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

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  

 


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Source: Porch Group, Inc.