Seattle-based vertical software company Porch Group announced Tuesday (Nov. 7) its financial results for the third quarter of 2023.
The company reported total revenue of $129.6 million, representing a 67% increase compared to the same period last year. Adjusted EBITDA for the quarter was $8.8 million, an improvement from the prior year. Despite a GAAP net loss of $(5.7) million, Porch Group remains optimistic about its ongoing profitability.
CEO Matt Ehrlichman expressed satisfaction with the company’s financial performance, highlighting the adjusted earnings of $8.8 million. He emphasized Porch Group’s commitment to achieving profitability, citing various underwriting actions and cost reduction initiatives across the company.
“We continue to focus on ongoing profitability, with underwriting actions including premium per policy increases, non-renewing policies where our data suggests they are higher risk and deductible increases in our insurance business, launching new software modules coupled with price increases in our software businesses, capital allocation toward businesses that are generating strong returns like our warranty business, and cost reduction initiatives across the company.” he said.
The increase in total revenue was driven by the insurance segment, which saw a 195% year-over-year growth. The revenue less cost of revenue for the quarter was $76.6 million, accounting for 59% of total revenue.
In 2021, Porch acquired Homeowners of America (HOA) and its related subsidiaries, moving the company into homeowners insurance. HOA faced uncertainty recently after a reinsurance contract it had resulted in a charge of $48.2 million. HOA was also placed under regulatory supervision in connection with that case, according to Porch.
Porch Group also reported positive operational highlights for the third quarter. The company achieved a gross loss ratio of 39% and a combined loss ratio of 58%, demonstrating the impact of its unique data in insurance pricing. Additionally, Porch Group was approved in 12 states to use its property data in insurance pricing, allowing for better risk accuracy and policy pricing for customers.
Looking ahead, Porch Group has revised its full-year 2023 guidance based on current market conditions and positive business trends. The company expects revenue to reach approximately $415 million, representing a 50% year-over-year growth.