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Porch Group Reports Strong Fourth Quarter and Full Year 2020 Financial Results

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Company Increases Full Year 2021 Revenue Guidance to $175 Million, Representing 140% Year-over-Year Growth

SEATTLE, March 30, 2021 (GLOBE NEWSWIRE) -- Porch Group, Inc. (“Porch” or “the Company”) (NASDAQ: PRCH), a leading vertical software company reinventing the home services and insurance industries, today reported financial results for the fourth quarter and full year ended December 31, 2020.

Fourth Quarter 2020 and Recent Operational Highlights

  • Closed business combination with PropTech Acquisition Corporation, bringing a leading vertical software and services platform for the home to the public market.

  • Announced four strategic acquisitions (Homeowners of America, V12, PalmTech and iRoofing) that marked the Company’s ambitions in InsurTech and strengthened Porch’s rapidly expanding platform for home service companies and homeowners.

  • Expanded leadership team with key appointments, including Adam Kornick as president of Insurtech, Matthew Cullen as general counsel and secretary, Joshua Steffan as VP and group GM, Inspection and Real Estate, Andrew Beck as head of Contractor Tools SaaS, Malcolm Conner leading Porch’s Home Services group, and Manisha Patel as VP of finance.

Fourth Quarter 2020 Financial Results
Total revenue for the fourth quarter of 2020 was $19.5 million, an increase of 7% from $18.3 million in the fourth quarter of 2019. When adjusting for past divestitures by the Company, year-over-year growth was 34%, up from $14.5 million in the fourth quarter of 2019 pro forma. The increase in total revenue was driven by selling software to more companies and significantly increasing both the B2B SaaS fees and transaction revenue generated per company.

Cost of revenue as a percentage of total revenue for the fourth quarter of 2020 was 22%.

Adjusted EBITDA loss, a non-GAAP metric, for the fourth quarter of 2020 totaled $3.2 million (or -17% of total revenue), an improvement from Adjusted EBITDA loss of $9.3 million (or -51% of total revenue) in the fourth quarter of 2019, and an improvement from Adjusted EBITDA loss of $8.1 million (or -56% of total revenue) pro forma adjusted for past divestitures in the fourth quarter of 2019.

As of December 31, 2020, cash, cash equivalents, and restricted cash totaled $207.5 million.

Full Year 2020 Financial Results
Total revenue for the full year 2020 increased 28% to $73.2 million from $56.0 million in 2019 pro forma adjusted for past divestitures. 2019 as-reported total revenue included $77.6 million in revenue contribution from previously divested businesses. The $73.2 million in total revenue for 2020 exceeded the Company’s guidance of $72 million.

Cost of revenue as a percentage of total revenue for the full year 2020 was 24%, continuing to demonstrate the high margins of Porch’s vertical software platform.

Adjusted EBITDA loss, a non-GAAP metric, for the full year 2020 totaled $17.5 million (or -24% of total revenue), an improvement from Adjusted EBITDA loss of $32.0 million (or -57% of total revenue) in 2019 pro forma adjusted for past divestitures.

Fourth Quarter 2020 Key Performance Indicators (KPIs)
Software and services to companies:

  • Average number of companies increased to 11,150 from 10,800 in Q3 2020

  • Average revenue per company per month increased 32% to $583 from $450 in Q4 2019

Monetized services for consumers:

  • Number of monetized services was approximately 170,000 in Q4 2020, with Porch monetizing insurance on a per sale basis with its in-house insurance agency. This was similar volume of total monetized services in Q4 2019 when Porch was previously monetizing insurance on a per quote basis.

  • Average revenue per monetized service increased 36% to $103 in Q4 2020 from $78 in Q4 2019

Management Commentary
“The fourth quarter marked a strong finish to a successful and transformative year for Porch,” said Matt Ehrlichman, founder, chairman and CEO. “We delivered strong results for the full year 2020, highlighted by 34% revenue growth when adjusting for past divestitures and a 2x improvement in Adjusted EBITDA margin. Achieving these results in the face of a pandemic and a transformational merger is a testament to our team, our partners, our customers, and the resilience of our operating model.

“Overall, our vertical software platform with SaaS and transaction monetization is working extremely well, as evidenced by approximately 85% year-over-year revenue growth rate expected in Q1 2021. We continue to have success generating more revenue per monetized service as we focus on higher value services like insurance. After we close the Homeowners of America acquisition, which is expected to occur in Q2, we plan to expand its footprint beyond the six states it operates in today, which we expect to significantly improve our long-term growth rates and value per monetized service.

“We entered 2021 with accelerating momentum, deep competitive moats, a massive $320 billion total addressable market, and a multiple pronged growth strategy, which we expect will enable us to grow rapidly for a long period of time. We believe this is only the beginning of our journey to build a truly great and enduring company.”

Full Year 2021 Financial Outlook
Porch provides guidance based on current market conditions and expectations. The Company emphasizes that its guidance is subject to various important cautionary factors, including those referenced in the section entitled "Forward-Looking Statements" below. These factors include ongoing risks and uncertainties associated with the COVID-19 pandemic.

For the first quarter of 2021, the Company forecasted total revenue to be approximately $23 million, representing approximately 85% growth compared to total revenue in the first quarter 2020 pro forma adjusted for past divestitures.

For the full year of 2021, Porch raised its 2021 revenue outlook from $170 million to $175 million, representing 140% year-over-year revenue growth. Porch continues to expect approximately 25% of 2021 total revenue to be from B2B SaaS fees, approximately 65% of revenue from B2B2C move-related services which includes recurring insurance revenue, and approximately 10% of revenues from post-move services. Porch reiterated its 2021 guidance for contribution margin, defined as total revenue less all variable expense, of 40%, an improvement from 31% and 19% in 2020 and 2019 respectively, pro forma adjusted for past divestitures. The Company expects Adjusted EBITDA margin of -10% to -16% for the full year of 2021, which is an improvement from -24% in 2020 and -57% in 2019 pro forma adjusted for past divestitures.

Conference Call        
Porch management will host a conference call today (March 30, 2021) at 5:00 p.m. Eastern time (2:00 p.m. Pacific time). The presentation will be accompanied by a slide presentation available on the Investor Relations section of the Company’s website. A question-and-answer session will follow management’s prepared remarks.

All are invited to listen to the event by registering for the webinar here.

To access the webinar by telephone, please see below:

Or Mobile one-tap:
US: +16699006833,,83672374549# or +14086380968,,83672374549#

Or Telephone:
Dial (for higher quality, dial a number based on your current location):     
US: +1 669 900 6833 or +1 408 638 0968 or +1 346 248 7799 or +1 253 215 8782 or +1 646 876 9923 or +1 301 715 8592 or +1 312 626 6799

Webinar ID: 836 7237 4549
Passcode: 031990

International numbers available: https://gatewayir.zoom.us/u/kbSf25i2nO

If you have any difficulty connecting with the conference call or webcast, please contact Porch’s investor relations team at (949) 574-3860 or PRCH@gatewayir.com.

A replay of the webinar will also be available in the Investor Relations section of Porch’s corporate website.

About Porch Group
Seattle-based Porch Group, the vertical software platform for the home, provides software and services to more than 11,150 home services companies such as home inspectors, moving companies, real estate agencies, utility companies, and warranty companies. Through these relationships and its multiple brands, Porch provides a moving concierge service to homebuyers, helping them save time and make better decisions on critical services, including insurance, moving, security, TV/internet, home repair and improvement, and more. To learn more about Porch, visit porchgroup.com or porch.com.

2020 Financial Information; Non-GAAP Financial Measures
Some of the financial information and data contained in this press release, such as Adjusted EBITDA, Adjusted EBITDA margin and contribution margin, has not been prepared in accordance with United States generally accepted accounting principles (“GAAP”). Porch defines Adjusted EBITDA as net income (loss) plus interest expense, net, income tax expense (benefit), other expense, net, and depreciation and amortization, certain non-cash long-lived asset impairment charges, stock-based compensation expense and acquisition-related impacts, including compensation to the sellers that requires future service, amortization of intangible assets, gains (losses) recognized on changes in the value of contingent consideration arrangements, if any, gain or loss on divestitures and certain transaction costs. Adjusted EBITDA margin is defined as Adjusted EBITDA as a percentage of total revenue. Contribution margin is defined as revenue less all variable expenses, including cost of revenue, market, and sales. See the reconciliation table below for more details regarding these non-GAAP measurements, including the reconciliation of historical non-GAAP figures to the nearest comparable GAAP measure.

Porch is not providing reconciliations of expected Adjusted EBITDA, Adjusted EBITDA margin or contribution margin for future periods to the most directly comparable measures prepared in accordance with GAAP because Porch is unable to provide these reconciliations without unreasonable effort because certain information necessary to calculate such measures on a GAAP basis is unbailable or dependent on the timing of future events outside of our control.

Porch uses these non-GAAP measures to compare Porch’s performance to that of prior periods for budgeting and planning purposes. Porch believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating projected operating results and trends in and in comparing Porch’s financial measures with other similar companies, many of which present similar non-GAAP financial measures to investors. Porch's method of determining these non-GAAP measures may be different from other companies' methods and, therefore, may not be comparable to those used by other companies and Porch does not recommend the sole use of these non-GAAP measures to assess its financial performance. Porch management does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP.

You should review the following reconciliation of non-GAAP measures to the nearest comparable GAAP measures, and not rely on any single financial measure to evaluate Porch’s business:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q4 2020

 

Q4 2019

 

FY 2020

 

FY 2019

Net loss

$

(18,060

)

$

(20,480

)

 

$

(51,609

)

 

$

(103,319

)

Interest expense

 

5,311

 

 

6,851

 

 

 

14,734

 

 

 

7,134

 

Income tax (benefit) expense

 

(1,691

)

 

82

 

 

 

(1,691

)

 

 

96

 

Depreciation and amortization

 

1,623

 

 

1,992

 

 

 

6,644

 

 

 

7,377

 

Other expense, net

 

(4,670

)

 

483

 

 

 

(2,791

)

 

 

7,966

 

Non-cash long-lived asset impairment charge

 

71

 

 

1,028

 

 

 

611

 

 

 

1,534

 

Non-cash stock-based compensation

 

9,864

 

 

359

 

 

 

11,103

 

 

 

34,855

 

Revaluation of contingent consideration

 

200

 

 

(300

)

 

 

1,700

 

 

 

(300

)

Acquisition and related (income) expense

 

805

 

 

697

 

 

 

1,862

 

 

 

7,821

 

Gain on divestiture of a business

 

 

 

 

 

 

(1,442

)

 

 

 

 

SPAC transaction bonus

 

3,350

 

 

 

 

 

3,350

 

 

 

 

Adjusted EBITDA (loss)

$

(3,197

)

$

(9,288

)

 

$

(17,529

)

 

$

(36,836

)

Adjusted EBITDA (loss) from Divested business

 

 

 

(1,176

)

 

 

 

 

 

(4,807

)

Proforma Adjusted EBITDA (loss)

$

(3,197

)

 

(8,112

)

 

$

(17,529

)

 

 

(32,029

)

 

 

 

 

 

 

 

 

 

 

 


 

 

 

 

 

 

 

 

 

 

 

FY 2020

 

FY 2019

Revenue

$

73,216

 

 

$

77,595

 

Cost of Revenue

 

17,562

 

 

 

21,500

 

Revenue- Cost of Revenue

 

55,654

 

 

 

56,095

 

Variable Selling & Marketing and Advertising

 

32,661

 

 

 

43,942

 

Contribution Margin

$

22,993

 

 

$

12,153

 

Contribution Margin % of revenue

 

31

%

 

 

16

%

Proforma Contribution Margin

 

 

 

 

19

%

Investor Relations Contact:
Gateway Investor Relations
Cody Slach, Matt Glover
(949) 574-3860
PRCH@gatewayir.com


Porch Group, Inc.

Condensed Consolidated Statements of Operations
(In thousands, except share and per share data)

 

 

 

 

 

 

 

 

 

2020

 

    

2019

 

Revenue

 

$

73,216

 

 

$

77,595

 

Operating expenses(1):

 

 

  

 

 

  

Cost of revenue

 

 

17,562

 

 

 

21,500

 

Selling and marketing

 

 

41,768

 

 

 

56,220

 

Product and technology

 

 

28,298

 

 

 

30,992

 

General and administrative

 

 

28,387

 

 

 

52,011

 

(Gain) loss on divestiture of businesses

 

 

(1,442

)

 

 

4,994

 

Total operating expenses

 

 

114,573

 

 

 

165,717

 

Operating loss

 

 

(41,357

)

 

 

(88,122

)

Other income (expense):

 

 

  

 

 

  

Interest expense

 

 

(14,734

)

 

 

(7,134

)

Other income (expense), net

 

 

2,791

 

 

 

(7,967

)

Total other income (expense)

 

 

(11,943

)

 

 

(15,101

)

Loss before income taxes

 

 

(53,300

)

 

 

(103,223

)

Income tax (benefit) expense

 

 

(1,691

)

 

 

96

 

Net loss

 

$

(51,609

)

 

$

(103,319

)

Induced conversion of preferred stock

 

 

(17,284

)

 

 

 

Net loss attributable to common stockholders

 

$

(68,893

)

 

$

(103,319

)

 

 

 

  

 

 

  

Net loss attributable per share to common stockholders:

 

 

  

 

 

  

Basic

 

$

(1.90

)

 

$

(3.31

)

Diluted

 

$

(1.90

)

 

$

(3.31

)

 

 

 

  

 

 

  

Weighted-average shares used in computing net loss attributable per share to common stockholders:

 

 

  

 

 

  

Basic

 

 

36,344,234

 

 

 

31,170,351

 

Diluted

 

 

36,344,234

 

 

 

31,170,351

 


Porch Group, Inc.

Condensed Consolidated Balance Sheets
(In thousands)

 

 

 

 

 

 

 

 

 

2020

 

    

2019

 

Assets

 

 

  

 

 

  

Current assets

 

 

  

 

 

  

Cash and cash equivalents

 

$

196,046

 

 

$

4,179

 

Accounts receivable, net

 

 

4,661

 

 

 

4,710

 

Prepaid expenses and other current assets

 

 

3,891

 

 

 

1,285

 

Restricted cash

 

 

11,407

 

 

 

 

Total current assets

 

 

216,005

 

 

 

10,174

 

Property, equipment, and software, net

 

 

4,593

 

 

 

6,658

 

Goodwill

 

 

28,289

 

 

 

18,274

 

Intangible assets, net

 

 

15,961

 

 

 

9,832

 

Restricted cash, non-current

 

 

 

 

 

3,000

 

Long-term insurance commissions receivable

 

 

3,365

 

 

 

 

Other assets

 

 

378

 

 

 

530

 

Total assets

 

$

268,591

 

 

$

48,468

 

 

 

 

  

 

 

  

Liabilities and Stockholders’ Equity (Deficit)

 

 

  

 

 

  

Current liabilities

 

 

  

 

 

  

Accounts payable

 

$

8,903

 

 

$

4,806

 

Accrued expenses and other current liabilities

 

 

9,991

 

 

 

17,071

 

Accrued acquisition compensation

 

 

 

 

 

8,624

 

Deferred revenue

 

 

4,870

 

 

 

3,333

 

Refundable customer deposit

 

 

2,664

 

 

 

3,167

 

Current portion of long-term debt (includes $0 and $11,659 at fair value, respectively)

 

 

4,746

 

 

 

20,461

 

Total current liabilities

 

 

31,174

 

 

 

57,462

 

Long-term debt

 

 

43,237

 

 

 

40,659

 

Refundable customer deposit, non-current

 

 

529

 

 

 

3,107

 

Earnout liability, at fair value

 

 

50,442

 

 

 

 

Other liabilities (includes $3,549 and $6,784 at fair value, respectively)

 

 

3,798

 

 

 

7,219

 

Total liabilities

 

 

129,180

 

 

 

108,447

 

Commitments and contingencies (Note 12)

 

 

  

 

 

  

Stockholders’ equity (deficit)

 

 

  

 

 

  

Common stock, $0.0001 par value:

 

 

8

 

 

 

3

 

Authorized shares – 400,000,000 and 52,575,160

 

 

  

 

 

  

Issued and outstanding shares – 81,669,151 and 34,197,822

 

 

 

 

 

 

Additional paid-in capital

 

 

454,486

 

 

 

203,492

 

Accumulated deficit

 

 

(315,083

)

 

 

(263,474

)

Total stockholders’ equity (deficit)

 

 

139,411

 

 

 

(59,979

)

Total liabilities and stockholders’ equity (deficit)

 

$

268,591

 

 

$

48,468

 


Porch Group, Inc.

Consolidated Statements of Cash Flows
(In thousands)

 

 

 

 

 

 

 

 

    

2020

 

    

2019

 

Cash flows from operating activities:

 

 

  

 

 

  

Net loss

 

$

(51,609

)

 

$

(103,319

)

Adjustments to reconcile net loss to net cash used in operating activities

 

 

 

 

 

  

Depreciation and amortization

 

 

6,644

 

 

 

7,377

 

Loss on sale and impairment of long-lived assets

 

 

895

 

 

 

1,088

 

Loss (gain) on extinguishment of debt

 

 

(5,748

)

 

 

483

 

Loss on remeasurement of debt

 

 

895

 

 

 

6,159

 

Loss (gain) on divestiture of businesses

 

 

(1,442

)

 

 

4,994

 

Loss on remeasurement of warrants

 

 

2,584

 

 

 

2,090

 

Loss (gain) on remeasurement of contingent consideration

 

 

1,700

 

 

 

(300

)

Stock-based compensation

 

 

11,409

 

 

 

35,972

 

Warrants issued for services

 

 

 

 

 

315

 

Interest expense (non-cash)

 

 

7,488

 

 

 

2,369

 

Deferred taxes

 

 

(30

)

 

 

29

 

Other

 

 

(200

)

 

 

236

 

Change in operating assets and liabilities, net of acquisitions and divestitures

 

 

  

 

 

  

Accounts receivable

 

 

16

 

 

 

(1,840

)

Prepaid expenses and other current assets

 

 

(2,398

)

 

 

603

 

Long-term insurance commissions receivable

 

 

(3,365

)

 

 

 

Accounts payable

 

 

3,793

 

 

 

2,361

 

Accrued expenses and other current liabilities

 

 

(15,860

)

 

 

7,704

 

Deferred revenue

 

 

1,868

 

 

 

(803

)

Refundable customer deposits

 

 

(3,521

)

 

 

6,122

 

Other

 

 

(1,788

)

 

 

(978

)

Net cash used in operating activities

 

 

(48,669

)

 

 

(29,335

)

Cash flows from investing activities:

 

 

  

 

 

  

Purchases of property and equipment

 

 

(279

)

 

 

(477

)

Capitalized internal use software development costs

 

 

(2,601

)

 

 

(4,096

)

Divestiture of businesses, net of cash disposed

 

 

 

 

 

(750

)

Acquisitions, net of cash acquired

 

 

(7,791

)

 

 

116

 

Net cash used in investing activities

 

 

(10,671

)

 

 

(5,208

)

Cash flows from financing activities:

 

 

  

 

 

  

Proceeds from recapitalization and PIPE financing

 

 

305,133

 

 

 

 

Distribution to stockholders

 

 

(30,000

)

 

 

 

Transaction costs - recapitalization

 

 

(5,652

)

 

 

 

Proceeds from debt issuance, net of fees

 

 

66,190

 

 

 

31,300

 

Repayments of principal and related fees

 

 

(81,640

)

 

 

(202

)

Proceeds from issuance of redeemable convertible preferred stock, net of fees

 

 

4,714

 

 

 

3,274

 

Repurchase of stock

 

 

(42

)

 

 

 

Proceeds from exercises of stock options and warrants

 

 

911

 

 

 

114

 

Net cash provided by financing activities

 

 

259,614

 

 

 

34,486

 

Change in cash, cash equivalents, and restricted cash

 

$

200,274

 

 

$

(57

)

Cash, cash equivalents, and restricted cash, beginning of period

 

$

7,179

 

 

$

7,236

 

Cash, cash equivalents, and restricted cash end of period

 

$

207,453

 

 

$

7,179