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 of Earliest EventReported):
August12, 2021
PORCH GROUP, INC.
(Exact name of registrant as specified in itscharter)
| Delaware | 001-39142 | 83-2587663 |
|---|---|---|
| (State or Other Jurisdiction<br><br> <br>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,including area code)
Not Applicable
(Former Name or Former Address, if ChangedSince Last 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 exchange on<br><br> <br>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 Operations and FinancialCondition.
On August 16, 2021, Porch Group, Inc. (the “Company”) issued an earnings release announcing financial results for the quarter ended June 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 5.02 Departure of Directors or CertainOfficers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On August 12, 2021, the Company’s Board of Directors (the “Board”) approved the appointment of Rachel Lam and Maurice Tulloch, effective immediately, to fill vacancies on the Board. The Board has determined that each of Ms. Lam and Mr. Tulloch satisfies the independence criteria set forth in the Nasdaq rules, and is therefore “independent” for purposes of serving on the Board.
Ms. Lam has been designated as a Class I director, whose term will expire at the Company’s annual meeting of stockholders in 2024, and Mr. Tulloch has been designated as a Class III director, whose term will expire at the Company’s annual meeting of stockholders in 2023.
On August 12, 2021, effective immediately prior to the aforementioned appointments, Margaret Whelan and Thomas D. Hennessy each notified the Company of their decision to resign from the Board and the respective committees of the Board on which they serve.
The Board is considering potential committee appointments of Ms. Lam and Mr. Tulloch in connection with their respective Board appointment, and the Company will file an amendment to this Current Report on Form 8-K to disclose such appointments, if applicable.
In connection with their appointments to the Board, Ms. Lam and Mr. Tulloch will be compensated in accordance with the Company’s non-employee director compensation policy (the “Policy”), including a grant of the annual restricted stock units (“RSUs”) specified in the Policy. The Company also will enter into its standard form of indemnification agreement which each of Ms. Lam and Mr. Tulloch, a copy of which was previously filed as Exhibit 10.3 of the Company’s Form 8-K (File No. 001-39142), filed with the SEC on December 31, 2020) and is incorporated herein by reference.
There are no arrangements or understandings between Ms. Lam or Mr. Tulloch and any other persons pursuant to which she or he, respectively, was elected as a director of the Company. In addition, there are no family relationships between Ms. Lam or Mr. Tulloch and any director, executive officer, or any person nominated or chosen by the Company to become a director or executive officer. Further, there are no related person transactions (within the meaning of Item 404 of Regulation S-K promulgated by the Securities and Exchange Commission) between Ms. Lam or Mr. Tulloch and the Company.
A copy of the Company’s press release dated August 16, 2021 announcing the appointment of Ms. Lam and Mr. Tulloch to, and the resignation of Ms. Whelan and Mr. Hennessy from, the Board is attached hereto as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 7.01. Regulation FD Disclosure.
On August 16, 2021, the Company will host an earnings call at 5:00 p.m. Eastern time to discuss its financial results for the second quarter ended June 30, 2021. The investor presentation to be used for the call is attached as Exhibit 99.3 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 under Item 2.02 and 7.01 in this Current Report on Form 8-K and the related 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 andExhibits.
(d) Exhibits:
| Exhibit Number | Description |
|---|---|
| 99.1 | Press Release dated August 16, 2021. |
| 99.2 | Press Release dated August 16, 2021. |
| 99.3 | Investor Presentation, dated August 16, 2021. |
| 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/ Martin L. Heimbigner | |
| Name: | Martin L. Heimbigner | |
| Title: | Chief Financial Officer |
Date: August 16, 2021
Exhibit 99.1
Porch Group Reports Second Quarter 2021 FinancialResults
Company Exceeds Q2 Guidance and Increases FullYear 2021 Revenue Guidance to $184 Million, Representing Approximately 155% Year-over-Year Growth
Via Acquisition, Porch now a Leading Providerof Software for Title Companies
SEATTLE,WA, August 16, 2021 – Porch Group, Inc. (“Porch” or “the Company”) (NASDAQ:PRCH), a leading vertical software and InsurTech company reinventing the home services industry, today reported financial results for the second quarter ended June 30, 2021.
“Our excellent second quarter results showcased our ability to significantly grow our business and expand our vertical software platform into adjacent home service industries,” said Matt Ehrlichman, Founder, Chairman and CEO. “We have demonstrated consistent execution of our strategy that is driving strong growth for shareholders, and we have raised our full year revenue outlook reflecting the continued confidence in our go-forward strategy. For the quarter, our total revenue increased by 200% compared to the same period last year and we are thrilled to welcome the Homeowners of America team into the Porch Group family following the acquisition’s close in April. We continue to execute well on our M&A pipeline, as evidenced by our Q2 acquisition of Rynoh, a leading provider of software for title companies. Our business continues to perform well across each of our areas of focus, with insurance at the core where we can leverage our unique customer acquisition and property data advantages. We have generated strong momentum into the back half of the year and are focused on continuing to execute across our business to benefit all our stakeholders. I want to credit and thank our incredible team that continues to drive us ahead and establish Porch as the leader for the home services industry.”
Second Quarter 2021 Financial Results
Total revenue for the second quarter of 2021 was $51.3 million, an increase of 200% from $17.1 million in the second quarter of 2020. When adjusting for past divestitures by the Company, year-over-year growth was 235%, up from $15.4 million in the second quarter of 2020 pro forma. The increase in total revenue was driven by selling software to more companies and by significantly increasing both the B2B SaaS fees and transaction revenue generated per company, in large part driven by rapid growth in Porch’s InsurTech division.
Revenue less cost of revenue for the second quarter 2021 was 62% and contribution margin was 33%. GAAP net loss for the second quarter of 2021 totaled $16.3 million. Adjusted EBITDA loss, a non-GAAP metric, for the second quarter of 2021 totaled $10.3 million (or -20% of total revenue). Weather-related insurance claims costs contributed approximately $4 million of additional cost of revenue as compared to historical Q2 periods with average weather.
As of June 30, 2021, cash, cash equivalents, and restricted cash totaled $152.4 million.
Second Quarter 2021 Key Performance Indicators (KPIs)
Software and services to companies:
| · | Average number of companies increased to 17,120, up 63% year-over-year.<br>Rynoh contributed 1,099 companies to Porch’s total Q2 company count. |
|---|---|
| · | Average revenue per company per month increased to $999.70, up 80% year-over-year. |
| --- | --- |
Monetized services for consumers:
| · | Number of monetized services was 302,462 in Q2 2021, up approximately 66% year-over-year. |
|---|---|
| · | Average revenue per monetized service was $129, up 50% year-over-year. |
| --- | --- |
Q2 Acquisitions
As previously disclosed, in April 2021, Porch closed its acquisition of Homeowners of America, going deeper into insurance by adding a full stack carrier and managing general agent. Additionally, in Q2, Porch acquired Rynoh, a leading provider of patented SaaS solutions for title companies and other settlement agents. Located in Virginia, Rynoh applications help protect real estate closings by providing continuous end-to-end account auditing, daily reconciliation, transaction monitoring, fraud detection and reporting. Porch expects Rynoh to generate $8 million in revenue for the full year 2021, with $4 million of that accruing to Porch’s 2021 year post-close. Rynoh contributed $1.3 million to Porch in the second quarter of 2021. Rynoh operates with similar gross margin and contribution margins as Porch and is expected to operate largely at breakeven Adjusted EBITDA in the near-term as it invests in growth. Porch acquired Rynoh for $31.5 million cash at closing, with $3.5 million due in April 2023.
Business Overview
| · | SaaS application used by title companies (and other settlement agents) to protect the residential real estate transaction |
|---|---|
| · | Open solution that integrates with 20 title CRM software platforms |
| --- | --- |
| · | Provides continuous end-to-end account auditing, daily reconciliation, transaction monitoring, fraud detection and reporting for greater<br>than 30% of all U.S. home purchase and refinance transactions in Q1 2021 |
| --- | --- |
| · | Since inception, the company has monitored over 16.5 million closings in the US worth more than $5 trillion |
| --- | --- |
Full Year 2021 Financial Outlook
Porch provides guidance based on current market conditions and expectations.
For the full year of 2021, Porch increased its revenue outlook from $178 million to $184 million, representing approximately 155% year-over-year revenue growth. The vast majority of Porch’s revenue is recurring, with the company continuing to expect approximately 90% of 2021 revenues from its vertical software solutions (25% from B2B software and service subscription fees and approximately 65% from corresponding move-related transaction revenues which includes insurance), and approximately 10% of revenues from post-move services. The Company reiterated full-year 2021 guidance for revenue less cost of revenue of approximately 72%, contribution margin of approximately 40%, and tightened its Adjusted EBITDA margin guidance range to -13% 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 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 particular, the charges excluded from these non-GAAP measures are subject to high variability and complexity due to Porch’s ongoing growth.
Conference Call
Porch management will host a conference call today (August 16, 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:
+16699006833,,82481756169# US (San Jose); +14086380968,,82481756169# US (San Jose)
Or join by phone:
Dial (for higher quality, dial a number based on your current location):
US: +1 669 900 6833 or +1 408 638 0968 or +1 346 248 7799 or +1 253 215 8782 or +1 301 715 8592 or +1 312 626 6799 or +1 646 876 9923
Webinar ID: 824 8175 6169
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 17,000 home services companies such as home inspectors, 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, 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 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 such as Porch’s quarterly report on Form 10-Q for the quarter ended June 30, 2021, filed with the Securities and Exchange Commission (the “SEC”), 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-GAAPFinancial Measures
Some of the financial information and data contained in this press release, such as Adjusted EBITDA, Adjusted EBITDA margin and contribution margin, has not been prepared in accordance with United States generally accepted accounting principles (“GAAP”). Porch defines Adjusted EBITDA 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 margin is defined as Adjusted EBITDA as a percentage of total revenue. Contribution margin is defined as revenue less all variable expenses, including cost of revenue, market, and sales. See the reconciliation table below for more details regarding these non-GAAP measurements, including the reconciliation of historical non-GAAP figures to the nearest comparable GAAP measure.
Porch uses these non-GAAP measures to compare Porch’s performance to that of prior periods for budgeting and planning purposes. Porch believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating projected operating results and trends in and in comparing Porch’s financial measures with other similar companies, many of which present similar non-GAAP financial measures to investors. Porch's method of determining these non-GAAP measures may be different from other companies' methods and, therefore, may not be comparable to those used by other companies and Porch does not recommend the sole use of these non-GAAP measures to assess its financial performance. You should not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP.
You should review the following reconciliation of non-GAAP measures to the nearest comparable GAAP measures, and not rely on any single financial measure to evaluate Porch’s business:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | |||||||||
| Net loss | $ | (16,296 | ) | $ | (6,258 | ) | $ | (81,398 | ) | $ | (24,625 | ) |
| Interest expense | 1,216 | 3,291 | 2,439 | 6,377 | ||||||||
| Income tax (benefit) expense | (7,731 | ) | 3 | (8,081 | ) | 24 | ||||||
| Depreciation and amortization | 3,894 | 128 | 6,356 | 1,917 | ||||||||
| Gain on extinguishment of debt | (8,243 | ) | (3,856 | ) | (8,243 | ) | (3,609 | ) | ||||
| Investment income and realized gains | (387 | ) | — | (397 | ) | — | ||||||
| Other expense, net^(1)^ | 165 | 1,841 | 91 | 3,468 | ||||||||
| Non-cash long-lived asset impairment charge | 72 | 134 | 139 | 301 | ||||||||
| Non-cash stock-based compensation | 6,642 | 363 | 23,365 | 732 | ||||||||
| Non-cash bonus expense | 393 | — | 683 | — | ||||||||
| Revaluation of contingent consideration | 574 | 1,480 | 220 | 1,400 | ||||||||
| Revaluation of earnout liability | 4,032 | — | 22,801 | — | ||||||||
| Revaluation of private warrant liability | 4,303 | — | 20,212 | — | ||||||||
| Acquisition and related expense^(2)^ | 1,056 | 780 | 1,896 | 1,151 | ||||||||
| Adjusted EBITDA (loss) | $ | (10,312 | ) | $ | (2,094 | ) | $ | (19,916 | ) | $ | (12,864 | ) |
| Adjusted EBITDA (loss) as a percentage of revenue | (20 | )% | (12 | )% | (26 | )% | (40 | )% |
Investor Relations Contacts:
Walter Ruddy, Head of Investor Relations & Treasury
Porch 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) 386-6332
PRCH@gatewayir.com
PORCH GROUP, INC.
Condensed Consolidated Statementsof Operations
(all numbers in thousands,except share amounts, unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | |||||||||
| Revenue | $ | 51,340 | $ | 17,122 | $ | 78,083 | $ | 32,196 | ||||
| Operating expenses^(1)^: | ||||||||||||
| Cost of revenue | 19,500 | 3,792 | 25,429 | 7,891 | ||||||||
| Selling and marketing | 23,122 | 8,787 | 37,762 | 21,640 | ||||||||
| Product and technology | 11,050 | 5,071 | 22,841 | 12,423 | ||||||||
| General and administrative | 20,611 | 5,893 | 44,625 | 10,049 | ||||||||
| Gain on divestiture of businesses | — | (1,442 | ) | — | (1,442 | ) | ||||||
| Total operating expenses | 74,283 | 22,101 | 130,658 | 50,561 | ||||||||
| Operating loss | (22,943 | ) | (4,979 | ) | (52,575 | ) | (18,365 | ) | ||||
| Other income (expense): | ||||||||||||
| Interest expense | (1,216 | ) | (3,291 | ) | (2,439 | ) | (6,377 | ) | ||||
| Change in fair value of earnout liability | (4,032 | ) | — | (22,801 | ) | — | ||||||
| Change in fair value of private warrant liability | (4,303 | ) | — | (20,212 | ) | — | ||||||
| Gain on extinguishment of debt | 8,243 | 3,856 | 8,243 | 3,609 | ||||||||
| Investment income and realized gains | 387 | — | 397 | — | ||||||||
| Other income (expense), net | (165 | ) | (1,841 | ) | (91 | ) | (3,468 | ) | ||||
| Total other expense | (1,084 | ) | (1,276 | ) | (36,904 | ) | (6,236 | ) | ||||
| Loss before income taxes | (24,027 | ) | (6,255 | ) | (89,479 | ) | (24,601 | ) | ||||
| Income tax benefit (expense) | 7,731 | (3 | ) | 8,081 | (24 | ) | ||||||
| Net loss | $ | (16,296 | ) | $ | (6,258 | ) | $ | (81,398 | ) | $ | (24,625 | ) |
| Net loss attributable per share to common stockholders: | ||||||||||||
| Basic | $ | (0.17 | ) | $ | (0.18 | ) | $ | (0.89 | ) | $ | (0.70 | ) |
| Diluted | $ | (0.17 | ) | $ | (0.18 | ) | $ | (0.89 | ) | $ | (0.70 | ) |
| Weighted-average shares used in computing net loss attributable per share to common stockholders: | ||||||||||||
| Basic | 95,221,928 | 35,478,347 | 91,483,053 | 35,117,130 | ||||||||
| Diluted | 95,221,928 | 35,478,347 | 91,483,053 | 35,117,130 |
PORCH GROUP, INC.
Condensed Consolidated BalanceSheets
(all numbers in thousands,except share amounts)
| December 31, 2020 | |||||
|---|---|---|---|---|---|
| Assets | |||||
| Current assets | |||||
| Cash and cash equivalents | 150,201 | $ | 196,046 | ||
| Accounts receivable, net | 22,982 | 4,268 | |||
| Short-term investments | 10,149 | — | |||
| Reinsurance balance due | 307,956 | — | |||
| Prepaid expenses and other current assets | 6,844 | 4,080 | |||
| Restricted cash | 2,222 | 11,407 | |||
| Total current assets | 500,354 | 215,801 | |||
| Property, equipment, and software, net | 7,888 | 4,593 | |||
| Goodwill | 120,961 | 28,289 | |||
| Long-term investments | 57,243 | — | |||
| Intangible assets, net | 84,670 | 15,961 | |||
| Long-term insurance commissions receivable | 6,140 | 3,365 | |||
| Other assets | 368 | 378 | |||
| Total assets | 777,624 | $ | 268,387 | ||
| Liabilities and Stockholders’ Equity | |||||
| Current liabilities | |||||
| Accounts payable | 4,621 | $ | 9,203 | ||
| Accrued expenses and other current liabilities | 25,670 | 9,905 | |||
| Deferred revenue | 162,627 | 5,208 | |||
| Refundable customer deposit | 2,299 | 2,664 | |||
| Current portion of long-term debt | 104 | 4,746 | |||
| Losses and loss adjustment expense reserves | 115,500 | — | |||
| Other insurance liabilities, current | 106,208 | — | |||
| Total current liabilities | 417,029 | 31,726 | |||
| Long-term debt | 43,834 | 43,237 | |||
| Refundable customer deposit, non-current | 378 | 529 | |||
| Earnout liability, at fair value | 47,224 | 50,238 | |||
| Private warrant liability, at fair value | 34,903 | 31,534 | |||
| Other liabilities (includes 10,050 and 3,549 at fair value, respectively) | 5,486 | 3,798 | |||
| Total liabilities | 548,854 | 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 – 96,293,416 and 81,669,151, respectively | |||||
| Additional paid-in capital | 627,396 | 424,823 | |||
| Accumulated other comprehensive income | 267 | — | |||
| Accumulated deficit | (398,903 | ) | (317,506 | ) | |
| Total stockholders’ equity | 228,770 | 107,325 | |||
| Total liabilities and stockholders’ equity | 777,624 | $ | 268,387 |
All values are in US Dollars.
PORCH GROUP, INC.
Condensed Consolidated Statementsof Cash Flows
(all numbers in thousands,unaudited)
| Six Months Ended June 30, | ||||||
|---|---|---|---|---|---|---|
| 2021 | 2020 | |||||
| Cash flows from operating activities: | ||||||
| Net loss | $ | (81,398 | ) | $ | (24,625 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities | ||||||
| Depreciation and amortization | 6,356 | 3,386 | ||||
| Loss on sale and impairment of long-lived assets | 126 | 325 | ||||
| Loss (gain) on extinguishment of debt | (8,243 | ) | (3,609 | ) | ||
| Loss on remeasurement of debt | — | 1,412 | ||||
| Loss (gain) on divestiture of businesses | — | (1,442 | ) | |||
| Loss on remeasurement of warrants | 20,212 | 1,999 | ||||
| Loss (gain) on remeasurement of contingent consideration | (314 | ) | 1,400 | |||
| Loss on remeasurement of earnout liability | 22,801 | — | ||||
| Stock-based compensation | 23,477 | 1,034 | ||||
| Amortization of premium/accretion of discount, net | 654 | — | ||||
| Net realized (gains) losses on investments | — | — | ||||
| Interest expense (non-cash) | 67 | 2,775 | ||||
| Other | (1,479 | ) | 310 | |||
| Change in operating assets and liabilities, net of acquisitions and divestitures | ||||||
| Accounts receivable | (5,017 | ) | (1,130 | ) | ||
| Reinsurance balance due | (94,883 | ) | — | |||
| Prepaid expenses and other current assets | 1,654 | 130 | ||||
| Long-term insurance commissions receivable | (2,775 | ) | (984 | ) | ||
| Accounts payable | (21,417 | ) | 2,723 | |||
| Accrued expenses and other current liabilities | (3,292 | ) | 3,522 | |||
| Losses and loss adjustment expense reserves | 29,655 | — | ||||
| Other insurance liabilities, current | 76,474 | — | ||||
| Deferred revenue | 15,824 | 4,320 | ||||
| Refundable customer deposits | (1,273 | ) | (1,506 | ) | ||
| Contingent consideration - business combination | — | — | ||||
| Deferred income tax benefit | (8,153 | ) | — | |||
| Other | 172 | 218 | ||||
| Net cash used in operating activities | (30,772 | ) | (9,742 | ) | ||
| Cash flows from investing activities: | ||||||
| Purchases of property and equipment | (539 | ) | (62 | ) | ||
| Capitalized internal use software development costs | (1,510 | ) | (1,571 | ) | ||
| Purchases of short-term and long-term investments | (9,476 | ) | — | |||
| Maturities, sales of short-term and long-term investments | 8,110 | — | ||||
| Acquisitions, net of cash acquired | (127,883 | ) | — | |||
| Net cash used in investing activities | (131,298 | ) | (1,633 | ) | ||
| Cash flows from financing activities: | ||||||
| Proceeds from debt issuance, net of fees | — | 10,079 | ||||
| Repayments of principal and related fees | (150 | ) | (3,731 | ) | ||
| Proceeds from issuance of redeemable convertible preferred stock, net of fees | — | 4,714 | ||||
| Proceeds from exercises of warrants | 126,772 | — | ||||
| Proceeds from exercises of stock options | 2,544 | 1 | ||||
| Income tax withholdings paid upon vesting of restricted stock units | (22,126 | ) | — | |||
| Settlement of contingent consideration related to a business combination | — | — | ||||
| Net cash provided by financing activities | 107,040 | 11,063 | ||||
| Change in cash, cash equivalents, and restricted cash | $ | (55,030 | ) | $ | (312 | ) |
| Cash, cash equivalents, and restricted cash, beginning of period | $ | 207,453 | $ | 7,179 | ||
| Cash, cash equivalents, and restricted cash end of period | $ | 152,423 | $ | 6,867 |
Exhibit 99.2
Porch Group Appoints Rachel Lam and Maurice Tulloch to Board of Directors as Independent Directors
SEATTLE, August 16, 2021 -- Porch Group, Inc. (“Porch” or “the Company”) (NASDAQ: PRCH), a leading vertical software company reinventing home services, announced today that Rachel Lam and Maurice Tulloch have been appointed to its Board of Directors, effective August 12, 2021. Thomas Hennessy and Margaret Whelan, directors of the former special purpose acquisition corporation (SPAC) PropTech Acquisition Corporation (PTAC), simultaneously concluded their service on Porch’s Board after helping guide Porch through a successful transition into the public markets.
“With solid performance in the public markets thus far since our December 2020 de-SPAC transaction, we felt it was the right time to further strengthen our Board of Directors. We are excited to welcome two highly-qualified and experienced directors to our Board,” said Matt Ehrlichman, founder, chairman and CEO. “Rachel brings significant finance, corporate development, governance, and M&A experience that we believe will be additive to our team and strategy. Maurice brings to us decades of leadership and technical experience in the insurance industry, and we believe his executive and board experience in financial services will be a valuable complement to the Board. We look forward to their contributions as we continue to execute on our strategy and drive sustained growth and returns.” He added, “We wish Tom and Margaret the best in their future endeavors, and are appreciative of their partnership to date.”
“The PTAC team is incredibly proud of our partnership with Porch Group, including our stewardship of Porch to the public markets,” said Thomas Hennessy, former Chairman and Co-CEO of PTAC. “We believe that Porch has a bright future as the long-term winner in providing software for home services companies and other valuable services for homeowners such as insurance. I am excited about remaining a shareholder. We’re pleased to have worked with Porch’s Board to ensure a smooth transition to the new Directors, who collectively bring the right expertise to help guide the business to the next stage of growth and maturity.”
Javier Saade, lead independent director of Porch Group since May 2021, added, “We invested in a thorough search process to find talent that we believe will help Porch bolster independent governance, diversity of perspective, and leverage best-in-class experience and insight. Rachel and Maurice enhance the Board along several dimensions. Their decades of collective experience are important to the company’s trajectory, especially as it deepens its insurance and technology offerings and continues to evaluate growth opportunities and acquisitions. We look forward to working with Rachel and Maurice.”
Lam will serve as a Class I director and Tulloch as a Class III director. The Board expects to align on committee appointments for new directors in 2021.
About Rachel Lam
Lam is the Co-Founder and Managing Partner of Imagination Capital, an early-stage venture capital firm founded in 2017. From 2003 to 2017, Lam served as SVP and Group Managing Director of the Time Warner Investments Group, the strategic investing arm of Time Warner Inc. She managed Time Warner's investments in numerous digital media companies and served on the board of directors of privately held Maker Studios and Bluefin Labs prior to their sales to the Walt Disney Company and Twitter, respectively. Lam has previously served on twenty boards of directors over the years and currently serves on the board of Magnite (NASDAQ: MGNI), the leading, independent omni-channel sell-side software platform, empowering programmatic ad sales at a truly global scale, as well as on the non-profit board of The Center for Reproductive Rights. She also spent several years in investment banking within the M&A group at Morgan Stanley and the Media and Telecommunications group at Credit Suisse. Lam received a B.S. in industrial engineering and operations research from U.C. Berkeley in 1989 and an M.B.A. from Harvard Business School in 1994.
About Maurice Tulloch
From March 2019 until his retirement in July 2020, Tulloch was Group CEO at Aviva plc, a leading multinational insurance company headquartered in London. He joined the Board of Directors of Aviva as an Executive Director in June 2017. In his role at Aviva, he oversaw global leadership, operations, strategy, risk management and governance. In addition, from 1992 until 2019, Tulloch held many executive and leadership roles at Aviva prior to serving as its Group CEO. Tulloch has also served on several external boards including PoolRe and as Chair of ClimateWise. Tulloch received a B.A. in economics from University of Waterloo in 1992, an M.B.A. from Heriot-Watt University in 2002, and is a Chartered Professional Accountant CPA, CMA since 1998.
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. For example, projections of business strategy and plans 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, 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 future and pending acquisitions or additional business combinations; and (2) other risks and uncertainties described in Porch’s most recent annual report on Form 10-K and quarterly report on Form 10-Q, filed with the Securities and Exchange Commission (the “SEC”), 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. 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.
About Porch Group
Seattle-based Porch Group, the vertical software platform for the home, provides software and services to more than 17,000 home services companies such as home inspectors, 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, moving, security, TV/internet, home repair and improvement, and more. To learn more about Porch, visit porchgroup.com and porch.com.
Investor Relations Contact:
Walter Ruddy
Porch 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) 574-3860
PRCH@gatewayir.com
Exhibit 99.3
Copyright 2021 Porch Group, Inc. All rights reserved 1 Q2 2021 Earnings Presentation August 16, 2021 Group Love your home. For moving and improving and everything in between.
Copyright 2021 Porch Group, Inc. All rights reserved Presenters Matt Ehrlichman CEO & Founder, Porch Group Marty Heimbigner CFO, Porch Group Matthew Neagle COO, Porch Group Adam Kornick President, InsurTech Division
Copyright 2021 Porch Group, Inc. All rights reserved 3 DISCLAIMERS 3 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 ) 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 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 Form 10 - K and quarterly report on Form 10 - Q, filed with the Securities and Exchange Commission (“SEC”), 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 Some of the financial information and data contained in this presentation, such as Adjusted EBITDA, Adjusted EBITDA Margin, Contribution Margin, and Gross Written Premium have not been prepared in accordance with United States generally accepted accounting principles (“GAAP”) . Porch defines Adjusted EBITDA as net income (loss) adjusted for interest expense, net, income taxes, total other expense, net, and 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 Margin is defined as Adjusted EBITDA as a percentage of total revenue . Contribution Margin is defined as revenue less all variable expenses, including cost of revenue, marketing and sales . Gross Written Premium represents the total dollars of insurance premium sales based on date of contract execution . The effects of these excluded items may be significant . Porch is not providing reconciliations of expected Adjusted EBITDA, Adjusted EBITDA Margin, Contribution Margin, or Gross Written Premium 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 our control . Porch uses these non - GAAP measures to compare Porch’s performance to that of prior periods for budgeting and planning purposes . Porch believes these non - GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to Porch’s results of operations . Porch believes that the use of these non - GAAP financial measures provides an additional tool for investors to use in evaluating projected operating results and trends in and in comparing Porch’s financial measures with other similar companies, many of which present similar non - GAAP financial measures to investors . Porch's method of determining these non - GAAP measures may be different from other companies' methods and, therefore, may not be comparable to those used by other companies and Porch does not recommend the sole use of these non - GAAP measures to assess its financial performance . Porch management does not consider these non - GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP . The principal limitation of these non - GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in Porch’s financial statements . In addition, they are subject to inherent limitations as they reflect the exercise of judgments by management about which expense and income are excluded or included in determining these non - GAAP financial measures . In order to compensate for these limitations, management presents non - GAAP financial measures in connection with GAAP results .
Copyright 2021 Porch Group, Inc. All rights reserved 4 Q2 2021 Earnings Call Kick - off Group
Copyright 2021 Porch Group, Inc. All rights reserved Software & Services for Companies Access to Consumers Deliver Services Porch has a unique strategy in the home services industry. 1. Porch provides software & services to home inspectors, movers, title and roofing companies and helps them to grow . 2. Through these companies, Porch gains early access to homebuyers and helps save time, stress, and money during the move . 3. Porch generates B2B2C transactional revenues by facilitating the purchase of key services such as insurance . Porch, the Vertical Software Platform for the Home 5
Copyright 2021 Porch Group, Inc. All rights reserved 6 Key Focus Areas for 2021 1. Increase number of companies using our vertical software 2. Increase access to consumers from software companies 3. Increase B2B2C transaction revenue per consumer 4. Continue to scale our InsurTech business 5. Help brands and advertisers improve their mover marketing 6. Pursue strategic and accretive M&A opportunities 6
Copyright 2021 Porch Group, Inc. All rights reserved 7 Q2 2021 Results & 2021E Guidance Group
Copyright 2021 Porch Group, Inc. All rights reserved 8 Strong Year - over - Year Revenue Performance of ~235% Growth Q2 2021 Revenue vs Q2 2020PF Revenue $1.3M - Rynoh Q2 acquisition $15.4M YoY ~235% increase $34.6M - Higher revenue $51.3M Q2 2020 PF Higher Revenue Q2 2021 Actuals PF stands for Pro Forma to account for the removal of financial results related to past divested businesses. Revenue from Rynoh is included and broken out as it is a Q2 2021 acquisition which is being announced for the first time with th is earnings presentation.
Copyright 2021 Porch Group, Inc. All rights reserved 9 Q2 2021 Actuals vs Q2 2021 Guidance See Appendix for a reconciliation of Revenue Less Cost of Revenue %, Adjusted EBITDA % and Contribution Margin % to their mos t d irectly comparable GAAP financial measures. $51.3M 62% 33% - 20% Q2 2021 Actuals “North of $45M” Not provided quarterly Not provided quarterly Not provided quarterly Q2 2021 Guidance vs $6.3M 14% In line with internal expectations
Copyright 2021 Porch Group, Inc. All rights reserved 10 Raising FY 2021E Revenue Guidance and Reiterating Margin Guidance $178M ~72% ~40% - 10% to - 16% Previous 2021E Guidance ~$184M (155% YOY Growth) ~72% ~40% - 13% to - 16% Current 2021E Guidance Guidance ▲ No Change Tightening the range (making investments) Disclaimer: Porch is not providing reconciliations of 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 control. In particular, the charges exclu ded from these non - GAAP measures are subject to high variability and complexity due to Porch’s ongoing growth. No Change
Copyright 2021 Porch Group, Inc. All rights reserved 25% 65% 10% 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. (1) Based on internal estimates, Porch believes without the COVID - 19 pandemic it would have achieved $85M in revenue for the 2020 ye ar resulting in 2020 and 2021E revenue growth would have been 49% and ~116%, respectively. (2) In January 2021, Porch announced the acquisitions of Homeowners of America (HOA) and V12 and layered $50M of 2021 revenue int o o ur guidance. This was based on the expectation of HOA closing at the start of Q2. It closed on April 6, 2021. This also includes $4M related to Rynoh which closed in Q2'2021. (3) B2B includes recurring fees paid by Companies to Porch for SaaS and other services. (4) 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. (5) 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. 11 2021E Revenue: 155% YoY Growth with ~90% Recurring or Reoccurring Revenue 2018PF 2019PF 2020A 2021E $36M $57M $184M % Growth 58% 26% ~155% 49% ~116% (1) (1) Software & Services Subscriptions B2B Recurring Fees From Companies Move - Related Transactions B2B2C Recurring & Reoccurring Transaction Fees via Companies Post - Move Transactions B2B2C and B2C Transaction Fees (3) (4) (5) $72M $85M (1) FY 2021E Guidance Revenue Distribution $54M HOA V12 Rynoh (2)
Copyright 2021 Porch Group, Inc. All rights reserved 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 Appendix for a reconciliation of Adjusted EBITDA and Contribution Margin to their most directly comparable GA AP financial measures. Porch is not providing reconciliations of 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 d epe ndent on the timing of future events outside of Porch’s control. In particular, the charges excluded from these non - GAAP measures are subject to high variability and complexity due to Porch’s ongoing growth. 12 2021E Contribution Margin % and Adjusted EBITDA % Continued Growth Contribution Margin % 2018PF 2019PF 2020PF 2021E 7% 19% ~40% 34% Long - Term Target 50% Adjusted EBITDA % 2018PF 2019PF 2020PF 2021E - 79% - 57% - 24% - 13% to - 16% 25% Long - Term Target
Copyright 2021 Porch Group, Inc. All rights reserved 13 KPIs – 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 divided by the average numb er of companies in the period divided by 3 (to provide monthly revenue). 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 calcul ati ons the company has been using to date. Q1 Q2 Q3 Q4 (1) (2) 17,120 companies in Q2 2021 $1,000 revenue per company in Q2 2021
Copyright 2021 Porch Group, Inc. All rights reserved 14 KPIs – Monetized Services for Consumers (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. Q1 Q2 Q3 Q4 (1) (2) 302,462 monetized services in Q2 2021 $129 revenue per monetized service in Q2 2021
Copyright 2021 Porch Group, Inc. All rights reserved 15 Deep Dives Group
Copyright 2021 Porch Group, Inc. All rights reserved InsurTech Update Gross Written Premium – 2021E Guidance HOA State Expansion Plan Active States Target States (2021 - 2022) $300M (from $275M) 16 Ceding vs Retaining Premium ~90% Premium Ceded to 3 rd party reinsurers Premium Held by HOA (backed with XOL reinsurance) Regulators Approved (launching soon) Gross Loss Ratios – 2020 Results 59%
Copyright 2021 Porch Group, Inc. All rights reserved 17 Vertical Software Expansion Welcome Rynoh ! A leading SaaS provider for title companies
Copyright 2021 Porch Group, Inc. All rights reserved Rynoh Deal Summary and Business Overview Business Overview • SaaS application used by title companies (and other settlement agents) to protect the residential real estate transaction • Open solution that integrates with 20 title CRM software platforms • Provides continuous end - to - end account auditing, daily reconciliation, transaction monitoring, fraud detection and reporting for >30% of all U.S. purchase and refinance transactions in Q1 2021 (1) • All - time: More than 16.5 million closings monitored and $5 trillion of disbursements protected 18 (1) https://www.nar.realtor/research - and - statistics/quick - real - estate - statistics ; https://www.mba.org/Documents/Research/Mortgage%20Finance%20Forecast%20Jun%202021.pdf ; Strategic Opportunities • Opportunity to introduce Porch services such as insurance to homebuyers via the real estate closing and settlement process • Higher value customer relationships allow for increased investment in S&M and R&D to reach and provide greater value to more customers • Real estate closing data is strategic and valuable to our insurance and mover marketing business • Extend the Porch digital consumer experience (Moving Dashboard) to include settlement and closing steps Deal Summary • $ 31.5 M of cash at closing, $3.5M due in 24 - months • $8M revenue business with $4M expected in Porch’s 2021 revenue totals ($1.3M in Q2 2021)
Copyright 2021 Porch Group, Inc. All rights reserved 19 Porch Group Investment Highlights 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 which no one else has 4. Large insurance operation with CAC, pricing, data, and value prop advantages 5. Proven team with strong track record 6. Massive $320B addressable TAM 7. Strong financial results with fast revenue growth and high contribution margins 8. Positioned to be long - term leader for the home: vertical SaaS, insurance, moving and maintenance 1 2 3 4 5 6 7 8
Copyright 2021 Porch Group, Inc. All rights reserved 20 Thank you Group
Copyright 2021 Porch Group, Inc. All rights reserved 21 Q&A Group
Copyright 2021 Porch Group, Inc. All rights reserved 22 Appendix Group
Copyright 2021 Porch Group, Inc. All rights reserved 23 Balance Sheet Cash and Restricted Cash as of June 30, 2021: $152.4M • 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 June 30, 2021: $43.8M Capital Structure • Total common shares outstanding as of June 30, 2021: 96.3M and 3.1M 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 ~11M 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. Cash position is strong
Copyright 2021 Porch Group, Inc. All rights reserved 24 QTD Net Income to Adj EBITDA non - GAAP Reconciliation Note: PF (Pro Forma) figures exclude the financial results of certain Porch businesses divested during 2019 and the first hal f o f 2020, after giving effect to all such divestitures as if they had occurred on January 1, 2018. (1) Includes interest expense and amortization of debt discount and issuance costs. (2) Includes net (gain) loss on settlement of accounts payable, net (gain) loss on remeasurement of debt, extinguishment of debt, re measurement of private warranty and other. (3) Includes compensation charges related to secondary market transaction, employee earnout restricted stock and employee awards. (4) Includes acquisition cash/stock compensation, bank fees, bonus expense, (gain) loss on divestitures, accounting/legal fees, a nd other transaction expenses. — Q2 2021 Q2 2020 Net income (loss) ( 17 .1M) $ ( 6.3M ) $ Interest expense (1) 1.2M 3.3M Income tax (benefit) expense (7 .7M ) 0.0M Depreciation and amortization 3.9M 0.1M Other expense, net (2) (8 .5M ) (2.0M) Non - cash bonus expense 0.4M — Non - cash long - lived asset impairment charge 0.1M 0.1M Non - cash stock - based compensation (3) 6.6M 0.4M Revaluation of contingent consideration 0.6M 1.5M Revaluation of earnout liability 4.0M — Revaluation of private warranty liability 4.3M Acquisition and related (income) expense (4) 1.9M 0.8M Adjusted EBITDA (loss) (10.3M) $ ( 2.1M ) $ Adjusted EBITDA (loss) from divested business — (0.4M) Pro Forma Adjusted EBITDA (loss) (10.3M) $ (1.7M) $
Copyright 2021 Porch Group, Inc. All rights reserved 25 QTD Revenue to Contribution Margin non - GAAP Reconciliation (1) Contribution Margin is defined as revenue less all variable expenses, including cost of revenue, marketing and sales. (2) Pro forma results exclude the financial results of certain Porch businesses divested during 2019 and the first half of 2020, aft er giving effect to all such divestitures as if they had occurred on January 1, 2018. Q2 2021 Q2 2020 Revenue 51.3M $ 17.1M $ Cost of Revenue 19.5M 3.8M Revenue - Cost of Revenue 31.8M 13.3M Variable Selling & Marketing and Advertising 15.0M 7.3M Contribution Margin (1) 16.8M $ 6.0M $ Contribution Margin % of Revenue 33 % 35% Pro Forma Contribution Margin % (2) — 39%
Copyright 2021 Porch Group, Inc. All rights reserved 26 YTD Net Income to Adj EBITDA non - GAAP Reconciliation Note: PF (Pro Forma) figures exclude the financial results of certain Porch businesses divested during 2019 and the first hal f o f 2020, after giving effect to all such divestitures as if they had occurred on January 1, 2018. (1) Includes interest expense and amortization of debt discount and issuance costs. (2) Includes net (gain) loss on settlement of accounts payable, net (gain) loss on remeasurement of debt, extinguishment of debt, re measurement of private warranty and other. (3) Includes compensation charges related to secondary market transaction, employee earnout restricted stock and employee awards. (4) Includes acquisition cash/stock compensation, bank fees, bonus expense, (gain) loss on divestitures, accounting/legal fees, a nd other transaction expenses. — Q2 2021 Q2 2020 Net income (loss) (82. 2 M) $ ( 6.3M ) $ Interest expense (1) 2 .4M 3.3M Income tax (benefit) expense (8 .1M ) 0.0M Depreciation and amortization 6.3M 0.1M Other expense, net (2) (8 .5M ) (2.0M) Non - cash bonus expense 0.7M — Non - cash long - lived asset impairment charge 0.1M 0.1M Non - cash stock - based compensation (3) 23 .4M 0.4M Revaluation of contingent consideration 0.2M 1.5M Revaluation of earnout liability 22.8M — Revaluation of private warranty liability 20.2M Acquisition and related (income) expense (4) 2.7M 0.8M Adjusted EBITDA (loss) (19.9M) $ ( 2.1M ) $ Adjusted EBITDA (loss) from divested business — (0.4M) Pro Forma Adjusted EBITDA (loss) (19.9M) $ (1.7M) $
Copyright 2021 Porch Group, Inc. All rights reserved 27 YTD Revenue to Contribution Margin non - GAAP Reconciliation (1) Contribution Margin is defined as revenue less all variable expenses, including cost of revenue, marketing and sales. (2) Pro forma results exclude the financial results of certain Porch businesses divested during 2019 and the first half of 2020, aft er giving effect to all such divestitures as if they had occurred on January 1, 2018. Q2 2021 Q2 2020 Revenue 78.1M $ 32.1M $ Cost of Revenue 25 .4M 7 .9M Revenue - Cost of Revenue 52 .7M 24. 2M Variable Selling & Marketing and Advertising 24.7M 17.8M Contribution Margin (1) 27.9M $ 6.4M $ Contribution Margin % of Revenue 36 % 20 % Pro Forma Contribution Margin % (2) — 24 %
Copyright 2021 Porch Group, Inc. All rights reserved $72M ~$500M ~$1.5B - $200 $400 $600 $800 $1000 $1200 $1400 $1600 2020E Revenue Core Business Growth Potential Core Business Revenue Potential in 5 - 7 Years Insurance Expansion New Home Service Verticals Mover Marketing Upside Potential ~$400M ~$200M ~$400M Porch Has The Potential to Grow Revenues ~20x 28 Mover Marketing: ~$200M potential revenue opportunity • Data monetization by shifting mover marketing spend by brands from change of address to 6 weeks prior with Porch. 30 - 35% CAGR New Vertical Expansion: ~$400M potential revenue opportunity • Enter new home service industries via M&A and organically. Insurance Expansion: ~$400M potential revenue opportunity • Expand from an insurance agency to a Managing General Agent (MGA) / carrier. 3 2 1 1 2 3 (1) (1) Represents Porch management approximate estimates of potential future revenue growth opportunities and does not constitute Po rch management financial projections or guidance and should not be regarded or relied on as such.
Copyright 2021 Porch Group, Inc. All rights reserved 29 Contractor Services: ~$ 141 B (3) (referral, managed services gross profit) Contractor Services Moving Services Mover Marketing Moving Services: ~ $4B (1) (moving, security, TV/internet) Porch has a U.S. Total Addressable Market of ~$320B The Home is one of the largest market opportunities Other Opportunities Mover Marketing: ~ $8 B ( 4) (1) Moving Services: TAM of $4B is comprised of Security, Moving, and TV / Internet installs. Security TAM of $1.3B estimated ba sed on $220 net commission per security install multiplied by 6M home sales per year. Moving TAM of $1.9B based on $314 net commission per move multiplied by 6M moves per year. TV / Internet Installs TAM of $684M based on $114 net commission per install multiplied by 6M installs per year. (2) Insurance: $167B TAM based on U.S. home insurance annual revenues of $104B plus U.S. auto insurance annual revenues of $313B mu ltiplied by a 20% broker commission (source: IBIS 2019 full year data). Umbrella and flood are incremental. (3) Contractor Services: TAM of $141B is composed of Managed Services and Referral Services . Managed services TAM of $104B based on home services spend of $460B (source: GM Insights 2018 full year data) with 50% of projects managed at a 45% gross margin. Referral services TAM of $35B based on home services spend of $470B with 50% referral projects at a 15% referral fee. (4) Mover Marketing: 6M homebuyers annually with $9K average spend during first 3 - 6 months (Epsilon 2012 New Mover Report). Of this $54B in spend, management estimates that 15% will be spent on marketing to these consumers based on what it has observed in t he industries it serves. Other Opportunities in “Home” (more SaaS verticals, h ome care subscription) Insurance P&C Insurance: ~ $167B (2) (home, auto, umbrella, flood)