PORCH GROUP, INC. – 10-Q – Management's Discussion and Analysis of Financial Condition and Results of Operations

This Quarterly Report and the documents incorporated herein by reference contain
forward- looking statements as defined by the Private Securities Litigation
Reform Act of 1995. These statements are based on the beliefs and assumptions of
management. Although the Company believes that its plans, intentions and
expectations reflected in or suggested by these forward-looking statements are
reasonable, the Company cannot assure you that it will achieve or realize these
plans, intentions or expectations. Forward-looking statements are inherently
subject to risks, uncertainties and assumptions. Generally, statements that are
not historical facts, including statements concerning the Company's possible or
assumed future actions, business strategies, events or results of operations,
are forward-looking statements. These statements may be preceded by, followed by
or include the words "believes," "estimates," "expects," "projects,"
"forecasts," "may," "will," "should," "seeks," "plans," "scheduled,"
"anticipates" or "intends" or similar expressions.

Forward-looking statements are not guarantees of performance. You should not put
undue reliance on these statements which speak only as of the date hereof.
Unless specifically indicated otherwise, the forward-looking statements in this
Quarterly Report do not reflect the potential impact of any divestitures,
mergers, acquisitions, or other business combinations that have not been
completed as of the date of this filing. You should understand that the
following important factors, among others, could affect the Company's future
results and could cause those results or other outcomes to differ materially
from those expressed or implied in the Company's forward-looking statements:

? expansion plans and opportunities, including recently completed acquisitions as

well as future acquisitions or additional business combinations;

? costs related to being a public company;

?litigation, complaints, and/or adverse publicity;

the impact of changes in consumer spending patterns, consumer preferences,

? local, regional and national economic conditions, crime, weather, demographic

trends and employee availability;

? further expansion into the insurance industry, and the related federal and

state regulatory requirements;

?privacy and data protection laws, privacy or data breaches, or the loss of
data; and

? the duration and scope of the COVID pandemic, and its continued effect on the

business and financial conditions of the Company.

These and other factors that could cause actual results to differ from those
implied by the forward-looking statements in this Quarterly Report are more
fully described in Part II, Item 1A of this Quarterly Report, Item 1A of the
Company's Annual Report on Form 10-K for the year ended December 31, 2021 filed
with the SEC on March 16, 2022 and in any of the Company's subsequent SEC
filings. The risks described in these filings are not exhaustive. New risk
factors emerge from time to time, and it is not possible for us to predict all
such risk factors, nor can the Company assess the impact of all such risk
factors on its business or the extent to which any factor or combination of
factors may cause actual results to differ materially from those contained in
any forward-looking statements. All forward-looking statements attributable to
the Company or persons acting on its behalf are expressly qualified in their
entirety by the foregoing cautionary statements. The Company undertakes no
obligations to update or revise publicly any forward-looking statements, whether
as a result of new information, future events or otherwise, except as required
by law.

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Business Overview

Porch Group is a vertical software platform for the home, providing software and
services to over 28,500 home services companies, such as home inspectors,
mortgage companies and loan officers, title companies, moving companies, real
estate agencies, utility companies, roofers and others, helping these service
providers grow their business and improve their customer experience. The Company
provides software and services to home services companies and, through these
relationships, gains unique and early access to homebuyers and homeowners,
assists homebuyers and homeowners with critical services such as insurance and
moving, and, in turn, the Company's platform drives demand for other services
from such companies as part of the value proposition. Porch has three types of
customers: (1) home services companies, such as home inspectors, mortgage
companies, and loan officers and title companies, for whom Porch provides
software and services and who pay recurring SaaS fees and increasingly provide
introductions to homebuyers and homeowners; (2) consumers, such as homebuyers
and homeowners, whom Porch assists with the comparison and provision of various
critical home services, such as insurance, moving, security, TV/Internet, and
home repair and improvement; and (3) service providers, such as insurance
carriers, moving companies, security companies, title companies, mortgage
companies and TV/Internet providers, who pay for new customer sign-ups.

The Company sells software and services to companies using a variety of sales
and marketing tactics, including teams of inside sales representatives organized
by vertical market who engage directly with companies, and enterprise sales
teams that target the large named accounts in each of the vertical markets.
These teams are supported by various typical software marketing tactics,
including digital, in-person (such as trade shows and other events) and content
marketing.

For consumers, Porch largely relies on our unique and proprietary relationships
with over 28,500 companies using the Company's software to provide the company
with end customer access and introductions. The Company then utilizes
technology, lifecycle marketing and teams in lower cost locations to operate as
a Moving Concierge to assist these consumers with services. The Company has
invested in limited direct-to-consumer marketing capabilities, but expects to
become more advanced over time with capabilities such as digital and social
retargeting.

Key Performance Measures and Operating Metrics

In the management of these businesses, the Company identifies, measures and
evaluates various operating metrics. The key performance measures and operating
metrics used in managing the businesses are set forth below. These key
performance measures and operating metrics are not prepared in accordance with
generally accepted accounting principles in the United States ("GAAP"), and may
not be comparable to or calculated in the same way as other similarly titled
measures and metrics used by other companies. The key performance measures
presented have been adjusted for divested businesses in 2020.

Average Companies in Quarter - Porch provides software and services to home

services companies and, through these relationships, gains unique and early

access to homebuyers and homeowners, assists homebuyers and homeowners with

critical services such as insurance, warranty and moving. The Company's

customers include home services companies, for whom the Company provides

software and services and who provide introductions to homebuyers and

homeowners and tracks the average number of home services companies from which

? it generates revenue each quarter in order to measure the ability to attract,

retain and grow relationships with home services companies. Porch management

defines the average number of companies in a quarter as the straight-line

average of the number of companies as of the end of period compared with the

beginning of period across all of the Company's home services verticals that

(i) generate recurring revenue and (ii) generated revenue in the quarter. For

new acquisitions, the number of companies is determined in the initial quarter

based on the percentage of the quarter the acquired business is a part of the

   Company.


   Average Revenue per Account per Month in Quarter - Management views the

Company's ability to increase revenue generated from existing customers as a

? key component of Porch's growth strategy. Average Revenue per Account per Month

in Quarter is defined as the average revenue per month generated across all

   home services company customer accounts in a quarterly period. Average Revenue
   per Account per Month in


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Quarter is derived from all customers and total revenue, not only customers and

revenues associated with the Company's referral network.

The following table summarizes Average Companies in Quarter and Average Revenue
per Account per Month in Quarter for each of the quarterly periods indicated:

                                             2022        2022         2022         2022
                                              Q1          Q2           Q3           Q4
Average Companies in Quarter                 25,512      28,730            -            -
Average Revenue per Account per Month
in Quarter                                 $    817    $    821     $      -     $      -

                                             2021        2021         2021         2021
                                              Q1          Q2           Q3           Q4
Average Companies in Quarter                 13,995      17,120       20,472       24,603
Average Revenue per Account per Month
in Quarter (adjusted)(1)                   $    637    $    933 (1) $    985 (1) $    776 (1)

                                             2020       2020         2020          2020
                                              Q1          Q2           Q3           Q4
Average Companies in Quarter                 10,903      10,523       10,792       11,157
Average Revenue per Account per Month
in Quarter                                 $    484    $    556     $    664     $    556


     During the quarter ended December 31, 2021, the Company corrected an

immaterial error that impacted revenue and cost of revenue for the three

(1) months ended June 30, 2021 and September 30, 2021. Average Revenue per

Account per Month in Quarter metrics were recalculated for the affected

quarters to show the impact of the adjustments.

The following tables shows the impact of this error on Average Revenue per
Account per Month in Quarter:

                                              2021       2021        2021   

2021

                                               Q1         Q2          Q3    

Q4

Total Revenue (as previously reported)        26,742   $  51,340   $  62,769   $ 51,582
Quarterly Impact of Revenue Adjustment
Recorded in Q4                                     -     (3,400)     (2,300)      5,700
Total Revenue (as adjusted)                 $ 26,742   $  47,940   $  60,469   $ 57,282
Average Revenue per Account per Month in
Quarter (as adjusted)                       $    637   $     933   $     985   $    776
Average Revenue per Account per Month in
Quarter (as previously reported)            $    637   $   1,000   $   

1,022 $ 699

In 2022, the Company completed acquisition of RWS. In 2021, the Company
completed acquisitions of V12 Data in Q1, Homeowners of America ("HOA") and
Rynoh in Q2, American Home Protect ("AHP") in Q3 and Floify in Q4, that impacted
the average number of companies in the quarter.

Monetized Services in Quarter - Porch connects consumers with home services

companies nationwide and offers a full range of products and services where

homeowners can, among other things: (i) compare and buy home insurance policies

(along with auto, flood and umbrella policies) and warranties with competitive

rates and coverage; (ii) arrange for a variety of services in connection with

their move, from labor to load or unload a truck to full-service, long-distance

moving services; (iii) discover and install home automation and security

systems; (iv) compare Internet and television options for their new home;

(v) book small handyman jobs at fixed, upfront prices with guaranteed quality;

? and (vi) compare bids from home improvement professionals who can complete

bigger jobs. The Company tracks the number of monetized services performed

through its platform each quarter and the revenue generated per service

performed in order to measure market penetration with homebuyers and homeowners

and the Company's ability to deliver high-revenue services within those groups.

Monetized Services in Quarter is defined as the total number of unique services

from which the Company generated revenue, including, but not limited to, new

and renewing insurance and warranty customers, completed moving jobs, security

installations, TV/Internet installations or other home projects, measured over

a quarterly period.

Average Revenue per Monetized Service in Quarter - Management believes that

shifting the mix of services delivered to homebuyers and homeowners toward

higher revenue services is a key component of Porch's growth strategy. Average

? Revenue per Monetized Services in Quarter is the average revenue generated per

monetized service performed in a quarterly period. When calculating Average

Revenue per Monetized Service in quarter, average revenue is defined as total

quarterly service transaction revenues generated from monetized services.

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The following table summarizes our monetized services and average revenue per
monetized service for each of the quarterly periods indicated:

                                              2022         2022          

2022 2022

                                               Q1           Q2            Q3            Q4
Monetized Services in Quarter                 254,249      331,889             -             -
Average Revenue per Monetized Service in
Quarter                                     $     176    $     158     $       -     $       -

                                              2021         2021          2021          2021
                                               Q1           Q2            Q3            Q4
Monetized Services in Quarter                 182,779      302,462       329,359       260,352
Average Revenue per Monetized Service in
Quarter (adjusted)(1)                       $      92    $     118 (1) $     137 (1) $     154 (1)

                                              2020         2020          2020          2020
                                               Q1           Q2            Q3            Q4
Monetized Services in Quarter                 152,165      181,520       198,165       169,949
Average Revenue per Monetized Service in
Quarter                                     $      93    $      86     $   

  97     $      98


     During the quarter ended December 31, 2021, the Company corrected an

immaterial error that impacted revenue and cost of revenue for the three

(1) months ended June 30, 2021 and September 30, 2021. Average Revenue per

Monetized Service in Quarter metrics were recalculated for the affected

quarters to show the impact of the adjustments.

The following tables shows the impact of this error on Average Revenue per
Monetized Service in Quarter:

                                               2021        2021         

2021 2021

                                                Q1          Q2           Q3 

Q4

Service Revenue (as previously reported)     $ 35,702    $  39,102    $  47,398    $ 34,351
Quarterly Impact of Revenue Adjustment
Recorded in Q4                                      -      (3,400)      (2,300)       5,700
Service Revenue (as adjusted)                $ 35,702    $  35,702    $  45,098    $ 40,051
Average Revenue per Monetized Service in
Quarter (adjusted)                           $     92    $     118    $     137    $    154
Average Revenue per Monetized Service in
Quarter (as previously reported)             $     92    $     129    $    

144 $ 132

In 2022, the Company completed acquisition of RWS. In 2021, the Company
completed acquisitions of V12 Data in Q1, HOA and Rynoh in Q2, AHP in Q3 and
Floify in Q4, which impacted the number of monetized services in the quarter.

Recent Developments

Adoption of New Accounting Standards

The Company early adopted Accounting Standards Update No. 2021-08, Business
Combinations (Topic 805): Accounting for Contract Assets and Contract
Liabilities from Contracts with Customers on January 1, 2022 and will apply the
guidance prospectively for business combinations that occur after the adoption
date. The adoption has no impact to the existing unaudited condensed
consolidated balance sheets, statements of operations, and statements of cash
flows.

Key Factors Affecting Operating Results

The Company has been implementing its strategy as a vertical software platform
for the home, providing software and services to over 28,500 home services
companies, such as home inspectors, moving companies, utility companies,
warranty companies, etc. The following are key factors affecting the Company's
operating results in the three and six months ended June 30, 2022:

? In April 2022, the Company completed the acquisition of Residential Warranty

Services ("RWS") with an aggregate purchase price of $45.7 million.

In 2021, the Company completed several acquisitions with an aggregate purchase

price of $346.3 million to acquire companies to expand the scope and nature of

? the Company's services offerings, add additional team members with important

   skillsets, and realize synergies. These acquisitions included V12 Data
   (acquired in


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January 2021), HOA (acquired in April 2021), Rynoh (acquired in May 2021), AHP

(acquired in September 2021) and Floify (acquired in October 2021). For a

complete discussion of 2021 acquisitions, refer to Item 8 in the Company's

Annual Report on Form 10-K for the fiscal year ended December 31, 2021, as filed

on March 16, 2022 (the "Annual Report on Form 10-K").

Continued investment in growing and expanding the Company's position in the

? home inspection industry including through core enterprise resource planning

and customer relationship management software offered by Inspection Support

Network LLC.

Continued investment in growing and expanding the Company's position in

? providing moving services to consumers as a result of the 2018 acquisition of

HireAHelper™, a provider of software and demand for moving companies.

Intentionally building operating leverage in the business by focusing on

? growing operating expenses at a slower rate than the growth in revenue.

Specifically, by increasing economies of scale related to fixed selling costs,

Moving Concierge call center operations and product and technology costs.

? Ongoing expansion in other software verticals related to the home and related

services such as title, warranty and mortgage software.

? Investments in consumer experience to drive higher conversion rates, including

investments in apps.

Investments in establishing and maintaining controls required by the

? Sarbanes-Oxley Act of 2002 ("SOX") and other internal controls across IT and

accounting organizations.

? Investments in data platforms and leveraging that data in pricing optimization

within insurance.

? Growth across the insurance business, including geographic expansion.

Basis of Presentation

The unaudited condensed consolidated financial statements and accompanying notes
of the Company include the accounts of the Company and its consolidated
subsidiaries and were prepared in accordance with GAAP. All significant
intercompany accounts and transactions are eliminated in consolidation.

The Company operates in two operating segments: Vertical Software and Insurance.
Operating segments are identified as components of an enterprise about which
separate discrete financial information is available for evaluation by the chief
operating decision-maker ("CODM") in making decisions regarding resource
allocation and assessing performance. The Company has determined that its Chief
Executive Officer is the CODM.

Components of Results of Operations

Total Revenue

The Company generates revenue from (1) software and service subscription revenue
generated from fees received for providing subscription access to the Company's
software platforms and subscription services across various industries; (2)
insurance revenue in the form of commissions from third-party insurance carriers
where Porch acts as an independent agent and commissions from reinsurers,
insurance and warranty premiums, policy fees and other insurance-related fees
generated through its own insurance carrier; (3) move-related service revenue
through fees received for connecting homeowners to service providers during time
of a move including movers, TV/Internet, warranty, and security monitoring
providers and for certain move related services for providing select services
directly to the homeowner; (4) post-move related revenue in the form of fees
earned from introducing homeowners to home service

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professionals including handymen, plumbers, electricians, roofers etc., and for
certain projects for providing select services directly to the homeowner.

Software and service subscription revenue primarily relates to subscriptions to
the Company's software offerings across its verticals as well as marketing
software and services. The Company's subscription arrangements for this revenue
stream do not provide the customer with the right to take possession of the
software supporting the cloud-based application services. The Company's standard
subscription contracts are monthly contracts in which pricing is based on a
specified price per inspection completed through the software. Marketing
software and services are primarily contractual monthly recurring billings. Fees
earned for providing access to the subscription software are non-refundable and
there is no right of return. Revenue is recognized based on the amount which the
Company is entitled to for providing access to the subscription software during
the monthly contract term.

The Insurance segment offers various property-related insurance policies through
its own risk-bearing carrier and independent agency as well as a risk-bearing
home warranty company. Third-party insurance companies pay Porch Company's
agency upfront and renewal commissions for selling their policies, reinsurers
pay the Company ceding commissions when premiums are ceded from owned insurance
products, and revenues are earned in the form of policy premiums collected from
insureds from owned insurance products. The Insurance segment also includes home
warranty revenue which mainly consists of premiums paid by warranty customers
for the Company's home warranty products.



Move-related transactions revenue arises when the Company connects service
providers with homeowners that meet pre-defined criteria and may be looking for
relevant services. Service providers include movers, TV/Internet, warranty, and
security monitoring providers. The Company earns revenue when consumers purchase
services from third-party providers. For moving products where the Company
manages the process of selecting the service provider and setting the price, the
Company generally invoices for projects on a fixed fee or time and materials
basis.

Post-move-related transaction revenue includes fees earned from introducing
consumers to home service providers as well as directly to the homeowner when
the Company manages the service. Revenue generated from service providers is
recognized at a point in time upon the connection of a homeowner to the service
provider. The Company generally invoices for managed services projects on a
fixed fee or time and materials basis.

Total Costs and Expenses

Operating expenses

Operating expenses are categorized into four categories:

 ? Cost of revenue;


 ? Selling and marketing;

? Product and technology; and

? General and administrative.

The categories of operating expenses include both cash expenses and non-cash
charges, such as stock-based compensation, depreciation and amortization.
Depreciation and amortization are recorded in all operating expense categories,
and consist of depreciation from property, equipment and software and intangible
assets.

Cost of revenue primarily consists of insurance claims losses and loss
adjustment expenses, claims personnel costs, warranty claims, third-party
providers for executing moving labor and handyman services when the Company is
managing the job, data costs related to marketing campaigns, certain call center
costs, credit card processing and merchant fees and operational cost of SaaS
businesses.

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Selling and marketing expenses primarily consist of payroll, employee benefits
and stock-based compensation expense, and other headcount related costs
associated with sales efforts directed toward companies and consumers, and
deferred policy acquisition costs ("DAC") of new and renewal insurance
contracts. Also included are any direct costs to acquire customers, such as
search engine optimization, marketing costs and affiliate and partner leads.

The Company capitalizes DAC, which consists primarily of commissions, premium
taxes, policy underwriting, and production expenses directly related to the
successful acquisition by the Company's insurance subsidiary of new or renewal
insurance contracts. DAC are amortized to expense on a straight-line basis over
the terms of the policies to which they relate, which is generally one year. DAC
is also reduced by ceding commissions paid by reinsurance companies which
represent recoveries of acquisition costs. DAC is periodically reviewed for
recoverability and adjusted if necessary.

Product and technology development costs primarily consist of payroll, employee
benefits, stock-based compensation expense, other headcount-related costs
associated with product development, net of costs capitalized as internally
developed software. Also included are cloud computing, hosting and other
technology costs, software subscriptions, professional services and amortization
of internally developed software.

General and administrative expenses primarily consist of expenses associated
with functional departments for finance, legal, human resources and executive
management. The primary categories of expenses include payroll, employee
benefits, stock-based compensation expense and other headcount related costs,
rent for office space, legal and professional fees, taxes, licenses and
regulatory fees, merger and acquisition transaction costs, and other
administrative costs.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with GAAP requires
management to make estimates, judgments, and assumptions that affect the amounts
reported and disclosed in the unaudited condensed consolidated financial
statements and accompanying notes. On an ongoing basis these estimates, which
include, but are not limited to, estimated variable consideration for services
performed, estimated lifetime value of the insurance agency commissions, current
estimate for credit losses, depreciable lives for property and equipment, the
valuation of and useful lives for acquired intangible assets, goodwill, the
valuation allowance on deferred tax assets, assumptions used in stock-based
compensation expense, unpaid losses for insurance claims and loss adjustment
expenses, contingent consideration, earnout liabilities and private warrant
liabilities, all of which are evaluated by management. Actual results could
differ materially from those estimates, judgments, and assumptions.

At least quarterly, the Company evaluates estimates and assumptions and makes
changes accordingly. For information on the Company's significant accounting
policies, see Note 1 in the notes to the unaudited condensed consolidated
financial statements included in Part I, Item 1 of this Quarterly Report.

During the three months ended June 30, 2022, there were no changes to the
critical accounting policies discussed in the Company's Annual Report on Form
10-K. For a complete discussion of the Company's Annual Report.

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Results of Operations

The following table sets forth the Company's historical operating results for
the periods indicated:

                                 Three Months Ended June 30,                          Six Months Ended June 30,
                          2022          2021      $ Change   % Change         2022          2021      $ Change    % Change

                                                           (dollar amounts in thousands)
Revenue                $   70,769    $   51,340     19,429         38 %    $  133,330    $   78,083   $  55,247         71 %
Operating expenses:
Cost of revenue            28,558        19,500      9,058         46 %    

   49,747        25,429      24,318         96 %
Selling and
marketing                  28,826        23,122      5,704         25 %        54,569        37,762      16,807         45 %
Product and
technology                 15,777        11,050      4,727         43 %        30,009        22,841       7,168         31 %
General and

administrative             28,405        20,611      7,794         38  %       55,103        44,625      10,478         23 %
Total operating
expenses                  101,566        74,283     27,283         37  %      189,428       130,658      58,770         45 %
Operating loss           (30,797)      (22,943)    (7,854)         34 %      (56,098)      (52,575)     (3,523)          7 %
Other income
(expense):
Interest expense          (1,858)       (1,216)      (642)         53 %    

  (4,151)       (2,439)     (1,712)         70 %
Change in fair value
of earnout liability        2,587       (4,032)      6,619         NM          13,766      (22,801)      36,567         NM
Change in fair value
of private warrant
liability                   4,078       (4,303)      8,381         NM          14,267      (20,212)      34,479         NM
Gain (loss) on
extinguishment of
debt                            -         8,243    (8,243)         NM               -         8,243     (8,243)         NM
Investment income
and realized gains,
net of investment
expenses                      243           387      (144)       (37) %           440           397          43         11 %
Other income, net           (162)         (165)          3        (2) %         (107)          (91)        (16)         18 %
Total other income
(expense)                   4,888       (1,084)      5,974         NM          24,215      (36,904)      61,119         NM
Loss before income

taxes                    (25,909)      (24,027)    (1,880)          8 %      (31,883)      (89,479)      57,596       (64) %
Income tax benefit
(expense)                   (468)         7,731    (8,199)         NM           (290)         8,081     (8,371)         NM
Net loss               $ (26,377)    $ (16,296)   (10,079)         62 %    $ (32,173)    $ (81,398)   $  49,225       (60) %


NM = Not Meaningful

Revenue

Three months ended June 30, 2022 compared to three months ended June 30, 2021:

Total revenue increased by $19.4 million, or 38%, from $51.3 million in the
three months ended June 30, 2021 to $70.8 million in the same period in 2022.
The increase in revenue in 2022 is primarily driven by the 2022 and 2021
acquisitions, organic growth, and accelerated growth of these acquisitions. In
April 2022, the Company acquired RWS for an aggregate purchase price of $45.7
million. During 2021, the Company acquired a number of businesses with an
aggregate purchase price of $346.3 million as disclosed in the Company's Annual
Report on Form 10-K.  These acquisitions included V12 Data (acquired in January
2021), HOA (acquired in April 2021), Rynoh (acquired in May 2021), AHP (acquired
in September 2021) and Floify (acquired in October 2021). Other than V12 Data,
HOA and Rynoh, these businesses were not owned by the Company during the three
months ended June 30, 2021 and, therefore no revenue was recognized from these
businesses during that period.

During the quarter ended December 31, 2021, the Company corrected an immaterial
error related to revenue from claims fees and contra claims expense, which was
recorded in the fourth quarter of 2021. This error impacted revenue

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and cost of revenue for the three months ended June 30, 2021 and September 30,
2021. The correction did not impact operating loss or net loss in these periods.

The following table summarizes the impact of the correction by quarter (in
thousands):

                                                                Quarter ended
                               March 31, 2021      June 30, 2021      September 30, 2021      December 31, 2021        Total
Revenue increase
(decrease)                    $              -    $       (3,400)    $            (2,300)    $             5,700    $          -
Cost of revenue increase
(decrease)                                   -              3,400                   2,300                (5,700)               -
Net loss impact               $              -    $             -    $                  -    $                 -    $          -

Six months ended June 30, 2022 compared to six months ended June 30, 2021:

Total revenue increased by $55.2 million, or 71% from $78.1 million in the six
months ended June 30, 2021 to $133.3 million in the same period in 2022. During
2022 and 2021, the Company acquired a number of businesses with an aggregate
purchase price of $346.3 million as disclosed in the Company's Annual Report on
Form 10-K.  These acquisitions included V12 Data (acquired in January 2021), HOA
(acquired in April 2021), Rynoh (acquired in May 2021), AHP (acquired in
September 2021), Floify (acquired in October 2021) and RWS (acquired in April
2022). Other than V12 Data, HOA and Rynoh, these businesses were not owned by
the Company during the six months ended June 30, 2021 and, therefore, no revenue
was recognized from these businesses during that period. Thus, the increase in
revenue in 2022 is primarily driven by the 2022 and 2021 acquisitions,
accelerated growth after acquisition and organic growth.

During the quarter ended December 31, 2021, the Company corrected an immaterial
error related to revenue from claims fees and contra claims expense, which was
recorded in the fourth quarter of 2021. This error impacted revenue and cost of
revenue for the three months ended June 30, 2021 and September 30, 2021. The
correction did not impact operating loss or net loss in these periods. See the
table above for the impact of the correction by quarter.

Cost of Revenue

Three months ended June 30, 2022 compared to three months ended June 30, 2021:

Cost of revenue increased by $9.1 million, or 46%, from $19.5 million in the
three months ended June 30, 2021 to $28.6 million in the same period in 2022.
The increase in the cost of revenue was primarily attributable to the 2022 and
2021 acquisitions of RWS (acquired in April 2022), V12 Data (acquired in January
2021), HOA (acquired in April 2021), Rynoh (acquired in May 2021), AHP (acquired
in September 2021), and Floify (acquired in October 2021). Other than V12 Data,
HOA and Rynoh, these businesses were not owned by the Company during the three
months ended June 30, 2021 and, therefore, no cost of revenue was recognized
from these businesses during that period. Thus, the increase in cost of revenue
in 2022 is primarily driven by the 2022 and 2021 acquisitions, accelerated
growth after acquisition and organic growth. As a percentage of revenue, cost of
revenue represented 40% of revenue in the three months ended June 30, 2022
compared with 38% in the same period in 2021. Cost of revenue as a percentage of
revenue is higher due to the mix shift in business with insurance as the claims
and loss and loss adjustment expense is recorded in cost of revenue.

Six months ended June 30, 2022 compared to six months ended June 30, 2021:

Cost of revenue increased by $24.3 million, or 96% from $25.4 million in the six
months ended June 30, 2021 to $49.7 million in the same period in 2022. The
increase in the cost of revenue was primarily attributable to the 2022 and 2021
acquisitions of RWS (acquired in April 2022),V12 Data (acquired in January
2021), HOA (acquired in April 2021), Rynoh (acquired in May 2021), AHP (acquired
in September 2021), Floify (acquired in October 2021). Other than V12 Data, HOA
and Rynoh, these businesses were not owned by the Company during the six months
ended June 30, 2021 and, therefore, no cost of revenue was recognized from these
businesses during that period. Thus, the increase in cost of revenue in 2022 is
primarily driven by the 2022 and 2021 acquisitions, accelerated growth after
acquisition

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and organic growth. As a percentage of revenue, cost of revenue represented 37%
of revenue in the six months ended June 30, 2022 compared with 33% in the same
period in 2021. Cost of revenue as a percentage of revenue is higher due to the
mix shift in business with insurance as the claims and loss and loss adjustment
expense is recorded in cost of revenue.

Selling and marketing

Three months ended June 30, 2022 compared to three months ended June 30, 2021:

Selling and marketing expenses increased by $5.7 million, or 25%, from $23.1
million in the three months ended June 30, 2021 to $28.8 million in the same
period in 2022. The increase is due to $4.9 million related to the selling and
marketing costs of the acquired businesses comprised of RWS, V12 Data, AHP,
Floify and Rynoh. The increase was also due to the growth of the insurance and
software and subscription businesses. This was partially offset by a decrease of
$0.2 million in stock-based compensation expenses. As a percentage of revenue,
selling and marketing expenses represented 41% of revenue in the three months
ended June 30, 2022 compared with 45% in the same period in 2021. The
improvement in selling and marketing expenses as a percentage of revenue is due
to the growing economies of scale across the Company's Vertical Software and
Insurance segments.

Six months ended June 30, 2022 compared to six months ended June 30, 2021:

Selling and marketing expenses increased by $16.8 million, or 45% from $37.8
million in the six months ended June 30, 2021 to $54.6 million in the same
period in 2022. The increase is due to $12.8 million related to the selling and
marketing costs of the acquired businesses comprised of HOA, RWS, V12 Data, AHP,
Floify and Rynoh. The increase was also due to a $2.2 million increase in
amortization expense related to acquired intangibles. Growth in the insurance
and software and subscription businesses further contributed to the increase.
This was partially offset by a decrease of $1.6 million in stock-based
compensation expenses. As a percentage of revenue, selling and marketing
expenses represented 41% of revenue in the six months ended June 30, 2022
compared with 48% in the same period in 2021. The improvement in selling and
marketing expenses as a percentage of revenue is due to the growing economies of
scale across the Company's Vertical Software and Insurance segments.

Product and technology

Three months ended June 30, 2022 compared to three months ended June 30, 2021:

Product and technology expenses increased by $4.7 million, or 43%, from $11.1
million in the three months ended June 30, 2021 to $15.8 million in the same
period in 2022. The increase is mainly due to a $2.5 million increase in
amortization expense related to acquired intangibles and a $1.2 million increase
in product and technology costs of the acquired businesses, most notably Floify.
As a percentage of revenue, product and technology expenses represented 22% of
revenue in the three months ended June 30, 2022 compared with 22% in the same
period in 2021.

Six months ended June 30, 2022 compared to six months ended June 30, 2021:

Product and technology expenses increased by $7.2 million, or 31% from $22.8
million in the six months ended June 30, 2021 to $30.0 million in the same
period in 2022. The increase is mainly due to a $3.4 million increase in
amortization expense related to acquired intangibles and a $7.2 million increase
in product and technology costs of the acquired businesses, most notably HOA,
Floify, Rynoh, RWS and AHP. This was offset by $1.2 million lower stock-based
compensation expense. As a percentage of revenue, product and technology
expenses represented 23% of revenue in the six months ended June 30, 2022
compared with 29% in the same period in 2021. The improvement in product and
technology expenses as a percentage of revenue is due to the growing economies
of scale in the overall business.

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General and administrative

Three months ended June 30, 2022 compared to three months ended June 30, 2021:

General and administrative expenses increased by $7.8 million, or 38%, from
$20.6 million in the three months ended June 30, 2021 to $28.4 million in the
same period in 2022, primarily due to costs related to increased hiring of
corporate resources, audit and accounting fees, as well as consulting fees
related to the ongoing SOX requirements. In the three months ended
June 30, 2022, general and administrative expenses included $6.2 million related
to the HOA, RWS, AHP, Floify and Rynoh, and additional investment in corporate
resources and systems, as well as SOX implementation. In addition, during the
three months ended June 30, 2022, loss on revaluation of contingent
consideration of $1.5 million was $0.9 million higher than during the three
months ended June 30, 2021.

Also, stock-based compensation expense for the three months ended June 30, 2022
was $3.2 million higher than in the same period in 2021.

Six months ended June 30, 2022 compared to six months ended June 30, 2021:

General and administrative expenses increased by $10.5 million, or 23% from
$44.6 million in the six months ended June 30, 2021 to $55.1 million in the same
period in 2022. The increase is primarily due to costs related to increased
hiring of corporate resources, audit and accounting fees, as well as consulting
fees related to the ongoing SOX requirements. In the six months ended
June 30, 2022, general and administrative expenses included $12.4 million
related to the HOA, RWS, AHP, Floify and Rynoh. Additional investment in
corporate resources and systems, and SOX implementation also contributed to the
increase. In addition, during the six months ended June 30, 2022, loss on
revaluation of contingent consideration of $3.2 million was $4.5 million higher
than during the six months ended June 30, 2021. This was offset by stock-based
compensation expense for the six months ended June 30, 2022, which was $5.1
million lower than in the same period in 2021.

Interest expense, net

Three months ended June 30, 2022 compared to three months ended June 30, 2021:

Interest expense increased by $0.7 million, or 53%, from $1.2 million in the
three months ended June 30, 2021 to $1.9 million in the same period in 2022.
This was primarily due to issuance of $425 million of Convertible Senior Notes
in September 2021, that in part was used to pay off the $42.1 million of Senior
Secured Term Loans that were outstanding at June 30, 2021. The total level of
interest-bearing debt balance was $425.6 million at January 1, 2022 and $50.8
million at January 1, 2021 and this higher outstanding debt balance was the
primary reason for the increased interest expense.

Six months ended June 30, 2022 compared to six months ended June 30, 2021:

Interest expense increased by $1.8 million, or 75% from $2.4 million in the six
months ended June 30, 2021 to $4.2 million in the same period in 2022. This was
primarily due to issuance of $425 million of Convertible Senior Notes in
September 2021, that in part was used to pay off the $42.1 million of Senior
Secured Term Loans that were outstanding at June 30, 2021. The higher
outstanding debt balance was the primary reason for the increased interest
expense.

Change in fair value of earnout liability

Three months ended June 30, 2022 compared to three months ended June 30, 2021:

Changes in fair value of earnout liability were $2.6 million (gain) and $4.0
million (loss) in the three months ended June 30, 2022 and 2021, respectively.
The decrease in fair value was primarily due to the decline in the stock price
at June 30, 2022 as compared to June 30, 2021.

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Six months ended June 30, 2022 compared to six months ended June 30, 2021:

Changes in fair value of earnout liability were $14.3 million (gain) and $22.8
million (loss) in the six months ended June 30, 2022 and 2021, respectively. The
decrease in fair value was primarily due to the decline in the stock price at
June 30, 2022 as compared to June 30, 2021. During the six months ended
June 30, 2021, $25.8 million of the earnout liability was reclassified to
additional paid in capital as a result of a vesting event in March 2021.

Change in fair value of private warrant liability

Three months ended June 30, 2022 compared to three months ended June 30, 2021:

Changes in fair value of private warrant liability were $4.1 million (gain) and
$4.3 million (loss) in the three months ended June 30, 2022 and 2021,
respectively. The decrease in fair value was primarily due to the decline in the
stock price at June 30, 2022 as compared to June 30, 2021.

Six months ended June 30, 2022 compared to six months ended June 30, 2021:

Changes in fair value of private warrant liability were $14.3 million (gain) and
$20.2 million (loss) in the six months ended June 30, 2022 and 2021,
respectively. The decrease in fair value was primarily due to the decline in the
stock price at June 30, 2022 as compared to June 30, 2021.

Investment income and realized gains, net of investment expenses

Three months ended June 30, 2022 compared to three months ended June 30, 2021:

Investment income and realized gains, net of investment expenses was $0.2
million and $0.4 million in the three months ended June 30, 2022 and 2021,
respectively. In April 2021, the Company acquired HOA, which maintains a
short-term and long-term investment portfolio that generated investment income
for nine months in 2021.

Six months ended June 30, 2022 compared to six months ended June 30, 2021:

Investment income and realized gains, net of investment expenses was $0.4
million and $0.4 million in the six months ended June 30, 2022 and 2021,
respectively. In April 2021, the Company acquired HOA, which maintains a
short-term and long-term investment portfolio that generated investment income
for nine months in 2021. The Company did not have any material investments

prior
to April 2021.

Income tax benefit (expense)

Three months ended June 30, 2022 compared to three months ended June 30, 2021:

Income tax expense of $0.5 million and income tax benefit of $7.7 million was
recognized for the six months ended June 30, 2022 and 2021, respectively. The
difference between the Company's effective tax rates for the 2022 period and the
U.S. statutory rate of 21% was primarily due to a full valuation allowance
related to the Company's net deferred assets. The difference between the
Company's effective tax rates for the 2021 period and the U.S. statutory rate of
21% was primarily due to the release of a portion of the valuation allowance due
to deferred tax liabilities created by certain acquisitions.

Six months ended June 30, 2022 compared to six months ended June 30, 2021:

Income tax expense of $0.3 million and income tax benefit $8.1 million was
recognized for the six months ended June 30, 2022 and 2021, respectively. The
Company's effective tax rates in both periods differs substantially from the
U.S. federal statutory tax rate of 21% primarily due to a full valuation
allowance related to the Company's net deferred tax assets.

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Segment Results of Operations

The Company operates the business as two reportable segments that are also
operating segments: Vertical Software and Insurance. For additional information
about these segments, see Note 14 in the notes to the unaudited condensed
consolidated financial statements included in Part I, Item 1 of this Quarterly
Report.

Segment Revenue

                                                       Three Months Ended June 30, 2022                               Six Months Ended June 30, 2022
                                           Vertical Software                                              Vertical Software
                                                Segment                            Insurance Segment           Segment                         Insurance Segment
Revenue:

Software and service subscriptions        $             20,544                    $                 -    $            38,509                  $         

-

Move-related transactions (excluding
insurance)                                              17,535                                      -                 29,728                                    -
Post-move transactions                                   4,734                                      -                  9,264                                    -
Insurance                                                    -                                 27,956                      -                               55,829
Total revenue                             $             42,813                    $            27,956    $            77,501                  $            55,829


                                                       Three Months Ended June 30, 2021                               Six Months Ended June 30, 2021
                                           Vertical Software                                              Vertical Software
                                                Segment                            Insurance Segment           Segment                         Insurance Segment
Revenue:

Software and service subscriptions        $             12,987                    $                 -    $            23,867                  $         

-

Move-related transactions (excluding
insurance)                                              16,295                                      -                 25,256                                    -
Post-move transactions                                   5,122                                      -                 10,219                                    -
Insurance                                                    -                                 16,936                      -                               18,741
Total revenue                             $             34,404                    $            16,936    $            59,342                  $            18,741

Three months ended June 30, 2022 compared to three months ended June 30, 2021:

For the three months ended June 30, 2022, Vertical Software segment revenue was
$42.8 million or 60.5% of total revenue for the same period. For the three
months ended June 30, 2021, Vertical Software segment revenue was $34.4 million
or 67.0% of total revenue for the same period. Software and service
subscriptions revenue increased from $13.0 million to $20.5 million as the
Company acquired RWS in April 2022, Rynoh in May 2021 and Floify in October
2021. Thus, the increase in revenue in 2022 is primarily driven by the recent
acquisitions, accelerated growth after acquisition and organic growth.

Insurance segment revenue was $28.0 million or 39.6% of total revenue for the
three months ended June 30, 2022. Insurance segment revenue was $16.9 million or
33.0% of total revenue for the three months ended June 30, 2021. The increase is
mainly due to the acquisitions of RWS (acquired in April 2022) and AHP (acquired
in September 2021), and the accelerated growth of these businesses after
acquisition, as well as organic growth of the Company's existing insurance
operation of HOA.

Six months ended June 30, 2022 compared to six months ended June 30, 2021:

For the six months ended June 30, 2022, Vertical Software segment revenue was
$77.5 million or 58.1% of total revenue for the same period. For the six months
ended June 30, 2021, Vertical Software segment revenue was $59.3 million or
76.0% of total revenue for the same period. Software and service subscriptions
revenue increased as the Company acquired RWS in April 2022, Rynoh in May 2021
and Floify in October 2021. Thus, the increase in revenue in 2022 is primarily
driven by the 2021 acquisitions, accelerated growth after acquisition and
organic growth.

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Insurance segment revenue was $55.8 million for the six months ended June 30,
2021, and represented 41.9% of total revenue for the same period. For the six
months ended June 30, 2021, Insurance segment revenue was $18.7 million or 24.0%
of total revenue for the same period. The increase is mainly due to the
acquisitions of RWS (acquired in April 2022), AHP (acquired in September 2021)
and HOA (acquired in April 2021), and the accelerated growth of these businesses
after acquisition, as well as the organic growth of HOA.

Segment Adjusted EBITDA (Loss)

Segment Adjusted EBITDA (loss) is defined as revenue less operating expenses
associated with the segments. Segment Adjusted EBITDA (loss) also excludes
non-cash items, certain transactions that are not indicative of ongoing segment
operating and financial performance and are not reflective of the Company's core
operations. See Note 14 in the notes to the unaudited condensed consolidated
financial statements included in Part I, Item 1 of this Quarterly Report for
additional information.

                                         Three Months Ended June 30,        

Six Months Ended June 30,

                                           2022                     2021             2022                  2021
Segment adjusted EBITDA (loss):
Vertical Software                   $          6,038            $    8,107    $         9,022          $   11,258
Insurance                                    (5,068)               (2,951)            (1,782)             (2,443)
Corporate and Other(1)                      (15,237)              (15,081)           (28,577)            (28,334)
Total segment adjusted EBITDA
(loss)(2)                           $       (14,267)            $  (9,925) 

$ (21,337) $ (19,519)

(1) Includes costs that are not directly attributable to reportable segments, as
well as certain shared costs.

(2) See reconciliation of adjusted EBITDA (loss) to net loss below.

Non-GAAP Financial Measures

This Quarterly Report includes non-GAAP financial measures, such as Adjusted
EBITDA (loss), Adjusted EBITDA (loss) as a percent of revenue, and average
revenue per monetized service.

The Company defines Adjusted EBITDA (loss) as net income (loss) adjusted for
interest expense, net, income taxes, other expenses, net, depreciation and
amortization, certain non-cash long-lived asset impairment charges, stock-based
compensation expense and acquisition-related impacts, amortization of intangible
assets, gains (losses) recognized on changes in the value of contingent
consideration arrangements, if any, gain or loss on divestures and certain
transaction costs. Adjusted EBITDA (loss) as a percent of revenue is defined as
Adjusted EBITDA (loss) divided by GAAP total revenue. Average revenue per
monetized services in quarter is the average revenue generated per monetized
service performed in a quarterly period. When calculating average revenue per
monetized service in a quarter, average revenue is defined as total quarterly
service transaction revenues generated from monetized services.

Company management uses these non-GAAP financial measures as supplemental
measures of the Company's operating and financial performance, for internal
budgeting and forecasting purposes, to evaluate financial and strategic planning
matters, and to establish certain performance goals for incentive programs. The
Company believes that the use of these non-GAAP financial measures provides
investors with useful information to evaluate the Company's operating and
financial performance and trends and in comparing Porch's financial results with
competitors, other similar companies and companies across different industries,
many of which present similar non-GAAP financial measures to investors. However,
the Company's definitions and methodology in calculating these non-GAAP measures
may not be comparable to those used by other companies. In addition, the Company
may modify the presentation of these non-GAAP financial measures in the future,
and any such modification may be material.

You should not consider these non-GAAP financial measures in isolation, as a
substitute to or superior to financial performance measures determined in
accordance with GAAP. The principal limitation of these non-GAAP financial
measures is that they exclude specified income and expenses, some of which may
be significant or material, that are required by GAAP to be recorded in the
Company's consolidated financial statements. The Company may also incur future
income or expenses similar to those excluded from these non-GAAP financial
measures, and the presentation of

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these measures should not be construed as an inference that future results will
be unaffected by unusual or non-recurring items. In addition, these non-GAAP
financial measures reflect the exercise of management judgment about which
income and expense are included or excluded in determining these non-GAAP
financial measures.

See the reconciliation tables below for more details regarding these non-GAAP
financial measures, including the reconciliation of non-GAAP financial measures
to the most directly comparable GAAP financial measures.

Revenue Less Cost of Revenue

The following table reconciles revenue less cost of revenue to operating loss
for the three and six months ended June 30, 2022 and 2021, respectively (dollar
amounts in thousands):

                                                 Three Months Ended June 30,             Six Months Ended June 30,
                                                   2022                2021                 2022             2021
Revenue                                       $        70,769     $        51,340      $      133,330     $    78,083
Less: Cost of revenue                                (28,558)            (19,500)            (49,747)        (25,429)
Revenue less cost of revenue                           42,211              31,840              83,583          52,654

Less: Selling and marketing costs                      28,826              23,122              54,569          37,762
Less: Product and technology costs                     15,777              11,050              30,009          22,841
Less: General and administrative costs                 28,405             

20,611              55,103          44,625
Total operating expenses                      $       101,566     $        74,283      $      189,428     $   130,658
Operating loss                                $      (30,797)     $      (22,943)      $     (56,098)     $  (52,575)

Three months ended June 30, 2022 compared to three months ended June 30, 2021:

Revenue less cost of revenue increased by $10.4 million, or 32.6% from $31.8
million in the three months ended June 30, 2021 to $42.2 million in the three
months ended June 30, 2022. During 2022, the Company acquired RWS. During 2021,
the Company acquired a number of businesses, including Rynoh (acquired in May
2021), AHP (acquired in September 2021) and Floify (acquired in October 2021).
The increase revenue less cost of revenue in 2022 is primarily driven by the
2022 and 2021 acquisitions, accelerated growth after acquisition and organic
growth.

Six months ended June 30, 2022 compared to six months ended June 30, 2021:

Revenue less cost of revenue increased by $30.9 million, or 58.7% from $52.7
million in the six months ended June 30, 2021 to $83.6 million in the six months
ended June 30, 2022. During 2022, the Company acquired RWS During 2021, the
Company acquired a number of businesses with an aggregate purchase price of
$346.3 million as disclosed in the Company's Annual Report on Form 10-K. These
acquisitions included V12 Data (acquired in January 2021), HOA (acquired in
April 2021), Rynoh (acquired in May 2021), AHP (acquired in September 2021) and
Floify (acquired in October 2021). Other than V12 Data, HOA and Rynoh, these
businesses were not owned by the Company in the six months ended June 30, 2022,
therefore, no revenue less cost of revenue was recognized from these businesses
during that period. Thus, the increase revenue less cost of revenue in 2022 is
primarily driven by the 2022 and 2021 acquisitions, accelerated growth after
acquisition and organic growth.

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Adjusted EBITDA (loss)

The following table reconciles net loss to Adjusted EBITDA (loss) for the three
and six months ended June 30, 2022 and 2021, respectively (dollar amounts in
thousands):

                                                 Three Months Ended June 30,          Six Months Ended June 30,
                                                   2022                2021             2022             2021
Net loss                                      $      (26,377)     $      (16,296)   $    (32,173)     $ (81,398)
Interest expense                                        1,858               1,216           4,151          2,439
Income tax benefit (expense)                              468             (7,731)             290        (8,081)
Depreciation and amortization                           6,416               3,894          12,899          6,356
Gain on extinguishment of debt                              -             (8,243)               -        (8,243)
Other expense (income), net                               162                 165             107             91
Non-cash long-lived asset impairment
charge                                                      -                  72              70            139
Non-cash stock-based compensation expense               9,702               7,035          15,556         24,048
Revaluation of contingent consideration                 1,481                 574           4,686            220
Revaluation of earnout liability                      (2,587)               4,032        (13,766)         22,801
Revaluation of private warrant liability              (4,078)               4,303        (14,267)         20,212
Acquisition and related expense                           214               1,056           1,110          1,896
Non-cash bonus expense                                (1,526)                   -               -              -
Adjusted EBITDA (loss)                        $      (14,267)     $       (9,925)   $    (21,337)     $ (19,519)
Adjusted EBITDA (loss) as a percentage of
revenue                                                  (20) %            

(19) % (16) % (25) %

Adjusted EBITDA (loss) for the three months ended June 30, 2022 was $14.3
million, a $4.4 million decline from Adjusted EBITDA (loss) of $9.9 million for
the same period in 2021. Adjusted EBITDA (loss) for the six months ended June
30, 2022 was $21.3 million, a $1.8 million decline from Adjusted EBITDA (loss)
of $19.5 million for the same period in 2021. During 2022, the Company acquired
RWS for an aggregate purchase price of $45.7 million. During 2021, the Company
acquired a number of businesses with an aggregate purchase price of $346.3
million as disclosed in the Company's Annual Report on Form 10-K. These
acquisitions included V12 Data (acquired in January 2021), HOA (acquired in
April 2021), Rynoh (acquired in May 2021), AHP (acquired in September 2021) and
Floify (acquired in October 2021). Other than V12 Data, HOA and Rynoh, these
businesses were not owned by the Company during the three and six months ended
June 30, 2021 and, therefore, no revenue and Adjusted EBITDA (loss) was
recognized from these businesses during these periods. The decline in Adjusted
EBITDA (loss) in 2022 is primarily driven by the macro housing environment
affecting both segments, and higher volume of claims paid out by HOA in the
second quarter of 2022, affecting the Insurance segment, as well as by continued
investments in sales and marketing and product and technology related to
consumer experience, app build out, data platforms and investments in
establishing and maintaining SOX and other internal controls across IT and
accounting organizations. This decline was partially offset by the impact of the
2022 and 2021 acquisitions.

Liquidity and Capital Resources

Since inception, as a private company, the Company has financed its operations
primarily from the sales of redeemable convertible preferred stock and
convertible promissory notes, and proceeds from the senior secured term loans.
On December 23, 2020, the Company received approximately $269.5 million of
aggregate cash proceeds from recapitalization, net of transaction costs, as it
began trading publicly.

During 2021, the Company completed a private offering of $425 million aggregate
principal amounts of convertible debt maturing in 2026, and raised $126.7
million and $4.3 million from exercise of public warrants and stock options,
respectively.

As of June 30, 2022, the Company had cash and cash equivalents of $271.0 million
and $11.1 million of restricted cash, respectively. Restricted cash consists of
funds held for the payment of possible warranty claims as required in 25 states;
funds held in certificates of deposits and money market mutual funds pledged to,
or held in escrow with, certain state insurance regulators in connection with
insurance operations; customer deposits; and acquisition indemnifications.

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The Company has incurred net losses since its inception, and has an accumulated
deficit at June 30, 2022 and December 31, 2021 totaling $456.3 million and
$424.1 million, respectively.

As of June 30, 2022 and December 31, 2021, the Company had $426.5 million and
$425.6 million aggregate principal amount outstanding in convertible notes and
promissory notes, respectively.

Based on the Company's current operating and growth plan, management believes
cash and cash equivalents at June 30, 2022, are sufficient to finance the
Company's operations, planned capital expenditures, working capital requirements
and debt service obligations for at least the next 12 months. As the Company's
operations evolve and continue its growth strategy, including through
acquisitions, the Company may elect or need to obtain alternative sources of
capital, and it may finance additional liquidity needs in the future through one
or more equity or debt financings. The Company may not be able to obtain equity
or additional debt financing in the future when needed or, if available, the
terms may not be satisfactory to the Company or could be dilutive to its
stockholders.

Porch Group, Inc. is a holding company that transacts a majority of its business
through operating subsidiaries, including insurance subsidiaries. Consequently,
the Company's ability to pay dividends and expenses is largely dependent on
dividends or other distributions from its subsidiaries. The Company's insurance
company subsidiaries are highly regulated and are restricted by statute as to
the amount of dividends they may pay without the prior approval of their
respective regulatory authorities. As of June 30, 2022, cash and cash
equivalents of $35.5 million and investments held by these companies was $64.4
million.

The Company may, at any time and from time to time, seek to retire or purchase
its outstanding debt or equity through cash purchases and/or exchanges for
equity or debt, in open-market purchases, privately negotiated transactions or
otherwise. Such repurchases or exchanges, if any, will be upon such terms and at
such prices as we may determine, and will depend on prevailing market
conditions, liquidity requirements, contractual restrictions and other factors.
The amounts involved may be material.

The following table provides a summary of cash flow data for the six months
ended June 30, 2022 and 2021:

                                            Six Months Ended June 30,             $            %
                                               2022               2021          Change       Change

                                           (dollar amounts in thousands)

Net cash used in operating activities    $        (2,306)     $   (30,772)    $    28,466         93 %
Net cash used in investing activities            (38,404)        (131,298)         92,894         71 %
Net cash (used) provided by financing
activities                                        (2,005)          107,040      (109,045)         NM
Change in cash, cash equivalents and
restricted cash                          $       (42,715)     $   (55,030)    $    12,315         NM


Operating Cash Flows

Net cash used in operating activities was $2.3 million for the six months ended
June 30, 2022. Net cash used in operating activities consists of net loss of
$32.2 million, adjusted for non-cash items and the effect of changes in working
capital. Non-cash adjustments include stock-based compensation expense of $15.6
million, depreciation and amortization of $12.9 million, non-cash interest
expense of $2.3 million, fair value adjustments to contingent consideration of
$4.7 million (loss), and fair value adjustments to earnout liability and private
warrant liability of $13.8 million (gain) and $14.3 million (gain),
respectively. Net changes in working capital were a use of cash of $20.3
million, primarily due to increases in reinsurance balance due and current
liabilities, offset by losses and loss adjustment expense reserves, other
insurance liabilities and deferred revenue.

Net cash used in operating activities was $30.8 million for the six months ended
June 30, 2021. Net cash used in operating activities consists of net loss of
$81.4 million, adjusted for non-cash items and the effect of changes in working
capital. Non-cash adjustments include stock-based compensation expense of $23.5
million, depreciation and amortization of $6.4 million, non-cash accrued and
payment-in-kind interest of $0.1 million, fair value adjustments to earnout
liability and private warrant liability of $22.8 million and $20.2 million,
respectively. Net changes in working capital were a use of cash of $13.0
million, primarily due to increases in current liabilities.

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  Table of Contents

Investing Cash Flows

Net cash used in investing activities was $38.4 million for the six months ended
June 30, 2022. Net cash used in investing activities is primarily related to
acquisitions, net of cash acquired of $32.0 million, purchases of investments of
$13.6 million, investments in developing internal-use software of $3.5 million,
and purchases of property and equipment of $1.5 million. This was offset by the
cash inflows related to maturities and sales of investments of $12.2 million.

Net cash used in investing activities was $131.3 million for the six months
ended June 30, 2021. Net cash used in investing activities is primarily related
to investments to develop internal use software of $1.5 million and
acquisitions, net of cash acquired of $127.9 million.

Financing Cash Flows

Net cash used in financing activities was $2.0 million for the six months ended
June 30, 2022. Net cash used in financing activities is primarily related to
shares repurchased to pay income tax withholdings upon vesting of RSUs of $1.9
million, payments of acquisition-related contingent consideration of $1.6
million and debt repayments of $0.2 million. This was partially offset by
proceeds from line of credit of $1.0 million and exercises of stock options of
$0.7 million.

Net cash provided by financing activities was $107.0 million for the six months
ended June 30, 2021. Net cash provided by financing activities is primarily
related to exercises of warrants and stock option of $129.3 million, offset by
shares repurchased to pay income tax withholdings upon vesting of RSUs of $22.1
million and debt repayments of $0.2 million.

Off-Balance Sheet Arrangements

Since the date of incorporation, the Company has not engaged in any off-balance
sheet arrangements, as defined in the rules and regulations of the Securities
and Exchange Commission (the "SEC").

Recent Accounting Pronouncements

See Note 1 in the notes to the unaudited condensed consolidated financial
statements included in Part I, Item 1 of this Quarterly Report for more
information about recent accounting pronouncements, the timing of their
adoption, and the assessment, to the extent one has been made, of their
potential impact on the Company's financial condition and results of operations.