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Porch Group Reports Third Quarter 2022 Results

Porch Group, Inc.
Porch Group, Inc.

- Reports $75.4 Million of Revenue, up 20% Year-Over-Year

- Announces Authorization of Up to $15 Million Repurchase Program

- Provides Updated 2022 Guidance; Reflecting Weather and Housing Market Impacts

SEATTLE, Nov. 08, 2022 (GLOBE NEWSWIRE) -- Porch Group, Inc. (“Porch Group” or “the Company”) (NASDAQ: PRCH), a leading vertical software company reinventing the home services and insurance industries, today reported third-quarter results for the Company as of September 30, 2022, with revenues of $75.4 million, compared to third-quarter 2021 revenues of $62.8 million. For the nine months ended September 30, 2022, Porch Group reported revenues of $208.7 million, compared to $140.9 million in 2021.

CEO Summary

“While macroeconomic headwinds continue to impact certain industries in which we operate, Porch Group continues to progress toward becoming one of the fastest growing homeowners insurance companies with the important long-term advantages our vertical software platform provides,” said Matt Ehrlichman, founder and Chief Executive Officer of Porch Group, Inc. “Due to the continued execution from our team, we are still tracking towards Adjusted EBITDA profitability in the second half of 2023, actively engaged in solutions to improve the capital efficiency and lower volatility at our insurance business, and are making progress on key initiatives to position us for continued strong growth anticipated throughout 2023.”

Third Quarter 2022 Financial Results

  • Total revenue for the third quarter of 2022 was $75.4 million, an increase of $12.6 million from $62.8 million in the third quarter of 2021.

  • Revenue less cost of revenue for the third quarter of 2022 was $42.1 million or 55.9% of total revenue, compared to $43.6 million or 69.5% of total revenue for the third quarter of 2021. Volatile weather, including Hurricane Ian, and inflation-related insurance claims costs drove the higher-than-average third quarter cost of revenue.

  • GAAP net loss for the third quarter of 2022 totaled $86.4 million, compared to a GAAP net loss of $5.1 million for the third quarter of 2021. GAAP net loss was impacted by a $57.1 million goodwill and intangible impairment recorded in the quarter.

  • Adjusted EBITDA loss for the third quarter of 2022 totaled $ (13.0) million or -17.2% of total revenue, compared to Adjusted EBITDA of $873 thousand or 1.4% of total revenue for the third quarter of 2021.

Segment Results for the Third Quarter 2022

  • Vertical Software revenue for the quarter was $44.5 million, revenue less cost of revenue was $29.9 million or 67.2% of Vertical Software revenue, and GAAP net loss was $2.7 million. Adjusted EBITDA for the third quarter was $5.0 million, or 11.1% of Vertical Software revenue.

  • Insurance revenue for the quarter was $30.9 million, revenue less cost of revenue was $12.2 million or 39.6% of Insurance revenue, and GAAP net loss was $6.9 million. Adjusted EBITDA loss for the third quarter was $2.3 million, or (7.5)% of Insurance revenue.

  • Insurance gross written premium for the quarter was $157 million with over 391 thousand policies.

Third Quarter 2022 and Recent Operational Highlights

  • Announced the appointment of Shawn Tabak (Chief Financial Officer), Nicholas Graham (Group GM, Moving Group), and Amanda Reierson and Camilla Velasquez (new and independent members of Porch Group’s Board of Directors).

  • Filed and received approval from 5 states to utilize Porch Group’s proprietary data in insurance pricing.

  • Launched home warranty in the State of Florida, now offering warranties across 49 states.

  • Floify, the mortgage industry’s leading point-of-sale solution, announced Technology Industry Partnership with National Association of Mortgage Brokers (NAMB), named a Service Partner of the Year by the NAMB

  • Launched the Porch consumer app to more consumers of home inspection companies, and expanded insurance embedded within Floify.

  • Ended the quarter with approximately $276 million in cash, restricted cash, and cash equivalents

Third Quarter 2022 Key Performance Indicators (KPIs)

Software and services to companies:

  • Average companies in quarter increased to 30,951 from 20,419 in the third quarter of 2021.

  • Average revenue per account per month in quarter decreased to $812 from $987 in the third quarter of 2021, driven partly by macroeconomic impacts to the move and post-move businesses.

Monetized services for consumers:

  • Number of monetized services in quarter was 318,452 in the third quarter of 2022, down from 338,157 in the third quarter of 2021.

  • Average revenue per monetized service in quarter was $181, a 36.1% increase from $133 in the third quarter of 2021.

Repurchase Program

Porch Group also announced today that its Board of Directors has approved a new repurchase program authorizing management’s deployment of up to $15 million to repurchase the Company’s outstanding common stock and/or convertible notes. Repurchases under the newly authorized program may be made from time to time on the open market between November 10, 2022 and June 30, 2023, at prevailing market prices, in privately negotiated transactions, in block trades, and/or through other legally permissible means, depending on market conditions and in accordance with applicable rules and regulations (including through Rule 10b5-1 trading plans and under 10b-18 of the Exchange Act). Certain executive officers and directors of Porch Group may also purchase shares of Company common stock in accordance with the Company’s insider trading policy and federal securities laws.

Matt Ehrlichman commented, “We believe the current market value of both the common shares and convertible note creates an attractive opportunity to consider a repurchase. My primary focus has always been finding opportunities to create value for long-term shareholders. I believe this repurchase program reflects our confidence in Porch Group’s future and our commitment to driving long-term value.”

The timing and amount of common stock or convertible notes repurchased will depend on various factors, including price, corporate and regulatory requirements, market conditions, and other corporate liquidity requirements and priorities. All purchased shares will be cancelled. The repurchase program does not obligate the Company to acquire a specific dollar amount or number of shares or notes and may be modified, suspended, or discontinued at any time without prior notice.

Full Year 2022 Financial Outlook
Porch Group provides updated guidance based on current market conditions and expectations.

 

 

 

 

 

Previous 2022E Guidance

 

Updated 2022E Guidance

Revenue
~$290M

∆ Drivers



Lower-than-expected home sales



Worse-than-expected weather, including Hurricane Ian



Higher insurance claims costs

Revenue
~$275M

Vertical Software Revenue
~$175M

Insurance Revenue
~$115M

Vertical Software Revenue
~$154M

Insurance Revenue
~$121M

Revenue Less Cost of Revenue
~$195M

Revenue Less Cost of Revenue
~$175M

Adj. EBITDA1
~-10% and > -$30.0M

Adj. EBITDA1
~-17% and >-$48.0M

2022 Gross Written Premium2
~$520M

 

2022 Gross Written Premium2
~$520M

1 Adjusted EBITDA is a non-GAAP measure.
2 2022 gross written premium (“GWP”) guidance is stated as the expected full-year GWP for 2022 and is the total premium written across Homeowners of America, Porch Group’s insurance agency, and warranty products for the face value of one year’s premium, before deductions for reinsurance and ceding commissions.

Porch Group is not providing reconciliations of expected Adjusted EBITDA (loss) for future periods to the most directly comparable measures prepared in accordance with GAAP because the Company is unable to provide these reconciliations without unreasonable effort because certain information necessary to calculate such measures on a GAAP basis is unavailable or dependent on the timing of future events outside of the Company’s control.

Conference Call
Porch Group management will host a conference call today November 8, 2022 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.

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

About Porch Group
Seattle-based Porch Group, Inc., the vertical software platform for the home, provides software and services to more than 30,900 home services companies such as home inspectors, mortgage companies and loan officers, title companies, moving companies, real estate agencies, utility companies, and warranty companies. Through these relationships and its multiple brands, Porch Group provides a moving concierge service to homebuyers, helping them save time and make better decisions on critical services, including insurance, warranty, moving, security, TV/internet, home repair and improvement, and more. To learn more about Porch Group, visit porchgroup.com or porch.com.

Investor Relations Contact:
Emily Lear, Head of Investor Relations
Porch Group, Inc.
(701) 214-8177
emilylear@porch.com

Porch Group Press Contact:
Anna Rutter
Gateway Group, Inc.
(949) 574-3860
PRCH@gatewayir.com

Forward-Looking Statements
Certain statements in this release may be considered “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements generally relate to future events or Porch Group’s future financial or operating performance. For example, forward-looking statements include projections of future revenue, revenue less cost of revenue, gross written premium, Adjusted EBITDA (loss), and other metrics, business strategy and plans, and anticipated impacts from pending or completed acquisitions. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expect,” “intend,” “will,” “estimate,” “anticipate,” “believe,” “predict,” “potential” or “continue,” or the negatives of these terms or variations of them or similar terminology. Such forward-looking statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from those expressed or implied by such forward-looking statements.

These forward-looking statements are based upon estimates and assumptions that, while considered reasonable by Porch Group and its management at the time they are made, are inherently uncertain.  Factors that may cause actual results to differ materially from current expectations include, but are not limited to:  (1) expansion plans and opportunities, including recently completed acquisitions as well as future acquisitions or additional business combinations; (2) costs related to being a public company; (3) litigation, complaints, and/or adverse publicity; (4) the impact of changes in consumer spending patterns, consumer preferences, local, regional and national economic conditions, crime, weather, demographic trends and employee availability; (5) further expansion into the insurance industry, and the related federal and state regulatory requirements; (6) privacy and data protection laws, privacy or data breaches, or the loss of data; (7) the duration and scope of the COVID-19 pandemic and its continued effect on the business and financial conditions of Porch Group; and (8) other risks and uncertainties described in the Company’s most recent Form 10-K and subsequent reports filed with the Securities and Exchange Commission (the “SEC”), such as Porch Group’s quarterly reports on Form 10-Q, as well as in its subsequent reports on Form 8-K, all of which are available on the SEC’s website at www.sec.gov.

Nothing in this release should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of such forward-looking statements will be achieved. You should not place undue reliance on forward-looking statements, which speak only as of the date of this release. Unless specifically indicated otherwise, the forward-looking statements in this release 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 release. Porch Group does not undertake any duty to update these forward-looking statements, whether as a result of changed circumstances, new information, future events or otherwise, except as may be required by law.

Non-GAAP Financial Measures
This release includes one or more non-GAAP financial measures, such as Adjusted EBITDA (loss), Adjusted EBITDA (loss) as a percentage of revenue, and average revenue per monetized service.

Porch Group 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, 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 (loss) as a percentage 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 quarter, “average revenue” is defined as total quarterly monetized service transaction revenues generated from monetized services.

Porch Group 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.  Porch Group 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 Group’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, Porch Group'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 Porch Group’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 Company’s presentation of 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.

You should review the tables accompanying this release for reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measure. The Company is not providing reconciliations of non-GAAP financial measures for future periods to the most directly comparable measures prepared in accordance with GAAP.  The Company is unable to provide these reconciliations without unreasonable effort because certain information necessary to calculate such measures on a GAAP basis is unavailable or dependent on the timing of future events outside of its control.

The following table reconciles Adjusted EBITDA (loss) to operating loss for the periods presented (dollar amounts in thousands):

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2022

 

2021

 

2022

 

2021

Segment adjusted EBITDA (loss):

 

 

 

 

 

 

 

 

 

 

 

Vertical Software

$

4,956

 

 

$

7,712

 

 

$

13,978

 

 

$

19,041

 

Insurance

 

(2,317

)

 

 

5,473

 

 

 

(4,099

)

 

 

3,067

 

Corporate and Other

 

(15,611

)

 

 

(12,312

)

 

 

(44,190

)

 

 

(40,754

)

Total segment adjusted EBITDA (loss)

 

(12,972

)

 

 

873

 

 

 

(34,311

)

 

 

(18,646

)

Reconciling items:

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

(8,676

)

 

 

(4,431

)

 

 

(21,574

)

 

 

(10,787

)

Non-cash stock-based compensation expense

 

(5,089

)

 

 

(6,579

)

 

 

(20,645

)

 

 

(30,627

)

Acquisition and related expense

 

(175

)

 

 

(1,958

)

 

 

(1,284

)

 

 

(4,648

)

Impairment loss on intangible assets and goodwill

 

(57,057

)

 

 

 

 

 

(57,057

)

 

 

 

Non-cash losses and impairment of property, equipment and software

 

(31

)

 

 

(76

)

 

 

(101

)

 

 

(216

)

Revaluation of contingent consideration

 

(565

)

 

 

(195

)

 

 

(5,251

)

 

 

380

 

Investment income and realized gains

 

(335

)

 

 

(248

)

 

 

(775

)

 

 

(448

)

Operating loss

$

(84,900

)

 

$

(12,614

)

 

$

(140,998

)

 

$

(64,992

)

The following table presents segment adjusted EBITDA (loss) and consolidated adjusted EBITDA (loss ) as a percentage of segment and consolidated revenue for the periods presented (dollar amounts in thousands):

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 

 

Nine Months Ended September 30, 

 

 

2022

    

2021

    

2022

    

2021

 

Segment adjusted EBITDA (loss):

 

 

 

 

 

 

 

 

Vertical Software

11.1

 

%

18.2

%

11.5

 

%

18.7

 

%

Insurance

(7.5

)

%

26.7

%

(4.7

)

%

7.8

 

%

Total segment adjusted EBITDA (loss)(1)

(17.2

)

%

1.4

%

(16.4

)

%

(13.2

)

%

(1) Total segment adjusted EBITDA (loss) includes Corporate and Other segment adjusted EBITDA (loss).

PORCH GROUP, INC.
Monetized Services Revenue
(all numbers in thousands, unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2022

 

2021

 

2022

 

2021

Monetized services revenue(1)(2)

$

57,567

 

$

45,098

 

$

154,726

 

$

97,611

Other operating revenue

 

17,799

 

 

17,671

 

 

53,970

 

 

43,241

Total revenue

$

75,366

 

$

62,769

 

$

208,696

 

$

140,852

PORCH GROUP, INC.
Revenue Less Cost of Revenue
(all numbers in thousands, unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2022

 

 

Corporate

 

Insurance

 

Vertical Software

 

Consolidated

 

Revenue

$

 

$

30,903

 

 

$

44,463

 

 

$

75,366

 

 

Less: Cost of revenue

 

 

 

(18,679

)

 

 

(14,590

)

 

 

(33,269

)

 

Revenue less cost of revenue

$

 

$

12,224

 

 

$

29,873

 

 

$

42,097

 

 

Revenue less cost of revenue as a percentage of revenue

 

N/A

 

 

40

 

%

 

67

 

%

 

56

 

%


 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2022

 

 

Corporate

 

Insurance

 

Vertical Software

 

Consolidated

 

Revenue

$

 

$

86,732

 

 

$

121,964

 

 

$

208,696

 

 

Less: Cost of revenue

 

 

 

(46,676

)

 

 

(36,340

)

 

 

(83,016

)

 

Revenue less cost of revenue

$

 

$

40,056

 

 

$

85,624

 

 

$

125,680

 

 

Revenue less cost of revenue as a percentage of revenue

 

N/A

 

 

46

 

%

 

70

 

%

 

60

 

%

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 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 Quarter is derived from all customers and total revenue, not only customers and revenues associated with the Company’s referral network.

During the quarter ended September 30, 2022, the Company corrected an immaterial error that impacted the number of Average Companies in Quarter. The following table presents Average Companies in Quarter and Average Revenue per Account per Month in Quarter metrics for the reporting periods starting June 30, 2021 and ending June 30, 2022 were recalculated for the affected quarters to show the impact of the adjustments:

 

2022

 

2022

 

2022

 

2022

 

Q1

 

Q2

 

Q3

 

Q4

Average Companies in Quarter (as previously reported)

 

25,512

 

 

 

28,730

 

 

 

 

 

 

 

Adjustment

 

33

 

 

 

43

 

 

 

 

 

 

 

Average Companies in Quarter (as adjusted)

 

25,545

 

 

 

28,773

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Revenue per Account per Month in Quarter (as previously reported)

$

817

 

 

$

821

 

 

$

 

 

$

 

Adjustment

$

(1

)

 

$

(1

)

 

$

 

 

$

 

Average Revenue per Account per Month in Quarter (as adjusted)

$

816

 

 

$

820

 

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2021

 

2021

 

2021

 

2021

 

Q1

 

Q2

 

Q3

 

Q4

Average Companies in Quarter (as previously reported)

 

13,995

 

 

 

17,120

 

 

 

20,472

 

 

 

24,603

 

Adjustment

 

 

 

 

(38

)

 

 

(53

)

 

 

(2

)

Average Companies in Quarter (as adjusted)

 

13,995

 

 

 

17,082

 

 

 

20,419

 

 

 

24,601

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Revenue per Account per Month in Quarter (as previously reported)

$

637

 

 

$

933

 

 

$

985

 

 

$

776

 

Adjustment

$

 

 

$

2

 

 

$

2

 

 

$

 

Average Revenue per Account per Month in Quarter (as adjusted)

$

637

 

 

$

935

 

 

$

987

 

 

$

776

 

  • 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.

During the quarter ended September 30, 2022, the Company corrected an immaterial error that impacted the number of Monetized Services in Quarter. The following table presents Monetized Services in Quarter and Average Revenue per Monetized Service in Quarter metrics for the reporting periods starting March 30, 2021 and ending June 30, 2022 were recalculated for the affected quarters to show the impact of the adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

2022

 

2022

 

2022

 

2022

 

Q1

 

Q2

 

Q3

 

Q4

Monetized Services in Quarter (as previously reported)

 

254,249

 

 

 

331,889

 

 

 

 

 

 

 

Adjustment

 

8,914

 

 

 

1,707

 

 

 

 

 

 

 

Monetized Services in Quarter (as adjusted)

 

263,163

 

 

 

333,596

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Revenue per Monetized Service in Quarter (as previously reported)

$

176

 

 

$

158

 

 

$

 

 

$

 

Adjustment

$

(6

)

 

$

(1

)

 

$

 

 

$

 

Average Revenue per Monetized Service in Quarter (as adjusted)

$

170

 

 

$

157

 

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

2021

 

2021

 

2021

 

2021

 

Q1

 

Q2

 

Q3

 

Q4

Monetized Services in Quarter (as previously reported)

 

182,779

 

 

 

302,462

 

 

 

329,359

 

 

 

260,352

 

Adjustment

 

7,954

 

 

 

14,212

 

 

 

8,798

 

 

 

7,331

 

Monetized Services in Quarter (as adjusted)

 

190,733

 

 

 

316,674

 

 

 

338,157

 

 

 

267,683

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Revenue per Monetized Service in Quarter (as previously reported)

$

92

 

 

$

118

 

 

$

137

 

 

$

154

 

Adjustment

$

(4

)

 

$

(5

)

 

$

(4

)

 

$

(4

)

Average Revenue per Monetized Service in Quarter (as adjusted)

$

88

 

 

$

113

 

 

$

133

 

 

$

150

 

PORCH GROUP, INC.
Unaudited Condensed Consolidated Balance Sheets
(all numbers in thousands, except share amounts)

 

 

 

 

 

 

 

September 30, 2022

 

December 31, 2021

Assets

 

 

 

 

 

Current assets

 

 

 

 

 

Cash and cash equivalents

$

260,198

 

 

$

315,741

 

Accounts receivable, net

 

37,032

 

 

 

28,767

 

Short-term investments

 

7,212

 

 

 

9,251

 

Reinsurance balance due

 

303,987

 

 

 

228,416

 

Prepaid expenses and other current assets

 

21,160

 

 

 

14,338

 

Restricted cash

 

16,296

 

 

 

8,551

 

Total current assets

 

645,885

 

 

 

605,064

 

Property, equipment, and software, net

 

11,236

 

 

 

6,666

 

Operating lease right-of-use assets

 

4,697

 

 

 

4,504

 

Goodwill

 

228,091

 

 

 

225,654

 

Long-term investments

 

55,357

 

 

 

58,324

 

Intangible assets, net

 

111,728

 

 

 

129,830

 

Restricted cash, non-current

 

500

 

 

 

500

 

Long-term insurance commissions receivable

 

11,930

 

 

 

7,521

 

Other assets

 

3,057

 

 

 

684

 

Total assets

$

1,072,481

 

 

$

1,038,747

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Current liabilities

 

 

 

 

 

Accounts payable

$

6,717

 

 

$

6,965

 

Accrued expenses and other current liabilities

 

36,847

 

 

 

37,675

 

Deferred revenue

 

277,616

 

 

 

201,085

 

Refundable customer deposit

 

19,867

 

 

 

15,274

 

Current portion of long-term debt

 

6,275

 

 

 

150

 

Losses and loss adjustment expense reserves

 

100,298

 

 

 

61,949

 

Other insurance liabilities, current

 

55,945

 

 

 

40,024

 

Total current liabilities

 

503,565

 

 

 

363,122

 

Long-term debt

 

425,012

 

 

 

414,585

 

Operating lease liabilities, non-current

 

2,968

 

 

 

2,694

 

Earnout liability, at fair value

 

57

 

 

 

13,866

 

Private warrant liability, at fair value

 

802

 

 

 

15,193

 

Other liabilities (includes $23,228 and $9,617 at fair value, respectively)

 

24,952

 

 

 

12,242

 

Total liabilities

 

957,356

 

 

 

821,702

 

Commitments and contingencies (Note 12)

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

Common stock, $0.0001 par value:

 

10

 

 

 

10

 

Authorized shares – 400,000,000 and 400,000,000, respectively

 

 

 

 

 

Issued and outstanding shares – 100,410,325 and 97,961,597, respectively

 

 

 

 

 

Additional paid-in capital

 

664,362

 

 

 

641,406

 

Accumulated other comprehensive loss

 

(6,571

)

 

 

(259

)

Accumulated deficit

 

(542,676

)

 

 

(424,112

)

Total stockholders’ equity

 

115,125

 

 

 

217,045

 

Total liabilities and stockholders’ equity

$

1,072,481

 

 

$

1,038,747

 

PORCH GROUP, INC.
Unaudited Condensed Consolidated Statements of Operations
(all numbers in thousands, except share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2022

 

2021

 

2022

 

2021

Revenue

$

75,366

 

 

$

62,769

 

 

$

208,696

 

 

$

140,852

 

Operating expenses(1):

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

33,269

 

 

 

19,158

 

 

 

83,016

 

 

 

44,587

 

Selling and marketing

 

30,245

 

 

 

22,874

 

 

 

84,815

 

 

 

60,636

 

Product and technology

 

14,438

 

 

 

11,317

 

 

 

44,446

 

 

 

34,158

 

General and administrative

 

25,257

 

 

 

22,034

 

 

 

80,360

 

 

 

66,463

 

Impairment loss on intangible assets and goodwill

 

57,057

 

 

 

 

 

 

57,057

 

 

 

 

Total operating expenses

 

160,266

 

 

 

75,383

 

 

 

349,694

 

 

 

205,844

 

Operating loss

 

(84,900

)

 

 

(12,614

)

 

 

(140,998

)

 

 

(64,992

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

(2,085

)

 

 

(1,857

)

 

 

(6,236

)

 

 

(4,296

)

Change in fair value of earnout liability

 

43

 

 

 

7,413

 

 

 

13,809

 

 

 

(15,388

)

Change in fair value of private warrant liability

 

124

 

 

 

2,692

 

 

 

14,391

 

 

 

(17,521

)

Gain (loss) on extinguishment of debt

 

 

 

 

(3,133

)

 

 

 

 

 

5,110

 

Investment income and realized gains, net of investment expenses

 

335

 

 

 

248

 

 

 

775

 

 

 

448

 

Other expense, net

 

69

 

 

 

316

 

 

 

(37

)

 

 

225

 

Total other income (expense)

 

(1,514

)

 

 

5,679

 

 

 

22,702

 

 

 

(31,422

)

Loss before income taxes

 

(86,414

)

 

 

(6,935

)

 

 

(118,296

)

 

 

(96,414

)

Income tax benefit (expense)

 

23

 

 

 

1,836

 

 

 

(268

)

 

 

9,917

 

Net loss

$

(86,391

)

 

$

(5,099

)

 

$

(118,564

)

 

$

(86,497

)

 

 

 

 

 

 

 

 

 

 

 

 

Loss per share - basic (Note 15)

$

(0.88

)

 

$

(0.05

)

 

$

(1.22

)

 

$

(0.93

)

Loss per share - diluted (Note 15)

$

(0.88

)

 

$

(0.08

)

 

$

(1.22

)

 

$

(0.93

)

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in computing basic and diluted loss per share

 

97,792,485

 

 

 

96,839,292

 

 

 

97,009,351

 

 

 

92,544,137

 

Shares used in computing diluted loss per share

 

97,792,485

 

 

 

97,545,942

 

 

 

97,009,351

 

 

 

92,544,137

 

___________________________

(1)   Amounts include stock-based compensation expense, as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2022

 

2021

 

2022

 

2021

Cost of revenue

$

 

$

 

$

 

$

1

Selling and marketing

 

1,689

 

 

1,382

 

 

3,592

 

 

4,888

Product and technology

 

911

 

 

1,367

 

 

3,888

 

 

5,522

General and administrative

 

2,489

 

 

3,135

 

 

13,165

 

 

18,950

 

$

5,089

 

$

5,884

 

$

20,645

 

$

29,361

PORCH GROUP, INC.
Unaudited Condensed Consolidated Statements of Comprehensive Loss
(all numbers in thousands, audited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2022

 

2021

 

2022

 

2021

Net loss

$

(86,391

)

 

$

(5,099

)

 

$

(118,564

)

 

$

(86,497

)

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

Current period change in net unrealized loss, net of tax

 

(2,012

)

 

 

(154

)

 

 

(6,312

)

 

 

113

 

Comprehensive loss

$

(88,403

)

 

$

(5,253

)

 

$

(124,876

)

 

$

(86,384

)

PORCH GROUP, INC.
Unaudited Condensed Consolidated Statements of Stockholders’ Equity (Deficit)
(all numbers in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

Additional

 

 

 

 

Other

 

Total

 

Common Stock

 

Paid-in

 

Accumulated

 

Comprehensive

 

Stockholders’

 

Shares

 

Amount

 

Capital

 

Deficit

 

Loss

 

Equity

Balances as of December 31, 2021

97,961,597

 

 

$

10

 

$

641,406

 

 

$

(424,112

)

 

$

(259

)

 

$

217,045

 

Net loss

 

 

 

 

 

 

 

 

(5,796

)

 

 

 

 

 

(5,796

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(2,515

)

 

 

(2,515

)

Stock-based compensation

 

 

 

 

 

5,854

 

 

 

 

 

 

 

 

 

5,854

 

Contingent consideration for acquisitions

 

 

 

 

 

530

 

 

 

 

 

 

 

 

 

530

 

Vesting of restricted stock awards

245,855

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of stock options

185,685

 

 

 

 

 

473

 

 

 

 

 

 

 

 

 

473

 

Income tax withholdings

(95,951

)

 

 

 

 

(712

)

 

 

 

 

 

 

 

 

(712

)

Balances as of March 31, 2022

98,297,186

 

 

$

10

 

$

647,551

 

 

$

(429,908

)

 

$

(2,774

)

 

$

214,879

 

Net loss

 

 

 

 

 

 

 

 

(26,377

)

 

 

 

 

 

(26,377

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(1,785

)

 

 

(1,785

)

Stock-based compensation

 

 

 

 

 

9,702

 

 

 

 

 

 

 

 

 

9,702

 

Issuance of common stock for acquisitions

628,660

 

 

 

 

 

3,552

 

 

 

 

 

 

 

 

 

3,552

 

Vesting of restricted stock units

563,406

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of stock options

88,772

 

 

 

 

 

219

 

 

 

 

 

 

 

 

 

219

 

Income tax withholdings

(137,496

)

 

 

 

 

(1,210

)

 

 

 

 

 

 

 

 

(1,210

)

Balances as of June 30, 2022

99,440,528

 

 

$

10

 

$

659,814

 

 

$

(456,285

)

 

$

(4,559

)

 

$

198,980

 

Net loss

 

 

 

 

 

 

 

 

(86,391

)

 

 

 

 

 

(86,391

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(2,012

)

 

 

(2,012

)

Stock-based compensation

 

 

 

 

 

5,089

 

 

 

 

 

 

 

 

 

5,089

 

Vesting of restricted stock units

1,062,323

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of stock options

197,758

 

 

 

 

 

416

 

 

 

 

 

 

 

 

 

416

 

Income tax withholdings

(290,284

)

 

 

 

 

(957

)

 

 

 

 

 

 

 

 

(957

)

Balances as of September 30, 2022

100,410,325

 

 

$

10

 

$

664,362

 

 

$

(542,676

)

 

$

(6,571

)

 

$

115,125

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

Additional

 

 

 

 

Other

 

Total

 

Common Stock

 

Paid-in

 

Accumulated

 

Comprehensive

 

Stockholders’

 

Shares

 

Amount

 

Capital

 

Deficit

 

Loss

 

Equity

Balances as of December 31, 2020

81,669,151

 

 

$

8

 

$

424,823

 

 

$

(317,506

)

 

$

 

 

$

107,325

 

Net loss

 

 

 

 

 

 

 

 

(65,101

)

 

 

 

 

 

(65,101

)

Stock-based compensation

 

 

 

 

 

4,462

 

 

 

 

 

 

 

 

 

4,462

 

Stock-based compensation - earnout

 

 

 

 

 

12,373

 

 

 

 

 

 

 

 

 

12,373

 

Issuance of common stock for acquisitions

90,000

 

 

 

 

 

1,169

 

 

 

 

 

 

 

 

 

1,169

 

Reclassification of earnout liability upon vesting

 

 

 

 

 

25,815

 

 

 

 

 

 

 

 

 

25,815

 

Vesting of restricted stock awards

2,078,102

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of stock warrants

8,087,623

 

 

 

1

 

 

93,007

 

 

 

 

 

 

 

 

 

93,008

 

Exercise of stock options

593,106

 

 

 

 

 

355

 

 

 

 

 

 

 

 

 

355

 

Income tax withholdings

(1,062,250

)

 

 

 

 

(16,997

)

 

 

 

 

 

 

 

 

(16,997

)

Transaction costs

 

 

 

 

 

(402

)

 

 

 

 

 

 

 

 

(402

)

Balances as of March 31,2021

91,455,732

 

 

$

9

 

$

544,605

 

 

$

(382,607

)

 

$

 

 

$

162,007

 

Net loss

 

 

 

 

 

 

 

 

(16,297

)

 

 

 

 

 

(16,297

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

267

 

 

 

267

 

Stock-based compensation

 

 

 

 

 

2,466

 

 

 

 

 

 

 

 

 

2,466

 

Stock-based compensation - earnout

 

 

 

 

 

4,176

 

 

 

 

 

 

 

 

 

4,176

 

Issuance of common stock for acquisitions

1,292,441

 

 

 

 

 

28,372

 

 

 

 

 

 

 

 

 

28,372

 

Reclassification of private warranty liability upon exercise

 

 

 

 

 

16,843

 

 

 

 

 

 

 

 

 

16,843

 

Vesting of restricted stock awards

33,182

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of stock warrants

2,862,312

 

 

 

1

 

 

33,761

 

 

 

 

 

 

 

 

 

33,762

 

Exercise of stock options

946,392

 

 

 

 

 

2,227

 

 

 

 

 

 

 

 

 

2,227

 

Income tax withholdings

(296,643

)

 

 

 

 

(5,194

)

 

 

 

 

 

 

 

 

(5,194

)

Transaction costs

 

 

 

 

 

140

 

 

 

 

 

 

 

 

 

140

 

Balances as of June 30, 2021

96,293,416

 

 

$

10

 

$

627,396

 

 

$

(398,904

)

 

$

267

 

 

$

228,769

 

Net loss

 

 

 

 

 

 

 

 

(5,099

)

 

 

 

 

 

(5,099

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

(154

)

 

 

(154

)

Stock-based compensation

 

 

 

 

 

1,641

 

 

 

 

 

 

 

 

 

1,641

 

Stock-based compensation - earnout

 

 

 

 

 

4,243

 

 

 

 

 

 

 

 

 

4,243

 

Issuance of common stock for acquisitions

102,636

 

 

 

 

 

1,937

 

 

 

 

 

 

 

 

 

1,937

 

Reclassification of private warranty liability upon exercise

 

 

 

 

 

14,505

 

 

 

 

 

 

 

 

 

14,505

 

Vesting of restricted stock awards

271,432

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of stock warrants

557,816

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of stock options

339,150

 

 

 

 

 

934

 

 

 

 

 

 

 

 

 

934

 

Income tax withholdings

(231,452

)

 

 

 

 

(1,587

)

 

 

 

 

 

 

 

 

(1,587

)

Capped call transactions

 

 

 

 

 

(52,913

)

 

 

 

 

 

 

 

 

(52,913

)

Balances as of September 30, 2021

97,332,998

 

 

$

10

 

$

596,156

 

 

$

(404,003

)

 

$

113

 

 

$

192,276

 

PORCH GROUP, INC.
Unaudited Condensed Consolidated Statements of Cash Flows
(all numbers in thousands)

 

 

 

 

 

 

 

Nine Months Ended September 30,

 

2022

 

2021

Cash flows from operating activities:

 

 

 

 

 

Net loss

$

(118,564

)

 

$

(86,497

)

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

 

 

 

 

 

Depreciation and amortization

 

21,574

 

 

 

10,787

 

Amortization of operating lease right-of-use assets

 

1,621

 

 

 

1,298

 

Impairment loss on intangible assets and goodwill

 

57,057

 

 

 

 

Loss on sale and impairment of property, equipment, and software

 

200

 

 

 

202

 

Gain on extinguishment of debt

 

 

 

 

(5,110

)

Loss (gain) on remeasurement of private warrant liability

 

(14,391

)

 

 

17,521

 

Loss (gain) on remeasurement of contingent consideration

 

5,251

 

 

 

(380

)

Loss (gain) on remeasurement of earnout liability

 

(13,809

)

 

 

15,388

 

Stock-based compensation

 

20,645

 

 

 

29,361

 

Amortization of investment premium/accretion of discount, net

 

1,702

 

 

 

941

 

Net realized losses on investments

 

187

 

 

 

45

 

Interest expense (non-cash)

 

2,287

 

 

 

67

 

Other

 

480

 

 

 

(1,379

)

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

 

 

 

 

 

Accounts receivable

 

(8,639

)

 

 

(5,424

)

Reinsurance balance due

 

(75,571

)

 

 

(33,097

)

Prepaid expenses and other current assets

 

(6,297

)

 

 

90

 

Accounts payable

 

(248

)

 

 

(23,284

)

Accrued expenses and other current liabilities

 

(8,001

)

 

 

3,031

 

Losses and loss adjustment expense reserves

 

38,349

 

 

 

1,892

 

Other insurance liabilities, current

 

15,921

 

 

 

5,085

 

Deferred revenue

 

71,600

 

 

 

42,948

 

Refundable customer deposits

 

4,593

 

 

 

(2,441

)

Deferred income tax benefit

 

 

 

 

(8,153

)

Long-term insurance commissions receivable

 

(4,409

)

 

 

(3,794

)

Operating lease liabilities, non-current

 

(1,936

)

 

 

(1,469

)

Other

 

(2,410

)

 

 

655

 

Net cash used in operating activities

 

(12,808

)

 

 

(41,717

)

Cash flows from investing activities:

 

 

 

 

 

Purchases of property and equipment

 

(1,986

)

 

 

(588

)

Capitalized internal use software development costs

 

(5,803

)

 

 

(2,629

)

Purchases of short-term and long-term investments

 

(19,446

)

 

 

(19,126

)

Maturities, sales of short-term and long-term investments

 

17,794

 

 

 

16,367

 

Acquisitions, net of cash acquired

 

(37,003

)

 

 

(178,681

)

Net cash used in investing activities

 

(46,444

)

 

 

(184,657

)

Cash flows from financing activities:

 

 

 

 

 

Proceeds from debt issuance, net of fees

 

15,000

 

 

 

413,537

 

Repayments of principal and related fees

 

(150

)

 

 

(42,965

)

Capped call transactions

 

 

 

 

(42,330

)

Proceeds from exercises of warrants

 

 

 

 

126,772

 

Proceeds from exercises of stock options

 

1,108

 

 

 

3,516

 

Income tax withholdings paid upon vesting of restricted stock units

 

(2,879

)

 

 

(23,778

)

Payments of acquisition-related contingent consideration

 

(1,625

)

 

 

 

Net cash (used) provided by financing activities

 

11,454

 

 

 

434,752

 

Net change in cash, cash equivalents, and restricted cash

$

(47,798

)

 

$

208,378

 

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

$

324,792

 

 

$

207,453

 

Cash, cash equivalents, and restricted cash end of period

$

276,994

 

 

$

415,831