Porch(US:PRCH)2021-03-31 16:25Business Overview - Porch provides software and services to approximately 11,000 home services companies, enhancing their business growth and customer experience [290]. - Porch serves approximately 11,000 home services companies, focusing on home inspections, moving services, and software subscriptions [310]. - The company began selling homeowner and auto insurance policies in January 2020, estimating the lifetime value (LTV) of policies sold based on various factors [433][434]. Financial Performance - Porch's net loss in 2020 was $51.6 million, a significant improvement from a net loss of $103.3 million in 2019, influenced by a one-time stock-based compensation charge of $33.2 million in 2019 [335]. - Total revenue for 2020 was $73,216,000, a decrease of 5.5% from $77,595,000 in 2019 [389]. - Net loss attributable to common stockholders decreased by $34.4 million, or 33%, from $103.3 million in 2019 to $68.9 million in 2020 [338]. - Adjusted EBITDA loss improved by $19.3 million, or 110%, from $36.8 million in 2019 to $17.5 million in 2020, attributed to cost savings initiatives [355]. - The company incurred a net loss of $51.6 million for the year ended December 31, 2020, compared to a net loss of $103.3 million in 2019, reflecting a decrease of 50.1% [361][365]. Revenue Streams - Revenue streams include Referral Network Revenue, Managed Services Revenue, and Software Subscription Revenue, with revenue recognized upon transfer of control of services [315]. - Porch Group's revenue primarily comes from B2B2C transaction revenues, with service providers paying for new customer sign-ups [396]. - Total revenue for 2020 was $73,216, a decrease from $77,595 in 2019, with referral network revenue at $53,440 and managed services revenue at $11,766 [457]. - Moving services accounted for 62% of total revenue in 2020, up from 47% in 2019, while post-move services decreased to 38% from 53% [457]. Expenses and Cost Management - Selling and marketing expenses decreased by $14.4 million, or 26%, from $56.2 million in 2019 to $41.8 million in 2020, representing 57% of revenue in 2020 compared to 73% in 2019 [341]. - General and administrative expenses decreased by $23.6 million, or 45%, from $52 million in 2019 to $28.4 million in 2020 [343]. - The company reduced cash payroll costs by $4.0 million in 2020, resulting in a cumulative catch-up of $6.5 million in compensation expense due to performance vesting conditions being met [310]. Acquisitions and Partnerships - Porch has established partnerships and selectively acquired companies to enhance its platform, including ISN™ and HireAHelper™ [292]. - The company invested $8.3 million in cash and $6.9 million in common stock to acquire four companies in 2020, aimed at expanding product offerings and customer acquisition channels [310]. - The company made acquisitions totaling $17.6 million in 2020, reflecting its commitment to growth through mergers and acquisitions [334]. Cash Flow and Financing - Porch generated gross cash sources of $70.9 million and $34.6 million from complex debt and equity financings in 2020 and 2019, respectively [310]. - Net cash provided by financing activities surged to $259.6 million in 2020, a 653% increase from $34.5 million in 2019 [360][367]. - The company reported a net cash used in operating activities of $48.7 million for 2020, compared to $29.3 million in 2019 [393]. Assets and Liabilities - Total assets increased significantly to $268,591,000 in 2020 from $48,468,000 in 2019 [387]. - Total liabilities increased to $129,180,000 in 2020 from $108,447,000 in 2019 [387]. - The company had an accumulated deficit of $315.1 million as of December 31, 2020, compared to $263.5 million in 2019 [359]. Market and Economic Impact - The COVID-19 pandemic initially impacted service volumes but recovery was noted by June 30, 2020, with volumes above prior year levels post-adjustment [302]. - The company experienced a recovery in home sales to pre-COVID-19 levels in the second half of 2020, positively impacting home inspections and related services [400]. Regulatory and Compliance - Porch expects to incur additional annual expenses as a public company, including increased audit and legal fees due to regulatory requirements [305]. - The company is classified as an emerging growth company under the JOBS Act, allowing it to delay adopting new accounting standards [370]. Stock and Equity - The merger with PTAC resulted in an increase in cash of approximately $269 million, enhancing Porch's financial position [304]. - Porch Group's stockholders' equity included $269.5 million reflected as contributed capital following the merger transactions [400].