8-K/A
Porch Group, Inc. (PRCH)
Common stock, par value $0.0001
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest eventreported): March 1, 2022
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 ¨
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. ¨
Explanatory Note
This Current Report on Form 8-K/A amends and supplements the Current Report on Form 8-K of Porch Group, Inc. (the “Company”), originally furnished to the Securities and Exchange Commission on March 1, 2022 (the “Initial Form 8-K”). The sole purpose for filing this Current Report on Form 8-K/A is to update certain information contained in Exhibits 99.1 and 99.2 to the Initial Form 8-K to reflect certain changes to the Company’s financial results as a result of the completion of the Company’s 2021 audit, as described further below.
Item 2.02. Results of Operations and Financial Condition.
On March 1, 2022, the Company issued an earnings release (the “Initial Earnings Release”) announcing financial results for the quarterly period and year ended December 31, 2021, which was attached as Exhibit 99.1 to the Initial Form 8-K. While conducting final procedures in connection with the preparation of the Company’s audited financial statements for the year ended December 31, 2021, (i) operating expenses were reduced by $2.5 million at the Company’s insurance carrier subsidiary related to the final determination of the amortization of deferred policy acquisition costs and (ii) $3.4 million of expense at the Company’s insurance carrier subsidiary was reclassified from general & administrative to cost of revenue. As a result of these two audit adjustments, on March 16, 2022, the Company issued an updated version of the earnings release attached hereto as Exhibit 99.1, which is incorporated herein by reference. The information contained within Exhibit 99.1 hereto amends and supersedes the information contained within the Initial Earnings Release.
Item 7.01. Regulation FD Disclosure.
On March 1, 2022, the Company hosted an earnings call to discuss its financial results for the quarterly period and year ended December 31, 2021 and used an investor presentation for the call (the “Initial Presentation”), which was attached as Exhibit 99.2 to the Initial Form 8-K. As a result of the two audit adjustments described above, the Company is providing an updated version of the investor presentation attached hereto as Exhibit 99.2, which is incorporated herein by reference. The information contained within Exhibit 99.2 hereto amends and supersedes the information contained within the Initial Presentation.
The information in this Current Report on Form 8-K/A 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.
| ExhibitNo. | Description |
|---|---|
| 99.1 | Updated<br> Earnings Press Release, dated March 16, 2022 |
| 99.2 | Updated<br> Investor Presentation, dated March 16, 2022 |
| 104 | Cover Page Interactive Data File (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/<br>Martin L. Heimbigner | |
| Name: | Martin<br>L. Heimbigner | |
| Title: | Chief<br>Financial Officer |
Date: March 16, 2022
Exhibit 99.1
PorchGroup Reports Fourth Quarter and Full Year 2021 Audited Financial Results
- Filed Annual Report on Form 10-Kon March 16, 2022 -
-Reports $192.4 Million of Full Year 2021 Revenue, up 166% Year-Over-Year -
- Reiterates 2022 Guidance Provided on March 1,2022 -
SEATTLE,March 16, 2022 – Porch Group, Inc. (“Porch” or “the Company”) (NASDAQ: PRCH), a leading vertical software company reinventing the home services and insurance industries, today filed its Annual Report on Form 10-K and reported audited financial results for the fourth quarter and full year ended December 31, 2021.
On March 1, 2022, the Company announced unaudited results for the fourth quarter and full year ended December 31, 2021. This press release updates and supersedes the press release issued on March 1, 2022 to reflect two adjustments to the Company’s financial results as a result of the completion of the 2021 audit.
Adjustments from preliminary to final results:
| Fourth<br> quarter 2021 | Full year<br> 2021 | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ($ thousands) | Preliminary | Change | Final | Preliminary | Change | Final | ||||||||||
| Revenue | 51,581 | - | 51,581 | 192,433 | - | 192,433 | ||||||||||
| Operating loss | (20,846 | ) | 2,473 | (18,373 | ) | (85,838 | ) | 2,473 | (83,365 | ) | ||||||
| GAAP net (loss) | (22,582 | ) | 2,473 | (20,109 | ) | (109,079 | ) | 2,473 | (106,606 | ) | ||||||
| Adj. EBITDA (loss) | (7,848 | ) | 2,473 | (5,375 | ) | (26,493 | ) | 2,473 | (24,020 | ) |
Operating expenses were reduced by approximately $2.5 million at our insurance carrier subsidiary related to the final determination of the amortization of deferred policy acquisition costs, and approximately $3.4 million of expense at our insurance carrier subsidiary was reclassified from general & administrative to cost of revenue. Aside from these two adjustments and related effects, there were no other changes to the 2021 information included in the March 1, 2022 press release. Please see tables included in this release for detailed comparison of unaudited to final audited results.
CEO Summary
“Two weeks ago, we announced our unaudited fourth quarter and full year 2021 earnings as well as provided guidance for 2022. I am pleased to now report our audited results for 2021,” said Matt Ehrlichman, Founder, Chairman and CEO. “We are excited about what is ahead and reiterate our guidance provided on March 1, 2022.”
1
Fourth Quarter 2021 Financial Results
| · | Includes impact of reduction in operating expenses related to final determination of amortization of deferred policy acquisition costs. |
|---|---|
| · | Includes a one-time change in revenue recognition of Porch’s Homeowners of America (“HOA”) insurance business, adjusting<br>approximately $7.5M of 2021 claims fees from revenue to a contra claims expense. This adjustment reflected the full period Porch owned<br>HOA in 2021 and was applied in total to Q4 2021 results. |
| --- | --- |
| · | Total revenue for the fourth quarter of 2021 was $51.6 million, an increase of 177% from $18.6 million in the fourth quarter of 2020. |
| --- | --- |
| · | Revenue less cost of revenue for the fourth quarter 2021 was $37.4 million or 73% of total revenue, compared to $14.3 million or 77%<br>of total revenue for the fourth quarter of 2020. |
| --- | --- |
| · | Contribution margin was $19.0 million or 37% of total revenue, compared to $5.4 million or 29% of total revenue for the fourth quarter<br>of 2020. |
| --- | --- |
| · | GAAP net loss for the fourth quarter of 2021 totaled $20.1 million, compared to a GAAP net loss of $20.5 million for the fourth quarter<br>of 2020. |
| --- | --- |
| · | Adjusted EBITDA loss for the fourth quarter of 2021 totaled $5.4 million or -10% of total revenue, compared to an Adjusted EBITDA<br>loss of $4.0 million or -22% of total revenue for the fourth quarter of 2020. |
| --- | --- |
Segment Results for the Fourth Quarter 2021
| · | Vertical Software revenue for the quarter was $35.5 million, revenue less cost of revenue was $24.1 million or 68% of Vertical Software<br>revenue, contribution margin was $14.0 million or 39% of Vertical Software revenue and Adjusted EBITDA was $3.2 million or 9% of Vertical<br>Software revenue. |
|---|---|
| · | Insurance revenue for the quarter was $16.1 million, revenue less cost of revenue was $13.3 million or 83% of Insurance revenue, contribution<br>margin was $5.3 million or 33% of Insurance revenue and Adjusted EBITDA was $5.9 million or 37% of Insurance revenue. |
| --- | --- |
| o | Includes impact of reduction in operating expenses related to final determination of amortization of deferred policy acquisition costs. |
| --- | --- |
| o | Reflects the full year 2021 impact of HOA’s revenue recognition change. |
| --- | --- |
| · | Insurance gross written premium for the quarter was $101 million with 304 thousand policyholders. |
| --- | --- |
Fourth Quarter 2021 and Recent Operational Highlights
| - | Announced the acquisition of Floify, a leading SaaS provider for mortgage companies and loan<br> officers. |
|---|---|
| - | Homeowners<br> of America, a Porch Group Subsidiary, continued its nationwide expansion plan, now operating<br> in 15 states. |
| --- | --- |
| - | Launched nationwide inspection pop-up conferences for home inspectors on its Inspection Fuel<br> Tour. |
| --- | --- |
| - | Announced the addition of a new Pay-At-Close module to its suite of software solutions<br> provided to home inspection companies through its inspection software business, Inspection Support Network. |
| --- | --- |
Fourth Quarter 2021 Key Performance Indicators (KPIs)
Software and services to companies:
| · | Average number of companies increased to 24,603 from 11,157 in Q4 2020. |
|---|---|
| · | Average revenue per company per month increased 26% to $699 from $556 in Q4 2020. |
| --- | --- |
2
Monetized services for consumers:
| · | Number of monetized services was 260,352 in Q4 2021, up from 169,949 in Q4 2020. |
|---|---|
| · | Average revenue per monetized service was $132, a 35% increase from $98 in Q4 2020. |
| --- | --- |
Full Year 2021 Audited Financial Results
| · | Includes impact of reduction in operating expenses related to final determination of amortization of deferred policy acquisition costs. |
|---|---|
| · | Total revenue for the full year 2021 was $192.4 million, an increase of 166% from total revenue of $72.3 million for the full year<br>2020. |
| --- | --- |
| · | Revenue less cost of revenue for the full year 2021 was $133.7 million or 69% of total revenue for the full year 2021, compared to<br>$54.7 million or 76% of total revenue for the full year 2020. |
| --- | --- |
| · | Contribution margin was $75.4 million for the full year 2021 or 39% of total revenue for the full year 2021, compared to $22.4 million<br>or 31% of total revenue for the full year 2020. |
| --- | --- |
| · | GAAP net loss for the full year of 2021 totaled $106.6 million, compared to a GAAP net loss of $54.0 million for the full year 2020. |
| --- | --- |
| · | Adjusted EBITDA loss, a non-GAAP metric, for the full year 2021 totaled $24.0 or -12.5% of total revenue, an improvement on a percentage<br>basis from the Adjusted EBITDA loss of $18.3 million or -25% of total revenue for the full year 2020. |
| --- | --- |
Segment Results for the Full Year 2021
| · | Vertical Software revenue for the full year 2021 was $137.2 million, revenue less cost of revenue was $96.6 million or 70% of full<br>year Vertical Software revenue, contribution margin was $57.4 or 42% of Vertical Software revenue, and Adjusted EBITDA was $20.7 million<br>or 15% of Vertical Software revenue. |
|---|---|
| · | Insurance revenue was $55.3 million, revenue less cost of revenue<br>$37.1 million or 67% of Insurance revenue, contribution margin was $20.4 million or 37% of Insurance revenue and Adjusted EBITDA was<br>$9.0 million or 16% of Insurance revenue. |
| --- | --- |
| o | Includes impact of reduction in operating expenses related to final determination of amortization of deferred policy acquisition costs. |
| --- | --- |
| · | Insurance gross written premium for the year was $307 million. |
| --- | --- |
Acquisition of Residential Warranty Services
On February 28^th^ Porch signed a definitive agreement for the acquisition of certain businesses relating to home warranty products and inspector-centric software and services from Residential Warranty Services, Inc. (“RWS”). Total consideration is $33 million including $29 million of cash, $4 million of Porch stock and additional contingent consideration tied to the performance of a recently launched business line. Of the total consideration, $4.95 million was paid at signing. Full year 2022 revenue impact to Porch is expected to be approximately $8 million, with approximately $10 million of expected annualized revenue. The acquisition is targeted to close in early Q2 2022.
3
Full Year 2022 Financial Outlook
Porch provides guidance based on current market conditions and expectations.
| 2022E Guidance**^1^** |
|---|
| Gross Written Premium<br><br> <br>~$600M<br><br> <br>(95% year-over-year growth) |
| Revenue<br><br> <br>~$320M<br><br> <br>(66% year-over-year growth) |
| Revenue Less Cost of Revenue<br><br> <br>~$210M<br><br> <br>(53% year-over-year growth) |
| Adj. EBITDA<br><br> <br>~-9% and >-$26.5M<br><br> <br>(>400 basis points of Adj EBITDA margin improvement) |
^1^ Guidance includes impact of announced but not yet closed acquisitions of CSE and RWS
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 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.
In preparing the Company’s financial statements as of and for the year ended December 31, 2021, the Company identified material weaknesses in its internal controls over financial reporting. While these material weaknesses create a reasonable possibility that an error in financial reporting may go undetected, no material adjustments, restatement or other revisions to previously issued financial statements are required. More information on these material weaknesses and Porch’s plans for remediation can be found in its Annual Report on Form 10-K filed on March 16, 2022.
About****Porch Group
Seattle-based Porch Group, the vertical software platform for the home, provides software and services to more than 24,000 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.
4
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) expansion plans and opportunities, including recently completed acquisitions as well as future acquisitions or additional business combinations; (2) costs related to being a public company; (3) litigation, complaints, and/or adverse publicity; (4) the impact of changes in consumer spending patterns, consumer preferences, local, regional and national economic conditions, crime, weather, demographic trends and employee availability; (5) further expansion into the insurance industry, and the related federal and state regulatory requirements; (6) privacy and data protection laws, privacy or data breaches, or the loss of data; (7) the duration and scope of the COVID-19 pandemic and its continued effect on the business and financial conditions of Porch; and (8) other risks and uncertainties described in Porch’s most recent Form 10-K and subsequent reports filed with the Securities and Exchange Commission (the “SEC”), such as Porch’s quarterly reports on Form 10-Q, as well as in its subsequent reports on Form 8-K, all of 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 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.
5
Porch management uses these non-GAAP financial measures as supplemental measures of Porch’s operating and financial performance, for internal budgeting and forecasting purposes, to evaluate financial and strategic planning matters, and to establish certain performance goals for incentive programs. Porch believes that the use of these non-GAAP financial measures provides investors with useful information to evaluate Porch’s operating and financial performance and trends and in comparing Porch’s financial results 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 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.
6
**PORCHGROUP,**INC.
**ConsolidatedBalance SheetsDecember 31, 2021 and 2020(all numbers in thousands, except share amounts, audited)
| 2020 | |||||
| Assets | |||||
| Current assets | |||||
| Cash<br> and cash equivalents | 315,741 | $ | 196,046 | ||
| Accounts receivable, net | 28,767 | 4,268 | |||
| Short-term<br> investments | 9,251 | — | |||
| Reinsurance balance due | 228,416 | — | |||
| Prepaid<br> expenses and other current assets | 14,338 | 4,080 | |||
| Restricted cash | 8,551 | 11,407 | |||
| Total<br> current assets | 605,064 | 215,801 | |||
| Property, equipment, and software, net | 6,666 | 4,593 | |||
| Operating lease right-of-use assets | 4,504 | — | |||
| Goodwill | 225,654 | 28,289 | |||
| Long-term investments | 58,324 | — | |||
| Intangible assets, net | 129,830 | 15,961 | |||
| Restricted cash, non-current | 500 | — | |||
| Long-term insurance commissions receivable | 7,521 | 3,365 | |||
| Other assets | 684 | 378 | |||
| Total assets | 1,038,747 | $ | 268,387 | ||
| Liabilities and Stockholders’ Equity | |||||
| Current liabilities | |||||
| Accounts payable | 6,965 | $ | 9,203 | ||
| Accrued<br> expenses and other current liabilities | 37,675 | 9,905 | |||
| Deferred revenue | 201,085 | 5,208 | |||
| Refundable<br> customer deposit | 15,274 | 2,664 | |||
| Current portion of long-term debt | 150 | 4,746 | |||
| Losses and<br> loss adjustment expense reserves | 61,949 | — | |||
| Other insurance<br> liabilities, current | 40,024 | — | |||
| Total<br> current liabilities | 363,122 | 31,726 | |||
| Long-term debt | 414,585 | 43,237 | |||
| Operating lease liabilities, non-current | 2,694 | — | |||
| Refundable customer deposit, non-current | — | 529 | |||
| Earnout liability, at fair value | 13,866 | 50,238 | |||
| Private warrant liability, at fair value | 15,193 | 31,534 | |||
| Other liabilities<br> (includes 9,617 and 3,549 at fair value, respectively) | 12,242 | 3,798 | |||
| Total liabilities | 821,702 | 161,062 | |||
| Commitments and contingencies (Note 16) | |||||
| Stockholders’ equity | |||||
| Common stock, 0.0001 par value: | 10 | 8 | |||
| Authorized shares – 400,000,000<br> and 400,000,000, respectively | |||||
| Issued and<br> outstanding shares – 97,961,597 and 81,669,151, respectively | |||||
| Additional paid-in capital | 641,406 | 424,823 | |||
| Accumulated other comprehensive<br> loss | (259 | ) | — | ||
| Accumulated deficit | (424,112 | ) | (317,506 | ) | |
| Total<br> stockholders’ equity | 217,045 | 107,325 | |||
| Total liabilities<br> and stockholders’ equity | 1,038,747 | $ | 268,387 |
All values are in US Dollars.
7
**PORCHGROUP,**INC.
ConsolidatedStatements of OperationsYears Ended December 31, 2021, 2020 and 2019(all numbers in thousands, except share amounts, audited)
| 2021 | 2020 | 2019 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Revenue | $ | 192,433 | $ | 72,299 | $ | 77,595 | |||
| Operating expenses^(1)^: | |||||||||
| Cost of revenue | 58,725 | 17,562 | 21,500 | ||||||
| Selling and marketing | 84,273 | 41,665 | 56,220 | ||||||
| Product and technology | 47,005 | 28,546 | 30,992 | ||||||
| General and administrative | 85,795 | 28,199 | 52,011 | ||||||
| Gain on divestiture of businesses | — | (1,442 | ) | 4,994 | |||||
| Total operating expenses | 275,798 | 114,530 | 165,717 | ||||||
| Operating loss | (83,365 | ) | (42,231 | ) | (88,122 | ) | |||
| Other income (expense): | |||||||||
| Interest expense | (5,757 | ) | (14,734 | ) | (7,134 | ) | |||
| Change in fair value of earnout liability | (18,519 | ) | — | — | |||||
| Change in fair value of private warrant liability | (15,389 | ) | 2,427 | — | |||||
| Gain (loss) on extinguishment of debt | 5,110 | 5,748 | (483 | ) | |||||
| Investment income and realized gains, net of investment expenses | 701 | — | — | ||||||
| Other income (expense), net | 340 | (6,931 | ) | (7,484 | ) | ||||
| Total other income (expense) | (33,514 | ) | (13,490 | ) | (15,101 | ) | |||
| Loss before income taxes | (116,879 | ) | (55,721 | ) | (103,223 | ) | |||
| Income tax benefit (expense) | 10,273 | 1,689 | (96 | ) | |||||
| Net loss | $ | (106,606 | ) | $ | (54,032 | ) | $ | (103,319 | ) |
| Induced conversion of preferred stock | — | (17,284 | ) | — | |||||
| Net loss attributable to common stockholders | $ | (106,606 | ) | $ | (71,316 | ) | $ | (103,319 | ) |
| Loss per share - basic | $ | (1.14 | ) | $ | (1.96 | ) | $ | (3.31 | ) |
| Loss per share - diluted (Note 19) | $ | (1.14 | ) | $ | (2.03 | ) | $ | (3.31 | ) |
| Shares used in computing basic loss per share | 93,884,566 | 36,344,234 | 31,170,351 | ||||||
| Shares used in computing diluted loss per share | 93,884,566 | 36,374,215 | 31,170,351 | ||||||
| (1) | Amounts include stock-based compensation expense, as follows: | ||||||||
| --- | --- | ||||||||
| 2021 | 2020 | 2019 | |||||||
| --- | --- | --- | --- | --- | --- | --- | |||
| Cost of revenue | $ | 1 | $ | 2 | $ | 9 | |||
| Selling and marketing | 5,584 | 1,901 | 477 | ||||||
| Product and technology | 7,223 | 5,248 | 747 | ||||||
| General and administrative | 25,784 | 4,145 | 34,739 | ||||||
| $ | 38,592 | $ | 11,296 | $ | 35,972 |
8
PORCH GROUP, INC.
ConsolidatedStatements of Comprehensive LossYears Ended December 31, 2021, 2020 and 2019(all numbers in thousands, except share amounts, audited)
| Year Ended December 31, | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2019 | |||||||
| Net loss | $ | (106,606 | ) | $ | (54,032 | ) | $ | (103,319 | ) |
| Other comprehensive income (loss): | |||||||||
| Current period change in net unrealized loss, net of tax | (259 | ) | — | — | |||||
| Comprehensive loss | $ | (106,865 | ) | $ | (54,032 | ) | $ | (103,319 | ) |
9
**PORCHGROUP,**INC.
**ConsolidatedStatements of Stockholders’ Equity (Deficit)**Years Ended December 31, 2021, 2020 and 2019(all numbers in thousands, except share amounts, audited)
| Redeemable Convertible | Additional | Total | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Preferred Stock | Common Stock | Paid-in | Accumulated | Stockholders’ | |||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Equity (Deficit) | |||||||||||||||
| Balances as of January 1, 2019 | 42,104,419 | $ | 119,000 | 20,475,883 | $ | 205 | $ | 10,615 | $ | (160,662 | ) | $ | (149,842 | ) | |||||||
| Retroactive application of recapitalization^(1)^ | (42,104,419 | ) | (119,000 | ) | 8,937,724 | (202 | ) | 119,202 | — | 119,000 | |||||||||||
| Adjusted balance, beginning of period | — | — | 29,413,607 | 3 | 129,817 | (160,662 | ) | (30,842 | ) | ||||||||||||
| Cumulative effect of a change in accounting principle | — | — | — | — | — | 507 | 507 | ||||||||||||||
| Net loss | — | — | — | — | — | (103,319 | ) | (103,319 | ) | ||||||||||||
| Stock-based compensation | — | — | — | — | 35,972 | — | 35,972 | ||||||||||||||
| Issuance of Series B and Series C redeemable convertible preferred stock^(1)^ | — | — | 3,944,897 | — | 37,274 | — | 37,274 | ||||||||||||||
| Issuance of common stock for acquisitions | — | — | 271,287 | — | 479 | — | 479 | ||||||||||||||
| Adjustment to purchase price consideration | — | — | — | — | (290 | ) | — | (290 | ) | ||||||||||||
| Issuance of common stock warrants | — | — | — | — | 168 | — | 168 | ||||||||||||||
| Vesting of restricted stock awards issued for acquisitions | — | — | 516,539 | — | — | — | |||||||||||||||
| Proceeds from issuance of redeemable convertible preferred stock warrants | — | — | — | — | 4 | — | 4 | ||||||||||||||
| Exercise of stock options | — | — | 74,980 | — | 110 | — | 110 | ||||||||||||||
| Shares repurchased | — | — | (23,488 | ) | — | (42 | ) | — | (42 | ) | |||||||||||
| Balances as of December 31, 2019 | — | $ | — | 34,197,822 | $ | 3 | $ | 203,492 | $ | (263,474 | ) | $ | (59,979 | ) | |||||||
| Net loss | — | — | — | — | — | (54,032 | ) | (54,032 | ) | ||||||||||||
| Stock-based compensation | — | — | — | — | 10,660 | — | 10,660 | ||||||||||||||
| Stock-based compensation - earnout | — | — | 1,976,332 | — | 636 | — | 636 | ||||||||||||||
| Issuance of Series B and Series C redeemable convertible preferred stock^(1)^ | — | — | 682,539 | — | 4,836 | — | 4,836 | ||||||||||||||
| Conversion of convertible notes to Series C redeemable convertible preferred stock^(1)^ | — | — | 198,750 | — | 1,436 | — | 1,436 | ||||||||||||||
| Repurchase of redeemable convertible preferred stock | — | — | (75,162 | ) | — | (480 | ) | — | (480 | ) | |||||||||||
| Issuance of common stock warrants | — | — | — | — | 44 | — | 44 | ||||||||||||||
| Vesting of restricted stock awards issued for acquisitions | — | — | 472,141 | — | — | — | — | ||||||||||||||
| Issuance of common stock for acquisitions | — | — | 785,330 | — | 6,898 | — | 6,898 | ||||||||||||||
| Exercise of stock options and warrants | — | — | 505,711 | — | 1,029 | — | 1,029 | ||||||||||||||
| Net share settlement of common stock options and restricted stock units | — | — | 1,189,911 | — | — | — | — | ||||||||||||||
| Shareholder contribution | — | — | — | — | 17,584 | — | 17,584 | ||||||||||||||
| Inducement to convert preferred stock | — | — | — | — | (17,284 | ) | — | (17,284 | ) | ||||||||||||
| Impacts of recognition of contingent beneficial conversion feature | — | — | — | — | (5,208 | ) | — | (5,208 | ) | ||||||||||||
| Conversion of common stock warrants into common stock | — | — | 1,705,266 | — | — | — | — | ||||||||||||||
| Conversion of redeemable convertible preferred stock warrants into common stock | — | — | 702,791 | — | 11,029 | — | 11,029 | ||||||||||||||
| Recapitalization and PIPE financing | — | — | 35,304,052 | 5 | 239,722 | — | 239,727 | ||||||||||||||
| Tax impacts of recapitalization | — | — | — | — | 187 | — | 187 | ||||||||||||||
| Earnout liability | — | — | 4,023,668 | — | (50,238 | ) | — | (50,238 | ) | ||||||||||||
| Cancellation of redeemable convertible preferred stock repurchase liability | — | — | — | — | 480 | — | 480 | ||||||||||||||
| Balances as of December 31, 2020 | — | $ | — | 81,669,151 | $ | 8 | $ | 424,823 | $ | (317,506 | ) | $ | 107,325 |
^(1)^Issuance of redeemable convertible preferred stock and convertible preferred stock warrants have been retroactively restated to give effect to the recapitalization transaction.
10
**PORCHGROUP,**INC.
ConsolidatedStatements of Stockholders’ Equity (Deficit) - ContinuedYears Ended December 31, 2021, 2020 and 2019(all numbers in thousands, except share amounts, audited)
| Accumulated | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Additional | Other | Total | |||||||||||||||
| Common Stock | Paid-in | Accumulated | Comprehensive | Stockholders’ | |||||||||||||
| Shares | Amount | Capital | Deficit | Loss | Equity | ||||||||||||
| Balances as of January 1, 2021 | 81,669,151 | $ | 8 | $ | 424,823 | $ | (317,506 | ) | $ | — | $ | 107,325 | |||||
| Net loss | — | — | — | (106,606 | ) | (259 | ) | (106,865 | ) | ||||||||
| Stock-based compensation | — | — | 15,631 | — | — | 15,631 | |||||||||||
| Stock-based compensation - earnout | — | — | 22,961 | — | — | 22,961 | |||||||||||
| Issuance of common stock for acquisitions | 2,042,652 | 1 | 35,706 | — | — | 35,707 | |||||||||||
| Contingent consideration for acquisitions | — | — | 6,685 | — | — | 6,685 | |||||||||||
| Reclassification of earnout liability upon vesting | — | — | 54,891 | — | — | 54,891 | |||||||||||
| Reclassification of private warrant liability upon exercise | — | — | 31,730 | — | — | 31,730 | |||||||||||
| Vesting of restricted stock awards | 2,549,223 | — | — | — | — | — | |||||||||||
| Exercise of stock warrants | 11,521,412 | 1 | 126,768 | — | — | 126,769 | |||||||||||
| Exercise of stock options | 1,700,557 | — | 4,326 | — | — | 4,326 | |||||||||||
| Income tax withholdings | (1,521,398 | ) | — | (28,940 | ) | — | — | (28,940 | ) | ||||||||
| Capped call transactions | — | — | (52,913 | ) | — | — | (52,913 | ) | |||||||||
| Transaction costs | — | — | (262 | ) | — | — | (262 | ) | |||||||||
| Balances as of December 31, 2021 | 97,961,597 | $ | 10 | $ | 641,406 | $ | (424,112 | ) | $ | (259 | ) | $ | 217,045 |
11
**PORCHGROUP,**INC.
ConsolidatedStatements of Cash FlowsYears Ended December 31, 2021, 2020 and 2019(all numbers in thousands, except share amounts, audited)
| Year Ended December 31, | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2019 | |||||||
| Cash flows from operating activities: | |||||||||
| Net loss | $ | (106,606 | ) | $ | (54,032 | ) | $ | (103,319 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities | |||||||||
| Depreciation and amortization | 16,386 | 6,644 | 7,377 | ||||||
| Amortization of operating lease right-of-use assets | 1,861 | — | — | ||||||
| Loss on sale and impairment of long-lived assets | 595 | 895 | 1,088 | ||||||
| Loss (gain) on extinguishment of debt | (5,110 | ) | (5,748 | ) | 483 | ||||
| Loss on remeasurement of debt | — | 895 | 6,159 | ||||||
| Loss (gain) on divestiture of businesses | — | (1,442 | ) | 4,994 | |||||
| Loss on remeasurement of Legacy Porch warrants | — | 2,584 | 2,090 | ||||||
| Loss on remeasurement of private warrant liability | 15,389 | (2,427 | ) | — | |||||
| Loss (gain) on remeasurement of contingent consideration | (2,244 | ) | 1,700 | (300 | ) | ||||
| Loss on remeasurement of earnout liability | 18,519 | — | — | ||||||
| Stock-based compensation | 38,592 | 11,296 | 35,972 | ||||||
| Amortization of premium/accretion of discount, net | 369 | — | — | ||||||
| Net realized losses on investments | 67 | — | — | ||||||
| Interest expense (non-cash) | 2,387 | 7,488 | 2,369 | ||||||
| Other | 1,055 | (23 | ) | 580 | |||||
| Change in operating assets and liabilities, net of acquisitions and divestitures | |||||||||
| Accounts receivable | (2,905 | ) | 203 | (1,840 | ) | ||||
| Reinsurance balance due | (15,343 | ) | — | — | |||||
| Prepaid expenses and other current assets | (5,323 | ) | (2,587 | ) | 603 | ||||
| Accounts payable | (11,779 | ) | 4,092 | 2,361 | |||||
| Accrued expenses and other current liabilities | (15,981 | ) | (15,946 | ) | 7,704 | ||||
| Losses and loss adjustment expense reserves | (22,417 | ) | — | — | |||||
| Other insurance liabilities, current | 14,396 | — | — | ||||||
| Deferred revenue | 53,556 | 2,206 | (803 | ) | |||||
| Refundable customer deposits | (3,545 | ) | (3,521 | ) | 6,122 | ||||
| Long-term insurance commissions receivable | (4,156 | ) | (3,365 | ) | — | ||||
| Operating lease liabilities, non-current | (2,141 | ) | — | — | |||||
| Other | (399 | ) | 2,419 | (975 | ) | ||||
| Net cash used in operating activities | (34,777 | ) | (48,669 | ) | (29,335 | ) | |||
| Cash flows from investing activities: | |||||||||
| Purchases of property and equipment | (972 | ) | (279 | ) | (478 | ) | |||
| Capitalized internal use software development costs | (3,719 | ) | (2,601 | ) | (4,096 | ) | |||
| Purchases of short-term and long-term investments | (24,006 | ) | — | — | |||||
| Maturities, sales of short-term and long-term investments | 21,694 | — | — | ||||||
| Acquisitions, net of cash acquired | (256,430 | ) | (7,791 | ) | 116 | ||||
| Divestiture of businesses net of cash disposed | — | — | (750 | ) | |||||
| Net cash used in investing activities | (263,433 | ) | (10,671 | ) | (5,208 | ) | |||
| Cash flows from financing activities: | |||||||||
| Proceeds from recapitalization and PIPE financing | — | 305,133 | — | ||||||
| Distribution to stockholders | — | (30,000 | ) | — | |||||
| Transaction costs - recapitalization | (262 | ) | (5,652 | ) | — | ||||
| Proceeds from debt issuance, net of fees | 413,537 | 66,190 | 31,300 | ||||||
| Repayments of principal and related fees | (46,965 | ) | (81,640 | ) | (202 | ) | |||
| Proceeds from issuance of redeemable convertible preferred stock, net of fees | — | 4,714 | 3,274 | ||||||
| Capped call transactions | (52,913 | ) | — | — | |||||
| Proceeds from exercises of warrants | 126,741 | — | — | ||||||
| Proceeds from exercises of stock options and Legacy Porch warrants | 4,288 | 911 | 114 | ||||||
| Income tax withholdings paid upon vesting of restricted stock units | (28,877 | ) | — | — | |||||
| Repurchase of stock | — | (42 | ) | — | |||||
| Net cash provided by financing activities | 415,549 | 259,614 | 34,486 | ||||||
| Net change in cash, cash equivalents, and restricted cash | $ | 117,339 | $ | 200,274 | $ | (57 | ) | ||
| Cash, cash equivalents, and restricted cash, beginning of period | $ | 207,453 | $ | 7,179 | $ | 7,236 | |||
| Cash, cash equivalents, and restricted cash end of period | $ | 324,792 | $ | 207,453 | $ | 7,179 |
12
**PORCHGROUP,**INC.
ConsolidatedStatements of Cash Flows - ContinuedYears Ended December 31, 2021, 2020 and 2019(all numbers in thousands, except share amounts, audited
| Year Ended December 31, | ||||||
|---|---|---|---|---|---|---|
| 2021 | 2020 | 2019 | ||||
| Supplemental disclosures | ||||||
| Cash paid for interest | $ | 2,662 | $ | 9,103 | $ | 3,466 |
| Reduction of earnout liability due to a vesting event | $ | 54,891 | $ | — | $ | — |
| Non-cash consideration for acquisitions | $ | 52,761 | $ | 9,295 | $ | 479 |
| Conversion of redeemable convertible preferred stock warrants into common stock | $ | — | $ | 11,029 | $ | — |
| Earnout liability | $ | — | $ | 50,238 | $ | — |
| Private warrant liability | $ | — | $ | 31,534 | $ | — |
| Capital contribution from a shareholder - inducement to convert preferred stock to common | $ | — | $ | 17,284 | $ | — |
| Non-cash inducement to convert preferred stock to common | $ | — | $ | 17,284 | $ | — |
| Debt discount for warrants issued (non-cash) | $ | — | $ | 1,215 | $ | 3,700 |
| 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 | $ | 34,105 |
| Capital contribution from a shareholder - guarantee of debt | $ | — | $ | 300 | $ | — |
13
**PORCHGROUP,**INC.
Adjusted EBITDA (loss)
Three Months Ended December 31, 2021
(allnumbers in thousands)
| CORPORATE | INSURANCE | VERTICAL<br><br> SOFTWARE | Consolidated | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Adjusted EBITDA (loss) | $ | (14,476 | ) | $ | 5,922 | $ | 3,180 | $ | (5,375 | ) | ||
| N/A | 37 | % | 9 | % | -10 | % | ||||||
| Less: | ||||||||||||
| Acquisition and related expense | 795 | 29 | - | 824 | ||||||||
| Loss on re-measurement of warrants | (2,132 | ) | - | - | (2,132 | ) | ||||||
| Loss on re-measurement of earnout liability | 3,131 | - | - | 3,131 | ||||||||
| Revaluation of contingent consideration | (2,427 | ) | - | 563 | (1,864 | ) | ||||||
| Non-cash bonus expense | (1,378 | ) | - | - | (1,378 | ) | ||||||
| Non-cash stock-based compensation | 6,489 | 400 | 2,342 | 9,231 | ||||||||
| Non-cash long-lived asset impairment charge | 50 | - | 285 | 335 | ||||||||
| Other, net | (38 | ) | 0 | (78 | ) | (115 | ) | |||||
| Depreciation and amortization | 597 | 1,001 | 4,000 | 5,598 | ||||||||
| Income tax expense (benefit) | (1,135 | ) | 778 | 2 | (356 | ) | ||||||
| Interest expense | 1,348 | 444 | (332 | ) | 1,460 | |||||||
| Net income (loss) | $ | (19,775 | ) | $ | 3,269 | $ | (3,603 | ) | $ | (20,109 | ) |
14
**PORCHGROUP,**INC.
Adjusted EBITDA
Twelve Months Ended December 31, 2021
(allnumbers in thousands)
| CORPORATE | INSURANCE | VERTICAL<br><br> SOFTWARE | Consolidated | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Adjusted EBITDA (loss) | $ | (53,760 | ) | $ | 9,007 | $ | 20,733 | $ | (24,020 | ) | ||
| N/A | 16 | % | 15 | % | -12.5 | % | ||||||
| Less: | ||||||||||||
| Acquisition and related expense | 5, 331 | 29 | - | 5,360 | ||||||||
| Loss on re-measurement of warrants | 15,389 | - | - | 15,389 | ||||||||
| Loss on re-measurement of earnout liability | 18,519 | - | - | 18,519 | ||||||||
| Revaluation of contingent consideration | (2,807 | ) | - | 563 | (2,244 | ) | ||||||
| Non-cash stock-based compensation | 33,180 | 876 | 4,537 | 38,592 | ||||||||
| Non-cash long-lived asset impairment charge | 252 | - | 298 | 550 | ||||||||
| Other, net | (81 | ) | (1 | ) | (259 | ) | (340 | ) | ||||
| Loss on extinguishment of debt | (5,099 | ) | - | (11 | ) | (5,110 | ) | |||||
| Depreciation and amortization | 2,915 | 3,432 | 10,039 | 16,386 | ||||||||
| Income tax benefit | (8,139 | ) | (1,788 | ) | (346 | ) | (10,273 | ) | ||||
| Interest expense | 4,739 | 508 | 510 | 5,757 | ||||||||
| Net income (loss) | $ | (117,959 | ) | $ | 5,950 | $ | 5,402 | $ | (106,606 | ) |
15
**PORCHGROUP,**INC.
MonetizedServices RevenueThree Months and Year Ended December 31, 2021(all numbers in thousands)
| 2021 | 2021 | |||
|---|---|---|---|---|
| Monetized Services Revenue | $ | 34,366 | $ | 137,383 |
| Other Operating Revenue | 17,215 | 55,050 | ||
| Total Revenue | $ | 51,581 | $ | 192,433 |
16
**PORCHGROUP,**INC.
RevenueLess Cost of Revenue and Contribution MarginThree Months Ended December 31, 2021(all numbers in thousands)
| CORPORATE | INSURANCE | VERTICAL<br><br> SOFTWARE | Consolidated | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | $ | - | $ | 16,060 | $ | 35,520 | $ | 51,581 | ||||
| Cost of Revenue | $ | - | $ | 2,725 | $ | 11,412 | $ | 14,137 | ||||
| Revenue Less Cost of Revenue | $ | - | $ | 13,335 | $ | 24,108 | $ | 37,443 | ||||
| N/A | 83 | % | 68 | % | 73 | % | ||||||
| Revenue | $ | - | $ | 16,060 | $ | 35,520 | $ | 51,581 | ||||
| Cost of Revenue | $ | - | $ | 2,725 | $ | 11,412 | $ | 14,137 | ||||
| Sales & Marketing (Variable) | $ | 287 | $ | 8,065 | $ | 10,089 | $ | 18,440 | ||||
| Contribution Margin | $ | (287 | ) | $ | 5,271 | $ | 14,019 | $ | 19,003 | |||
| N/A | 33 | % | 39 | % | 37 | % | ||||||
| Sales & Marketing (Fixed) | $ | 905 | $ | 473 | $ | 3,816 | $ | 5,195 | ||||
| Product & Technology | $ | 6,003 | $ | 621 | $ | 6,223 | $ | 12,847 | ||||
| General & Administrative | $ | 11,407 | $ | (64 | ) | $ | 7,991 | $ | 19,335 | |||
| Total Operating Expenses | $ | 18,602 | $ | 11,820 | $ | 39,531 | $ | 69,954 | ||||
| Operating Loss | $ | (18,602 | ) | $ | 4,240 | $ | (4,011 | ) | $ | (18,373 | ) |
17
**PORCHGROUP,**INC.
RevenueLess Cost of Revenue and Contribution MarginTwelve Months Ended December 31, 2021(all numbers in thousands)
| CORPORATE | INSURANCE | VERTICAL<br><br> SOFTWARE | Consolidated | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | $ | - | $ | 55,283 | $ | 137,150 | $ | 192,433 | ||||
| Cost of Revenue | $ | - | $ | 18,133 | $ | 40,591 | $ | 58,724 | ||||
| Revenue Less Cost of Revenue | $ | - | $ | 37,150 | $ | 96,559 | $ | 133,709 | ||||
| N/A | 67 | % | 70 | % | 69 | % | ||||||
| Revenue | $ | - | $ | 55,283 | $ | 137,150 | $ | 192,433 | ||||
| Cost of Revenue | $ | - | $ | 18,133 | $ | 40,591 | $ | 58,724 | ||||
| Sales & Marketing (Variable) | $ | 2,444 | $ | 16,763 | $ | 39,111 | $ | 58,317 | ||||
| Contribution Margin | $ | (2,444 | ) | $ | 20,388 | $ | 57,448 | $ | 75,392 | |||
| N/A | 37 | % | 42 | % | 39 | % | ||||||
| Sales & Marketing (Fixed) | $ | 5,416 | $ | 7,059 | $ | 13,479 | $ | 25,954 | ||||
| Product & Technology | $ | 26,675 | $ | 1,055 | $ | 19,276 | $ | 47,005 | ||||
| General & Administrative | $ | 58,100 | $ | 8,284 | $ | 19,414 | $ | 85,798 | ||||
| Total Operating Expenses | $ | 92,635 | $ | 51,293 | $ | 131,870 | $ | 275,798 | ||||
| Operating Loss | $ | (92,635 | ) | $ | 3,990 | $ | 5,280 | $ | (83,365 | ) |
18
Comparison of Preliminary Results to Final Results
Fourth Quarter 2021
| Insurance | Vertical Software | Total | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ($ thousands) | Preliminary | Final | Preliminary | Final | Preliminary | Final | ||||||||||||
| Revenue | 16,060 | 16,060 | 35,520 | 35,520 | 51,581 | 51,581 | ||||||||||||
| Revenue Less Cost of Revenue | 16,775 | 13,335 | 24,108 | 24,108 | 40,883 | 37,443 | ||||||||||||
| Revenue Less Cost of Revenue % | 104 | % | 83 | % | 68 | % | 68 | % | 79 | % | 73 | % | ||||||
| Contribution Margin | 8,711 | 5,271 | 14,019 | 14,019 | 22,443 | 19,003 | ||||||||||||
| Contribution Margin % | 54 | % | 33 | % | 39 | % | 39 | % | 44 | % | 37 | % | ||||||
| GAAP net (loss) | N/A | N/A | N/A | N/A | (22,582 | ) | (20,109 | ) | ||||||||||
| Adj. EBITDA (loss) | 3,449 | 5,922 | 3,180 | 3,180 | (7,848 | ) | (5,375 | ) | ||||||||||
| Adj. EBITDA % | 21 | % | 37 | % | 9 | % | 9 | % | -15 | % | -10 | % |
Operating expenses were reduced by approximately $2.5 million at our insurance carrier subsidiary related to the final determination of the amortization of deferred policy acquisition costs, and approximately $3.4 million of expense at our insurance carrier subsidiary was reclassified from general & administrative to cost of revenue.
Full Year 2021
| Insurance | Vertical Software | Total | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ($ thousands) | Preliminary | Final | Preliminary | Final | Preliminary | Final | ||||||||||||
| Revenue | 55,283 | 55,283 | 137,150 | 137,150 | 192,433 | 192,433 | ||||||||||||
| Revenue Less Cost of Revenue | 40,590 | 37,150 | 96,559 | 96,559 | 137,149 | 133,709 | ||||||||||||
| Revenue Less Cost of Revenue % | 73 | % | 67 | % | 70 | % | 70 | % | 71 | % | 69.5 | % | ||||||
| Contribution Margin | 23,828 | 20,388 | 57,448 | 57,448 | 78,832 | 75,392 | ||||||||||||
| Contribution Margin % | 43 | % | 37 | % | 42 | % | 42 | % | 41 | % | 39.2 | % | ||||||
| GAAP net (loss) | N/A | N/A | N/A | N/A | (109,079 | ) | (106,606 | ) | ||||||||||
| Adj. EBITDA (loss) | 6,533 | 9,007 | 20,733 | 20,733 | (26,493 | ) | (24,020 | ) | ||||||||||
| Adj. EBITDA % | 12 | % | 16 | % | 15 | % | 15 | % | -13.8 | % | -12.5 | % |
Operating expenses were reduced by approximately $2.5 million at our insurance carrier subsidiary related to the final determination of the amortization of deferred policy acquisition costs, and approximately $3.4 million of expense at our insurance carrier subsidiary was reclassified from general & administrative to cost of revenue.
19
Investor Relations Contacts:
Walter Ruddy, Head of Investor Relations & Treasury
Porch Group, Inc.
(206) 715-2369
walter@porch.com
Matt Glover/Alex Thompson
Gateway Group, Inc.
(949) 574-3860
PRCH@gatewayir.com
**Porch Press contact:**Catherine Adcock****Gateway Group, Inc. ****(949) 386-6332
PRCH@gatewayir.com
20
Exhibit 99.2
Copyright 2022 Porch Group, Inc. All rights reserved Q4 and FY 2021 Earnings Presentation March 16, 2022 Love your home. For moving and improving and everything in between.
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 2
Copyright 2022 Porch Group, Inc. All rights reserved 3 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 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 ) expansion plans and opportunities, including recently completed acquisitions as well as future acquisitions or additional business combinations ; ( 2 ) costs related to being a public company ; ( 3 ) litigation, complaints, and/or adverse publicity ; ( 4 ) the impact of changes in consumer spending patterns, consumer preferences, local, regional and national economic conditions, crime, weather, demographic trends and employee availability ; ( 5 ) further expansion into the insurance industry, and the related federal and state regulatory requirements ; ( 6 ) privacy and data protection laws, privacy or data breaches, or the loss of data ; ( 7 ) the duration and scope of the COVID - 19 pandemic and its continued effect on the business and financial conditions of Porch ; and ( 8 ) other risks and uncertainties described in Porch’s most recent Form 10 - K and subsequent reports filed with the Securities and Exchange Commission (the “SEC”), such as Porch’s quarterly reports on Form 10 - Q, as well as in its subsequent reports on Form 8 - K, all of which are available on the SEC’s website at www . sec . gov . 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 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, 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, future events or otherwise, except as may be required by law . Non - GAAP Financial Measures 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 . 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 management uses these non - GAAP financial measures as supplemental measures of Porch’s operating and financial performance, for internal budgeting and forecasting purposes, to evaluate financial and strategic planning matters, and to establish certain performance goals for incentive programs . Porch believes that the use of these non - GAAP financial measures provides investors with useful information to evaluate Porch’s operating and financial performance and trends and in comparing Porch’s financial results 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 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 - 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 . 3
Copyright 2022 Porch Group, Inc. All rights reserved Agenda 1. Strategy Recap 2. Q4 and FY2021 Results 3. FY 2022 Guidance 4. Segments & KPIs 5. Deep Dives: Product | M&A | Targeted Future Milestones 6. Q&A 4
Copyright 2022 Porch Group, Inc. All rights reserved FY 2021 Earnings Call CEO Update
Copyright 2022 Porch Group, Inc. All rights reserved Porch, the Vertical Software Platform for the Home Insurance (Carrier, Agency & Warranty) Vertical Software (SaaS + Transaction) (1) Customer acquisition cost 6
Copyright 2022 Porch Group, Inc. All rights reserved Key Focus Areas for 2022 1. Sell Vertical Software to more companies, increasing market share in key strategic verticals 2. Embed and expand B2B2C Transactions via our privileged access to consumers 3. Grow profitably our capital light Insurance revenue via geographic and product expansion 4. Begin to leverage Proprietary Data to improve insurance and warranty risk - based Pricing 5. Enhance Consumer Experience and Conversion via app, digital, and concierge experiences 6. Pursue strategic and accretive M&A and accelerate growth of acquired companies 7
Copyright 2022 Porch Group, Inc. All rights reserved FY 2021 Earnings Call Q4 and FY 2021 Results
Copyright 2022 Porch Group, Inc. All rights reserved Strong Growth and Margin Improvement from Q4 2020 Year Over Year ▲ Disclaimer: See Porch’s Q4 and full year 2021 earnings press release for final audited results for a reconciliation of Adjust ed EBITDA (loss) as a percentage of revenue and Contribution Margin to their most directly comparable GAAP financial measures (1) Includes full 2021 impact of change to HOA accounting resulting in $7.5M of reduced revenue and $7.5M of costs $18.9M Revenue 77% Revenue - Cost of Revenue Margin - 21% Adj. EBITDA Margin 31% Contribution Margin $51.6M Revenue 73% Revenue - Cost of Revenue Margin - 10% Adj. EBITDA Margin 37% Contribution Margin Q4 2021 (1) Q4 2020 9 172% Increase
Copyright 2022 Porch Group, Inc. All rights reserved Recap of 2021 Guidance History vs. Actuals $195M Revenue ~70% Revenue - Cost of Revenue Margin - 14 to - 16% Adj. EBITDA Margin ~40% Contribution Margin $192.4M Revenue 69.5% Revenue - Cost of Revenue Margin - 12.5% Adj. EBITDA Margin 39.2% Contribution Margin Actual Latest guidance 10 Disclaimer: See Porch’s Q4 and full year 2021 earnings press release for final audited results for a reconciliation of Adjust ed EBITDA (loss) as a percentage of revenue and Contribution Margin to their most directly comparable GAAP financial measures
Copyright 2022 Porch Group, Inc. All rights reserved $36M $57M $72M 2018PF 2019PF 2020A 2021A Note: PF figures are Pro Forma results which exclude the financial results of certain Porch businesses divested during 2019 a nd the first half of 2020, after giving effect to all such divestitures as if they had occurred on January 1, 2018 Disclaimer: See Porch’s Q4 and full year 2021 earnings press release for final audited results for a reconciliation of Adjust ed EBITDA (loss) as a percentage of revenue and Contribution Margin to their most directly comparable GAAP financial measures 2021A Revenue: 166 % Year - over - Year Growth Revenue % Growth 58% 26% 166% $192.4M $137M Vertical Software $55M Insurance Adjusted EBITDA % - 79% - 57% - 24% - 12.5% 25% 2018PF 2019PF 2020A 2021A Long-Term Target 11
Copyright 2022 Porch Group, Inc. All rights reserved FY 2021 Earnings Call FY 2022 Guidance
Copyright 2022 Porch Group, Inc. All rights reserved 2022 Guidance: 66% Revenue Growth & Adj EBITDA Improvement ~$320M Revenue ~ - 9% > - $26.5M Adj EBITDA % Adj EBITDA $ ~$210M Revenue Less Cost of Revenue Increase of 58% from $133.7M in 2021 YoY improvements of >400 bps and total Adj EBITDA $ (1) (Guiding to profitability in 2H 2023 and FY 2024) 2022E Guidance Disclaimer: See Porch’s Q4 and full year 2021 earnings press release for final audited results for a reconciliation of Adjusted EBITDA (l oss ) as a percentage of revenue and Contribution Margin to their most directly comparable GAAP financial measures. Porch is not providing reconciliations of forward - looking non - GAAP guidance to the comparable GAAP measures because certain info rmation necessary to calculate such measures on a GAAP basis is unavailable or dependent on the timing of future events outside of Porch’s control. In particular, the charges excluded from these non - GAAP mea sures are subject to high variability and complexity due to Porch’s ongoing growth (1) Excluding one time HOA purchase price accounting adjustment of $2.5M reflected in 2021 FY results $302.5M + $17.5M from announced acquisitions (RWS = $7.5M of $10M annualized; CSE = $10M of $25M annualized) ~$600M Gross Written Premium Increase of 95% from $307M GWP in 2021 13
Copyright 2022 Porch Group, Inc. All rights reserved Rapid Growth Expected Across Each Key Measure $192.4M ~$320M 2021 2022E YoY 66 % increase YoY 95% increase $ 307 M ~$ 600 M 0 100 200 300 400 500 600 700 2021 2022E Series 1 $ 133.7 M ~$ 210 M 0 50 100 150 200 250 2021 2022E Series 1 YoY 58% increase Revenue Less Cost of Revenue Gross Written Premium Revenue 14 Note: 2022 estimates include impact of announced but not yet closed acquisitions of CSE and RWS including revenue of: RWS ($7.5M) and CSE (+$10M based on the expectation of a mid 2022 close date)
Copyright 2022 Porch Group, Inc. All rights reserved $36M $57M $72M 2018PF 2019PF 2020A 2021A 2022E 2022E: Both Strong Growth and Margin Improvement Revenue % Growth 58% 26% 166% $192.4M $137M Vertical Software $55M Insurance Adjusted EBITDA % ~$190M Vertical Software $320M ~$130M Insurance 66% - 79% - 57% - 24% - 12.5% ~ - 9% 25% 2018PF 2019PF 2020A 2021A Long - Term Target 2022E 15 (1) (1) (2) Disclaimer: See Porch’s Q4 and full year 2021 earnings press release for final audited results for a reconciliation of Adjust ed EBITDA (loss) as a percentage of revenue and Contribution Margin to their most directly comparable GAAP financial measures (1) PF figures are Pro Forma results which exclude the financial results of certain Porch businesses divested during 2019 and the fi rst half of 2020, after giving effect to all such divestitures as if they had occurred on January 1, 2018 (2) 2022 Estimated revenue includes the amount of revenue expected from '22 acquisitions to be recorded in the '22 year: RWS ($7. 5M) and CSE (+$10M based on the expectation of a mid 2022 close date)
Copyright 2022 Porch Group, Inc. All rights reserved FY 2021 Earnings Call Segment Information
Copyright 2022 Porch Group, Inc. All rights reserved ~30% ~ 40% ~ 23% ~ 7% (1) B2B includes recurring fees paid by Companies to Porch for SaaS and other services (2) B2B2C (Move - Related Services) includes revenue predominantly related to selling consumers insurance, moving, security and TV/int ernet with majority of these consumers being provided to Porch on a reoccurring basis by companies (3) B2B2C and B2C (Post - Move Services) includes revenue predominantly related to connecting consumers with contractors across home m aintenance and improvement projects with these consumers originating from both 1) companies on a reoccurring basis, and 2) direct - to - consumer channels (4) 2022 Estimated revenue includes the amount of revenue expected from '22 acquisitions to be recorded in the '22 year: RWS ($7. 5M) and CSE (+$10M based on the expectation of a mid 2022 close date) 2022E Revenue: Strong Growth in Both Vertical Software and Insurance Software & Services Subscriptions (~30%) (1) B2B Recurring Fees From Companies Move - Related Transactions – Excl. Insurance Segment (~23%) (2) B2B2C Transaction Revenue via Companies (Reoccurring) Post - Move Transactions (~7%) (3) Transaction Revenue FY 2022E Guidance Revenue Distribution Move - Related Transactions – Insurance Segment (~40%) (2) Insurance + Warranty (Recurring Revenue) Segment Revenue Growth( 4) $137M ~$190M 2021 2022E Vertical Software $55M ~$130M 2021 2022E Insurance 132% YoY Growth 40 % YoY Growth 17
Copyright 2022 Porch Group, Inc. All rights reserved Number of Companies & Average Revenue Per Company (1) Porch management defines average companies in a quarter as an average of the end of period number of companies with the begin nin g of period number, inclusive of all companies across Porch’s home services verticals that (i) generate recurring revenue and (ii) generated revenue in the quarter. For new acquisitions, we determine t he number of customers in their initial quarter based on the percentage of the quarter they were part of Porch (2) Average revenue per account per month in quarter is defined as the total revenue from the quarter generated across all our ho me services company customer accounts divided by the average number of companies in the period divided by 3 (to provide monthly revenue). Note: while the wording of both footnote (1) and (2) on t his slide has been updated to be made more clear, they are the same calculations the company has been using to date (1) (2) 24,603 companies in Q4 2021 $699 revenue per company per month in Q4 2021 18
Copyright 2022 Porch Group, Inc. All rights reserved Monetized Services & Average Revenue Per Monetized Service (1) Monetized Services per Quarter is defined as the total number of unique consumer services from which Porch generated revenue, in cluding, but not limited to, new and renewing insurance customers, completed moving jobs, security installations, TV/internet installations or other home projects, measured over a quarterly period (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 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 fourth quarter 2021 earnings press release for a reconciliation of total service revenue Q1 Q2 Q3 Q4 (1) (2) 260,352 monetized services in Q4 2021 $132 revenue per monetized service in Q4 2021 19
Copyright 2022 Porch Group, Inc. All rights reserved 20 Vertical Software Segment: 4Q 2021 Financials $35.5M Q4 Revenue 68% Revenue Less Cost of Revenue Margin 39% Contribution Margin 9% Adj. EBITDA Margin (1) Disclaimer: See Porch’s Q4 and full year 2021 earnings press release for final audited results for a reconciliation of Adjust ed EBITDA (loss) as a percentage of revenue and Contribution Margin to their most directly comparable GAAP financial measures (1) Impact of preliminary estimate of shared allocation of corporate expense would indicate a 2% Adjusted EBITDA (loss) as a perc ent age of revenue in the quarter
Copyright 2022 Porch Group, Inc. All rights reserved Insurance Segment: 4Q 2021 Financial Performance & KPI's 21 Insurance (Agency in 50 states. Carrier now live in 15 states as carrier) Warranty (Live in 46 states and D.C.) Active states Approved / Signed (coming soon) (5) Agency only (carrier opportunity) $16.1M Q4 Revenue (1) $101M Q4 GWP (2) 83% Revenue Less Cost of Revenue Margin 304K Policyholders 37% Adj. EBITDA Margin (6) 89% Customer Retention (4) 33% Contribution Margin $211 Annualized Revenue Per Policyholder (3) Disclaimer: See Porch’s Q4 and full year 2021 earnings press release for final audited results for a reconciliation of Adjusted EBITDA (l oss ) as a percentage of revenue and Contribution Margin to their most directly comparable GAAP financial measures; (1) Includes full 2021 impact of change to HOA accounting resulting in a reduction of $7.5M in revenue and $7.5M in costs (2) GWP includes gross written premium written for 3 rd party carriers through EIG, gross written premium HOA writes as well as AHP’s face value of policy premiums written during th e period (3) Includes quarterly revenue for the segment divided by number of policyholders in the segment multiplied by four (4) Represents rolling 12 months ending December 2021 for HOA (5) Includes CSE Insurance Group subject to regulatory approval; anticipated for mid - 2022 (6) Impact of preliminary estimate of shared allocation of corporate expense would indicate a 36% Adjusted EBITDA (loss) as a per cen tage of revenue in the quarter
Copyright 2022 Porch Group, Inc. All rights reserved FY 2021 Earnings Call Product Deep Dives
Copyright 2022 Porch Group, Inc. All rights reserved Porch Platform Consumer Experience Embedded Transactions Data Platform Proprietary Insights 23
Copyright 2022 Porch Group, Inc. All rights reserved Consumer App Demo Onboarding 24
Copyright 2022 Porch Group, Inc. All rights reserved Consumer App Demo Welcome 25
Copyright 2022 Porch Group, Inc. All rights reserved Consumer App Demo Checklist 26
Copyright 2022 Porch Group, Inc. All rights reserved Consumer App Demo My home 27 H o me Inspection Report
Copyright 2022 Porch Group, Inc. All rights reserved Consumer App Demo Contacts 28
Copyright 2022 Porch Group, Inc. All rights reserved Looking Ahead: The App for your Home 29
Copyright 2022 Porch Group, Inc. All rights reserved FY 2021 Earnings Call M&A Deep Dives
Copyright 2022 Porch Group, Inc. All rights reserved (1) Companies include acquisitions from the first half of 2021: Homeowners of America, iRoofing , Palm - Tech, Rynoh and V12. Recent acquisitions are accelerating as part of Porch 31 ~6% ~28% 2020 Average Growth Rate 2021 Average Growth Rate Growth in Revenue (1)
Copyright 2022 Porch Group, Inc. All rights reserved 2015 2017 2018 Series 1 Porch has a track record of improving growth post acquisition 19 % CAGR 2 years prior to acquisition 45 % growth 2018 Growth in Revenue 15 % CAGR 3 years prior to acquisition Growth in Revenue 32 2017 2020 2021 Series 1 19 % CAGR 3 years prior to acquisition 35 % growth 2021 Growth in GWP Growth in Revenue 2017 2020 2021 Growth in Policies 26 % CAGR 3 years prior to acquisition 50 % CAGR past 3 years 2018 2021 2022 ISN acquired Q3 2017 HOA acquired Q2 2021 Rynoh acquired Q2 2021 AHP acquired Q3 2021 Floify acquired Q4 2021 2017 2020 2021 41 % growth 2021 41 % growth 2021
Copyright 2022 Porch Group, Inc. All rights reserved RWS Acquisition Strengthens Porch’s Warranty and Inspection Capabilities Company Overview • Residential Warranty Services (“RWS”), based in Carmel, Indiana, is a national provider of home warranty products and inspector - centric software and services. • Distributes solutions through a network of real estate agents and >1,000 home inspectors. • Non - core assets have been carved out and remain with the previous owner and subject to post - closing co - marketing agreements. Strategic Rationale x Enhances Porch’s inspector offerings: x Additional software modules x Complimentary marketing and back - office services x Unique 90 - day warranty product that inspectors provide to consumers x Opportunity to provide inspectors discounted 90 - day warranty instead of free software x Both comprehensive and limited home warranty products distributed through the real estate agent channel x Porch Moving Concierge will offer existing inspectors and real estate agents added value for customers 33
Copyright 2022 Porch Group, Inc. All rights reserved RWS Offers an Attractive Addition to Porch’s Capabilities Transaction Summary • Definitive Agreements signed February 28, 2022 with closing expected in early Q2 2022 subject to certain closing conditions • Total closing consideration of $33M represents a ~3X 2022 full year estimated revenue of ~$10M. ~$8M revenue impact expected to Porch in 2022. • Revenue is recurring and we expect growth in - line with Porch's long - term targets • Expect to be slightly Adjusted EBITDA positive in 2022 • Consideration includes: • $29M of cash, of which $4.95M was paid at signing • $4M in Porch stock • Contingent consideration tied to performance of recently launched business line 34
Copyright 2022 Porch Group, Inc. All rights reserved FY 2021 Earnings Call Targeted Future Milestones
Copyright 2022 Porch Group, Inc. All rights reserved Porch’s Key Target Milestones 36 2021 $600M GWP 166% YoY Revenue Growth 2022 2024 2023 2 nd half positive Adj. EBITDA Full year positive Adj. EBITDA $1.5B revenue $320M Revenue Mid - term revenue target Disclaimer: See Porch’s Q4 and full year 2021 earnings press release for a reconciliation of Adjusted EBITDA (loss) as a perc ent age of revenue and Contribution Margin to their most directly comparable GAAP financial measures; 2022 Estimated revenue and GWP includes the amount of revenue expected from '22 acquisitions to be recorded in the '22 year: RWS ( $7. 5M) and CSE (+$10M based on the expectation of a mid 2022 close date)
Copyright 2022 Porch Group, Inc. All rights reserved ~51% ~ 41% ~ 8% 39% Contribution Margin in 2021 demonstrates profit potential 37 B2B (51%) Largely software sales and support to companies Consumer (41%) Largely consumer sales and support teams 2021 Expenses Cost of Revenue Sales & Marketing Fixed Expenses 2021 Expenses (1) 2021 Sales & Marketing Investments (1) Key Product & Technology Investments Corporate (8%) • Data platform build - out and integrations across Porch • Consumer app and digital experiences • Additional modules across verticals • Integration of data into insurance pricing • SOX and public company - related investments (1) Excludes non - cash expenses
Copyright 2022 Porch Group, Inc. All rights reserved $320M ~$1.5B - $200 $400 $600 $800 $1000 $1200 $1400 $1600 2022E Revenue Insurance Expansion Grow Current Software Verticals Enter New Software Verticals Mover Marketing Mid-term Target 2 3 4 Porch’s Path To $1.5 Billion Mid - Term Revenue Target Expand our insurance business: Enter new states, add new products (i.e. bundled auto), and convert at a higher rate to Porch customers 1 Grow in current software verticals: Sell software and services to more companies in existing verticals and increase both B2B SaaS and B2B2C transaction revenue 2 Enhance and expand mover marketing offering: Continue to develop new products and services to brands to help them effectively reach movers 38 1 Enter new software verticals: Expand software offering to new home service verticals either organically or via M&A 4 3 ~$500M ~$400M ~$150M ~$150M
Copyright 2022 Porch Group, Inc. All rights reserved FY 2021 Earnings Call Q&A
Copyright 2022 Porch Group, Inc. All rights reserved FY 2021 Earnings Call Appendix
Copyright 2022 Porch Group, Inc. All rights reserved Balance Sheet Cash and Restricted Cash as of Dec 31, 2021: $325M • Primary use of cash expected for M&A • Well positioned to support investments; vertical software systems, Insurtech, data platform & consumer experience Total Long - Term Debt as of Dec 31, 2021: $414.6M • $425M of convertible note issued in September 2021 and due September 2026 that the Company may settle with cash, shares of the Company’s common stock, or any combination of cash and shares of the Company’s common stock • $600K Other notes Balance Sheet well positioned for growth 41
Copyright 2022 Porch Group, Inc. All rights reserved Capital Structure • Total common shares issued and outstanding as of December 31, 2021: 98.0M and 1.8M private warrants outstanding • In addition to the above, when team RSUs vest or team options both vest and are exercised, it will be added to total shares outstanding above. This relates to pre - SPAC Porch options and RSUs which rolled over and the ~8M share MIP pool from the SPAC merger agreement, some of which will be granted soon with long - term vesting and some of which may be granted in future years. Capital Structure Update 42
Copyright 2022 Porch Group, Inc. All rights reserved 1. Vertical software leader to key home service companies with low churn and high NPS 2. Large and ideal consumer audience provided via software companies, with low acquisition costs 3. Unique, substantial, and valuable property data 4. Large insurance operation with CAC, pricing, data, and value prop advantages 5. Proven team with strong track record 6. Massive and expanding addressable TAM 7. Strong financial results with fast revenue growth as well as strong and improving margins 8. Positioned for long - term leadership in the home: SaaS, insurance, warranty, moving, and homeownership 1 2 3 4 5 6 7 8 Porch Group Investment Highlights 43