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Porch(PRCH) - 2022 Q2 - Quarterly Report
2022-08-09 20:46
Table of Contents 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 June 30, 2022 or ☐ 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 o ...
Porch Group (PRCH) Investor Presentation - Slideshow
2022-06-09 19:36
Love your home. For moving and improving and everything in between. May 2022 Copyright 2022 Porch Group, Inc. All rights reserved DISCLAIMERS Forward-Looking Statements Certain statements in this presentation 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, Inc.'s ("Porch") future financial or operating performanc ...
Porch(PRCH) - 2022 Q1 - Earnings Call Transcript
2022-05-11 03:01
Porch Group Inc - Class A (NASDAQ:PRCH) Q1 2022 Earnings Conference Call May 10, 2022 5:00 PM ET Company Participants Walter Ruddy - Head, Investor Relations & Treasury Matt Ehrlichman - Chief Executive Officer, Chairman & Founder Marty Heimbigner - Chief Financial Officer Matthew Neagle - Chief Operating Officer Adam Kornick - President of InsurTech Division Conference Call Participants John Campbell - Stephens Jason Helfstein - Oppenheimer Ryan Tomasello - KBW Ygal Arounian - Wedbush Justin Ages - Berenbe ...
Porch(PRCH) - 2022 Q1 - Earnings Call Presentation
2022-05-10 21:21
Love your home. For moving and improving and everything in between. Q1 2022 Earnings Presentation May 10, 2022 Copyright 2022 Porch Group, Inc. All rights reserved Presenters Matt Ehrlichman CEO, Chairman & Founder Porch Group Marty Heimbigner CFO Porch Group Matthew Neagle COO Porch Group Adam Kornick President, InsurTech Division ~Porch Copyright 2022 Porch Group, Inc. All rights reserved 2 DISCLAIMERS 3 Forward-Looking Statements Certain statements in this presentation may be considered "forward-looking ...
Porch(PRCH) - 2022 Q1 - Quarterly Report
2022-05-10 20:34
Table of Contents 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 March 31, 2022 or ☐ 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) (State or other jurisdiction o ...
Porch(PRCH) - 2021 Q4 - Annual Report
2022-03-16 10:14
PART I [Business Overview](index=4&type=section&id=Item%201.%20Business) Porch Group operates a vertical software platform for the home, providing services across Vertical Software and Insurance segments - Porch is a vertical software platform for the home, providing software and services to over **24,000 home services companies**[15](index=15&type=chunk) - The company operates in two reportable segments: **Vertical Software and Insurance**[16](index=16&type=chunk) - The Vertical Software segment provides SaaS fees and gains early access to homebuyers and homeowners through relationships with home services companies[17](index=17&type=chunk) - The Insurance segment offers property-related insurance policies through its own risk-bearing carrier and independent agency, and home warranty products[18](index=18&type=chunk) Estimated Total Addressable Market (TAM) by Service Offering | Service Offering | Estimated TAM (Billions USD) | | :--------------- | :--------------------------- | | Moving Services | $4.7 | | P&C Insurance | $181 (Home & Auto) + $4.5 (Home Warranty) | | Contractor Services | $150 | | Mover Marketing | $9.7 | - Key growth strategies include selling more software, increasing revenue per homebuyer, expanding insurance offerings (e.g., V12 Data, HOA, AHP, Rynoh, Floify acquisitions), and geographic expansion[63](index=63&type=chunk)[64](index=64&type=chunk)[65](index=65&type=chunk)[66](index=66&type=chunk)[67](index=67&type=chunk)[68](index=68&type=chunk)[69](index=69&type=chunk)[72](index=72&type=chunk)[73](index=73&type=chunk)[74](index=74&type=chunk)[75](index=75&type=chunk) [Risk Factors](index=16&type=section&id=Item%201A.%20Risk%20Factors) This section outlines significant risks that could materially and adversely affect the company's business, financial condition, and results of operations - The company operates in a highly competitive and evolving industry, facing challenges from well-established competitors and new entrants[108](index=108&type=chunk) - Success is dependent on maintaining strategic, proprietary relationships with third parties for access to personal data and information, which could be impacted by changes in policies or regulations[114](index=114&type=chunk)[115](index=115&type=chunk) - Future growth relies on increasing revenue per customer and consumer, which may not be successful[116](index=116&type=chunk) - The business is sensitive to general economic events, trends in the housing market, severe weather, and other catastrophes, particularly impacting consumer confidence and spending[127](index=127&type=chunk)[131](index=131&type=chunk)[134](index=134&type=chunk) - Expansion into the insurance business introduces various risks, including claims exceeding reserves, reinsurance availability, and regulatory compliance[195](index=195&type=chunk)[197](index=197&type=chunk)[202](index=202&type=chunk)[209](index=209&type=chunk)[218](index=218&type=chunk)[221](index=221&type=chunk)[222](index=222&type=chunk)[223](index=223&type=chunk)[224](index=224&type=chunk)[225](index=225&type=chunk)[226](index=226&type=chunk)[227](index=227&type=chunk)[228](index=228&type=chunk)[229](index=229&type=chunk)[230](index=230&type=chunk)[231](index=231&type=chunk)[232](index=232&type=chunk)[233](index=233&type=chunk) - The company has identified material weaknesses in internal control over financial reporting as of December 31, 2021, related to IT general controls, control activity documentation, and personnel quantity[174](index=174&type=chunk)[176](index=176&type=chunk) [Unresolved Staff Comments](index=50&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments to report - No unresolved staff comments[308](index=308&type=chunk) [Properties](index=50&type=section&id=Item%202.%20Properties) The company leases real properties in the United States and other countries to support its business operations - The company leases real properties in the United States and other countries for business operations[309](index=309&type=chunk) - Current facilities are suitable and adequate for anticipated future needs, with no expected problems in lease renewal or acquisition[309](index=309&type=chunk) [Legal Proceedings](index=50&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in several legal proceedings, including mass tort actions alleging TCPA violations and a breach of contract claim - Porch and/or GoSmith.com are party to twelve legal proceedings alleging violations of the Telephone Consumer Protection Act (TCPA) for automated calling and Do Not Call restrictions[310](index=310&type=chunk) - Former owners of Kandela, LLC filed complaints alleging breach of contract and fraudulent inducement related to an earnout agreement, currently in arbitration[312](index=312&type=chunk)[314](index=314&type=chunk) - A putative class action claims failure to pay overtime, compensation at separation, and unfair business practices by HireAHelper™; a settlement deal has been reached and is awaiting court approval[315](index=315&type=chunk) - The company is also involved in other ordinary course litigation, but believes no current proceedings would individually or in aggregate have a material adverse effect on its business, financial condition, or results of operations[316](index=316&type=chunk) [Mine Safety Disclosures](index=51&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[317](index=317&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=51&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on the NASDAQ Capital Market under "PRCH", with no cash dividends paid or planned - Common stock trades on the NASDAQ Capital Market under the symbol "**PRCH**"[319](index=319&type=chunk) - As of March 11, 2022, there were **686 stockholders of record**[319](index=319&type=chunk) - The company has not paid any cash dividends on its common stock to date and has no current plans to do so, prioritizing future earnings for operations, expansion, and debt repayment[320](index=320&type=chunk)[300](index=300&type=chunk) - No issuer purchases of equity securities were made[324](index=324&type=chunk) - Between January 7, 2021, and October 27, 2021, the company issued **2,042,652 shares of common stock** to previous owners of acquisition targets[325](index=325&type=chunk) [Reserved](index=53&type=section&id=Item%206.%20Reserved) This item is reserved and contains no information - This item is reserved[330](index=330&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=53&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition and operations, highlighting key performance, acquisitions, COVID-19 impact, and financial results - Porch is a vertical software platform for the home, serving over **24,000 home services companies**, with three customer types: home services companies, consumers, and service providers[336](index=336&type=chunk) - The company's growth strategy includes selective acquisitions, with V12, HOA, Rynoh, AHP, and Floify acquired in 2021 to expand verticals and insurance capabilities[337](index=337&type=chunk)[342](index=342&type=chunk)[345](index=345&type=chunk)[356](index=356&type=chunk) - The COVID-19 pandemic adversely affected business operations and revenue, particularly in the first half of 2020, with an uncertain ongoing impact[352](index=352&type=chunk) - Revenue is generated from recurring SaaS fees, reoccurring B2B2C transaction revenues for move-related services, and B2C transaction revenues from post-move services[76](index=76&type=chunk)[361](index=361&type=chunk) - Critical accounting policies include Revenue Recognition, Stock-Based Compensation, and Business Combinations, which involve significant management estimates and assumptions[377](index=377&type=chunk)[380](index=380&type=chunk)[385](index=385&type=chunk)[388](index=388&type=chunk) - The company raised **$126.7 million** from warrant exercises and **$413.5 million** (net cash) from convertible notes in 2021, providing sufficient financial resources for operations and future acquisitions[347](index=347&type=chunk)[356](index=356&type=chunk)[446](index=446&type=chunk)[447](index=447&type=chunk)[449](index=449&type=chunk) [Key Performance Measures and Operating Metrics](index=103&type=section&id=Key%20Performance%20Measures%20and%20Operating%20Metrics) Management uses non-GAAP operating metrics to evaluate business performance, tracking customer acquisition, revenue per account, and service penetration Average Companies and Revenue per Account (Quarterly) | Metric | Q1 2021 | Q2 2021 | Q3 2021 | Q4 2021 | | :-------------------------------------- | :------- | :-------- | :-------- | :-------- | | Average Companies in Quarter | 13,995 | 17,120 | 20,472 | 24,603 | | Average Revenue per Account per Month ($) | 637 | 1,000 | 1,022 | 699 | | | Q1 2020 | Q2 2020 | Q3 2020 | Q4 2020 | | Average Companies in Quarter | 10,903 | 10,523 | 10,792 | 11,157 | | Average Revenue per Account per Month ($) | 484 | 556 | 664 | 556 | | | Q1 2019 | Q2 2019 | Q3 2019 | Q4 2019 | | Average Companies in Quarter | 10,199 | 10,470 | 10,699 | 10,972 | | Average Revenue per Account per Month ($) | 305 | 468 | 552 | 450 | Monetized Services and Revenue per Service (Quarterly) | Metric | Q1 2021 | Q2 2021 | Q3 2021 | Q4 2021 | | :-------------------------------------- | :-------- | :-------- | :-------- | :-------- | | Monetized Services in Quarter | 182,779 | 302,462 | 329,359 | 260,352 | | Average Revenue per Monetized Service ($) | 92 | 129 | 144 | 132 | | | Q1 2020 | Q2 2020 | Q3 2020 | Q4 2020 | | Monetized Services in Quarter | 152,165 | 181,520 | 198,165 | 169,949 | | Average Revenue per Monetized Service ($) | 93 | 86 | 97 | 98 | | | Q1 2019 | Q2 2019 | Q3 2019 | Q4 2019 | | Monetized Services in Quarter | 185,378 | 205,887 | 211,190 | 172,862 | | Average Revenue per Monetized Service ($) | 43 | 63 | 76 | 78 | - Acquisitions in 2021 (V12, HOA, Rynoh, AHP, Floify) significantly impacted the average number of companies and monetized services[342](index=342&type=chunk)[345](index=345&type=chunk) - In 2020, a shift in insurance monetization from per-quote to multi-year commissions led to fewer monetized transactions but higher average revenue per service[346](index=346&type=chunk) [Results of Operations](index=120&type=section&id=Results%20of%20Operations) The company experienced a net loss of **$106.6 million** in 2021, primarily due to higher stock-based compensation and earnout liabilities, despite a **166% revenue increase** Consolidated Statements of Operations Summary (2021 vs. 2020) | Metric | 2021 ($ thousands) | 2020 ($ thousands) | Change ($ thousands) | Change (%) | | :--------------------------- | :----------------- | :----------------- | :------------------- | :--------- | | Revenue | 192,433 | 72,299 | 120,134 | 166% | | Cost of revenue | 58,725 | 17,562 | 41,163 | 234% | | Selling and marketing | 84,273 | 41,665 | 42,608 | 102% | | Product and technology | 47,005 | 28,546 | 18,459 | 65% | | General and administrative | 85,795 | 28,199 | 57,596 | 204% | | Total operating expenses | 275,798 | 114,530 | 161,268 | 141% | | Operating loss | (83,365) | (42,231) | (41,134) | 97% | | Net loss | (106,606) | (54,032) | (52,574) | 97% | - Revenue increase in 2021 was driven by acquisitions and organic growth in insurance, moving services, and inspection businesses, contributing **$124.4 million**[391](index=391&type=chunk) - Cost of revenue increased significantly in 2021, primarily due to **$18.3 million** for insurance losses and warranty claims from HOA and AHP acquisitions, and growth in moving business and marketing data costs[392](index=392&type=chunk)[394](index=394&type=chunk) - Selling and marketing expenses as a percentage of revenue improved from **58% in 2020 to 44% in 2021**, reflecting growing economies of scale[395](index=395&type=chunk) - General and administrative expenses surged in 2021 due to a **$21.6 million** increase in stock-based compensation, **$10.1 million** in public company legal/accounting fees, and **$27 million** from acquired entities[398](index=398&type=chunk) Total Stock-Based Compensation Expenses | Category | 2021 ($ thousands) | 2020 ($ thousands) | 2019 ($ thousands) | | :------------------------------- | :----------------- | :----------------- | :----------------- | | Secondary market transaction | 1,933 | 1,616 | 33,232 | | Employee earnout restricted stock | 22,961 | — | — | | Employee awards | 13,698 | 9,680 | 2,740 | | **Total** | **38,592** | **11,296** | **35,972** | [Segment Results of Operations](index=131&type=section&id=Segment%20Results%20of%20Operations) In 2021, Vertical Software generated **$137.1 million** (71% of total revenue) and Insurance generated **$55.3 million** (29%), with both segments showing positive Adjusted EBITDA Segment Revenue (2019-2021) | Segment | 2021 ($ thousands) | 2020 ($ thousands) | 2019 ($ thousands) | | :---------------- | :----------------- | :----------------- | :----------------- | | Vertical Software | 137,150 | 63,799 | 59,259 | | Insurance | 55,283 | 4,166 | — | | Divested Businesses | — | 4,334 | 18,336 | | **Total revenue** | **192,433** | **72,299** | **77,595** | - In 2021, Vertical Software segment revenue was **$137.1 million (71% of total)**, and Insurance segment revenue was **$55.3 million (29% of total)**, with significant growth in Insurance due to HOA and AHP acquisitions[429](index=429&type=chunk)[430](index=430&type=chunk) Segment Adjusted EBITDA (Loss) (2019-2021) | Segment | 2021 ($ thousands) | 2020 ($ thousands) | 2019 ($ thousands) | | :-------------------------- | :----------------- | :----------------- | :----------------- | | Vertical Software | 20,733 | 12,718 | 4,616 | | Insurance | 9,007 | 405 | — | | Corporate and Other | (53,760) | (30,001) | (36,645) | | Divested Businesses | — | (1,441) | (4,806) | | **Total segment adjusted EBITDA (loss)** | **(24,020)** | **(18,319)** | **(36,835)** | [Non-GAAP Financial Measures](index=131&type=section&id=Non-GAAP%20Financial%20Measures) The company uses non-GAAP measures like Adjusted EBITDA (loss) and Contribution Margin to assess performance, both showing improvement in 2021 - Adjusted EBITDA (loss) is defined as net income (loss) adjusted for interest, taxes, other expenses, depreciation, amortization, non-cash impairment charges, stock-based compensation, acquisition impacts, and certain transaction costs[434](index=434&type=chunk) - Contribution margin is calculated as revenue less cost of revenue and variable selling and marketing costs[437](index=437&type=chunk) Contribution Margin (2019-2021) | Metric | 2021 ($ thousands) | 2020 ($ thousands) | 2019 ($ thousands) | | :-------------------------------------- | :----------------- | :----------------- | :----------------- | | Revenue | 192,433 | 72,299 | 77,595 | | Less: Cost of revenue | (58,725) | (17,562) | (21,500) | | Revenue less cost of revenue | 133,708 | 54,737 | 56,095 | | Less: Variable selling and marketing costs | (58,317) | (32,328) | (43,942) | | **Contribution margin** | **75,391** | **22,409** | **12,153** | | Contribution margin as a percentage of revenue | 39% | 31% | 16% | - Contribution margin increased by **$53.0 million (236.4%)** in 2021, with **$48.7 million** from acquired businesses and the remainder from organic growth[443](index=443&type=chunk) Adjusted EBITDA (Loss) (2019-2021) | Metric | 2021 ($ thousands) | 2020 ($ thousands) | 2019 ($ thousands) | | :-------------------------------------- | :----------------- | :----------------- | :----------------- | | Net loss | (106,606) | (54,032) | (103,319) | | Interest expense | 5,757 | 14,734 | 7,134 | | Income tax (benefit) expense | (10,273) | (1,689) | 96 | | Depreciation and amortization | 16,386 | 6,644 | 7,377 | | Non-cash stock-based compensation expense | 38,592 | 11,296 | 35,972 | | Revaluation of earnout liability | 18,519 | — | — | | Revaluation of private warrant liability | 15,389 | (2,427) | — | | **Adjusted EBITDA (loss)** | **(24,020)** | **(18,319)** | **(36,835)** | | Adjusted EBITDA (loss) as a percentage of revenue | (12)% | (25)% | (47)% | - Adjusted EBITDA (loss) improved from **(25)% of revenue in 2020 to (12)% in 2021**, despite a decline in absolute terms due to weather-related losses in HOA, increased investments, and higher G&A costs as a public company[444](index=444&type=chunk) [Liquidity and Capital Resources](index=137&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is primarily financed through equity and debt offerings, with **$315.7 million** in cash as of December 31, 2021 - Since inception, operations have been financed primarily through sales of redeemable convertible preferred stock, convertible promissory notes, and senior secured loans[445](index=445&type=chunk) - In 2021, the company raised **$126.7 million** from warrant exercises and **$413.5 million** (net cash) from convertible notes, using a portion to repay **$47.0 million** in senior secured debt[446](index=446&type=chunk)[447](index=447&type=chunk) - As of December 31, 2021, cash and cash equivalents were **$315.7 million**, with an accumulated deficit of **$424.1 million** and **$425.6 million** in outstanding debt[448](index=448&type=chunk) - Management believes current cash and equivalents are sufficient for operations, capital expenditures, working capital, and debt service for at least the next 12 months[449](index=449&type=chunk) - Insurance company subsidiaries are highly regulated, with restrictions on dividends and requirements to maintain minimum policyholder's surplus and risk-based capital levels[450](index=450&type=chunk)[451](index=451&type=chunk) Summary of Cash Flow Data (2020-2021) | Cash Flow Activity | 2021 ($ thousands) | 2020 ($ thousands) | Change ($ thousands) | Change (%) | | :------------------------------ | :----------------- | :----------------- | :------------------- | :--------- | | Net cash used in operating activities | (34,777) | (48,669) | 13,892 | (29)% | | Net cash used in investing activities | (263,433) | (10,671) | (252,762) | NM | | Net cash provided by financing activities | 415,549 | 259,614 | 155,935 | 60% | - Net cash used in investing activities significantly increased in 2021 to **$263.4 million**, primarily due to **$256.4 million** for acquisitions[456](index=456&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=75&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses the company's exposure to market risks, primarily interest rate risk, inflation risk, and foreign currency risk - The company's interest-bearing debt of **$425.6 million** as of December 31, 2021, is primarily fixed-rate (**0.75% convertible senior notes**), limiting exposure to interest rate increases[472](index=472&type=chunk) - A **$67.6 million** fixed income securities portfolio held by the insurance subsidiary is subject to unrealized losses in a rising interest rate environment[473](index=473&type=chunk) - Inflation may have a material impact on the business in the future due to significant increases in the consumer price index, supply chain disruptions, and geopolitical events[475](index=475&type=chunk) - Foreign currency risk was not material for the years ended December 31, 2021, 2020, and 2019, as activities are primarily conducted in the United States[476](index=476&type=chunk) [Financial Statements and Supplementary Data](index=77&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This item presents the company's audited consolidated financial statements and the independent auditor's report, including an adverse opinion on internal controls - The independent registered public accounting firm issued an unqualified opinion on the consolidated financial statements but an adverse opinion on the effectiveness of internal control over financial reporting as of December 31, 2021[481](index=481&type=chunk)[482](index=482&type=chunk)[837](index=837&type=chunk) - Critical audit matters included the accounting for business combinations (fair values of acquired intangible assets) and the identified material weaknesses in internal control over financial reporting[485](index=485&type=chunk)[486](index=486&type=chunk)[487](index=487&type=chunk)[488](index=488&type=chunk)[489](index=489&type=chunk) Consolidated Balance Sheets Summary (2021 vs. 2020) | Metric | Dec 31, 2021 ($ thousands) | Dec 31, 2020 ($ thousands) | | :--------------------------- | :------------------------- | :------------------------- | | Total assets | 1,038,747 | 268,387 | | Total current assets | 605,064 | 215,801 | | Goodwill | 225,654 | 28,289 | | Intangible assets, net | 129,830 | 15,961 | | Total liabilities | 821,702 | 161,062 | | Total stockholders' equity | 217,045 | 107,325 | Consolidated Statements of Operations Summary (2021 vs. 2020 vs. 2019) | Metric | 2021 ($ thousands) | 2020 ($ thousands) | 2019 ($ thousands) | | :--------------------------- | :----------------- | :----------------- | :----------------- | | Revenue | 192,433 | 72,299 | 77,595 | | Total operating expenses | 275,798 | 114,530 | 165,717 | | Operating loss | (83,365) | (42,231) | (88,122) | | Net loss | (106,606) | (54,032) | (103,319) | Consolidated Statements of Cash Flows Summary (2021 vs. 2020 vs. 2019) | Cash Flow Activity | 2021 ($ thousands) | 2020 ($ thousands) | 2019 ($ thousands) | | :------------------------------ | :----------------- | :----------------- | :----------------- | | Net cash used in operating activities | (34,777) | (48,669) | (29,335) | | Net cash used in investing activities | (263,433) | (10,671) | (5,208) | | Net cash provided by financing activities | 415,549 | 259,614 | 34,486 | [1. Description of Business and Summary of Significant Accounting Policies](index=158&type=section&id=1.%20Description%20of%20Business%20and%20Summary%20of%20Significant%20Accounting%20Policies) This note details the company's business model, segments, and significant accounting policies, including the impact of the 2020 merger and COVID-19 - Porch Group, Inc. is a vertical software platform for the home, with Vertical Software and Insurance segments[502](index=502&type=chunk) - The December 23, 2020 merger with PropTech Acquisition Corporation was accounted for as a reverse recapitalization, with Porch.com, Inc. as the accounting acquirer[504](index=504&type=chunk)[506](index=506&type=chunk) - The COVID-19 pandemic adversely affected business operations starting March 2020, with an uncertain ongoing impact on future revenues and results[507](index=507&type=chunk) - The company adopted ASU 2016-02 (Leases), ASU 2016-13 (Credit Losses), and early adopted ASU 2020-06 (Convertible Instruments) in fiscal 2021[353](index=353&type=chunk)[354](index=354&type=chunk)[355](index=355&type=chunk)[579](index=579&type=chunk)[581](index=581&type=chunk)[582](index=582&type=chunk) - Revenue recognition follows a five-step framework, distinguishing between Core Services, Managed Services, and Software and Service Subscription revenue[545](index=545&type=chunk)[547](index=547&type=chunk) - Business acquisitions are accounted for using the acquisition method, recording identifiable intangible assets and goodwill at fair value[574](index=574&type=chunk) [2. Revenue](index=183&type=section&id=2.%20Revenue) Total revenue in 2021 was **$192.4 million**, with significant increases in contract assets and deferred revenue, largely from the Insurance segment Disaggregation of Revenue (2019-2021) | Revenue Type | 2021 ($ thousands) | 2020 ($ thousands) | 2019 ($ thousands) | | :------------------------------ | :----------------- | :----------------- | :----------------- | | Core services revenue | 98,275 | 53,048 | 49,449 | | Managed services revenue | 37,154 | 11,579 | 21,888 | | Software and service subscription revenue | 57,004 | 7,672 | 6,258 | | **Total revenue** | **192,433** | **72,299** | **77,595** | - Revenue from divested businesses was **$4.3 million** in 2020 and **$18.3 million** in 2019, with no divestitures in 2021[594](index=594&type=chunk) Contract Assets (Insurance Commissions Receivable) Activity | Metric | Amount ($ thousands) | | :-------------------------------------- | :------------------- | | Balance at December 31, 2019 | — | | Estimated lifetime value of insurance policies sold by carriers | 4,313 | | Cash receipts | (784) | | Balance at December 31, 2020 | 3,529 | | Estimated lifetime value of insurance policies sold by carriers | 8,089 | | Cash receipts | (2,234) | | **Balance at December 31, 2021** | **9,384** | Contract Liabilities (Refundable Customer Deposits) Activity | Metric | Amount ($ thousands) | | :-------------------------------------- | :------------------- | | Balance at January 1, 2019 | — | | Additions (prepayment, interest) | 7,152 | | Transferred to revenue | (878) | | Balance at December 31, 2019 | 6,274 | | Additions (interest) | 440 | | Transferred to revenue | (3,521) | | Balance at December 31, 2020 | 3,193 | | Additions (new, interest) | 3,566 | | Transferred to revenue | (6,250) | | Repayment | (887) | | Impact of acquisitions | 15,652 | | **Balance at December 31, 2021** | **15,274** | Deferred Revenue by Segment (2019-2021) | Segment | 2021 ($ thousands) | 2020 ($ thousands) | 2019 ($ thousands) | | :---------------- | :----------------- | :----------------- | :----------------- | | Vertical Software | 3,814 | 5,208 | 3,333 | | Insurance | 197,271 | — | — | | **Total** | **201,085** | **5,208** | **3,333** | [3. Investments](index=185&type=section&id=3.%20Investments) The company's investment portfolio, primarily held by its insurance subsidiary, totaled **$67.6 million** in fair value as of December 31, 2021, with **$0.7 million** in net investment income and realized gains Investment Income and Realized Gains (2021) | Metric | 2021 ($ thousands) | | :-------------------------------------------- | :----------------- | | Investment income, net of investment expenses | 768 | | Realized gains on investments | 62 | | Realized losses on investments | (129) | | **Total** | **701** | Investment Securities Amortized Cost, Fair Value, and Unrealized Gains/Losses (Dec 31, 2021) | Security Type | Amortized Cost ($ thousands) | Gross Unrealized Gains ($ thousands) | Gross Unrealized Losses ($ thousands) | Fair Value ($ thousands) | | :------------------------------------------ | :--------------------------- | :----------------------------------- | :------------------------------------ | :----------------------- | | U.S. Treasuries | 5,452 | 1 | (36) | 5,417 | | Obligations of states, municipalities and political subdivisions | 8,913 | 21 | (84) | 8,850 | | Corporate bonds | 31,491 | 89 | (155) | 31,425 | | Residential and commercial mortgage-backed securities | 14,387 | 34 | (139) | 14,282 | | Other loan-backed and structured securities | 7,637 | 5 | (41) | 7,601 | | **Total debt securities** | **67,880** | **150** | **(455)** | **67,575** | - The company believes unrealized losses on fixed-maturity securities are primarily due to interest rate changes, not credit quality, and does not consider any investments to be other-than-temporarily impaired[610](index=610&type=chunk) [4. Fair Value](index=188&type=section&id=4.%20Fair%20Value) This note provides fair value measurements for financial assets and liabilities, totaling **$84.9 million** and **$38.7 million** respectively, as of December 31, 2021 Fair Value Measurement at December 31, 2021 (Recurring Basis) | Category | Level 1 ($ thousands) | Level 2 ($ thousands) | Level 3 ($ thousands) | Total Fair Value ($ thousands) | | :---------------------------------------- | :-------------------- | :-------------------- | :-------------------- | :----------------------------- | | **Assets** | | | | | | Money market mutual funds | 17,318 | — | — | 17,318 | | Debt securities (U.S. Treasuries) | 5,417 | — | — | 5,417 | | Debt securities (States, municipalities) | — | 8,850 | — | 8,850 | | Debt securities (Corporate bonds) | — | 31,425 | — | 31,425 | | Debt securities (Mortgage-backed) | — | 14,282 | — | 14,282 | | Debt securities (Other loan-backed) | — | 7,601 | — | 7,601 | | **Total Assets** | **22,735** | **62,158** | **—** | **84,893** | | **Liabilities** | | | | | | Contingent consideration - business combinations | — | — | 9,617 | 9,617 | | Contingent consideration - earnout | — | — | 13,866 | 13,866 | | Private warrant liability | — | — | 15,193 | 15,193 | | **Total Liabilities** | **—** | **—** | **38,676** | **38,676** | - Contingent consideration for business combinations and earnout liabilities are valued using Monte Carlo simulation, with key inputs including forecasted revenue, EBITDA, stock price, discount rates, and volatility[614](index=614&type=chunk)[615](index=615&type=chunk)[616](index=616&type=chunk)[617](index=617&type=chunk) - Private warrant liabilities are estimated using the Black-Scholes-Merton option pricing model, with key inputs including exercise price, expected volatility, remaining contractual term, and stock price[620](index=620&type=chunk) [5. Property, Equipment, and Software](index=193&type=section&id=5.%20Property%2C%20Equipment%2C%20and%20Software) The company's net property, equipment, and software totaled **$6.7 million** as of December 31, 2021, with **$4.4 million** in depreciation and amortization expense Property, Equipment, and Software, Net (2021 vs. 2020) | Category | Dec 31, 2021 ($ thousands) | Dec 31, 2020 ($ thousands) | | :-------------------------------- | :------------------------- | :------------------------- | | Software and computer equipment | 7,287 | 1,381 | | Furniture, office equipment, and other | 2,006 | 567 | | Internally developed software | 13,102 | 10,741 | | Leasehold improvements | 2,191 | 1,112 | | Less: Accumulated depreciation and amortization | (17,920) | (9,208) | | **Property, equipment, and software, net** | **6,666** | **4,593** | - Depreciation and amortization expense related to property, equipment, and software was **$4.4 million** in 2021, **$3.8 million** in 2020, and **$3.7 million** in 2019[626](index=626&type=chunk) [6. Intangible Assets and Goodwill](index=194&type=section&id=6.%20Intangible%20Assets%20and%20Goodwill) Intangible assets, net, increased to **$129.8 million** and goodwill to **$225.7 million** in 2021, primarily due to acquisitions, with no impairment losses recorded Intangible Assets, Net (Dec 31, 2021) | Category | Weighted Average Useful Life (years) | Intangible Assets, gross ($ thousands) | Accumulated Amortization ($ thousands) | Intangible Assets, Net ($ thousands) | | :-------------------------- | :----------------------------------- | :------------------------------------- | :------------------------------------- | :----------------------------------- | | Customer relationships | 9.0 | 56,810 | (6,760) | 50,050 | | Acquired technology | 5.0 | 48,135 | (10,095) | 38,040 | | Trademarks and tradenames | 12.0 | 25,389 | (2,587) | 22,802 | | Non-compete agreements | 2.0 | 450 | (251) | 199 | | Value of business acquired | 1.0 | 400 | (294) | 106 | | Renewal rights | 6.0 | 9,734 | (811) | 8,923 | | Trademarks and tradenames (Indefinite) | Indefinite | 4,750 | — | 4,750 | | Insurance licenses (Indefinite) | Indefinite | 4,960 | — | 4,960 | | **Total intangible assets** | | **150,628** | **(20,798)** | **129,830** | - Aggregate amortization expense for intangibles was **$12.3 million** in 2021, **$2.9 million** in 2020, and **$3.7 million** in 2019[628](index=628&type=chunk) Goodwill Carrying Amount Changes (2019-2021) | Metric | Amount ($ thousands) | | :--------------------------- | :------------------- | | Balance as of January 1, 2019 | 21,305 | | Acquisitions | 916 | | Divestitures | (3,657) | | Purchase price adjustments | (290) | | Balance as of December 31, 2019 | 18,274 | | Acquisitions | 10,176 | | Divestitures | (161) | | Balance as of December 31, 2020 | 28,289 | | Acquisitions | 197,365 | | **Balance as of December 31, 2021** | **225,654** | - No goodwill impairment losses were recorded during the years ended December 31, 2021, 2020, and 2019[530](index=530&type=chunk) [7. Debt](index=195&type=section&id=7.%20Debt) As of December 31, 2021, total debt was **$425.6 million**, primarily from **0.75% Convertible Senior Notes due 2026**, with prior loans repaid and a PPP loan forgiven Debt Composition (Dec 31, 2021) | Debt Type | Principal ($ thousands) | Unaccreted Discount ($ thousands) | Debt Issuance Costs ($ thousands) | Carrying Value ($ thousands) | | :---------------------------- | :---------------------- | :-------------------------------- | :-------------------------------- | :--------------------------- | | Convertible senior notes, due 2026 | 425,000 | — | (10,785) | 414,215 | | Other notes | 600 | (80) | — | 520 | | **Total** | **425,600** | **(80)** | **(10,785)** | **414,735** | - In September 2021, Porch issued **$425 million** in **0.75% Convertible Senior Notes due 2026**, with net proceeds of approximately **$413.5 million**[631](index=631&type=chunk) - The 2026 Notes are convertible under specific conditions related to stock price, trading price, corporate actions, or redemption, with an initial conversion price of approximately **$25.0027 per share**[633](index=633&type=chunk) - The company purchased capped call transactions for **$52.9 million** to offset potential dilution from the conversion of the 2026 Notes[639](index=639&type=chunk)[640](index=640&type=chunk) - The **$8.1 million** Paycheck Protection Program Loan received in April 2020 was forgiven in whole in June 2021, resulting in an **$8.2 million** gain on extinguishment[658](index=658&type=chunk) - All outstanding obligations under the Senior Secured Term Loan (Runway Loan Agreement) were repaid in September 2021, resulting in a **$3.1 million** loss on extinguishment[650](index=650&type=chunk) [8. Equity and Warrants](index=206&type=section&id=8.%20Equity%20and%20Warrants) As of December 31, 2021, the company had **97.96 million** common shares outstanding, with a fully diluted capital structure including warrants and convertible notes - As of December 31, 2021, the company had **410 million** authorized shares (**400M common, 10M preferred**) and **97,961,597 common shares** issued and outstanding[671](index=671&type=chunk)[491](index=491&type=chunk) Fully Diluted Capital Structure (Dec 31, 2021 vs. 2020) | Category | Dec 31, 2021 (shares) | Dec 31, 2020 (shares) | | :---------------------------------------- | :-------------------- | :-------------------- | | Issued and outstanding common shares | 95,911,597 | 75,519,151 | | Earnout common shares | 2,050,000 | 6,150,000 | | **Total common shares issued and outstanding** | **97,961,597** | **81,669,151** | | Common shares reserved for future issuance: | | | | Public warrants | — | 8,625,000 | | Private warrants | 1,795,700 | 5,700,000 | | Common stock options outstanding | 4,822,992 | 6,414,611 | | Restricted stock units and awards | 2,717,154 | 2,581,902 | | 2020 Equity Plan pool reserved for future issuance | 8,126,263 | 11,137,824 | | Convertible senior notes, due 2026 | 16,998,130 | — | | **Total shares of common stock outstanding and reserved for future issuance** | **132,421,836** | **116,128,488** | - Public warrants were redeemed on April 16, 2021, ceasing trading on Nasdaq[677](index=677&type=chunk) - Private warrants (**1,795,700 outstanding as of Dec 31, 2021**) are liability-classified and remeasured at fair value periodically[675](index=675&type=chunk)[676](index=676&type=chunk) - Capped call transactions are expected to reduce potential dilution from the 2026 Convertible Senior Notes, effectively increasing the conversion price from **$25 to approximately $37.74 per share**[672](index=672&type=chunk) [9. Stock-Based Compensation](index=209&type=section&id=9.%20Stock-Based%20Compensation) Total stock-based compensation expense was **$38.6 million** in 2021, significantly higher than 2020, primarily due to employee and CEO earnout restricted stock vesting - The 2020 Stock Incentive Plan reserves **8,126,263 shares** for future issuance, with annual increases[682](index=682&type=chunk) Stock-Based Compensation Expense (2019-2021) | Category | 2021 ($ thousands) | 2020 ($ thousands) | 2019 ($ thousands) | | :------------------------------- | :----------------- | :----------------- | :----------------- | | Secondary market transaction | 1,933 | 1,616 | 33,232 | | Employee earnout restricted stock | 22,961 | — | — | | Employee awards | 13,698 | 9,680 | 2,740 | | **Total operating expenses** | **38,592** | **11,296** | **35,972** | - In 2021, **$11.2 million** in stock-based compensation expense was recorded for employee earnout restricted shares, and **$11.8 million** for CEO earnout restricted shares, as market vesting conditions were met[699](index=699&type=chunk)[701](index=701&type=chunk) - The total unrecognized stock-based compensation expense for RSUs as of December 31, 2021, was approximately **$44.7 million**, to be recognized over a weighted-average period of **1.6 years**[695](index=695&type=chunk) [10. Income Taxes](index=217&type=section&id=10.%20Income%20Taxes) The company recognized an income tax benefit of **$10.3 million** in 2021, primarily due to a partial release of its valuation allowance from deferred tax liabilities from acquisitions Income Tax Benefit (Expense) Provision (2019-2021) | Category | 2021 ($ thousands) | 2020 ($ thousands) | 2019 ($ thousands) | | :------------------------ | :----------------- | :----------------- | :----------------- | | Current | 860 | (71) | (67) | | Deferred | 9,413 | 1,760 | (29) | | **Income tax benefit (expense)** | **10,273** | **1,689** | **(96)** | - Income tax benefit in 2021 was primarily due to the partial release of the valuation allowance as a result of deferred tax liabilities from acquisitions[409](index=409&type=chunk) - The company maintains a full valuation allowance against substantially all of its net deferred tax assets due to the uncertainty of their realization, with the allowance increasing by **$25.3 million** in 2021[705](index=705&type=chunk)[706](index=706&type=chunk) - As of December 31, 2021, the company had federal NOL carryforwards of **$360.3 million** and state NOLs of **$209.4 million**, subject to Section 382 limitations[707](index=707&type=chunk) [11. 401(k) Savings Plan](index=218&type=section&id=11.%20401(k)%20Savings%20Plan) The company operates nine 401(k) savings plans for domestic employees, making its first contributions of approximately **$0.6 million** in 2021 - The company has nine 401(k) savings plans covering substantially all domestic employees[711](index=711&type=chunk) - In 2021, the company made approximately **$0.6 million** in contributions to the plans, having made no contributions prior to 2021[712](index=712&type=chunk) [12. Business Combinations and Disposals](index=220&type=section&id=12.%20Business%20Combinations%20and%20Disposals) The company completed several significant business combinations in 2021, totaling **$346.3 million** in purchase consideration, to expand service offerings and capabilities - The company completed several business combinations in 2021, 2020, and 2019 to expand product/service offerings, acquire new customer channels, and realize synergies[713](index=713&type=chunk) 2021 Acquisitions Purchase Consideration | Acquisition | Cash ($ thousands) | Issuance of Common Stock ($ thousands) | Holdback Liabilities & Escrow ($ thousands) | Contingent Consideration - Equity ($ thousands) | Contingent Consideration - Liability ($ thousands) | Total Purchase Consideration ($ thousands) | | :---------- | :----------------- | :------------------------------------- | :------------------------------------------ | :-------------------------------------------- | :------------------------------------------------- | :----------------------------------------- | | V12 Data | 20,196 | — | 150 | — | 1,410 | 21,756 | | HOA | 84,370 | 22,773 | 1,000 | 6,685 | — | 114,828 | | Rynoh | 32,302 | — | 3,500 | — | — | 35,802 | | AHP | 43,750 | — | 2,500 | — | — | 46,250 | | Floify | 75,959 | 9,908 | 900 | — | 8,632 | 95,399 | | Other | 27,121 | 3,026 | 1,775 | — | 327 | 32,249 | | **Total** | **283,698** | **35,707** | **9,825** | **6,685** | **10,369** | **346,284** | - Revenue from the five significant 2021 acquisitions (V12 Data, HOA, Rynoh, AHP, Floify) included in the consolidated statements of operations through December 31, 2021, was **$79.6 million**, with a net loss of **$1.8 million**[735](index=735&type=chunk) Unaudited Pro Forma Consolidated Financial Information (2020-2021) | Metric | 2021 ($ thousands) | 2020 ($ thousands) | | :-------- | :----------------- | :----------------- | | Revenue | 215,769 | 148,771 | | Net loss | (112,239) | (61,253) | - In 2020, the company disposed of the Serviz business, recording a **$1.4 million** gain on divestiture[743](index=743&type=chunk) [13. Leases](index=227&type=section&id=13.%20Leases) The company leases office facilities under operating lease agreements, recognizing **$4.5 million** in ROU assets and **$4.7 million** in lease liabilities as of December 31, 2021 - The company leases office facilities under operating lease agreements with initial terms of **1 to 5 years**, and renewal options up to **10 additional years**[747](index=747&type=chunk) - Upon adoption of Topic 842 on January 1, 2021, the company recognized ROU assets and lease liabilities[590](index=590&type=chunk) Operating Lease Costs and Balance Sheet Information (2021) | Metric | 2021 ($ thousands) | | :-------------------------------------- | :----------------- | | Operating lease cost | 2,155 | | Variable lease cost | 339 | | **Total lease cost** | **2,494** | | Operating cash outflows for operating leases | 2,141 | | Right-of-use assets obtained in exchange for new lease obligations | 6,365 | | Operating lease right-of-use assets | 4,504 | | Operating lease liabilities, current | 1,957 | | Operating lease liabilities, non-current | 2,694 | | **Total operating lease liabilities** | **4,651** | - As of December 31, 2021, the weighted-average remaining lease term was **2.1 years**, and the weighted-average discount rate was **9.4%**[751](index=751&type=chunk) [14. Reinsurance](index=230&type=section&id=14.%20Reinsurance) The company's insurance subsidiary, HOA, uses reinsurance to manage risk exposure, employing quota share and excess of loss treaties to limit net retention - HOA uses reinsurance to manage exposure to property and casualty insurance risks, including from catastrophes[754](index=754&type=chunk) - The 2021 reinsurance program includes two quota share placements (Coastal and Core, both at **90% of subject losses**) and property catastrophe excess of loss treaties[756](index=756&type=chunk)[757](index=757&type=chunk) - HOA remains primarily liable to policyholders for reinsured portions and monitors reinsurer financial condition and credit risk[754](index=754&type=chunk)[755](index=755&type=chunk) Effects of Reinsurance on Premiums (April 5 - Dec 31, 2021) | Metric | Written ($ thousands) | Earned ($ thousands) | | :-------------- | :-------------------- | :------------------- | | Direct premiums | 266,609 | 213,423 | | Ceded premiums | (237,102) | (199,366) | | **Net premiums**| **29,507** | **14,057** | Effects of Reinsurance on Incurred Losses and LAE (April 5 - Dec 31, 2021) | Metric | Amount ($ thousands) | | :------------------ | :------------------- | | Direct losses and LAE | 181,256 | | Ceded losses and LAE | (162,752) | | **Net losses and LAE**| **18,504** | [15. Unpaid Losses and Loss Adjustment Reserve](index=232&type=section&id=15.%20Unpaid%20Losses%20and%20Loss%20Adjustment%20Reserve) The liability for losses and loss adjustment expenses (LAE) is an estimate of future claim costs, totaling **$61.9 million** gross of reinsurance as of December 31, 2021 - The liability for losses and loss adjustment expenses (LAE) is an estimate of amounts required to cover known incurred losses and LAE, including IBNR[534](index=534&type=chunk) Rollforward of Losses and LAE Reserve (April 5 - Dec 31, 2021) | Metric | Amount ($ thousands) | | :-------------------------------------------- | :------------------- | | Losses and LAE reserve at April 5 | 84,366 | | Reinsurance recoverables on losses and LAE | (82,898) | | Losses and LAE reserve, net of reinsurance recoverables at April 5 | 1,468 | | Net incurred losses and LAE during the current year | 18,504 | | Net claim and LAE payments during the current year | (14,775) | | Reserve for losses and LAE, net of reinsurance recoverables, at end of year | 5,197 | | Reinsurance recoverables on losses and LAE | 56,752 | | **Losses and LAE reserve at December 31** | **61,949** | - Changes in estimates for prior year claims resulted in a **$0.9 million** increase in provisions for losses and LAE during 2021[760](index=760&type=chunk) [16. Commitments and Contingencies](index=233&type=section&id=16.%20Commitments%20and%20Contingencies) The company has commitments related to a pending acquisition of CSE for **$48.6 million**, non-cancelable purchase commitments, and is involved in various litigations - The company has a stock purchase agreement to acquire CSE, a California-based personal lines insurer, for **$48.6 million** in cash, subject to customary closing conditions and regulatory approval[763](index=763&type=chunk) Non-Cancelable Purchase Commitments (as of Dec 31, 2021) | Year | Amount ($ thousands) | | :-------- | :------------------- | | 2022 | 2,535 | | 2023 | 1,600 | | 2024 | 1,600 | | 2025 | — | | 2026 | — | | **Total** | **5,735** | - The company is party to twelve legal proceedings alleging TCPA violations, a breach of contract claim related to the Kandela acquisition, and a putative wage and hours class action[767](index=767&type=chunk)[769](index=769&type=chunk)[771](index=771&type=chunk) - HOA is subject to Texas state insurance regulations, requiring a minimum of **$2.5 million** in capital stock and **$2.5 million** in surplus, and limiting dividends to the greater of **10% of statutory surplus** or prior year's net income[773](index=773&type=chunk)[775](index=775&type=chunk) [17. Segment Information](index=238&type=section&id=17.%20Segment%20Information) The company's two reportable segments, Vertical Software and Insurance, reflect how the Chief Operating Decision Maker manages the business - The company has two reportable segments: Vertical Software and Insurance, based on how the CODM manages the business[778](index=778&type=chunk) - Vertical Software segment includes software fees and non-insurance revenue, while the Insurance segment offers homeowner/auto insurance and home warranty services[779](index=779&type=chunk)[780](index=780&type=chunk) Segment Revenues (2019-2021) | Segment | 2021 ($ thousands) | 2020 ($ thousands) | 2019 ($ thousands) | | :---------------- | :----------------- | :----------------- | :----------------- | | Vertical Software | 137,150 | 63,799 | 59,259 | | Insurance | 55,283 | 4,166 | — | | Divested Businesses | — | 4,334 | 18,336 | | **Total segment revenue** | **192,433** | **72,299** | **77,595** | Segment Adjusted EBITDA (Loss) (2019-2021) | Segment | 2021 ($ thousands) | 2020 ($ thousands) | 2019 ($ thousands) | | :-------------------------- | :----------------- | :----------------- | :----------------- | | Vertical Software | 20,733 | 12,718 | 4,616 | | Insurance | 9,007 | 405 | — | | Corporate and Other | (53,760) | (30,001) | (36,645) | | Divested Businesses | — | (1,441) | (4,806) | | **Total segment adjusted EBITDA (loss)** | **(24,020)** | **(18,319)** | **(36,835)** | [18. Related Parties](index=239&type=section&id=18.%20Related%20Parties) The company has engaged in various transactions with related parties, including a **$17.3 million** capital contribution from the CEO and legal service expenses - In July 2020, the CEO made a **$17.3 million** capital contribution to the company in connection with the PTAC Merger Agreement[787](index=787&type=chunk) - In 2019, the CEO purchased convertible promissory notes with an aggregate principal balance of **$1.0 million**[788](index=788&type=chunk) - The company sold a direct-to-customer security services business to a related party in 2019[788](index=788&type=chunk) - The company purchased legal services totaling **$2.9 million** in 2020 and **$0.9 million** in 2019 from a law firm where an immediate family member of the CEO was a partner[791](index=791&type=chunk) [19. Basic and Diluted Net Loss Per Share](index=240&type=section&id=19.%20Basic%20and%20Diluted%20Net%20Loss%20Per%20Share) Due to reported net losses in all periods, basic net loss per share equals diluted net loss per share, with a **$(1.14)** loss per share in 2021 - Basic and diluted net loss per share are presented using the two-class method[792](index=792&type=chunk) - Due to reported net losses in all periods, all potentially dilutive securities are antidilutive, resulting in basic net loss per share equaling diluted net loss per share[793](index=793&type=chunk) Basic and Diluted Net Loss Per Share (2019-2021) | Metric | 2021 | 2020 | 2019 | | :-------------------------------------- | :-------- | :-------- | :-------- | | Net loss attributable to common stockholders ($ thousands) | (106,606) | (71,316) | (103,319) | | Weighted average shares outstanding (Basic) | 93,884,566 | 36,344,234 | 31,170,351 | | Loss per share - basic ($) | (1.14) | (1.96) | (3.31) | | Loss per share - diluted ($) | (1.14) | (2.03) | (3.31) | [20. Subsequent Events](index=241&type=section&id=20.%20Subsequent%20Events) Subsequent events include a definitive agreement to acquire certain businesses of RWS, Inc. for approximately **$33.0 million** and the grant of **$5.0 million** in annual equity awards to the CEO - On February 28, 2022, the company entered into an agreement to acquire certain businesses of RWS, Inc. for approximately **$33.0 million** in cash and common stock[798](index=798&type=chunk) - The RWS acquisition includes contingent consideration based on product line performance and is subject to regulatory approval for warranty operations in California and Florida[798](index=798&type=chunk)[799](index=799&type=chunk) - In February 2022, the CEO was granted **$5.0 million** in annual equity awards, including performance-based restricted stock units (CEO PRSUs) and time-based restricted stock units (CEO RSUs)[799](index=799&type=chunk) - CEO PRSUs vest based on stock price hurdles (**$26.00, $28.00, $30.00**) within **36 months**, while CEO RSUs and CEO TWW RSUs vest quarterly over **30-36 months**, all with a **three-year post-vesting holding period**[799](index=799&type=chunk)[800](index=800&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=149&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) There are no changes in or disagreements with accountants on accounting and financial disclosure to report - Not applicable[817](index=817&type=chunk) [Controls and Procedures](index=149&type=section&id=Item%209A.%20Controls%20and%20Procedures) The company's disclosure controls and procedures were deemed ineffective as of December 31, 2021, due to identified material weaknesses in internal control over financial reporting - Disclosure controls and procedures were not effective as of December 31, 2021, due to material weaknesses in internal control over financial reporting[818](index=818&type=chunk) - Management identified material weaknesses related to: a) design and implementation of IT general controls; b) identification, design, implementation, and retention of evidence of control activities; and c) quantity of personnel to design and operate internal controls[822](index=822&type=chunk) - Despite material weaknesses, management concluded that the consolidated financial statements fairly present the financial position, results of operations, and cash flows[819](index=819&type=chunk)[823](index=823&type=chunk) - The assessment of internal control over financial reporting excluded 2021 acquired businesses, which constituted approximately **68% of total assets** and **51% of total revenue**[824](index=824&type=chunk)[838](index=838&type=chunk) - Planned remediation efforts include consolidating fin
Porch(PRCH) - 2021 Q4 - Earnings Call Presentation
2022-03-02 05:22
Group Love your home. For moving and improving and everything in between. Q4 and FY 2021 Earnings Presentation March 1, 2022 Copyright 2022 Porch Group, Inc. All rights reserved Presenters Matt Ehrlichman CEO, Chairman & Founder Porch Group Marty Heimbigner CFO Porch Group Matthew Neagle COO Porch Group Nicole Pelley SVP, Product & Technology Porch Group ~Porch Copyright 2022 Porch Group, Inc. All rights reserved 2 DISCLAIMERS 3 Forward-Looking Statements Certain statements in this presentation may be consi ...
Porch(PRCH) - 2021 Q4 - Earnings Call Transcript
2022-03-02 05:18
Porch Group, Inc. (NASDAQ:PRCH) Q4 2021 Earnings Conference Call March 1, 2022 5:00 PM ET Company Participants Walter Ruddy - Head, Investor Relations and Treasury Matt Ehrlichman - Founder, Chairman, President and CEO Marty Heimbigner - Chief Financial Officer Matthew Neagle - Chief Operating Officer Nicole Pelley - Senior Vice President, Product and Technology Conference Call Participants Jason Helfstein - Oppenheimer James Holly - Stephens Daniel Kurnos - Benchmark Ben Sherlund - Cantor Ken Wong - Guggen ...
Porch (PRCH) Investor Presentation - Slideshow
2021-11-23 19:55
~Porch Group Copyright 2021 Porch.com. All rights reserved 1 For moving and improving and everything in between. November 2021 Love your home. DISCLAIMERS 2 Forward-Looking Statements Certain statements in this presentation 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, Inc.'s ("Porch") future financial or opera ...
Porch(PRCH) - 2021 Q3 - Earnings Call Transcript
2021-11-16 15:20
Financial Data and Key Metrics Changes - The company reported Q3 2021 revenue of $62.8 million, a 192% increase year-over-year compared to $21.5 million in Q3 2020 [8][15] - Revenue increased by 22% quarter-over-quarter from $51.3 million in Q2 2021 to $62.8 million in Q3 2021 [17] - Adjusted EBITDA margin improved to 45% in Q3, marking the first profitable adjusted EBITDA quarter for the company [9][15] - Full-year 2021 revenue guidance was raised from $187.5 million to $195 million, representing a 170% year-over-year growth [18][20] Business Line Data and Key Metrics Changes - The company now reports two operating segments: Vertical Software and Insurance [13] - Vertical Software generated $42.3 million in revenue for Q3, with a contribution margin of 42% and an adjusted EBITDA margin of 18% [28] - The Insurance segment reported gross written premiums of $108 million, with segment revenue of $20.5 million, resulting in a contribution margin of 54% and adjusted EBITDA margin of 27% [33][34] Market Data and Key Metrics Changes - The average number of companies served increased to over 20,000, a 90% year-over-year growth, with average revenue per company rising to $1,022 per month, a 54% increase year-over-year [23] - Monetized services reached almost 330,000, representing a 66% year-over-year growth, with an average revenue of $144 per monetized service, a 48% increase year-over-year [25] Company Strategy and Development Direction - The company aims to build a leading position in the home services market by providing software and services to various home service companies, generating recurring B2B revenues [12][13] - The strategy includes aggressive investments in product and technology to drive growth, while also focusing on M&A to expand the platform [9][11] - The company is positioned to leverage its unique customer acquisition and property data advantages in the insurance sector [32] Management's Comments on Operating Environment and Future Outlook - Management noted no significant softening in business due to the housing market and expressed confidence in navigating the macro reinsurance market challenges in 2022 [10] - The company is optimistic about future growth potential, citing a predictable business model and competitive advantages in a large market opportunity exceeding $320 billion [9][40] Other Important Information - The company completed a $425 million convertible note offering to strengthen its balance sheet for future M&A opportunities [11] - The acquisition of American Home Protect allows the company to offer home warranties, while the acquisition of Floify enhances access to homebuyers [11][32] Q&A Session Summary Question: What is the vision behind the nationwide inspection tour? - The company aims to increase market share and improve unit economics through various go-to-market tactics, including pop-up conferences [43][44] Question: How does the conversion to customer access pay work? - The company focuses on educating small businesses during in-person events to help them grow and transition to transactional pay models [46] Question: Can you discuss the underlying trends and growth expectations for next year? - The company plans to provide formal guidance for 2022 in the next quarter, emphasizing a balance between growth and profitability [51][52] Question: What is the expected revenue from new states launched in 2021? - The company anticipates some revenue impact from new states in 2022, with a conservative pricing strategy to ensure proper data feedback [76]