Porch Group, Inc 10-Q for FY2022 Q1

Porch Group, Inc. (PRCH)

10-Q 2022-05-10 For: 2022-03-31

Added on April 06, 2026

About this 10-Q

Porch Group, Inc filed this 10-Q on May 10, 2022, covering the quarter ended March 31, 2022 (FY2022 Q1).

Headline figures

Quarter ended March 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $62.56M; up 133.9% from $26.74M a year earlier
Net loss: $5.8M; compared with a net loss of $65.1M a year earlier
Diluted EPS: -$0.06; compared with -$0.76 a year earlier

Search and read filings like this one from Claude or ChatGPT with the SEC filings MCP server →

Delaware	83-2587663
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)


Title of Each Class	Trading symbol	Name of Exchange on which registered
Common Stock, par value $0.0001 per share	PRCH	The Nasdaq Stock Market LLC


Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐	Emerging growth company	☐

		Page

Part I.	Financial Information	3

Item 1.	Financial Statements	3

	Unaudited Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021	3

	Unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2022 and 2021	4

	Unaudited Condensed Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2022 and 2021	5

	Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2022 and 2021	6

	Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021	8

	Notes to Unaudited Condensed Consolidated Financial Statements	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	45

Item 4.	Controls and Procedures	46

Part II.	Other Information	48

Item 1.	Legal Proceedings	48

Item 1A.	Risk Factors	48

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	48

Item 3.	Defaults Upon Senior Securities	48

Item 4.	Mine Safety Disclosures	48

Item 5.	Other Information	48

Item 6.	Exhibits	49

Exhibit Index		49

Signatures		50


	March 31, 2022		December 31, 2021
Assets
Current assets
Cash and cash equivalents	$	292,373	$	315,741
Accounts receivable, net		29,996		28,767
Short-term investments		8,462		9,251
Reinsurance balance due		239,739		228,416
Prepaid expenses and other current assets		21,087		14,338
Restricted cash		10,162		8,551
Total current assets		601,819		605,064
Property, equipment, and software, net		8,340		6,666
Operating lease right-of-use assets		3,922		4,504
Goodwill		226,576		225,654
Long-term investments		56,865		58,324
Intangible assets, net		124,306		129,830
Restricted cash, non-current		500		500
Long-term insurance commissions receivable		9,061		7,521
Other assets		5,373		684
Total assets	$	1,036,762	$	1,038,747

Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	8,016	$	6,965
Accrued expenses and other current liabilities		35,029		37,675
Deferred revenue		198,857		201,085
Refundable customer deposit		16,686		15,274
Current portion of long-term debt		150		150
Losses and loss adjustment expense reserves		79,608		61,949
Other insurance liabilities, current		43,049		40,024
Total current liabilities		381,395		363,122
Long-term debt		415,002		414,585
Operating lease liabilities, non-current		2,267		2,694
Earnout liability, at fair value		2,687		13,866
Private warrant liability, at fair value		5,004		15,193
Other liabilities (includes $12,822 and $9,617 at fair value, respectively)		15,528		12,242
Total liabilities		821,883		821,702
Commitments and contingencies (Note 12)
Stockholders’ equity
Common stock, $0.0001 par value:		10		10
Authorized shares – 400,000,000 and 400,000,000, respectively
Issued and outstanding shares – 98,297,186 and 97,961,597, respectively
Additional paid-in capital		647,551		641,406
Accumulated other comprehensive loss		(2,774)		(259)
Accumulated deficit		(429,908)		(424,112)
Total stockholders’ equity		214,879		217,045
Total liabilities and stockholders’ equity	$	1,036,762	$	1,038,747


	Three Months Ended March 31,
	2022		2021
Revenue	$	62,561	$	26,742
Operating expenses⁽¹⁾:
Cost of revenue		21,189		5,930
Selling and marketing		25,743		14,638
Product and technology		14,231		11,789
General and administrative		26,699		24,016
Total operating expenses		87,862		56,373
Operating loss		(25,301)		(29,631)
Other income (expense):
Interest expense		(2,293)		(1,223)
Change in fair value of earnout liability		11,179		(18,770)
Change in fair value of private warrant liability		10,189		(15,910)
Investment income and realized gains, net of investment expenses		197		—
Other income, net		56		83
Total other income (expense)		19,328		(35,820)
Loss before income taxes		(5,973)		(65,451)
Income tax benefit		177		350
Net loss	$	(5,796)	$	(65,101)

Loss per share - basic and diluted (Note 14)	$	(0.06)	$	(0.76)

Shares used in computing basic and diluted loss per share		96,074,527		85,331,575


								Accumulated
				Additional				Other		Total
	Common Stock			Paid-in		Accumulated		Comprehensive		Stockholders’
	Shares	Amount		Capital		Deficit		Loss		Equity
Balances as of December 31, 2021	97,961,597	$	10	$	641,406	$	(424,112)	$	(259)	$	217,045
Net loss	—		—		—		(5,796)		—		(5,796)
Other comprehensive income	—		—		—		—		(2,515)		(2,515)
Stock-based compensation	—		—		5,854		—		—		5,854
Contingent consideration for acquisitions	—		—		530		—		—		530
Vesting of restricted stock awards	245,855		—		—		—		—		—
Exercise of stock options	185,685		—		473		—		—		473
Income tax withholdings	(95,951)		—		(712)		—		—		(712)
Balances as of March 31, 2022	98,297,186	$	10	$	647,551	$	(429,908)	$	(2,774)	$	214,879


	2022
Deferred policy acquisition costs at December 31, 2021 (gross)	$	33,014
Ceded deferred policy acquisition costs		(29,026)
Deferred policy acquisition costs at December 31, 2021 (net)		3,988
Capitalized costs		16,753
Amortized costs		(13,001)
Deferred policy acquisition costs at March 31, 2022 (net)	$	7,740


	March 31, 2022		December 31, 2021
Ceded reinsurance premiums payable	$	21,439	$	22,523
Funds held under reinsurance treaty		2,092		2,206
Commissions payable, reinsurers and agents		9,259		10,697
General and accrued expenses payable		579		321
Advance premiums		9,680		4,277
Other insurance liabilities, current	$	43,049	$	40,024


	Contract Assets
Balance at December 31, 2021	$	9,384
Estimated lifetime value of insurance policies sold by carriers		2,422
Cash receipts		(753)
Balance at March 31, 2022	$	11,053


	Contract
	Liabilities
Balance at December 31, 2021		15,274
Additions to contract liabilities		7,891
Contract liabilities transferred to revenue		(6,479)
Balance at March 31, 2022	$	16,686


	Vertical Software		Insurance		Total
	Deferred Revenue		Deferred Revenue		Deferred Revenue
Balance at December 31, 2021		3,814	$	197,271	$	201,085
Revenue recognized⁽¹⁾		(5,279)		(91,994)		(97,273)

Additional amounts deferred			5,722			89,323			95,045
Balance at March 31, 2022		$	4,257		$	194,600		$	198,857


	Three Months Ended March 31,
	2022
Investment income, net of investment expenses	$	265
Realized gains on investments		2
Realized losses on investments		(70)
Investment income and realized gains, net of investment expenses	$	197


	March 31, 2022
			Gross Unrealized
	Amortized Cost		Gains		Losses		Fair Value
U.S. Treasuries	$	3,653	$	1	$	(135)	$	3,519
Obligations of states, municipalities and political subdivisions		9,997		—		(584)		9,413
Corporate bonds		30,283		3		(1,234)		29,052
Residential and commercial mortgage-backed securities		15,237		27		(617)		14,647
Other loan-backed and structured securities		8,931		2		(237)		8,696
Total debt securities	$	68,101	$	33	$	(2,807)	$	65,327


	Three Months Ended March 31,
	2022		2021
Vertical Software segment
Software and service subscriptions	$	17,965	$	10,879
Move-related transactions (excluding insurance)		12,193		8,960
Post-move transactions		4,530		5,098
Total Vertical Software segment revenue		34,688		24,937

Insurance segment
Insurance and warranty premiums, commissions and policy fees⁽¹⁾		27,873		1,805
Total Insurance segment revenue		27,873		1,805

Total revenue	$	62,561	$	26,742


	March 31, 2022
Remaining Time to Maturity	Amortized Cost		Fair Value
Due in one year or less	$	6,425	$	6,388
Due after one year through five years		20,771		19,914
Due after five years through ten years		13,700		12,820
Due after ten years		3,037		2,862
Residential and commercial mortgage-backed securities		15,237		14,647
Other loan-backed and structured securities		8,931		8,696
Total	$	68,101	$	65,327


	Less Than Twelve Months				Twelve Months or Greater				Total
	Gross				Gross				Gross
	Unrealized		Fair		Unrealized		Fair		Unrealized		Fair
At December 31, 2021	Loss		Value		Loss		Value		Loss		Value
U.S. Treasuries	$	(36)	$	5,007	$	—	$	—	$	(36)	$	5,007
Obligations of states, municipalities and political subdivisions		(84)		4,292		—		—		(84)		4,292
Corporate bonds		(155)		15,446		—		—		(155)		15,446
Residential and commercial mortgage-backed securities		(139)		9,687		—		—		(139)		9,687
Other loan-backed and structured securities		(41)		6,818		—		—		(41)		6,818
Total securities	$	(455)	$	41,250	$	—	$	—	$	(455)	$	41,250


			Contingent
	Contingent		Consideration -		Private
	Consideration -		Business		Warrant
	Earnout		Combinations		Liability
Fair value as of January 1, 2021	$	50,238	$	3,549	$	31,534
Additions		—		1,737		—
Settlements		(25,815)		(2,062)		—
Change in fair value, loss (gain) included in net loss⁽¹⁾		18,770		(355)		15,910
Fair value as of March 31, 2021	$	43,193	$	2,869	$	47,444


	Fair Value Measurement at March 31, 2022
							Total
	Level 1		Level 2		Level 3		Fair Value
Assets
Money market mutual funds	$	5,041	$	—	$	—	$	5,041
Debt securities:
U.S. Treasuries		3,519		—		—		3,519
Obligations of states and municipalities		—		9,413		—		9,413
Corporate bonds		—		29,052		—		29,052
Residential and commercial mortgage-backed securities		—		14,647		—		14,647
Other loan-backed and structured securities		—		8,696		—		8,696
	$	8,560	$	61,808	$	—	$	70,368
Liabilities
Contingent consideration - business combinations	$	—	$	—	$	12,822	$	12,822
Contingent consideration - earnout		—		—		2,687		2,687
Private warrant liability		—		—		5,004		5,004
	$	—	$	—	$	20,513	$	20,513


	Fair Value Measurement at December 31, 2021
							Total
	Level 1		Level 2		Level 3		Fair Value
Assets
Money market mutual funds		17,318	$	—	$	—	$	17,318
Debt securities:
U.S. Treasuries		5,417		—		—		5,417
Obligations of states and municipalities		—		8,850		—		8,850
Corporate bonds		—		31,425		—		31,425
Residential and commercial mortgage-backed securities		—		14,282		—		14,282
Other loan-backed and structured securities		—		7,601		—		7,601
	$	22,735	$	62,158	$	—	$	84,893


Liabilities
Contingent consideration - business combinations	$	—	$	—	$	9,617	$	9,617
Contingent consideration - earnout		—		—		13,866		13,866
Private warrant liability		—		—		15,193		15,193
	$	—	$	—	$	38,676	$	38,676


	March 31,		December 31,
	2022		2021
Software and computer equipment	$	8,257	$	7,287
Furniture, office equipment, and other		2,126		2,006
Internally developed software		14,221		13,102
Leasehold improvements		2,208		2,191
		26,812		24,586
Less: Accumulated depreciation and amortization		(18,472)		(17,920)
Property, equipment, and software, net	$	8,340	$	6,666


	Weighted
	Average	Intangible				Intangible
	Useful Life	Assets,		Accumulated		Assets,
	(in years)	gross		Amortization		Net
Customer relationships	9.0	$	56,810	$	(8,658)	$	48,152
Acquired technology	5.0		48,135		(12,619)		35,516
Trademarks and tradenames	12.0		25,389		(3,194)		22,195
Non-compete agreements	2.0		450		(320)		130
Value of business acquired	1.0		400		(394)		6
Renewal rights	6.0		9,734		(1,137)		8,597
Trademarks and tradenames	Indefinite		4,750		—		4,750
Insurance licenses	Indefinite		4,960		—		4,960
Total intangible assets		$	150,628	$	(26,322)	$	124,306


	Goodwill
Balance as of December 31, 2021		225,654
Purchase price adjustments		922
Balance as of March 31, 2022	$	226,576


					Debt
			Unaccreted		Issuance		Carrying
	Principal		Discount		Costs		Value
Convertible senior notes, due 2026	$	425,000	$	—	$	(10,228)	$	414,772
Other notes		450		(70)		—		380
	$	425,450	$	(70)	$	(10,228)	$	415,152


	Number of
	Common
	Shares Issued	Cash Received
Balances as of January 1, 2022	1,795,700	$	—
Exercised	—		—
Canceled	—		—
Balances as of March 31, 2022	1,795,700	$	—


	Three months ended
	March 31,
	2022		2021
Secondary market transaction	$	—	$	1,933
Employee earnout restricted stock		—		12,373
Employee awards		5,854		2,529
Total operating expenses	$	5,854	$	16,835


	2022
	Written		Earned
Direct premiums	$	87,123	$	84,318
Ceded premiums		(60,636)		(71,727)
Net premiums	$	26,487	$	12,591


	2022
Direct losses and LAE	$	68,221
Ceded losses and LAE		(58,973)
Net losses and LAE	$	9,248


	March 31, 2022		December 31, 2021
Unearned premium	$	142,619	$	153,710
Losses and LAE Reserve		71,196		56,752
Reinsurance recoverable		25,746		17,780
Other		178		174
Reinsurance balance due	$	239,739	$	228,416


	2022
Reserve for losses and LAE, at December 31, 2021	$	61,949
Reinsurance recoverables on losses and LAE		(56,752)
Losses and LAE reserve, net of reinsurance recoverables at December 31, 2021		5,197
Add provisions for losses and LAE occurring in:
Current year		9,868
Prior years		(620)
Net incurred losses and LAE during the current year		9,248
Deduct payments for losses and LAE occurring in:
Current year		(4,431)
Prior years		(1,602)
Net claim and LAE payments during the current year		(6,033)
Reserve for losses and LAE, net of reinsurance recoverables, at end of year		8,412
Reinsurance recoverables on losses and LAE		71,196
Losses and LAE reserve at March 31, 2022	$	79,608


	2022	2021

Stock options	4,569,743	6,199,325
Restricted stock units and awards	4,225,986	1,282,327
Public and private warrants	1,795,700	6,237,377
Earnout shares	2,050,000	4,099,999
Convertible debt⁽¹⁾	16,998,130	—


	Quarter ended
	March 31, 2021		June 30, 2021		September 30, 2021		December 31, 2021		Total
Revenue increase (decrease)	$	—	$	(3,400)	$	(2,300)	$	5,700	$	—
Cost of revenue increase (decrease)		—		3,400		2,300		(5,700)		—
Net loss impact	$	—	$	—	$	—	$	—	$	—


	Three Months Ended March 31, 2022
	Vertical Software Segment		Insurance Segment			Total
Revenue:
Software and service subscriptions	$	17,965	$	—	$	17,965
Move-related transactions (excluding insurance)		12,193		—		12,193
Post-move transactions		4,530		—		4,530
Insurance		—		27,873		27,873
Total revenue	$	34,688	$	27,873	$	62,561


	Three Months Ended March 31, 2021
	Vertical Software Segment		Insurance Segment			Total
Revenue:
Software and service subscriptions	$	10,880	$	—	$	10,880
Move-related transactions (excluding insurance)		8,961		—		8,961
Post-move transactions		5,096		—		5,096
Insurance		—		1,805		1,805
Total revenue	$	24,937	$	1,805	$	26,742


Exhibit No.		Description

31.1*		Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*		Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1**		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2**		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS*		XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH*		XBRL Taxonomy Extension Schema Document

101.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*		XBRL Taxonomy Extension Label Linkbase Document

101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document
104*	Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)


	PORCH GROUP, INC.

	By:	/s/ Martin L. Heimbigner
	Name:	Martin L. Heimbigner
	Title:	Chief Financial Officer
		(Principal Financial Officer)



	By:	/s/ Matthew Ehrlichman
	Name:	Matthew Ehrlichman
	Title:	Chief Executive Officer