Porch Group, Inc 10-Q for FY2021 Q1

Porch Group, Inc. (PRCH)

10-Q 2021-05-20 For: 2021-03-31

Added on April 06, 2026

About this 10-Q

Porch Group, Inc filed this 10-Q on May 20, 2021, covering the quarter ended March 31, 2021 (FY2021 Q1).

Headline figures

Quarter ended March 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $26.74M; up 77.4% from $15.07M a year earlier
Net loss: $65.1M; compared with a net loss of $18.37M a year earlier
Diluted EPS: -$0.76; compared with -$0.53 a year earlier


	Contract Assets
Balance at December 31, 2020	$	3,529
Estimated lifetime value of insurance policies sold by carriers		1,805
Cash receipts		(435)
Balance at March 31, 2021	$	4,899


	Deferred
	Revenue
Balance at December 31, 2020	$	5,208
Revenue recognized		(1,769)
Additional amounts deferred		407
Impact of acquisitions		500
Balance at March 31, 2021	$	4,346


Issued and outstanding common shares		87,355,733
Earnout common shares (Note 1 and Note 8)		4,099,999
Total common shares issued and outstanding		91,455,732
Common shares reserved for future issuance:
Public warrants		537,377
Private warrants		5,700,000
Common stock options outstanding - 2012 Equity Plan		6,199,325
Restricted stock units (Note 8)		1,282,327
2020 Equity Plan pool reserved for future issuance (Note 8)		11,005,115
Total shares of common stock outstanding and reserved for future issuance		116,179,876

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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, 2021 and December 31, 2020	3

	Unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2021 and 2020	4

	Unaudited Condensed Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2021 and 2020	5

	Unaudited Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the three months ended March 31, 2021 and 2020	6

	Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2020	7

	Notes to Unaudited Condensed Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	35

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	47

Item 4.	Controls and Procedures	47

Part II.	Other Information	49

Item 1.	Legal Proceedings	49

Item 1A.	Risk Factors	49

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	50

Item 3.	Defaults Upon Senior Securities	50

Item 4.	Mine Safety Disclosures	50

Item 5.	Other Information	50

Item 6.	Exhibits	50

Exhibit Index		50

Signatures		52


	March 31, 2021		December 31, 2020
Assets
Current assets
Cash and cash equivalents	$	222,948	$	196,046
Accounts receivable, net		9,629		4,268
Prepaid expenses and other current assets		7,869		4,080
Restricted cash		10,435		11,407
Total current assets		250,881		215,801
Property, equipment, and software, net		5,328		4,593
Goodwill		50,120		28,289
Intangible assets, net		22,715		15,961
Long-term insurance commissions receivable		4,748		3,365
Other assets		444		378
Total assets	$	334,236	$	268,387

Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	6,384	$	9,203
Accrued expenses and other current liabilities		15,268		9,905
Deferred revenue		4,346		5,208
Refundable customer deposit		2,026		2,664
Current portion of long-term debt		7,480		4,746
Total current liabilities		35,504		31,726
Long-term debt		42,624		43,237
Refundable customer deposit, non-current		396		529
Earnout liability, at fair value		43,193		50,238
Private warrant liability, at fair value		47,444		31,534
Other liabilities (includes $2,869 and $3,549 at fair value, respectively)		3,068		3,798
Total liabilities		172,229		161,062
Commitments and contingencies (Note 10)
Stockholders’ equity
Common stock, $0.0001 par value:		9		8
Authorized shares – 400,000,000 and 400,000,000
Issued and outstanding shares – 91,455,732 and 81,669,151
Additional paid-in capital		544,605		424,823
Accumulated deficit		(382,607)		(317,506)
Total stockholders’ equity		162,007		107,325
Total liabilities and stockholders’ equity	$	334,236	$	268,387


	Three Months Ended
	March 31,
	2021		2020
Revenue	$	26,742	$	15,074
Operating expenses⁽¹⁾:
Cost of revenue		5,930		4,099
Selling and marketing		14,638		12,853
Product and technology		11,789		7,352
General and administrative		24,016		4,156
Total operating expenses		56,373		28,460
Operating loss		(29,631)		(13,386)
Other income (expense):
Interest expense		(1,223)		(3,086)
Change in fair value of earnout liability		(18,770)		—
Change in fair value of private warrant liability		(15,910)		—
Other income (expense), net		83		(1,874)
Total other income (expense)		(35,820)		(4,960)
Loss before income taxes		(65,451)		(18,346)
Income tax (benefit) expense		(350)		21
Net loss	$	(65,101)	$	(18,367)

Net loss attributable per share to common stockholders:
Basic	$	(0.76)	$	(0.53)
Diluted	$	(0.76)	$	(0.53)

Weighted-average shares used in computing net loss attributable per share to common stockholders:
Basic		85,331,575		34,965,300
Diluted		85,331,575		34,965,300


	`				Additional						Total
		Common Stock			Paid-in		Accumulated		Accumulated Other		Stockholders’
		Shares	Amount		Capital		Deficit		Comprehensive Income		Equity (Deficit)
Balances as of December 31, 2019⁽¹⁾		34,197,822	$	3	$	203,492	$	(263,474)	$	—	$	(59,979)
Net loss		—		—		—		(18,367)		—		(18,367)
Other comprehensive income		—		—		—		—		3,856		3,856
Stock-based compensation		—		—		672		—		—		672
Issuance of Series C redeemable convertible preferred stock⁽¹⁾		1,430,166		—		4,714		—		—		4,714
Conversion of convertible notes to Series C redeemable convertible preferred stock⁽¹⁾		423,088		—		1,436		—		—		1,436
Vesting of restricted stock awards issued for acquisitions		1,005,068		—		—		—		—		—
Issuance of common stock warrants		—		—		44		—		—		44
Exercise of stock options		17,900		—		1		—		—		1
Balances as of March 31, 2020		37,074,044	$	3	$	210,359	$	(281,841)	$	3,856	$	(67,623)

Balances as of December 31, 2020		81,669,151	$	8	$	424,823	$	(317,506)	$	—	$	107,325
Net loss		—		—		—		(65,101)		—		(65,101)
Stock-based compensation		—		—		4,462		—		—		4,462
Stock-based compensation - earnout		—		—		12,373		—		—		12,373
Issuance of common stock for acquisitions		90,000		—		1,169		—		—		1,169
Reclassification of earnout liability upon vesting		—		—		25,815		—		—		25,815
Vesting of restricted stock units		2,078,102		—		—		—		—		—
Exercise of stock warrants		8,087,623		1		93,007		—		—		93,008
Exercise of stock options		593,106		—		355		—		—		355
Income tax withholdings		(1,062,250)		—		(16,997)		—		—		(16,997)
Transaction costs		—		—		(402)		—		—		(402)
Balances as of March 31, 2021		91,455,732	$	9	$	544,605	$	(382,607)	$	—	$	162,007


	2021		2020
Loss on remeasurement of debt (Note 3)		—		(454)
Loss on remeasurement of legacy preferred stock warrant liability		—		(1,079)
Loss on extinguishment of debt, net		—		(247)
Other, net		83		(94)
	$	83	$	(1,874)


	Contract
	Liabilities
Balance at December 31, 2020	$	3,193
Additions to contract liabilities		—
Additions to contract liabilities – significant financing component interest		66
Contract liabilities transferred to revenue		(837)
Balance at March 31, 2021	$	2,422


	Fair Value Measurement at March 31, 2021
							Total
	Level 1		Level 2		Level 3		Fair Value
Contingent consideration - business combinations	$	—	$	—	$	2,869	$	2,869
Contingent consideration - earnout		—		—		43,193		43,193
Private warrant liability		—		—		47,444		47,444
	$	—	$	—	$	93,506	$	93,506


	Fair Value Measurement at December 31, 2020
							Total
	Level 1		Level 2		Level 3		Fair Value
Contingent consideration - business combinations	$	—	$	—	$	3,549	$	3,549
Contingent consideration - earnout		—		—		50,238		50,238
Private warrant liability		—		—		31,534		31,534
	$	—	$	—	$	85,321	$	85,321


			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


	Redeemable				Contingent
	Convertible				Consideration -
	Preferred Stock				Business
	Warrants		FVO Notes		Combinations
Fair value as of January 1, 2020	$	6,684	$	11,659	$	100
Additions		—		—		—
Settlements		—		—		—
Change in fair value, loss (gain) included in net loss⁽¹⁾		1,214		454		(80)
Change in fair value, (gain) included in other comprehensive income		—		(3,856)		—
Fair value as of March 31, 2020	$	7,898	$	8,257	$	20


	March 31,		December 31,
	2021		2020
Software and computer equipment	$	1,544	$	1,381
Furniture, office equipment, and other		1,538		567
Internally developed software		11,369		10,741
Leasehold improvements		1,112		1,112
		15,563		13,801
Less: Accumulated depreciation and amortization		(10,235)		(9,208)
Property, equipment, and software, net	$	5,328	$	4,593


	Weighted
	Average	Intangible				Intangible
	Useful Life	Assets,		Accumulated		Assets,
	(in years)	gross		Amortization		Net
Customer relationships	8.0	$	10,790	$	(2,593)	$	8,197
Acquired technology	6.0		16,295		(6,211)		10,084
Trademarks and tradenames	11.0		5,263		(1,052)		4,211
Non-compete agreements	2.0		280		(57)		223
Total intangible assets		$	32,628	$	(9,913)	$	22,715


	Goodwill
Balance as of December 31, 2020	$	28,289
Acquisitions		21,831
Balance as of March 31, 2021	$	50,120


					Debt
			Unaccreted		Issuance		Carrying
	Principal		Discount		Costs		Value
1.0% promissory notes, due 2022	$	10,343	$	—	$	—	$	10,343
8.55% term loan, due 2024		42,145		(2,867)		—		39,278
Other notes		600		(117)		—		483
	$	53,088	$	(2,984)	$	—	$	50,104


	Weighted Average Useful Life (in years)	January 12, 2021 Acquisition		Other Acquisitions		Total
Purchase consideration:
Cash		$	20,169	$	4,000	$	24,169
Issuance of common stock			—		1,169		1,169
Contingent consideration			1,410		327		1,737
Total purchase consideration:		$	21,579	$	5,496	$	27,075
Assets:
Cash and cash equivalents		$	1,035	$	252	$	1,287
Current assets			4,939		413		5,352
Property and equipment			996		—		996
Intangible assets:
Customer relationships	9.0		1,650		700		2,350
Acquired technology	4.0		3,525		600		4,125
Trademarks and tradenames	14.0		1,225		350		1,575
Non-competition agreements	2.0		40		15		55
Goodwill			18,262		3,569		21,831
Total assets acquired			31,672		5,899		37,571
Current liabilities			(8,067)		(22)		(8,089)
Long term liabilities			(2,026)		—		(2,026)
Deferred tax liabilities, net			—		(381)		(381)
Net assets acquired		$	21,579	$	5,496	$	27,075


	2021	2020
Stock options	6,199,325	6,918,406
Restricted stock units and awards	1,282,327	96,550
Legacy Porch warrants	—	3,134,068
Public and private warrants	6,237,377	—
Earnout shares	4,099,999	—
Convertible debt	—	1,034,760


	2018		2018		2018		2019		2019		2019		2019		2020		2020		2020		2020		2021
	Q2		Q3		Q4		Q1		Q2		Q3		Q4		Q1		Q2		Q3		Q4		Q1
Average Companies in Quarter		8,520		9,142		9,627		10,199		10,470		10,699		10,972		10,903		10,523		10,792		11,157		13,995
Average Revenue per Account per Month in Quarter	$	369	$	344	$	325	$	305	$	468	$	552	$	450	$	484	$	556	$	664	$	556	$	637


	2021		2020
Loss on remeasurement of debt		—		454
Loss on remeasurement of legacy preferred stock warrant liability		—		1,079
Loss on extinguishment of debt, net		—		247
Other, net		(83)		94
	$	(83)	$	1,874


	2021		2020
Acquisition compensation – cash	$	—	$	14
Acquisition compensation – stock		112		302
Bank fees		4		—
Bonus expense		—		22
Professional fees – accounting		59		—
Professional fees – legal		665		33
	$	840	$	371


Exhibit No.	Description

2.1*	Agreement and Plan of Merger, dated as of January 13, 2021, by and among Homeowners of America Holding Corporation, Porch Group, Inc., HPAC, Inc. and HOA Securityholder Representative, LLC, solely in its capacity as the Securityholder Representative (incorporated by reference to Exhibit 2.1 of the Company’s Form 8-K (File No. 001-39142), filed with the SEC on January 14, 2021).
2.2*	Membership Interest Purchase Agreement, dated as of January 12, 2021, by and among Porch.com, Inc., Datamentors Intermediate, LLC and Datamentors, LLC (incorporated by reference to Exhibit 2.2 of the Company’s Form 8-K (File No. 001-39142), filed with the SEC on January 14, 2021).
10.1	Second Amendment to Loan and Security Agreement, dated as of January 13, 2021, by and among Porch.com, Inc., the other borrowers party thereto, Porch Group, Inc. and the other guarantors party thereto, the lenders party thereto and Runway Growth Credit Fund, Inc., as administrative agent and collateral agent for such lenders (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K (File No. 001-39142), filed with the SEC on January 14, 2021).
10.2**†	Form of Restricted Stock Award Agreement under Porch Group, Inc. 2020 Stock Incentive Plan.
10.3**†	Form of Stock Option Agreement under Porch Group, Inc. 2020 Stock Incentive Plan.
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)