UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-39142

Porch Group, Inc.

(Exact name of registrant as specified in its charter)

Delaware	83-2587663
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

2200 1^st Avenue S., Suite 300, Seattle, WA 98134

(Address of Principal Executive Offices) (Zip Code)

(855) 767-2400

(Registrant’s telephone number, including area code)

N/A
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading symbol	Name of Exchange on which registered
Common Stock, par value $0.0001 per share	PRCH	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒	Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of outstanding shares of the Registrant’s Common Stock as of November 8, 2021 was 98,064,108.

Table of Contents

PART I —FINANCIAL INFORMATION

Item 1. Financial Statements

PORCH GROUP, INC.

Condensed Consolidated Balance Sheets

(all numbers in thousands, except share amounts)


	September 30, 2021		December 31, 2020
Assets	(unaudited)
Current assets
Cash and cash equivalents	$	410,217	$	196,046
Accounts receivable, net		33,641		4,268
Short-term investments		10,142		—
Reinsurance balance due		246,170		—
Prepaid expenses and other current assets		8,636		4,080
Restricted cash		4,614		11,407
Total current assets		713,420		215,801
Property, equipment, and software, net		7,656		4,593
Goodwill		170,427		28,289
Long-term investments		58,646		—
Intangible assets, net		91,650		15,961
Restricted cash, non-current		1,000		—
Long-term insurance commissions receivable		7,159		3,365
Other assets		368		378
Total assets	$	1,050,326	$	268,387

Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	5,525	$	9,203
Accrued expenses and other current liabilities		57,274		9,905
Deferred revenue		190,137		5,208
Refundable customer deposit		1,509		2,664
Current portion of long-term debt		107		4,746
Losses and loss adjustment expense reserves		87,737		—
Other insurance liabilities, current		34,819		—
Total current liabilities		377,108		31,726
Long-term debt		417,976		43,237
Refundable customer deposit, non-current		—		529
Earnout liability, at fair value		39,811		50,238
Private warrant liability, at fair value		17,706		31,534
Other liabilities (includes $2,849 and $3,549 at fair value, respectively)		5,449		3,798
Total liabilities		858,050		161,062
Commitments and contingencies (Note 11)
Stockholders’ equity
Common stock, $0.0001 par value:		10		8
Authorized shares – 400,000,000 and 400,000,000, respectively
Issued and outstanding shares – 97,332,998 and 81,669,151, respectively
Additional paid-in capital		596,156		424,823
Accumulated other comprehensive income		113		—
Accumulated deficit		(404,003)		(317,506)
Total stockholders’ equity		192,276		107,325
Total liabilities and stockholders’ equity	$	1,050,326	$	268,387

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

PORCH GROUP, INC.

Condensed Consolidated Statements of Operations

(all numbers in thousands, except share amounts, unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Revenue	$	62,769	$	21,507	$	140,852	$	53,703
Operating expenses⁽¹⁾:
Cost of revenue		19,158		5,361		44,587		13,252
Selling and marketing		22,874		8,803		60,636		30,443
Product and technology		11,317		5,701		34,158		18,124
General and administrative		22,034		5,490		66,463		15,539
Gain on divestiture of businesses		—		—		—		(1,442)
Total operating expenses		75,383		25,355		205,844		75,916
Operating loss		(12,614)		(3,848)		(64,992)		(22,213)
Other income (expense):
Interest expense		(1,857)		(3,952)		(4,296)		(10,329)
Change in fair value of earnout liability		7,413		—		(15,388)		—
Change in fair value of private warrant liability		2,692		—		(17,521)		—
Gain (loss) on extinguishment of debt		(3,133)		(2,532)		5,110		1,077
Investment income and realized gains, net of investment expenses		248		—		448		—
Other income (expense), net		316		1,418		225		(2,050)
Total other income (expense)		5,679		(5,066)		(31,422)		(11,302)
Loss before income taxes		(6,935)		(8,914)		(96,414)		(33,515)
Income tax benefit (expense)		1,836		(9)		9,917		(33)
Net loss	$	(5,099)	$	(8,923)	$	(86,497)	$	(33,548)

Loss per share - basic	$	(0.05)	$	(0.25)	$	(0.93)	$	(0.95)
Loss per share - diluted (Note 13)	$	(0.08)	$	(0.25)	$	(0.93)	$	(0.95)

Shares used in computing basic loss per share		96,839,292		35,809,973		92,544,137		35,294,839
Shares used in computing diluted loss per share		97,545,942		35,809,973		92,544,137		35,294,839

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Cost of revenue	$	—	$	1	$	1	$	1
Selling and marketing		1,382		88		4,888		186
Product and technology		1,367		115		5,522		619
General and administrative		3,135		303		18,950		735
	$	5,884	$	507	$	29,361	$	1,541

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

PORCH GROUP, INC.

Condensed Consolidated Statements of Comprehensive Loss

(all numbers in thousands, unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net loss	$	(5,099)	$	(8,923)	$	(86,497)	$	(33,548)
Other comprehensive income (loss):
Current period change in net unrealized gain (loss), net of tax		(154)		—		113		—
Comprehensive loss	$	(5,253)	$	(8,923)	$	(86,384)	$	(33,548)

Table of Contents

PORCH GROUP, INC.

Condensed Consolidated Statements of Stockholders’ Equity (Deficit)

(all numbers in thousands, except share amounts, unaudited)


								Accumulated
				Additional				Other		Total
	Common Stock			Paid-in		Accumulated		Comprehensive		Stockholders’
	Shares	Amount		Capital		Deficit		Income		Equity (Deficit)
Balances as of December 31, 2020	81,669,151	$	8	$	424,823	$	(317,506)	$	—	$	107,325
Net loss	—		—		—		(65,101)		—		(65,101)
Other comprehensive income	—		—		—		—				—
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 units	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		—		21,687		—		—		21,687
Contingent consideration for acquisitions	—		—		6,685		—		—		6,685
Reclassification of private warrant liability upon exercise	—		—		16,843		—		—		16,843
Vesting of restricted stock units	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 warrant liability upon exercise	—		—		14,505		—		—		14,505
Vesting of restricted stock units	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

Table of Contents

PORCH GROUP, INC.

Condensed Consolidated Statements of Stockholders’ Equity (Deficit) - Continued

(all numbers in thousands, except share amounts, unaudited)


								Accumulated
				Additional				Other		Total
	Common Stock			Paid-in		Accumulated		Comprehensive		Stockholders’
	Shares	Amount		Capital		Deficit		Income		Equity (Deficit)
Balances as of December 31, 2019⁽¹⁾	34,197,822	$	3	$	203,492	$	(263,474)	$	—	$	(59,979)
Net loss	—		—		—		(18,367)		—		(18,367)
Other comprehensive income	—		—		—		—		3,856		3,856
Stock-based compensation	—		—		672		—		—		672
Issuance of Series C redeemable convertible preferred stock⁽¹⁾	671,836		—		4,714		—		—		4,714
Conversion of convertible notes to Series C redeemable convertible preferred stock⁽¹⁾	198,750		—		1,436		—		—		1,436
Vesting of restricted stock awards issued for acquisitions	472,141		—		—		—		—		—
Issuance of common stock warrants	—		—		44		—		—		44
Exercise of stock options	8,409		—		1		—		—		1
Balances as of March 31, 2020	35,548,958	$	3	$	210,359	$	(281,841)	$	3,856	$	(67,623)
Net loss	—		—		—		(6,258)		—		(6,258)
Other comprehensive income	—		—		—		—		(3,856)		(3,856)
Stock-based compensation	—		—		362		—		—		362
Issuance of common stock for acquisitions	11,744		—		39		—		—		39
Exercise of stock options	1,174		—		—		—		—		—
Balances as of June 30, 2020	35,561,876	$	3	$	210,760	$	(288,099)	$	—	$	(77,336)
Net loss	—		—		—		(8,923)				(8,923)
Stock-based compensation	—		—		507		—		—		507
Issuance of Series C redeemable convertible preferred stock⁽¹⁾	10,703		—		122		—		—		122
Repurchase of redeemable convertible stock⁽¹⁾	(75,162)		—		(480)		—		—		(480)
Issuance of common stock for acquisitions	396,713		—		1,790		—		—		1,790
Shareholder contribution	—		—		300		—		—		300
Exercise of stock options

		Page

Part I.	Financial Information	3

Item 1.	Financial Statements	3

	Unaudited Condensed Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020	3

	Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2021 and 2020	4

	Unaudited Condensed Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2021 and 2020	5

	Unaudited Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the three and nine months ended September 30, 2021 and 2020	6

	Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2021 and 2020	8

	Notes to Unaudited Condensed Consolidated Financial Statements	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	43

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	59

Item 4.	Controls and Procedures	60

Part II.	Other Information	62

Item 1.	Legal Proceedings	62

Item 1A.	Risk Factors	62

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	66

Item 3.	Defaults Upon Senior Securities	66

Item 4.	Mine Safety Disclosures	66

Item 5.	Other Information	66

Item 6.	Exhibits	67

Exhibit Index		67

Signatures		68