Sentiment Analysis of the earnings transcript to help figure out if there are any bullish or bearish sentiments that could be gathered from it. We're doing ML and AI based analysis on the earnings call to get some more insights.
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| We are also excited about the app and the way the app can bring together a really nice experience |
| With respect to capital allocation, I think the good news is I think we have a lot of great places to deploy capital and earn a very attractive risk adjusted return |
| We have lower cost of customer acquisition offer a variety of products which are distributed through unique partners and have unique advantages that the Porch platform provides |
| As we have said before, we believe the homeowners insurance base is highly attractive, given how significantly we expect the TAM to grow for many years at |
| The business improved its profitability substantially and anticipates approximately $16 million in adjusted EBITDA at 35% adjusted EBITDA margin |
| Our warranty strategy is producing strong results |
| We continue to make great progress in leveraging this competitive advantage across the 22 states we write in and across different factors in payrolls |
| And as a result of the work we have done, financial results were strong and exceeded expectations |
| The point to highlight here is our unique data improves our ability to underwrite policies effectively as we focus on profit |
| Revenue less cost of revenue grew 82% to $80 million, $20 million above guidance |
| I just note 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 |
| In 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 2023 profitability target we set 2 years ago with second half adjusted EBITDA of $21 million |
| And we are able to do that, because we have significantly increased the profitability of the book |
| 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 |
| We expect 2024 to be a very successful and fun year |
| This clearly demonstrates our ability to identify and price risk |
| This product increases the size of our market opportunity and provides a higher margin offering |
| We’re excited about the fantastic second half of 2023 |
| As Matt mentioned, we are extremely pleased to accomplish our second half 2023 adjusted EBITDA target, despite market headwinds |
| And so our business just becomes much more predictable, much better protected, much lower risk even as we have these we think are clear and strong goals in front of us |
| 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 |
| I think have set us up really well for this year on that front |
| 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 |
| We’ve made steady progress unlocking data and rolling out price increases across states to create value and improve our risk accuracy |
| I mean, it’s an exciting time, as you know, as folks that have followed us know and our long-term investors now, certainly, the focus for second half of last year, focus for 2024 is profitability, right? We wanted to be able to make sure that we’ve really demonstrated profits |
| So it was about 2 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 homes |
| Now clearly, you can see on the insurance underwriting results that we are positioned to be able to grow with, we believe, very strong ongoing profitability |
| 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 year and our typical reinsurance renewals will occur on April 1 |
| In 2024, we expect adjusted EBITDA to improve approximately $10 million to $15 million in each quarter compared to the same quarters in the prior year |
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| 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 |
| Vertical Software adjusted EBITDA loss was $300,000 with continued market pressure in moving services |
| Premium retention was 96%, approximately 10 percentage points lower than prior year, driven by the non-renewals we discussed |
| The average number of companies was 30,000 in the fourth quarter, broadly similar to last quarter and prior year with continued housing market headwinds |
| Overall industry transaction volumes declined 62% since 2021, with refinance volumes reducing more than 85% and home purchase volumes declining around 30% |
| Industry home sales declined 18% in 2022, an additional 19% in 2023 |
| EIG 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 |
| This includes executing further non-renewals and higher risk policies exiting the state of Georgia where we are unable to get the rate needed to achieve our profit targets and being selective around bringing in attractive new business |
| And then as was mentioned here, the market has declined and that does impact our ability to cross-sell because there is fewer people who are buying homes |
| Gross written premium was $112 million, 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 |
| 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 |
| Being primarily transaction driven, you might think Rynoh’s revenues would have similarly decreased 62% |
| You can see the overall declines in transaction volume through the Rynoh 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 |
| Policies in force declined 20% compared to prior year, while GWP decreased 14% |
| So, for example, last year, John, was a tough weather year in terms of hail particularly, due to some weather in Q1, hit that same year happened again this year |
| So, I mentioned the risk, which is the probable maximum loss of the insurance for it |
| But the last 2 years have been pretty tough |
| And that’s even with a tough weather environment |
| If you guys hit the 2024 targets for warranty and Rhino and then obviously just sold EIG, so that’s going to add back another $3 million of losses, that’s $27 million in EBITDA |
| As we look further back in the time, weather, more than 5 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 |
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