8-K
Porch Group, Inc. (PRCH)
Common stock, par value $0.0001
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date Earliest Event Reported):
November 15, 2021
PORCH GROUP, INC.
(Exact name of registrant as specified in itscharter)
| Delaware | 001-39142 | 83-2587663 |
|---|---|---|
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
| 2200 1st Avenue South, Suite 300 | ||
| --- | --- | |
| Seattle, Washington | 98134 | |
| (Address of Principal Executive Offices) | (Zip Code) |
(855) 767-2400
(Registrant’s telephone number, includingarea code)
Not Applicable
(Former Name or Former Address, if Changed SinceLast Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e- 4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<br><br> <br>Symbol(s) | Name of each exchangeon which registered |
|---|---|---|
| Common stock,par value $0.0001 | PRCH | The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company x
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. ¨
Item 2.02. Results of Operation and Financial Condition.
On November 15, 2021, Porch Group, Inc. (the “Company”) issued an earnings release announcing financial results for the quarter ended September 30, 2021. The full text of the press release issued in connection with the announcement is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 7.01. Regulation FD Disclosure.
On November 15, 2021, the Company will host an earnings call at 5:00 p.m. Eastern time to discuss its financial results for the quarter ended September 30, 2021. The investor presentation to be used for the call is attached as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated herein by reference. Live and archived webcasts of the presentation will be available on the Company’s website at https://ir.porchgroup.com.
The information in this Current Report on Form 8-K and the exhibits attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits.
| Exhibit No. | Description |
|---|---|
| 99.1 | Press<br> Release, dated November 15, 2021 |
| 99.2 | Investor Presentation,<br> dated November 15, 2021 |
| 104 | Cover Page Interactive Data File<br> (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| PORCH GROUP, INC. | ||
|---|---|---|
| By: | /s/ Martin L. Heimbigner | |
| Name: | Martin L. Heimbigner | |
| Title: | Chief Financial Officer |
Date: November 15, 2021
Exhibit 99.1
Porch Group Reports Third Quarter 2021 FinancialResults
-Reports $62.8 Million of Revenue and Increases Full Year 2021 Revenue Guidance to $195 Million, A 170% Year-Over-Year Increase**-
- Reports Positive Quarterly Adjusted EBITDAof $873 Thousand and GAAP Net Loss of $5.1 Million -
- Reports $416 Million Cash Balance After Executionof Convertible Senior Notes Offering -
SEATTLE,November 15, 2021 – Porch Group, Inc. (“Porch” or “the Company”) (NASDAQ: PRCH), a leading vertical software company reinventing the home services industry, today reported financial results for the third quarter ended September 30, 2021.
“Our operational and strategic execution resulted in excellent third quarter financial results, highlighted by almost 200% year-over-year revenue growth and positive quarterly adjusted EBITDA for the first time in Porch’s history as a public company,” said Matt Ehrlichman, Founder, Chairman and CEO. “Bolstered by our balance sheet and cash position, we continue to demonstrate our ability to drive simultaneous strong growth and margins, while strengthening our strategically advantaged position in the marketplace, both organically and through acquisitions. Our strong Q3 and ongoing performance gives us confidence to increase our full year 2021 revenue guidance to $195 million which would be 170% growth year-over-year. I’m proud of our team’s hard work that has positioned us favorably for the remainder of the year and into 2022 to deliver for our shareholders and other key stakeholders. We’re continuing to take Porch to the next level as a truly great and enduring company.”
Third Quarter 2021 Financial Results
Total revenue for the third quarter of 2021 was $62.8 million, an increase of 192% from $21.5 million in the third quarter of 2020. The increase in total revenue was driven by strong performance across the business including increased software sales to more companies and growth in sales of key services such as insurance as well as closed acquisitions.
Revenue less cost of revenue for the third quarter 2021 was 69% and contribution margin was 45%. GAAP net loss for the third quarter of 2021 totaled $5.1 million. Adjusted EBITDA for the third quarter of 2021 totaled $873 thousand (or 1% of total revenue).
For the first time, the company is reporting financials with two reportable operating segments: Vertical Software and Insurance.
Segment Results for theThird Quarter 2021
| · | Vertical Software revenue was $42.3 million, revenue less cost of revenue was 66%, contribution margin was 42% and adjusted EBITDA<br>margin was 18% |
|---|---|
| · | Insurance revenue was $20.5 million, revenue less cost of revenue was 77%, contribution margin was 54% and adjusted EBITDA margin<br>was 27% |
| · | Insurance gross written premium was $108 million with 292,000 policyholders |
In the third quarter, we announced and closed an offering of $425 million aggregate principal amount of convertible senior notes due 2026. As of September 30, 2021, cash, cash equivalents, and restricted cash totaled $416 million. This amount is measured prior to the October acquisition of Floify, a provider of software for mortgage companies.
Third Quarter 2021 Key Performance Indicators (KPIs)
Software and services to companies:
| · | Average number of companies increased to 20,472, up 90% year-over-year. |
|---|---|
| · | Average revenue per company per month increased to $1,022, up 54% year-over-year. |
Monetized services for consumers:
| · | Number of monetized services was 329,359 in Q3 2021, up 66% year-over-year. |
|---|---|
| · | Average revenue per monetized service was $144, up 48% year-over-year. |
Recent Strategic Acquisitions
On September 9, 2021, Porch announced two strategic acquisitions – CSE Insurance (CSE) and American Home Protect (AHP) – to help the Company further provide high value services to homebuyers across the United States. CSE is expected to close mid-2022 (following regulatory approval) and will advance Porch’s insurance presence into California. AHP closed in September. Porch is now competing through AHP in the direct-to-consumer home warranty market. Porch will provide both of the acquired companies with unique advantages and revenue synergy opportunities, including low-cost access to homebuyers who require these services, and proprietary property data that may improve pricing and underwriting.
CSE Business Overview
| · | Personal lines insurer focused on property and auto |
|---|---|
| · | 71-year history and management team with significant home and auto experience in California |
| · | CSE operates in six states, including its primary focus of California, as well as Arizona, Nevada and Utah. It is licensed in an additional<br>six states |
AHP Business Overview
| · | Texas-based provider of whole home warranty policies across the United States |
|---|---|
| · | Utilizes a direct-to-consumer model to acquire customers for their multi-year warranty plans |
On October 27, Porch announced the acquisition of Floify, a leading SaaS provider for mortgage companies and loan officers. The acquisition deepens Porch’s strategy of providing software to companies involved in key moments of the homebuying process and expands its early access to high-intent homebuyers who need key services including insurance, warranty and moving services.
Full Year 2021 Financial Outlook
Porch provides guidance based on current market conditions and expectations.
| Previous 2021E Guidance | Current 2021E Guidance | |
|---|---|---|
| Gross Written Premium<br><br> <br>$300M | Increase | Gross Written Premium<br><br> <br>$305M |
| Revenue<br><br> <br>$187.5M | Increase | Revenue<br><br> <br>$195M<br><br> <br>(170% YOY Growth) |
| Revenue Less Cost of Revenue %<br><br> <br>~72% | Adj. for mix shift | Revenue Less Cost of Revenue %<br><br> <br>~70% |
| Contribution Margin %<br><br> <br>~40% | No Change | Contribution Margin %<br><br> <br>~40% |
| Adj. EBITDA %<br><br> <br>-14 to -16% | No Change | Adj. EBITDA %<br><br> <br>-14 to -16% |
Porch is not providing reconciliations of expected 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 as certain information necessary to calculate such measures on a GAAP basis is unavailable or dependent on the timing of future events outside of Porch’s control.
Conference Call
Porch management will host a conference call today (November 15, 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 One tap mobile:
U.S.: +14086380968,,85153860010# or +16699006833,,85153860010#
Or join by phone:
Dial (for higher quality, dial a number based on your current location):
US: +1 408 638 0968 or +1 669 900 6833 or +1 253 215 8782 or +1 346 248 7799 or +1 646 876 9923 or +1 301 715 8592 or +1 312 626 6799
Webinar ID: 851 5386 0010
International numbers available here.
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 Investors 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 20,000 home services companies such as home inspectors, mortgage companies and loan officers, title companies, moving companies, real estate agencies, utility companies, and warranty companies. Through these relationships and its multiple brands, Porch provides a moving concierge service to homebuyers, helping them save time and make better decisions on critical services, including insurance, warranty, moving, security, TV/internet, home repair and improvement, and more. To learn more about Porch, visit porchgroup.com or porch.com.
Forward-Looking Statements
Certain statements in this release may be considered “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements generally relate to future events or Porch’s future financial or operating performance. For example, projections of future revenue, contribution margin, Adjusted EBITDA and other metrics, business strategy and plans, and anticipated impacts from pending or completed acquisitions, are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expect,” “intend,” “will,” “estimate,” “anticipate,” “believe,” “predict,” “potential” or “continue,” or the negatives of these terms or variations of them or similar terminology. Such forward-looking statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from those expressed or implied by such forward looking statements.
These forward-looking statements are based upon estimates and assumptions that, while considered reasonable by Porch and its management at the time they are made, are inherently uncertain. Factors that may cause actual results to differ materially from current expectations include, but are not limited to: (1) the ability to recognize the anticipated benefits of Porch’s December 2020 business combination (the “Merger”) with PropTech Acquisition Corporation (“PropTech”), which may be affected by, among other things, competition and the ability of the combined company to grow and manage growth profitably, maintain key commercial relationships and retain its management and key employees; (2) expansion plans and opportunities, including recently completed acquisitions as well as future and pending acquisitions or additional business combinations; (3) costs related to the Merger and being a public company; (4) litigation, complaints, and/or adverse publicity; (5) the impact of changes in consumer spending patterns, consumer preferences, local, regional and national economic conditions, crime, weather, demographic trends and employee availability; (6) privacy and data protection laws, privacy or data breaches, or the loss of data; (7) the impact of the COVID-19 pandemic and its effect on the business and financial conditions of Porch; and (8) other risks and uncertainties described in Porch’s most recent annual report on Form 10-K/A and subsequent reports filed with the Securities and Exchange Commission (the “SEC”), such as Porch’s quarterly report on Form 10-Q for the quarter ended June 30, 2021, and September 30, 2021, which are available on the SEC’s website at www.sec.gov.
Nothing in this release should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of such forward-looking statements will be achieved. You should not place undue reliance on forward-looking statements, which speak only as of the date of this release. Unless specifically indicated otherwise, the forward-looking statements in this release do not reflect the potential impact of any divestitures, mergers, acquisitions, or other business combinations that have not been completed as of the date of this release. Porch does not undertake any duty to update these forward-looking statements, whether as a result of changed circumstances, new information, future events or otherwise, except as may be required by law.
Non-GAAP Financial Measures
This press release includes one or more non-GAAP financial measures, such as Adjusted EBITDA (loss), Adjusted EBITDA (loss) as a percentage of revenue, contribution margin, and average revenue per monetized service.
Porch defines Adjusted EBITDA (loss) as net income (loss) adjusted for interest expense, net, income taxes, other expenses, net, depreciation and amortization, certain non-cash long-lived asset impairment charges, stock-based compensation expense and acquisition-related impacts, including compensation to the sellers that requires future service, amortization of intangible assets, gains (losses) recognized on changes in the value of contingent consideration arrangements, if any, gain or loss on divestures and certain transaction costs. Adjusted EBITDA (loss) as a percentage of revenue is defined as Adjusted EBITDA (loss) divided by GAAP total revenue. Contribution margin is defined as revenue less all variable expenses, including cost of revenue, variable marketing and sales. Average revenue per monetized services in quarter is the average revenue generated per monetized service performed in a quarterly period. When calculating average revenue per monetized service in quarter, average revenue is defined as total quarterly monetized service revenues generated from monetized services.
Porch’s management and Board of Directors use these non-GAAP financial measures as supplemental measures of Porch’s operating and financial performance for historical and forward-looking periods, for internal budgeting and forecasting purposes, to evaluate financial and strategic planning matters, and for certain measures, to establish performance goals for incentive programs. Porch believes that the use of these non-GAAP financial measures provides investors with useful information to evaluate projected operating results and trends and in comparing Porch’s financial measures with competitors, other similar companies and companies across different industries, many of which present similar non-GAAP financial measures to investors. However, Porch's definitions and methodology in calculating these non-GAAP measures may not be comparable to those used by other companies. In addition, Porch may modify the presentation of these non-GAAP financial measures in the future, and any such modification may be material.
You should not consider these non-GAAP financial measures in isolation, as a substitute to or superior to financial performance measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude specified income and expenses, some of which may be significant or material, that are required by GAAP to be recorded in Porch’s consolidated financial statements. Porch may also incur future income or expenses similar to those excluded from these non-GAAP financial measures, and Porch’s presentation of these measures should not be construed as an inference that future results will be unaffected by unusual or non-recurring items. In addition, these non-GAAP financial measures reflect the exercise of management judgment about which income and expense are included or excluded in determining these non-GAAP financial measures.
You should review the tables accompanying this press release for reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measure. Porch is not providing reconciliations of non-GAAP financial measures for future periods to the most directly comparable measures prepared in accordance with GAAP. Porch is unable to provide these reconciliations without unreasonable effort because certain information necessary to calculate such measures on a GAAP basis is unavailable or dependent on the timing of future events outside of Porch’s control.
Adjusted EBITDA (loss) For Three MonthsEnded September 30, 2021
| CORPORATE | INSURANCE | VERTICAL<br> SOFTWARE | Consolidated | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Adjusted EBITDA (loss) | $ | (12,312 | ) | $ | 5,473 | $ | 7,713 | $ | 873 | |||
| Adjusted EBITDA as a % of total revenue | N/A | 27 | % | 18 | % | 1 | % | |||||
| Acquisition and related (income) expense) | 1,958 | - | - | 1,958 | ||||||||
| Loss on re-measurement of warrants | (2,692 | ) | - | - | (2,692 | ) | ||||||
| Loss on re-measurement of earnout liability | (7,413 | ) | - | - | (7,413 | ) | ||||||
| Revaluation of contingent consideration | 195 | - | - | 195 | ||||||||
| Non-cash bonus expense | 695 | - | - | 695 | ||||||||
| Non-cash stock-based compensation | 5,172 | 156 | 555 | 5,884 | ||||||||
| Non-cash long-lived asset impairment charge | 76 | - | - | 76 | ||||||||
| Other, net | (40 | ) | (187 | ) | (89 | ) | (315 | ) | ||||
| Investment Income and Realized Gains | - | - | - | - | ||||||||
| Gain (loss) on extinguishment of debt | 3,133 | - | - | 3,133 | ||||||||
| Depreciation and amortization | 727 | 1,262 | 2,442 | 4,430 | ||||||||
| Income tax expense | 354 | (1,838 | ) | (353 | ) | (1,836 | ) | |||||
| Interest expense | 1,148 | 31 | 679 | 1,857 | ||||||||
| Net Loss | $ | (15,627 | ) | $ | 6,049 | $ | 4,479 | $ | (5,099 | ) |
Adjusted EBITDA (loss) For Nine MonthsEnded September 30, 2021
| CORPORATE | INSURANCE | VERTICAL<br> SOFTWARE | Consolidated | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Adjusted EBITDA (loss) | $ | (40,754 | ) | $ | 3,068 | $ | 19,040 | $ | (18,646 | ) | ||
| Adjusted EBITDA as a % of total revenue | N/A | 8 | % | 19 | % | -13 | % | |||||
| Acquisition and related (income) expense | 4,648 | - | - | 4,648 | ||||||||
| Loss on re-measurement of warrants | 17,521 | - | 17,521 | |||||||||
| Loss on re-measurement of earnout liability | 15,388 | - | - | 15,388 | ||||||||
| Revaluation of contingent consideration | (380 | ) | - | - | (380 | ) | ||||||
| Non-cash bonus expense | 1,378 | - | - | 1,378 | ||||||||
| Non-cash stock-based compensation | 26,579 | 476 | 2,195 | 29,249 | ||||||||
| Non-cash long-lived asset impairment charge | 202 | - | 14 | 216 | ||||||||
| Other, net | (43 | ) | (0 | ) | (181 | ) | (225 | ) | ||||
| Investment Income and Realized Gains | - | - | (0 | ) | (0 | ) | ||||||
| Gain (loss) on extinguishment of debt | (5,099 | ) | - | (11 | ) | (5,110 | ) | |||||
| Depreciation and amortization | 2,318 | 2,431 | 6,038 | 10,788 | ||||||||
| Income tax expense | (7,003 | ) | (2,566 | ) | (348 | ) | (9,917 | ) | ||||
| Interest expense | 3,391 | 64 | 842 | 4,296 | ||||||||
| Net Loss | $ | (99,653 | ) | $ | 2,664 | $ | 10,492 | $ | (86,497 | ) |
Monetized Services Revenue
| Three and Nine Months Ended September 30, 2021 | ||||
|---|---|---|---|---|
| 2021 | 2021 | |||
| Monetized Services Revenue | $ | 47,398 | $ | 103,311 |
| Other Operating Revenue | $ | 15,371 | 37,541 | |
| Total Revenue | $ | 62,769 | 140,852 |
Revenue Less Cost of Revenue and ContributionMargin Reconciliation for Three Months Ended September 30, 2021
| CORPORATE | INSURANCE | VERTICAL <br> SOFTWARE | Consolidated | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | $ | - | $ | 20,482 | $ | 42.287 | $ | 62,769 | ||||
| Cost of Revenue | $ | - | $ | 4,678 | $ | 14,480 | $ | 19,158 | ||||
| Revenue Less Cost of Revenue | $ | - | $ | 15,804 | $ | 27,808 | $ | 43,611 | ||||
| N/A | 77 | % | 66 | % | 69 | % | ||||||
| Revenue | $ | - | $ | 20,482 | $ | 42,287 | $ | 62,769 | ||||
| Cost of Revenue | $ | - | $ | 4,768 | $ | 14,480 | $ | 19,158 | ||||
| Sales & Marketing (Variable) | $ | 800 | $ | 4,834 | $ | 10,039 | $ | 15,673 | ||||
| Contribution Margin | $ | (800 | ) | $ | 10,969 | $ | 17,769 | $ | 27,939 | |||
| N/A | 54 | % | 42 | % | 45 | % | ||||||
| Sales & Marketing (Fixed) | $ | 940 | $ | 1,663 | $ | 3,266 | $ | 5,869 | ||||
| Product & Technology | $ | 5,882 | $ | 429 | $ | 5,006 | $ | 11,317 | ||||
| General & Administrative | $ | 13,514 | $ | 4,875 | $ | 4,782 | $ | 23,170 | ||||
| Total Operating Expenses | $ | 21,135 | $ | 16,479 | $ | 37,572 | $ | 75,186 | ||||
| Operating Loss | $ | (21,135 | ) | $ | 4,003 | $ | 4,716 | $ | (12,417 | ) |
Revenue Less Cost of Revenue and ContributionMargin Reconciliation for Nine Months Ended September 30, 2021
| CORPORATE | INSURANCE | VERTICAL<br><br> SOFTWARE | Consolidated | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | $ | - | $ | 39,223 | $ | 101,629 | $ | 140,852 | ||||
| Cost of Revenue | $ | - | $ | 15,408 | $ | 29,179 | $ | 44,587 | ||||
| Revenue Less Cost of Revenue | $ | - | $ | 23,815 | $ | 72,450 | $ | 96,265 | ||||
| N/A | 61 | % | 71 | % | 68 | % | ||||||
| Revenue | $ | - | $ | 39,223 | $ | 101,629 | $ | 140,852 | ||||
| Cost of Revenue | $ | - | $ | 15,408 | $ | 29,179 | $ | 44,587 | ||||
| Sales & Marketing (Variable) | $ | 4,602 | $ | 8,794 | $ | 28,047 | $ | 41,443 | ||||
| Contribution Margin | $ | (4,602 | ) | $ | 15,021 | $ | 44,404 | $ | 54,882 | |||
| N/A | 38 | % | 44 | % | 39 | % | ||||||
| Sales & Marketing (Fixed) | $ | 3,625 | $ | 6,490 | $ | 9,079 | $ | 19,193 | ||||
| Product & Technology | $ | 20,778 | $ | 433 | $ | 12,946 | $ | 34,158 | ||||
| General & Administrative | $ | 46,497 | $ | 8,366 | $ | 11,601 | $ | 66,463 | ||||
| Total Operating Expenses | $ | 75,502 | $ | 39,491 | $ | 90,851 | $ | 205,844 | ||||
| Operating Loss | $ | (75,502 | ) | $ | (268 | ) | $ | 10,778 | $ | (64,992 | ) |
**Investor Relations Contacts:**Walter Ruddy, Head of Investor Relations & TreasuryPorch Group(206) 715-2369****WalterRuddy@porch.com
Cody Slach/Matt Glover/Alex Thompson
Gateway Group, Inc.
(949) 574-3860
PRCH@gatewayir.com
**Porch Press contact:**Jordan Schmidt****Gateway Group, Inc. (949) 386-6332PRCH@gatewayir.com
PORCH GROUP, INC.
Condensed Consolidated Statements of Operations
(all numbers in thousands, except share amounts, unaudited)
| Three<br> Months Ended September <br><br>30, | Nine<br> Months Ended September <br><br>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 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 <br><br>30, | Nine Months Ended September <br><br>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 |
PORCH GROUP, INC.
Condensed Consolidated Balance Sheets
(all numbers in thousands, except share amounts)
| December 31,<br> 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 |
All values are in US Dollars.
**PORCHGROUP,**INC.
Condensed Consolidated Statements of Cash Flows
(all numbers in thousands, unaudited)
| Nine Months Ended September 30, | ||||||
|---|---|---|---|---|---|---|
| 2021 | 2020 | |||||
| Cash flows from operating activities: | ||||||
| Net loss | $ | (86,497 | ) | $ | (33,548 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities | ||||||
| Depreciation and amortization | 10,787 | 5,021 | ||||
| Loss on sale and impairment of long-lived assets | 202 | 807 | ||||
| Gain on extinguishment of debt | (5,110 | ) | (1,077 | ) | ||
| Loss on remeasurement of debt | — | 924 | ||||
| Gain on divestiture of businesses | — | (1,442 | ) | |||
| Loss on remeasurement of warrants | 17,521 | 1,214 | ||||
| Loss (gain) on remeasurement of contingent consideration | (380 | ) | 1,500 | |||
| Loss on remeasurement of earnout liability | 15,388 | — | ||||
| Stock-based compensation | 29,361 | 1,541 | ||||
| Amortization of premium/accretion of discount, net | 941 | — | ||||
| Net realized losses on investments | 45 | — | ||||
| Interest expense (non-cash) | 67 | 4,899 | ||||
| Other | (1,379 | ) | 106 | |||
| Change in operating assets and liabilities, net of acquisitions and divestitures | ||||||
| Accounts receivable | (5,424 | ) | (1,056 | ) | ||
| Reinsurance balance due | (33,097 | ) | — | |||
| Prepaid expenses and other current assets | 90 | 208 | ||||
| Long-term insurance commissions receivable | (3,794 | ) | (1,947 | ) | ||
| Accounts payable | (23,284 | ) | 3,723 | |||
| Accrued expenses and other current liabilities | 3,031 | 1,575 | ||||
| Losses and loss adjustment expense reserves | 1,892 | — | ||||
| Other insurance liabilities, current | 5,085 | — | ||||
| Deferred revenue | 42,948 | 3,109 | ||||
| Refundable customer deposits | (2,441 | ) | (2,641 | ) | ||
| Deferred income tax benefit | (8,153 | ) | — | |||
| Other | 484 | 69 | ||||
| Net cash used in operating activities | (41,717 | ) | (17,015 | ) | ||
| Cash flows from investing activities: | ||||||
| Purchases of property and equipment | (588 | ) | (121 | ) | ||
| Capitalized internal use software development costs | (2,629 | ) | (2,113 | ) | ||
| Purchases of short-term and long-term investments | (19,126 | ) | — | |||
| Maturities, sales of short-term and long-term investments | 16,367 | — | ||||
| Acquisitions, net of cash acquired | (178,681 | ) | (1,618 | ) | ||
| Net cash used in investing activities | (184,657 | ) | (3,852 | ) | ||
| Cash flows from financing activities: | ||||||
| Proceeds from debt issuance, net of fees | 413,537 | 61,190 | ||||
| Repayments of principal and related fees | (42,965 | ) | (42,858 | ) | ||
| Proceeds from issuance of redeemable convertible preferred stock, net of fees | — | 4,714 | ||||
| Capped call transactions | (42,330 | ) | — | |||
| Proceeds from exercises of warrants | 126,772 | — | ||||
| Proceeds from exercises of stock options | 3,516 | 76 | ||||
| Income tax withholdings paid upon vesting of restricted stock units | (23,778 | ) | — | |||
| Deferred offering costs | — | (1,255 | ) | |||
| Repurchase of stock | — | (42 | ) | |||
| Net cash provided by financing activities | 434,752 | 21,825 | ||||
| Net change in cash, cash equivalents, and restricted cash | $ | 208,378 | $ | 958 | ||
| Cash, cash equivalents, and restricted cash, beginning of period | $ | 207,453 | $ | 7,179 | ||
| Cash, cash equivalents, and restricted cash end of period | $ | 415,831 | $ | 8,137 |
PORCH GROUP, INC.
Condensed Consolidated Statements of Cash Flows- Continued
(all numbers in thousands, unaudited)
| Nine Months Ended September 30, | ||||
|---|---|---|---|---|
| 2021 | 2020 | |||
| Supplemental disclosures | ||||
| Cash paid for interest | $ | 2,675 | $ | 4,344 |
| Reduction of earnout liability due to a vesting event | $ | 25,815 | $ | — |
| Non-cash consideration for acquisitions | $ | 42,229 | $ | 1,829 |
| Payable for capped call transactions | $ | 10,583 | $ | — |
| Debt discount for warrants issued (non-cash) | $ | — | $ | 1,215 |
| Cancelation of a convertible promissory note on divestiture of a business | $ | — | $ | 2,724 |
| Conversion of debt to redeemable convertible preferred stock (non-cash) | $ | — | $ | 1,436 |
| Capital contribution from a shareholder | $ | — | $ | 300 |
Exhibit 99.2
| Copyright 2021 Porch Group, Inc. All rights reserved 1<br>Q3 2021 Earnings Presentation November 15, 2021<br>Love your home.<br>For moving and improving and everything in between. |
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| Copyright 2021 Porch Group, Inc. All rights reserved<br>Presenters<br>Matt Ehrlichman<br>CEO & Founder, Porch Group<br>Marty Heimbigner<br>CFO, Porch Group<br>Matthew Neagle<br>COO, Porch Group<br>Adam Kornick<br>President,<br>Porch’s InsurTech<br>Division |
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| Copyright 2021 Porch Group, Inc. All rights reserved<br>3<br>DISCLAIMERS<br>3<br>Forward-Looking Statements<br>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<br>future events or Porch Group, Inc.’s (“Porch”) future financial or operating performance. For example, projections of future revenue, contribution margin, Adjusted EBITDA and other metrics, business strategy and plans, and anticipated impacts from pending or<br>completed acquisitions, are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expect,” “intend,” “will,” “estimate,” “anticipate,” “believe,” “predict,” “potential” or “continue,” or the<br>negatives of these terms or variations of them or similar terminology. Such forward-looking statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from those expressed or implied by such forward<br>looking statements.<br>These forward-looking statements are based upon estimates and assumptions that, while considered reasonable by Porch and its management at the time they are made, are inherently uncertain. Factors that may cause actual results to differ materially from<br>current expectations include, but are not limited to: (1) the ability to recognize the anticipated benefits of Porch’s December 2020 business combination (the “Merger”) with PropTech Acquisition Corporation (“PropTech”), which may be affected by, among<br>other things, competition and the ability of the combined company to grow and manage growth profitably, maintain key commercial relationships and retain its management and key employees; (2) expansion plans and opportunities, including recently<br>completed acquisitions as well as future and pending acquisitions or additional business combinations; (3) costs related to the Merger and being a public company; (4) litigation, complaints, and/or adverse publicity; (5) the impact of changes in consumer<br>spending patterns, consumer preferences, local, regional and national economic conditions, crime, weather, demographic trends and employee availability; (6) privacy and data protection laws, privacy or data breaches, or the loss of data; (7) the impact of the<br>COVID-19 pandemic and its effect on the business and financial conditions of Porch; and (8) other risks and uncertainties described in Porch’s most recent Form 10-K/A and subsequent reports filed with the Securities and Exchange Commission (the “SEC”),<br>such as Porch’s quarterly reports on Form 10-Q for the quarters ended June 30, 2021 and September 30, 2021, which are available on the SEC’s website at www.sec.gov.<br>Nothing in this presentation should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of such forward-looking statements will be achieved. You should<br>not place undue reliance on forward-looking statements, which speak only as of the date of this presentation. Unless specifically indicated otherwise, the forward-looking statements in this release do not reflect the potential impact of any divestitures, mergers,<br>acquisitions, or other business combinations that have not been completed as of the date of this presentation. Porch does not undertake any duty to update these forward-looking statements, whether as a result of changed circumstances, new information,<br>future events or otherwise, except as may be required by law.<br>Non-GAAP Financial Measures<br>This presentation includes one or more non-GAAP financial measures, such as Adjusted EBITDA (loss), Adjusted EBITDA (loss) as a percentage of revenue, contribution margin, and average revenue per monetized service.<br>Porch defines Adjusted EBITDA (loss) as net income (loss) adjusted for interest expense, net, income taxes, other expenses, net, depreciation and amortization, certain non-cash long-lived asset impairment charges, stock-based compensation expense and<br>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 divestures and<br>certain transaction costs. Adjusted EBITDA (loss) as a percentage of revenue is defined as Adjusted EBITDA (loss) divided by GAAP total revenue. Contribution margin is defined as revenue less all variable expenses, including cost of revenue, variable marketing<br>and sales. Average revenue per monetized services in quarter is the average revenue generated per monetized service performed in a quarterly period. When calculating average revenue per monetized service in quarter, average revenue is defined as total<br>quarterly monetized service revenues generated from monetized services.<br>Porch’s management and Board of Directors use these non-GAAP financial measures as supplemental measures of Porch’s operating and financial performance for historical and forward-looking periods, for internal budgeting and forecasting purposes, to<br>evaluate financial and strategic planning matters, and for certain measures, to establish performance goals for incentive programs. Porch believes that the use of these non-GAAP financial measures provides investors with useful information to evaluate<br>projected operating results and trends and in comparing Porch’s financial measures with competitors, other similar companies and companies across different industries, many of which present similar non-GAAP financial measures to investors. However,<br>Porch's definitions and methodology in calculating these non-GAAP measures may not be comparable to those used by other companies. In addition, Porch may modify the presentation of these non-GAAP financial measures in the future, and any such<br>modification may be material.<br>You should not consider these non-GAAP financial measures in isolation, as a substitute to or superior to financial performance measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude<br>specified income and expenses, some of which may be significant or material, that are required by GAAP to be recorded in Porch’s consolidated financial statements. Porch may also incur future income or expenses similar to those excluded from these non-<br>GAAP financial measures, and Porch’s presentation of these measures should not be construed as an inference that future results will be unaffected by unusual or non-recurring items. In addition, these non-GAAP financial measures reflect the exercise of<br>management judgment about which income and expense are included or excluded in determining these non-GAAP financial measures.<br>You should review the tables accompanying Porch’s earnings release available at www.sec.gov for reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measure. Porch is not providing reconciliations of non-<br>GAAP financial measures for future periods to the most directly comparable measures prepared in accordance with GAAP. Porch is unable to provide these reconciliations without unreasonable effort because certain information necessary to calculate such<br>measures on a GAAP basis is unavailable or dependent on the timing of future events outside of Porch’s control. |
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| Copyright 2021 Porch Group, Inc. All rights reserved 4<br>Q3 2021 Earnings Call Kick-off |
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| Copyright 2021 Porch Group, Inc. All rights reserved 5<br>Porch, the Vertical Software Platform for the Home<br>Insurance<br>(Carrier, Agency & Warranty)<br>Vertical Software<br>(SaaS + Transaction)<br>(2)<br>(1) Floify acquired October 27, 2021<br>(2) CSE Insurance Group subject to regulatory approval; anticipated for mid-2022<br>(3) Customer acquisition cost<br>(1) |
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| Copyright 2021 Porch Group, Inc. All rights reserved<br>6 Key Focus Areas for 2021<br>1. Grow SaaS revenue as we increase the number of companies using our vertical software<br>2. Increase access to consumers from software companies<br>3. Increase B2B2C transaction revenue per consumer<br>4. Continue to scale our Insurance (carrier, agency & warranty) business<br>5. Help more brands and advertisers improve their mover marketing<br>6. Pursue strategic and accretive M&A opportunities<br>6 |
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| Copyright 2021 Porch Group, Inc. All rights reserved 7<br>Q3 2021 Results & 2021E Guidance |
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| Copyright 2021 Porch Group, Inc. All rights reserved 8<br>Strong Q3 Revenue Growth of 192% Year-over-Year<br>$21.5M<br>$62.8M<br>Q3 2020 Q3 2021<br>YoY 192% increase<br>Q3 2021 vs. Q3 2020 |
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| Copyright 2021 Porch Group, Inc. All rights reserved 9<br>Strong Growth and Margin Improvement from Q2 to Q3<br>Quarter Over<br>Quarter ▲<br>Disclaimer: See Porch’s third quarter 2021 earnings press release for a reconciliation of Adjusted EBITDA (loss) as a percentage of revenue, Contribution Margin to their most directly comparable GAAP financial measures<br>$51.3M<br>Revenue<br>62%<br>Revenue-Cost of<br>Revenue Margin<br>-20%<br>Adj. EBITDA Margin<br>33%<br>Contribution Margin<br>$62.8M<br>Revenue<br>69%<br>Revenue-Cost of<br>Revenue Margin<br>+1%<br>Adj. EBITDA Margin<br>45%<br>Contribution Margin<br>Q3 2021 Q2 2021 |
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| Copyright 2021 Porch Group, Inc. All rights reserved 10<br>FY 2021E Guidance Update: Raising ‘21 Revenue Guidance to $195M<br>Guidance▲<br>$187.5M<br>Revenue<br>~72%<br>Revenue Less<br>Cost of Revenue Margin<br>-14 to -16%<br>Adj. EBITDA Margin<br>~40%<br>Contribution Margin<br>$195M<br>Revenue (170% YoY Growth)<br>~70%<br>Revenue Less<br>Cost of Revenue Margin<br>-14 to -16%<br>Adj. EBITDA Margin<br>~40%<br>Contribution Margin<br>No Change<br>Adj. for mix shift<br>No Change<br>Current 2021E Guidance Previous 2021E Guidance<br>Disclaimer: See Porch’s third quarter 2021 earnings press release for a reconciliation of Adjusted EBITDA and Contribution Margin to their most directly comparable GAAP financial measures. Porch is not providing reconciliations of<br>forward-looking non-GAAP guidance to the comparable GAAP measures because certain information necessary to calculate such measures on a GAAP basis is unavailable or dependent on the timing of future events outside of Porch’s<br>control. In particular, the charges excluded from these non-GAAP measures are subject to high variability and complexity due to Porch’s ongoing growth |
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| Copyright 2021 Porch Group, Inc. All rights reserved<br>$36M<br>$57M<br>$72M<br>2018PF 2019PF 2020A 2021E<br>~28%<br>~31%<br>~31%<br>~10%<br>Note: PF figures are Pro Forma results which exclude the financial results of certain Porch businesses divested during 2019 and the first half of 2020, after giving effect to all such divestitures as if they had occurred on January 1, 2018<br>(1) Based on internal estimates, Porch believes without the COVID-19 pandemic it would have achieved $85M in revenue for the 2020 year and 2020 and 2021E revenue growth would have been 49% and ~130%, respectively<br>(2) Reflects amounts of revenue added to full year 2021 revenue guidance at respective acquisition announcements<br>(3) B2B includes recurring fees paid by Companies to Porch for SaaS and other services<br>(4) B2B2C (Move-Related Services) includes revenue predominantly related to selling consumers insurance, moving, security and TV/internet with majority of these consumers being provided to Porch on a reoccurring basis by companies<br>(5) B2B2C and B2C (Post-Move Services) includes revenue predominantly related to connecting consumers with contractors across home maintenance and improvement projects with these consumers originating from both 1) companies on a<br>reoccurring basis, and 2) direct-to-consumer channels<br>11<br>2021E Revenue: 170% Year-over-Year Growth<br>Software & Services Subscriptions(3)<br>B2B Recurring Fees From Companies<br>Move-Related Transactions – Excl. Insurance Segment(4)<br>B2B2C Transaction Revenue via Companies (Reoccurring)<br>Post-Move Transactions(5)<br>Transaction Revenue<br>FY 2021E Guidance Revenue Distribution Revenue<br>% Growth 58% 26% ~170%<br>49%(1) ~130%(1)<br>Move-Related Transactions – Insurance Segment(4)<br>Insurance + Warranty (Recurring Revenue)<br>$85M(1)<br>$195M From 2021 M&A(2)<br>$134M<br>Vertical<br>Software<br>$61M<br>Insurance<br>HOA: $30M<br>AHP: $3.5M<br>V12: $20M<br>Rynoh: $4M<br>Floify: $2M<br>$33.5M<br>$26M |
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| Copyright 2021 Porch Group, Inc. All rights reserved<br>Note: PF figures are Pro Forma results which exclude the financial results of certain Porch businesses divested during 2019 and the first half of 2020, after giving effect to all such divestitures as if they had occurred on January 1, 2018<br>Disclaimer: See Porch’s third quarter 2021 earnings press release for a reconciliation of Adjusted EBITDA and Contribution Margin to their most directly comparable GAAP financial measures. Porch is not providing reconciliations of<br>forward-looking non-GAAP guidance to the comparable GAAP measures because certain information necessary to calculate such measures on a GAAP basis is unavailable or dependent on the timing of future events outside of Porch’s<br>control. In particular, the charges excluded from these non-GAAP measures are subject to high variability and complexity due to Porch’s ongoing growth<br>12<br>2021E Contribution Margin % and Adjusted EBITDA % Continued Growth<br>Contribution Margin %<br>2018PF 2019PF 2020PF 2021E<br>7%<br>19%<br>~40%<br>34%<br>Long-Term<br>Target<br>50%<br>Adjusted EBITDA %<br>2018PF 2019PF 2020PF 2021E<br>-79%<br>-57%<br>-24%<br>-14% to -16%<br>25%<br>Long-Term<br>Target |
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| Copyright 2021 Porch Group, Inc. All rights reserved 13<br>Segment Deep Dive |
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| Copyright 2021 Porch Group, Inc. All rights reserved 14<br>Number of Companies & Average Revenue Per Company<br>(1) Porch management defines average companies in a quarter as an average of the end of period number of companies with the beginning of period number, inclusive of all companies across Porch’s home services<br>verticals that (i) generate recurring revenue and (ii) generated revenue in the quarter. For new acquisitions, we determine the number of customers in their initial quarter based on the percentage of the quarter<br>they were part of Porch<br>(2) Average revenue per account per month in quarter is defined as the total revenue from the quarter divided by the average number of companies in the period divided by 3 (to provide monthly revenue). Note:<br>while the wording of both footnote (1) and (2) on this slide has been updated to be made more clear, they are the same calculations the company has been using to date<br>(1) (2)<br>20,472 companies in Q3 2021 $1,022 revenue per company per month in Q3 2021 |
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| Copyright 2021 Porch Group, Inc. All rights reserved 15<br>Monetized Services & Average Revenue Per Monetized Service<br>(1) Monetized Services per Quarter is defined as the total number of unique consumer services from which Porch generated revenue, including, but not limited to, new and renewing insurance customers, completed<br>moving jobs, security installations, TV/internet installations or other home projects, measured over a quarterly period<br>(2) Average revenue per monetized services in quarter is defined as the total service revenue (Move-Related Transaction revenue plus Post-Move Transaction revenue) divided by the number of Monetized Services per<br>Quarter. Note: while the wording of both footnote (1) and (2) on this slide has been updated to be made more clear, they are the same calculations the company has been using to date. See Porch’s third quarter 2021<br>earnings press release for a reconciliation of total service revenue<br>Q1 Q3 Q3 Q4<br>(1) (2)<br>329,359 monetized services in Q3 2021 $144 revenue per monetized service in Q3 2021 |
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| Copyright 2021 Porch Group, Inc. All rights reserved<br>Porch is a Leading Software Provider in Key Home Verticals<br>16<br>(1) Based on Porch management estimates of relative market share<br>(2) Floify acquisition announced and closed on Oct. 27, 2021<br>#1 moving la bor + full s e rvice (1) #1 Inspector ERP / CRM (1) #1 transaction management<br>software for title companies(1)<br>Leading SMB mortgage<br>automation and point-of-<br>s a le s olution (2) |
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| Copyright 2021 Porch Group, Inc. All rights reserved 17<br>Porch Value Proposition to Software Companies<br>Best-in-Class Vertical Software Differentiated Value Prop Demand Generation<br>Mortgage<br>Inspection<br>Movers<br>More |
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| Copyright 2021 Porch Group, Inc. All rights reserved<br>Vertical Software Segment: Q3 2021 Financials<br>18<br>$42.3M<br>Q3 Revenue<br>66%<br>Revenue Less<br>Cost of Revenue Margin<br>42%<br>Contribution Margin<br>18%<br>Adj. EBITDA Margin(1)<br>Disclaimer: See Porch’s third quarter 2021 earnings press release for a reconciliation of Adjusted EBITDA (loss) as a percentage of revenue and Contribution Margin to their most directly comparable GAAP financial measures<br>(1) Impact of preliminary estimate of shared allocation of corporate expense would indicate a low double digit Adjusted EBITDA (loss) as a percentage of revenue in the quarter |
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| Copyright 2021 Porch Group, Inc. All rights reserved<br>Insurance Segment: High-Value Protection Products<br>19<br>(1)<br>(1) CSE Insurance Group subject to regulatory approval; anticipated for mid-2022<br> • Licensed in all 50 states<br> • Write Porch’s insurance<br>products as well as 3rd party<br>carriers<br> • Operate a capital-light model,<br>ceding vast majority of<br>premiums to reinsurers<br> • Writing in 10 states<br> • Selling policies in 45 states<br> • Utilize innovative 3-year policy<br>structure<br>Agency Capital-Light InsurTech Home Warranty |
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| Copyright 2021 Porch Group, Inc. All rights reserved<br>Insurance Segment: 3Q 2021 Financial Performance & KPI's<br>20<br>Insurance<br>(Live in 10<br>states as<br>carrier)<br>Warranty<br>(Live in 45 states<br>and D.C.)<br>Active states<br>Approved / Signed (coming soon) (4)<br>Agency only (carrier opportunity)<br>$20.5M<br>Q3 Revenue<br>$108M<br>Q3 GWP(1)<br>77%<br>Revenue Less<br>Cost of Revenue Margin<br>292K<br>Policyholders<br>27%<br>Adj. EBITDA Margin(5)<br>88%<br>Customer Retention(3)<br>54%<br>Contribution Margin<br>$281<br>Annualized Revenue Per<br>Policyholder(2)<br>Disclaimer: See Porch’s third quarter 2021 earnings press release for a reconciliation of Adjusted EBITDA (loss) as a percentage of revenue and Contribution Margin to their most directly comparable GAAP financial measures<br>(1) GWP includes gross written premium written for 3rd party carriers through EIG, gross written premium HOA writes as well as AHP’s face value of policy premiums written during the period<br>(2) Includes quarterly revenue for the segment divided by number of policyholders in the segment multiplied by four<br>(3) Represents rolling 12 months ending September 2021<br>(4) Includes CSE Insurance Group subject to regulatory approval; anticipated for mid-2022<br>(5) Impact of normalization including preliminary estimate of shared allocation of corporate expense indicate a 22% Adjusted EBITDA (loss) as a percentage of revenue for the quarter |
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| Copyright 2021 Porch Group, Inc. All rights reserved<br>Porch Runs a Scaled (~$430M GWP(1)) Capital-Light InsurTech<br>21<br>Source: SNL Financial; Porch includes HOAIC; Indices represent median of personal lines for the SNL Group of following companies: National: Allstate, Auto Owners, Cincinnati, Farmers, Liberty Mutual, Main Street America, Mercury, National<br>General, Progressive, State Farm, State Auto, Travelers; Regional: Allied Trust, Erie, Heritage, Lighthouse, QBE, Sagesure/Occidental, Universal P&C; UPC; InsurTech: Hippo, Kin, Lemonade, Metromile, Root<br>1) GWP Annual Run Rate as of Q3 2021 GWP includes gross written premium written for 3rd party carriers through EIG, gross written premium HOA writes as well as AHP’s face value of policy premiums written during the period<br>2) Represents median of peer company average for 2018, 2019 and 2020 Statutory Net Written Premium (NWP) / GWP<br>3) Represents HOAIC<br>7.0%<br>97.8%<br>42.6%<br>26.5%<br>93.0%<br>2.2%<br>57.4% 73.5%<br>0%<br>10%<br>20%<br>30%<br>40%<br>50%<br>60%<br>70%<br>80%<br>90%<br>100%<br>Porch National Carriers Regional Carriers InsurTech peer set<br>Porch’s high-performing gross loss ratio allows Porch and reinsurers both attractive financial results<br>3 Year Average(2) Statutory NWP / GWP Ceded to 3rd<br>party reinsurers<br>Retained by<br>company<br>(3) |
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| Copyright 2021 Porch Group, Inc. All rights reserved<br>Value of Proprietary Data for Claims Mitigation<br>22<br>Wind & Hail<br>~34%(1) of industry loss<br>Water Damage<br>~29%(1) of industry loss<br>Fire & Lightning<br>~29%(1) of industry loss<br>Systems & Appliances<br>~95%+ of warranty losses(2)<br>Source: Insurance Information Institute<br>1) Insurance reflects percentage of losses incurred for 2019 per Insurance Information Institute<br>2) Represents management estimates based company experience<br>Insurance Warranty<br>Example: Older roofs are more easily<br>damaged; replacing can exceed $10K(2)<br>Example: Water heater failure typically<br>costs $7.5K(2)<br>Example: Appliance failure and faulty<br>wiring are among key loss drivers<br>Example: Avg. appliance loss – HVAC:<br>~$725+(2), washer: ~$350+(2)<br>Data Advantage: Up to date roof<br>type, age and quality<br>Data Advantage: Make, model,<br>serial number, age of water heater<br>Data Advantage: Quality of<br>electrical; make, model, serial<br>number, and age of appliances<br>Data Advantage: Make, model,<br>serial number, and age of systems<br>and appliances |
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| Copyright 2021 Porch Group, Inc. All rights reserved<br>1. Vertical software leader to key home service companies with low churn and high NPS<br>2. Large and ideal consumer audience provided via software companies, with low acquisition costs<br>3. Unique, substantial, and valuable property data<br>4. Large insurance operation with CAC, pricing, data, and value prop advantages<br>5. Proven team with strong track record<br>6. Massive and expanded $320B+ addressable TAM<br>7. Strong financial results with fast revenue growth and high contribution margins<br>8. Positioned for long-term leadership for the home: SaaS, insurance, warranty, moving and maintenance<br>1<br>2<br>3<br>4<br>5<br>6<br>7<br>8<br>23<br>Porch Group Investment Highlights |
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| Copyright 2021 Porch Group, Inc. All rights reserved 24<br>Thank you |
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| Copyright 2021 Porch Group, Inc. All rights reserved 25<br>Q&A |
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| Copyright 2021 Porch Group, Inc. All rights reserved 26<br>Appendix |
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| Copyright 2021 Porch Group, Inc. All rights reserved 27<br>Balance Sheet<br>Cash and Restricted Cash as of Sept 30, 2021: $411M<br> • Primary use of cash expected for M&A<br> • Well positioned to support investments; vertical software<br>systems, Insurtech, data platform & consumer experience<br>Total Long-Term Debt as of Sept 30, 2021: $418M<br> • $414M of convertible note issued in September 2021 and<br>due September 2026 that the Company may settle with<br>cash, shares of the Company’s common stock, or any<br>combination of cash and shares of the Company’s<br>common stock<br> • $4M line of credit at HOA<br>Balance Sheet well positioned for growth |
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| Copyright 2021 Porch Group, Inc. All rights reserved 28<br>Capital Structure<br> • Total common shares outstanding as of Sept 30,<br>2021: 97.3M and 1.8M private warrants outstanding<br> • In addition to the above, when team RSUs vest or team options<br>both vest and are exercised, it will be added to total shares<br>outstanding above. This relates to pre-SPAC Porch options and<br>RSUs which rolled over and the ~11M share MIP pool from the<br>SPAC merger agreement, some of which will be granted soon<br>with long-term vesting and some of which may be granted in<br>future years.<br>Capital Structure Update |
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