comparative period.
Speaker Change: Revenue list cost of revenue was $212.2 million, representing a margin of 48%.
Speaker Change: Adjusted EBITDA was $7.2 million for the full year. Better than our expectations, driven by strong execution across all segments.
Speaker Change: This was an increase of $51.7 million over the prior year.
Speaker Change: Gross written premium decreased from the prior year, driven by the divestiture of EIG and Q1. Otherwise, we managed HOA gross written premiums to our plan of roughly flat compared to the prior year.
Now moving on to the balance sheet.
Speaker Change: There are several benefits from the shift toward the commission and fee-based insurance services business model. It is simpler, higher margin, and asset-like.
Speaker Change: Excluding HOA, we ended 2024 with cash, cash equivalents, and investments of $70 million.
Speaker Change: At that time, Porch Group also held a $49 million surplus note in HOA that yields a coupon equal to 9.75% plus over.
Speaker Change: Following the sale of HOA to PYRE on January 1, 2025, as of month-end January, cash and investments was approximately $93 million, and the surplus note balance increased to $106 million.
Speaker Change: Additionally, following the period end, there was positive progress with our VESTU claims. We now expect to receive approximately $7 million of additional cash later in Q1 from the VESTU bankruptcy process, with the potential to promote more over time.
Speaker Change: Additionally, our litigation against other parties remain ongoing and we will keep you posted as things develop.
Speaker Change: At the SOFR current rates, these surplus notes would generate approximately $15 million of interest income annually for port shareholders, which substantially offsets our debt interest base.
Speaker Change: Now looking ahead to 2025. First I wanted to remind about a few changes starting in Q1 consistent with what we laid out in our investor day.
Speaker Change: First, we will continue to focus on generating cash for the porch shareholders as the primary measure of value creation.
Speaker Change: While we will consolidate PYR and HOA into our GAP financials for the time being, adjusted EBITDA will exclude the results of PYR and HOA as they do not contribute to cash available to Port Sheralds.
Speaker Change: Adjusted EBITDA will include results of the segments that contribute to generating porch catch, which will include insurance services, software and data, and consumer services.
Speaker Change: offset by corporate expenses. We will call this porch shareholder interest and provide guidance on this basis for revenue, gross profit, and adjusted EBITDA.
Speaker Change: We expect to introduce new KPIs in 2025, which align with our Go Forward business segments.
Speaker Change: Starting with Q1 2025, we plan to report growth profit instead of revenue-less cost of revenue.
Speaker Change: This requires a reclassification of approximately $10 million of depreciation and amortization expense into cost of revenue, predominantly in the software and data segment.
Speaker Change: Even with this change, we expect gross margins to be substantially improved in 2025.
Speaker Change: Now, for our 2025 Guidance for PORCH Shareholder Interest. We expect 2025 revenue of $390 million to $410 million, better than previously communicated.
Speaker Change: This is a slight decrease year-over-year given the shift to the lower-revenue but higher-margin Reciprocal Operating Services model.
Speaker Change: Case in point, we expect gross profit to grow approximately 50% compared to 2024 revenue less cost of revenue.
Speaker Change: We expect 2025 gross profit of $310 million to $325 million, with an associated margin of approximately 80%, highlighting the more profitable and predictable model.
Speaker Change: Overall, we expect adjusted EBITDA of $55 million to $65 million.
Speaker Change: At the midpoint, this is approximately a 15% Adjusted EBITDA margin and a $53 million increase over 2024.
Speaker Change: Our Higher Adjusted EBITDA Guidance includes increasing sales and product investments in the first half of 2025 to drive faster growth in 2026 and beyond across each of our sectors.
Speaker Change: I'll now hand over to Matthew to discuss a strategic update and review our KPIs.
Matthew Neagle: Thank you, Shawn. I'd like to start by highlighting our four focus areas to drive revenue growth for the business.
Matthew Neagle: First is to scale insurance premiums. We expect the massive homeowner's insurance market to increase rapidly for years to come. We focus on homebuyers and low-risk homes.
Matthew Neagle: Homebuyers make up about 40% of homeowners' insurance purchases each year. Low-risk homes are what everybody in the industry wants. We just have the advantage to identify and price them more effectively, given our unique property data.
Matthew Neagle: Toward the end of Q4, after the PIR approval was received, we restarted premium growth after a period of managing premiums to flat.
Matthew Neagle: We've been reopening geographies, hiring sales leadership, reengaging legacy agency partners, and adding new agencies to expand distribution.
Matthew Neagle: Momentum is building and in fact we saw 50% growth in new business premium in Q4 and already in Q1 we are seeing new business double versus the prior year.
Matthew Neagle: Most of our premiums though will come through renewals so rate increases make a big impact.
Matthew Neagle: We will continue to take rate and expect average rate and premium for policy nearing $3,000 at the end of 2025.
an increase of approximately 20% over the prior year.
Matthew Neagle: Overall, we're excited about the momentum towards our $500 million gross rate and premium target for 2025. We expect premium growth to continue to accelerate throughout the year.
Matthew Neagle: The second area of revenue growth is innovation in our vertical software businesses.
Matthew Neagle: Q4 key advancements include an AI-powered assistant to accelerate inspection report building, advanced reporting capabilities for Rhino,
Flowify Verify for streamlined income and employment verification.
in a new measurement-as-a-service product in our roofing software.
Matthew Neagle: Retention and satisfaction rates remain strong, and as the housing market stabilizes, we expect solid revenue growth.
Matthew Neagle: Next is the growth of our data business. Launched in 2024, Home Factors has the potential to become a big and profitable business. Our work with HOA and third-party carriers clearly indicates that Home Factors improves risk selection.
Matthew Neagle: We're adding new home factors each quarter, increasing value for Pyre and HOA, and driving third-party revenue.
Matthew Neagle: Lastly, there is a real opportunity to access more homebuyers and help them with more high-value home services.
In December, we launched Moving Place.
A Marketplace That Simplifies Movies.
Matthew Neagle: We also signed new warranty and moving partnerships, which expands our access to high-value home buyers early in their journey.
Matthew Neagle: Strategically, this is important as it creates more leads for our insurance agency partners and incentivizes them to sell higher in HOA insurance products.
Matthew Neagle: Now to KPIs. 2024 KPIs are presented on the legacy segments and will be updated in Q1 2025 to reflect the go-forward business segments.
Matthew Neagle: Looking at the legacy KPIs for Q4 2024, first the average number of companies was 27,000. Average revenue for company per month was $1,236.
Matthew Neagle: We had 219,000 monetized services in the quarter, and the average revenue per monetized service was $390.
Matthew Neagle: Looking now at our insurance segment KPIs, as a reminder, this segment currently includes HOA and warranty.
Matthew Neagle: From Q1 2025, warranty will be included in our consumer services segment.
Matthew Neagle: Also, when comparing year-over-year figures, a reminder that we divested our insurance agency, EIG, in January 2025.
Matthew Neagle: In Q4 2024, gross rent premium was $112 million, roughly flat compared to the prior year.
Policies in force was 206,000.
Matthew Neagle: As we have previously discussed, our strategy has been to use tactics such as targeted non-renewals to manage a decline in policies over the last couple of years while maintaining premium roughly flat.
Matthew Neagle: Annualized revenue per policy was $1,396, an increase of 25% from the prior year, driven by premium per policy increases.
Matthew Neagle: Focusing on HOA, the annualized earned premium per policy increased 31% to $2,446. Premium retention was 105%.
Lastly, HOA is healthy.
Matthew Neagle: with a record surplus as it transitions to the reciprocal structure.
Matthew Neagle: As of December 31, 2024, it held $157 million of surplus combined with non-admitted assets that include a portion related to porch sales held by HOA.
Matthew Neagle: In Q4, our gross loss ratio was exceptional at 21%, down from 36% last year. Our attritional loss ratio sets the bar for the industry at 16%, compared to 30% in the prior year.
Matthew Neagle: November and December saw the lowest planes volumes for many years.
Matthew Neagle: We have effectively targeted and retained the homes with lower risk over the last few years. Also note that the insurance carrier has no exposure in California.
Matthew Neagle: For the full year, we delivered a 65% gross loss ratio, lower than 69% in the prior year, despite Hurricane Beryl, one of HOA's larger weather events.
Matthew Neagle: As you can see in the chart, we improved despite the increase in catastrophic weather costs driven by a 22% attritional loss ratio compared to a 34% in the prior year.
Matthew Neagle: Gross combined ratio was 79% in 2024, an improvement from 88% in the prior year, and a fantastic result for the year.
Matthew Neagle: All of these metrics reflect our success in targeting and retaining lower-risk homes through the strength of our advantaged underwriting and strategic actions over the last couple of years.
I'll now hand it back to Matt for closing remarks.
Thank you, Matthew.
Matthew Neagle: We believe the numbers speak for themselves and that our performance ahead will clearly demonstrate the value in what we're building. We believe the homeowners insurance industry presents a huge and exciting growth opportunity with highly sticky and valuable customers.
Matthew Neagle: With our insurance services, commission and fee structure, we're positioned for consistent and sustained profitable revenue growth with approximately 80% expected gross margins and mitigation from weather volatility.
Our unique data drives long-term pricing and underwriting advantages.
Matthew Neagle: We laid out our objectives clearly in our recent Investor Day to achieve $100 million of adjusted EBITDA in 2026.
Speaker Change: scale our insurance business to three billion dollars in premiums over time?
to build a large and defensible data business.
Speaker Change: grow our software and consumer services divisions and generate a consistent and increasing amount of cash for shareholders.
Speaker Change: I'll wrap up by reinforcing the most important messages from today. First, delivering record quarterly adjusted EBITDA of $42 million in Q4 2024 and full year adjusted EBITDA of $7 million.
Speaker Change: Second, we increased our 2025 Adjusted EBITDA guidance to $60 million at the midpoint and reaffirmed our $100 million 2026 Adjusted EBITDA target.
Speaker Change: 3. The formation of PYRE and the sale of HOA occurred as expected.
Speaker Change: Four, we opened geographies and commenced our premium growth plan and are seeing strong early signs.
Speaker Change: We expect some fantastic years ahead. Thank you again to our shareholders for your continued support. And with that, John, please open up the call for questions.
Speaker Change: Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star followed by the number one on your telephone keypad. If you would like to withdraw your question, simply press star one again. If you are called upon to ask a question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question.
Speaker Change: Your first question comes from the line of Dan Kernis with The Benchmark Company. Please go ahead.
Great, thanks. Good afternoon.
Speaker Change: Matt, the investor day was a little over two months ago and we're already starting to tweak numbers up in 25. So can we just get some more color on what's informing that enthusiasm that you have out of the gate specific segments, gross written premium trends? Is there anything to start would be helpful?
Speaker Change: Yeah, maybe I'll kick it off and Shawn, go ahead and layer in.
Shawn Tabak: I think a few things. One, you know, the plan has just come together as we had intended, so actually getting through the formation of the reciprocal, completing the sale, you know, of HOA's plan. Obviously, we would, you know, leave a bit of cushion there until those events actually occurred, and so it's nice to see those things, again, happening as expected.
Shawn Tabak: Two, Matthew mentioned just as we, you know, activated our growth plan, you know, we're just seeing really good signs, you know, there. And so, you know, certainly comforting, exciting to see, you know, see the growth happening as intended and as expected.
Shawn Tabak: And then lastly, I would just say, across the board, you know, we're seeing, you know, strong execution, continued strong execution, you know, from our business units and the leaders.
Shawn Tabak: We feel really good about where the team is, and just the day-to-day, week-to-week, month-to-month execution. Anything else that you'd like to layer in there, Shawn?
Shawn Tabak: Yeah, I'll just maybe touch on the insurance segment in particular. I think at the Investor Day we talked about about a 40% conversion of premium, insurance premium, to revenue there.
Shawn Tabak: We also talked about our ability to toggle up that conversion rate.
Shawn Tabak: as well with other opportunities. And so as we progress with Pyre,
Shawn Tabak: To Matt's point, given the very strong, you know, out-the-gate early progress on a number of things, we're seeing those opportunities ahead. The other point I'll make there is that is a very high gross profit margin as well as adjusted EBITDA margin business that we're able to drive.
Shawn Tabak: That's super helpful. If I can just follow up on that point, and maybe Matthew Neagle, if you want to step in too, just you commented on new business being strong. Just any way to give us some directional color on agencies turn back on, how receptive they are to driving prior and new business.
Shawn Tabak: and just, you know, obviously that's going to layer into how we should think about surplus and take rate. So just directionally some initial, I know it's really early, but directional thoughts would be helpful. Thank you.
Shawn Tabak: Yeah, so we, as Shawn mentioned, we turned back on growth towards the end of Q4, just to share, give you a little color of...
what that means.
First, we reopened geographies.
Shawn Tabak: took a closer look at our commission plans to make sure we were incenting the type of behavior that we wanted. We started to invest in our growth team, which is a team that goes out and onboards new agents and engages our existing agents.
Shawn Tabak: We hired a phenomenal leader from Farmers. He was a VP of growth there. He led a region that did over three billion dollars in premium.
Shawn Tabak: Agents are excited about Pyre. There's a number of exciting things about the Port Insurance product in terms of the value it can provide.
Shawn Tabak: What we're seeing is just people getting reengaged with HOA after a period where we were quiet, you know, intentionally quiet.
Shawn Tabak: So a lot of it is just being open for business.
Shawn Tabak: telling folks we want to grow, and all of that is encouraging. And so we're seeing it in the number of policies, the number of new policies.
Shawn Tabak: And we're certainly seeing it in the number of agents that we're onboarding. And then, of course, as we onboard those agents, there's sort of a ramp-up period before they get fully appointed, and then they start running the business, and that business starts to get active.
Shawn Tabak: It is early, but I think we're encouraged by how things are shaping up at the gate.
Thank you. Bye.
Thank you. Thank you.
Shawn Tabak: All right, I'll jump back in queue, but it's a nice start to the year, guys, obviously. Well done. Thanks, Jeff.
Speaker Change: Your next question comes from the line of Chase and Helpsign with Oppenheimer. Please go ahead.
Thanks, I guess.
Speaker Change: I want to say similar, but just how are you thinking about leaning more into growth or leaning into growth now that...
Fire is closed.
I think you addressed some of the likes.
Speaker Change: the, I guess, organic benefits you'll get, and some of the uncertainty around HOA is kind of gone. But just what proactively can you do kind of with your own investments to drive more growth in the business?
Thank you.
Speaker Change: I'll take that, Matthew and Shawn, if you guys want to layer on.
Wham!
Speaker Change: You know, some of what I want to reiterate is what I just shared and what we talked about at the investor day, but you know, our go-to-market in insurance is through
Speaker Change: agents and there are many many more agents that are out there than are currently engaged or appointed with HOA and so
Speaker Change: A lot of the focus is just how do we go reactivate that agent channel and it's
Speaker Change: It's a lot of blocking and tackling, it's getting people on the team, it's having conversations with agents.
Speaker Change: and it's getting the right incentives in place which we feel
Speaker Change: We have done and are able to do there's also a little bit of benefit that we've talked about just from you know The natural rate increases that we're getting
A lot of those from 2024 are still flowing through.
In 2025, we already have some planned.
for 2025. So from an insurance standpoint...
Speaker Change: You know, it'll take some time and it requires us to execute.
Speaker Change: But kind of the path is there for us, and the goal is $500 million gross written premium for this year, $600 million for next year, but our real ambition is we think we can get to $3 billion over the next 5 to 10 years.
When we look beyond the insurance business, we are starting.
Speaker Change: to invest in more growth. Shawn did mention that we've introduced some investments into sales and marketing.
Speaker Change: in particular in our consumer services group, but also some in our software group, and then also starting to invest more in just the strategic product roadmap that we have where
Speaker Change: We're trying to consistently roll out new features that are then paired with price increases. And we think we have a good enough understanding of kind of the mechanics there and the economics where, you know, all of those investments that
Speaker Change: We're going to do this year, you know, we went through and did the analysis and found really good returns.
Speaker Change: I still think, you know, insurance is a big opportunity for us, but there is growth opportunity across other parts of the business as we look, you know, 25, certainly into 26 and 27.
Speaker Change: Two quick things, Jason, just to layer on. Matthew mentioned the additional investments that we're making. The return profile of those investments is really attractive.
Speaker Change: And so we set a certain threshold for what kind of returns we want to be able to deploy more capital in our businesses, and it's attractive. And so we're excited, clearly, to be able to deploy more capital and still increase EBITDA guidance like we are.
Speaker Change: And then the second thing is, I would just say that the market is set up really well, you know, for us. We're not assuming anything in our, you know, in our plan here in terms of big housing market bounce backs or anything. So if an ad that happens, that will just be tailwinds, you know, for us.
Speaker Change: But in the insurance industry as well, it's a very attractive market dynamic where certain carriers are wanting to write less. We've done the work to get out ahead and to get things priced correctly so that we can generate the types of margins that we are and add surplus to the insurance business.
Speaker Change: And with the reciprocal structure, we get to participate in this attractive insurance market, which will just naturally lead to solid growth.
Speaker Change: Your next question comes from the line of John Kompnell with Ethan. Please go ahead.
John Kompnell: Hey guys, good afternoon. Congrats on a great quarter and a good close to the year.
Thank you.
John Kompnell: It was great seeing you guys raise your EBITDA guidance, I mean obviously in just two months, your stock is trading at a
Yeah, we're...
John Kompnell: Sure, happy to. We're certainly seeing, as I think as we just talked about,
John Kompnell: Really great progress and momentum in the business, and the execution has been really, really wonderful.
Speaker Change: And, you know, it really is, I think, what you're thinking about there, John. A hundred million dollars is a really important target for us and the Just Adiba to offer next year.
Speaker Change: The business is certainly marching towards that. Today, we're happy to, you know, increase the 2025 guidance to $60 million and, you know, we'll provide, we'll leave it there for now.
Speaker Change: Let me add one more thing, which is, John, it is really just about not getting over our skis. I think you said it really well.
Speaker Change: We don't want every quarter, you know, to be updating on the next year's.
Speaker Change: You know, guidance, that's not our plan. Just to update on this year's guidance, we feel good, like I said, about how we're set up, you know, for 2026, but we'll, you know, we'll update and change that number, you know, as we, as we get closer to 2026.
Speaker Change: That makes sense. You know how we do on the sell side. We'll run away without your numbers, so smart move.
Speaker Change: On home factors, I saw on the press release you guys are, you know, growing the pipeline for testing. That's great to hear.
Speaker Change: I'm curious how the product is performing versus maybe your original expectations and then for the 2026 targets, if you can maybe shed any kind of light on the home factors rev you've kind of baked in or just maybe more generally just the shape of the curve or maybe the trajectory of growth out to 2026.
Speaker Change: Yeah, I can speak to that. You know, we see very strong evidence in using it in our own
Fundraising and pricing.
We're now engaged with multiple carriers in a deep way.
Speaker Change: to either test or to begin using the Home Factors data in the early signal is there is interest that it does have an impact on their pricing in underwriting. The other point I would just mention is we're still building out
Speaker Change: more home factors. We release home factors every quarter, really faster than that. And I think, you know, we'll have over 100 by the end of 2025.
Speaker Change: Investing in the go-to-market teams, in fact, we just identified a leader that will start in the next month or so.
And that will accelerate our pipeline building.
Speaker Change: We have communicated that it is a laddering process of getting more and more carriers engaged, and the sales cycle does take time. You know, you've got to work through some of these larger carriers, you've got to get a test.
And then they got to kind of roll it out.
So we haven't assumed really much revenue for 2025.
Speaker Change: We start to assume some in 2026, and then we see a bigger opportunity.
Speaker Change: in 27 and 28. And right now we're just we're focused on executing and adding more home factors in talking to more carriers. It's still early but I would say the energy
Speaker Change: internally and the people we're talking to is very strong and encouraging.
Okay, it's very helpful. Good work guys. Thanks.
Thanks, John.
Speaker Change: Your next question comes from the line of Ryan Tomasello with KBW. Please go ahead.
Ryan Tomasello: Hi everyone, thanks for taking the questions. I wanted to dovetail on the home factors topic and Matthew, I know you kind of already touched on it, but just
If you can provide some more color on what.
Ryan Tomasello: would there still is to chop on building out the go-to-market for that product? You mentioned, I think you just hired a new sales leader there, but what that go-to-market will look like, how much of that is being baked into some of the investments you're alluding to here in 2025?
Ryan Tomasello: Yeah, it's certainly an investment area in 25. It's not a massive infrastructure right now that's needed. It's a sales team that can go, you know, there's four to five hundred targets.
Ryan Tomasello: You know, our goal is to try to start conversations with all of them in some form, and then, you know, the proof of concepts and other things take time. There's some, you know, sales engineer work in order to support the test and roll it out, but...
Ryan Tomasello: The actual infrastructure is all done via APIs, and it's very scalable. You know, over time, we're already starting to kind of envision, you know, variations of products to meet particular use cases that we may invest in as those come up. Bye.
Ryan Tomasello: It's within our means, you know, we just got to go execute, build out the team, and then just...
But the interest is certainly there.
Speaker Change: Great. And then I recall from the event today, it sounds like you are still interested in opportunistic M&A. So, Matt, I'm just curious where that ranks on the list of growth priorities currently. And, you know, among the ways that you can leverage M&A, it seems like scaling...
Speaker Change: The insurance business is an interesting way to lean on that in organic areas. So just curious how you're thinking about M&A from here.
Speaker Change: Yeah, certainly to be clear, you know, the guidance we put out today is all organic. And so M&A would be incremental to what we're laying out.
Speaker Change: You know, we are at a point where we can begin to start to, you know, talk about that again. We do believe we have a strong set of capabilities, the ability to integrate.
Speaker Change: acquisitions effectively and to be able to accelerate growth given kind of a broad set of capabilities that we have.
Speaker Change: I agree with you. I think there's different ways that you could use the M&A capabilities to accelerate what we're doing in the insurance industry. And obviously, as we progress there, we'll provide more updates, but more to come. Nothing to share in terms of details here today.
Great. Thanks, guys.
Thanks, Ryan.
Speaker Change: Your next question comes from the line of Jason Pryor with Crate Column Capital Group. Please go ahead.
Kyle: Great. Thank you. This is Kyle for Jason. Maybe just to start, can you just talk about your expectations to grow policies and, you know, what a cadence for PIP grow that 2025 progressions could look like?
Kyle: Sure, I can. So in terms of, you know, we're working towards the $500 million gross premium target, gross rate premium target.
Kyle: We are assuming an increase in policy due to rate increases that are already filed that are still flowing through and also ones that we have planned for this year.
Kyle: In terms of growth, we aren't expecting a lot of growth in 2025. It's mostly flat.
Kyle: And then we'll start to see that pick up, you know, as we head into 2026.
Well, we're excited, right? You know, thanks. Yeah, go ahead.
Speaker Change: I guess maybe just secondly, you know, we've seen a bit more mild start to the real estate market this year, so just curious your thoughts on how this potentially impacts course trends of 2025 and beyond.
Speaker Change: I mean, we're conservative as it relates to just, you know, our assumptions that are built into our guidance as compared to kind of third party, you know, estimates. We think that's, you know, the, you know, the prudent place to kind of, you know, pick, you know, housing market growth. And like I said, we're not assuming, you know, much in terms of housing market bounce back. And like, you see in our guidance.
Speaker Change: You know, a flat year in the housing market, our businesses can perform really nicely. And when the housing market does come back and it will normalize, obviously we'll benefit from that. But yes, we are being conservative as compared to what third parties expect at this point.
Great, thank you.
Speaker Change: As there are no further questions at this time, I would like to turn the call back over to Matt for closing remarks.
Matt Ehrlichman: I just would say I appreciate the questions. I appreciate the time. You know, this is, you know, a great moment for the company. We worked hard to be able to get the business structured what we believe is optimally, and you can start to see it in the results. We're clearly excited to get back together, you know, here for Q1 earnings.
Speaker Change: And then to continue to share more as we progress through an important 2025. With that, we will close the call. Thank you all very much.