Porch Group, Inc. (“Porch” or “the
Company”) (NASDAQ: PRCH), a leading vertical software
company reinventing the home services and insurance industries,
today reported financial results for the fourth quarter and full
year ended December 31, 2020.
Fourth Quarter 2020 and Recent Operational
Highlights
- Closed business combination with
PropTech Acquisition Corporation, bringing a leading vertical
software and services platform for the home to the public
market.
- Announced four strategic
acquisitions (Homeowners of America, V12, PalmTech and iRoofing)
that marked the Company’s ambitions in InsurTech and strengthened
Porch’s rapidly expanding platform for home service companies and
homeowners.
- Expanded leadership team with key appointments, including Adam
Kornick as president of Insurtech, Matthew Cullen as general
counsel and secretary, Joshua Steffan as VP and group GM,
Inspection and Real Estate, Andrew Beck as head of Contractor Tools
SaaS, Malcolm Conner leading Porch’s Home Services group, and
Manisha Patel as VP of finance.
Fourth Quarter 2020 Financial ResultsTotal
revenue for the fourth quarter of 2020 was $19.5 million, an
increase of 7% from $18.3 million in the fourth quarter of 2019.
When adjusting for past divestitures by the Company, year-over-year
growth was 34%, up from $14.5 million in the fourth quarter of 2019
pro forma. The increase in total revenue was driven by selling
software to more companies and significantly increasing both the
B2B SaaS fees and transaction revenue generated per company.
Cost of revenue as a percentage of total revenue for the fourth
quarter of 2020 was 22%.
Adjusted EBITDA loss, a non-GAAP metric, for the fourth quarter
of 2020 totaled $3.2 million (or -17% of total revenue), an
improvement from Adjusted EBITDA loss of $9.3 million (or -51% of
total revenue) in the fourth quarter of 2019, and an improvement
from Adjusted EBITDA loss of $8.1 million (or -56% of total
revenue) pro forma adjusted for past divestitures in the fourth
quarter of 2019.
As of December 31, 2020, cash, cash equivalents, and restricted
cash totaled $207.5 million.
Full Year 2020 Financial ResultsTotal revenue
for the full year 2020 increased 28% to $73.2 million from $56.0
million in 2019 pro forma adjusted for past divestitures. 2019
as-reported total revenue included $77.6 million in revenue
contribution from previously divested businesses. The $73.2 million
in total revenue for 2020 exceeded the Company’s guidance of $72
million.
Cost of revenue as a percentage of total revenue for the full
year 2020 was 24%, continuing to demonstrate the high margins of
Porch’s vertical software platform.
Adjusted EBITDA loss, a non-GAAP metric, for the full year 2020
totaled $17.5 million (or -24% of total revenue), an improvement
from Adjusted EBITDA loss of $32.0 million (or -57% of total
revenue) in 2019 pro forma adjusted for past divestitures.
Fourth Quarter 2020 Key Performance Indicators
(KPIs)Software and services to companies:
- Average number of companies increased to 11,150 from 10,800 in
Q3 2020
- Average revenue per company per month increased 32% to $583
from $450 in Q4 2019
Monetized services for consumers:
- Number of monetized services was approximately 170,000 in Q4
2020, with Porch monetizing insurance on a per sale basis with its
in-house insurance agency. This was similar volume of total
monetized services in Q4 2019 when Porch was previously monetizing
insurance on a per quote basis.
- Average revenue per monetized service increased 36% to $103 in
Q4 2020 from $78 in Q4 2019
Management Commentary“The fourth quarter marked
a strong finish to a successful and transformative year for Porch,”
said Matt Ehrlichman, founder, chairman and CEO. “We delivered
strong results for the full year 2020, highlighted by 34% revenue
growth when adjusting for past divestitures and a 2x improvement in
Adjusted EBITDA margin. Achieving these results in the face of a
pandemic and a transformational merger is a testament to our team,
our partners, our customers, and the resilience of our operating
model.
“Overall, our vertical software platform with SaaS and
transaction monetization is working extremely well, as evidenced by
approximately 85% year-over-year revenue growth rate expected in Q1
2021. We continue to have success generating more revenue per
monetized service as we focus on higher value services like
insurance. After we close the Homeowners of America acquisition,
which is expected to occur in Q2, we plan to expand its footprint
beyond the six states it operates in today, which we expect to have
a significantly improve our long-term growth rates and value per
monetized service.
“We entered 2021 with accelerating momentum, deep competitive
moats, a massive $320 billion total addressable market, and a
multiple pronged growth strategy, which we expect will enable us to
grow rapidly for a long period of time. We believe this is only the
beginning of our journey to build a truly great and enduring
company.”
Full Year 2021 Financial OutlookPorch provides
guidance based on current market conditions and expectations. The
Company emphasizes that its guidance is subject to various
important cautionary factors, including those referenced in the
section entitled "Forward-Looking Statements" below. These factors
include ongoing risks and uncertainties associated with the
COVID-19 pandemic.
For the first quarter of 2021, the Company forecasted total
revenue to be approximately $23 million, representing approximately
85% growth compared to total revenue in the first quarter 2020 pro
forma adjusted for past divestitures.
For the full year of 2021, Porch raised its 2021 revenue outlook
from $170 million to $175 million, representing 140% year-over-year
revenue growth. Porch continues to expect approximately 25% of 2021
total revenue to be from B2B SaaS fees, approximately 65% of
revenue from B2B2C move-related services which includes recurring
insurance revenue, and approximately 10% of revenues from post-move
services. Porch reiterated its 2021 guidance for contribution
margin, defined as total revenue less all variable expense, of 40%,
an improvement from 31% and 19% in 2020 and 2019 respectively, pro
forma adjusted for past divestitures. The Company expects Adjusted
EBITDA margin of -10% to -16% for the full year of 2021, which is
an improvement from -24% in 2020 and -57% in 2019 pro forma
adjusted for past divestitures.
Conference
Call Porch
management will host a conference call today (March 30, 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 Mobile one-tap:US: +16699006833,,83672374549# or
+14086380968,,83672374549# Or Telephone: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 +1 646 876 9923 or +1 301 715
8592 or +1 312 626 6799 Webinar ID: 836 7237 4549 Passcode:
031990International numbers available:
https://gatewayir.zoom.us/u/kbSf25i2nO
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 Investor Relations section of Porch’s corporate
website.
About Porch
GroupSeattle-based Porch
Group, the vertical software platform for the
home, provides software and services to more than 11,150 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.
2020 Financial Information; Non-GAAP Financial
MeasuresSome 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) plus interest expense, net, income tax expense (benefit),
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 divestitures 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 is not providing reconciliations of expected Adjusted
EBITDA, 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
unbailable 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 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.
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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4 2020 |
|
Q4 2019 |
|
FY 2020 |
|
FY 2019 |
Net loss |
$ |
(18,060 |
) |
$ |
(20,480 |
) |
|
$ |
(51,609 |
) |
|
$ |
(103,319 |
) |
Interest expense |
|
5,311 |
|
|
6,851 |
|
|
|
14,734 |
|
|
|
7,134 |
|
Income tax (benefit) expense |
|
(1,691 |
) |
|
82 |
|
|
|
(1,691 |
) |
|
|
96 |
|
Depreciation and amortization |
|
1,623 |
|
|
1,992 |
|
|
|
6,644 |
|
|
|
7,377 |
|
Other expense, net |
|
(4,670 |
) |
|
483 |
|
|
|
(2,791 |
) |
|
|
7,966 |
|
Non-cash long-lived asset impairment charge |
|
71 |
|
|
1,028 |
|
|
|
611 |
|
|
|
1,534 |
|
Non-cash stock-based compensation |
|
9,864 |
|
|
359 |
|
|
|
11,103 |
|
|
|
34,855 |
|
Revaluation of contingent consideration |
|
200 |
|
|
(300 |
) |
|
|
1,700 |
|
|
|
(300 |
) |
Acquisition and related (income) expense |
|
805 |
|
|
697 |
|
|
|
1,862 |
|
|
|
7,821 |
|
Gain on divestiture of a business |
|
— |
|
|
— |
|
|
|
(1,442 |
) |
|
|
|
|
SPAC transaction bonus |
|
3,350 |
|
|
— |
|
|
|
3,350 |
|
|
|
— |
|
Adjusted EBITDA (loss) |
$ |
(3,197 |
) |
$ |
(9,288 |
) |
|
$ |
(17,529 |
) |
|
$ |
(36,836 |
) |
Adjusted EBITDA (loss) from Divested business |
|
— |
|
|
(1,176 |
) |
|
|
— |
|
|
|
(4,807 |
) |
Proforma Adjusted EBITDA (loss) |
$ |
(3,197 |
) |
|
(8,112 |
) |
|
$ |
(17,529 |
) |
|
|
(32,029 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FY 2020 |
|
FY 2019 |
Revenue |
$ |
73,216 |
|
|
$ |
77,595 |
|
Cost of
Revenue |
|
17,562 |
|
|
|
21,500 |
|
Revenue- Cost of Revenue |
|
55,654 |
|
|
|
56,095 |
|
Variable
Selling & Marketing and Advertising |
|
32,661 |
|
|
|
43,942 |
|
Contribution Margin |
$ |
22,993 |
|
|
$ |
12,153 |
|
Contribution Margin % of revenue |
|
31 |
% |
|
|
16 |
% |
Proforma Contribution Margin |
|
— |
|
|
|
19 |
% |
Investor Relations Contact:Gateway Investor
RelationsCody Slach, Matt Glover(949)
574-3860PRCH@gatewayir.com
Porch Group, Inc.
Condensed Consolidated Statements of
Operations(In thousands, except share and per
share data)
|
|
|
|
|
|
|
|
|
2020 |
|
|
2019 |
|
Revenue |
|
$ |
73,216 |
|
|
$ |
77,595 |
|
Operating expenses(1): |
|
|
|
|
|
|
Cost of revenue |
|
|
17,562 |
|
|
|
21,500 |
|
Selling and marketing |
|
|
41,768 |
|
|
|
56,220 |
|
Product and technology |
|
|
28,298 |
|
|
|
30,992 |
|
General and administrative |
|
|
28,387 |
|
|
|
52,011 |
|
(Gain) loss on divestiture of businesses |
|
|
(1,442 |
) |
|
|
4,994 |
|
Total operating expenses |
|
|
114,573 |
|
|
|
165,717 |
|
Operating loss |
|
|
(41,357 |
) |
|
|
(88,122 |
) |
Other income (expense): |
|
|
|
|
|
|
Interest expense |
|
|
(14,734 |
) |
|
|
(7,134 |
) |
Other income (expense), net |
|
|
2,791 |
|
|
|
(7,967 |
) |
Total other income
(expense) |
|
|
(11,943 |
) |
|
|
(15,101 |
) |
Loss before income taxes |
|
|
(53,300 |
) |
|
|
(103,223 |
) |
Income tax (benefit)
expense |
|
|
(1,691 |
) |
|
|
96 |
|
Net loss |
|
$ |
(51,609 |
) |
|
$ |
(103,319 |
) |
Induced conversion of
preferred stock |
|
|
(17,284 |
) |
|
|
— |
|
Net loss attributable to
common stockholders |
|
$ |
(68,893 |
) |
|
$ |
(103,319 |
) |
|
|
|
|
|
|
|
Net loss attributable per
share to common stockholders: |
|
|
|
|
|
|
Basic |
|
$ |
(1.90 |
) |
|
$ |
(3.31 |
) |
Diluted |
|
$ |
(1.90 |
) |
|
$ |
(3.31 |
) |
|
|
|
|
|
|
|
Weighted-average shares used
in computing net loss attributable per share to common
stockholders: |
|
|
|
|
|
|
Basic |
|
|
36,344,234 |
|
|
|
31,170,351 |
|
Diluted |
|
|
36,344,234 |
|
|
|
31,170,351 |
|
Porch Group,
Inc.Condensed Consolidated Balance
Sheets(In thousands)
|
|
|
|
|
|
|
|
|
2020 |
|
|
2019 |
|
Assets |
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
196,046 |
|
|
$ |
4,179 |
|
Accounts receivable, net |
|
|
4,661 |
|
|
|
4,710 |
|
Prepaid expenses and other current assets |
|
|
3,891 |
|
|
|
1,285 |
|
Restricted cash |
|
|
11,407 |
|
|
|
— |
|
Total current assets |
|
|
216,005 |
|
|
|
10,174 |
|
Property, equipment, and
software, net |
|
|
4,593 |
|
|
|
6,658 |
|
Goodwill |
|
|
28,289 |
|
|
|
18,274 |
|
Intangible assets, net |
|
|
15,961 |
|
|
|
9,832 |
|
Restricted cash,
non-current |
|
|
— |
|
|
|
3,000 |
|
Long-term insurance
commissions receivable |
|
|
3,365 |
|
|
|
— |
|
Other assets |
|
|
378 |
|
|
|
530 |
|
Total assets |
|
$ |
268,591 |
|
|
$ |
48,468 |
|
|
|
|
|
|
|
|
Liabilities and
Stockholders’ Equity (Deficit) |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Accounts payable |
|
$ |
8,903 |
|
|
$ |
4,806 |
|
Accrued expenses and other current liabilities |
|
|
9,991 |
|
|
|
17,071 |
|
Accrued acquisition compensation |
|
|
— |
|
|
|
8,624 |
|
Deferred revenue |
|
|
4,870 |
|
|
|
3,333 |
|
Refundable customer deposit |
|
|
2,664 |
|
|
|
3,167 |
|
Current portion of long-term debt (includes $0 and $11,659 at fair
value, respectively) |
|
|
4,746 |
|
|
|
20,461 |
|
Total current liabilities |
|
|
31,174 |
|
|
|
57,462 |
|
Long-term debt |
|
|
43,237 |
|
|
|
40,659 |
|
Refundable customer deposit,
non-current |
|
|
529 |
|
|
|
3,107 |
|
Earnout liability, at fair
value |
|
|
50,442 |
|
|
|
— |
|
Other liabilities (includes
$3,549 and $6,784 at fair value, respectively) |
|
|
3,798 |
|
|
|
7,219 |
|
Total liabilities |
|
|
129,180 |
|
|
|
108,447 |
|
Commitments and contingencies
(Note 12) |
|
|
|
|
|
|
Stockholders’ equity
(deficit) |
|
|
|
|
|
|
Common stock, $0.0001 par
value: |
|
|
8 |
|
|
|
3 |
|
Authorized shares – 400,000,000 and 52,575,160 |
|
|
|
|
|
|
Issued and outstanding shares – 81,669,151 and 34,197,822 |
|
|
|
|
|
|
Additional paid-in
capital |
|
|
454,486 |
|
|
|
203,492 |
|
Accumulated deficit |
|
|
(315,083 |
) |
|
|
(263,474 |
) |
Total stockholders’ equity (deficit) |
|
|
139,411 |
|
|
|
(59,979 |
) |
Total liabilities and stockholders’ equity (deficit) |
|
$ |
268,591 |
|
|
$ |
48,468 |
|
Porch Group,
Inc.Consolidated Statements of Cash Flows
(In thousands)
|
|
|
|
|
|
|
|
|
2020 |
|
|
2019 |
|
Cash flows from
operating activities: |
|
|
|
|
|
|
Net loss |
|
$ |
(51,609 |
) |
|
$ |
(103,319 |
) |
Adjustments to reconcile net loss to net cash used in operating
activities |
|
|
|
|
|
|
Depreciation and amortization |
|
|
6,644 |
|
|
|
7,377 |
|
Loss on sale and impairment of long-lived assets |
|
|
895 |
|
|
|
1,088 |
|
Loss (gain) on extinguishment of debt |
|
|
(5,748 |
) |
|
|
483 |
|
Loss on remeasurement of debt |
|
|
895 |
|
|
|
6,159 |
|
Loss (gain) on divestiture of businesses |
|
|
(1,442 |
) |
|
|
4,994 |
|
Loss on remeasurement of warrants |
|
|
2,584 |
|
|
|
2,090 |
|
Loss (gain) on remeasurement of contingent consideration |
|
|
1,700 |
|
|
|
(300 |
) |
Stock-based compensation |
|
|
11,409 |
|
|
|
35,972 |
|
Warrants issued for services |
|
|
— |
|
|
|
315 |
|
Interest expense (non-cash) |
|
|
7,488 |
|
|
|
2,369 |
|
Deferred taxes |
|
|
(30 |
) |
|
|
29 |
|
Other |
|
|
(200 |
) |
|
|
236 |
|
Change in operating assets and liabilities, net of acquisitions and
divestitures |
|
|
|
|
|
|
Accounts receivable |
|
|
16 |
|
|
|
(1,840 |
) |
Prepaid expenses and other current assets |
|
|
(2,398 |
) |
|
|
603 |
|
Long-term insurance commissions receivable |
|
|
(3,365 |
) |
|
|
— |
|
Accounts payable |
|
|
3,793 |
|
|
|
2,361 |
|
Accrued expenses and other current liabilities |
|
|
(15,860 |
) |
|
|
7,704 |
|
Deferred revenue |
|
|
1,868 |
|
|
|
(803 |
) |
Refundable customer deposits |
|
|
(3,521 |
) |
|
|
6,122 |
|
Other |
|
|
(1,788 |
) |
|
|
(978 |
) |
Net cash used in operating activities |
|
|
(48,669 |
) |
|
|
(29,335 |
) |
Cash flows from
investing activities: |
|
|
|
|
|
|
Purchases of property and equipment |
|
|
(279 |
) |
|
|
(477 |
) |
Capitalized internal use software development costs |
|
|
(2,601 |
) |
|
|
(4,096 |
) |
Divestiture of businesses, net of cash disposed |
|
|
— |
|
|
|
(750 |
) |
Acquisitions, net of cash acquired |
|
|
(7,791 |
) |
|
|
116 |
|
Net cash used in investing activities |
|
|
(10,671 |
) |
|
|
(5,208 |
) |
Cash flows from
financing activities: |
|
|
|
|
|
|
Proceeds from recapitalization and PIPE financing |
|
|
305,133 |
|
|
|
— |
|
Distribution to stockholders |
|
|
(30,000 |
) |
|
|
— |
|
Transaction costs - recapitalization |
|
|
(5,652 |
) |
|
|
— |
|
Proceeds from debt issuance, net of fees |
|
|
66,190 |
|
|
|
31,300 |
|
Repayments of principal and related fees |
|
|
(81,640 |
) |
|
|
(202 |
) |
Proceeds from issuance of redeemable convertible preferred stock,
net of fees |
|
|
4,714 |
|
|
|
3,274 |
|
Repurchase of stock |
|
|
(42 |
) |
|
|
— |
|
Proceeds from exercises of stock options and warrants |
|
|
911 |
|
|
|
114 |
|
Net cash provided by financing activities |
|
|
259,614 |
|
|
|
34,486 |
|
Change in cash, cash
equivalents, and restricted cash |
|
$ |
200,274 |
|
|
$ |
(57 |
) |
Cash, cash
equivalents, and restricted cash, beginning of period |
|
$ |
7,179 |
|
|
$ |
7,236 |
|
Cash, cash
equivalents, and restricted cash end of period |
|
$ |
207,453 |
|
|
$ |
7,179 |
|
Porch (NASDAQ:PRCHW)
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Porch (NASDAQ:PRCHW)
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Von Jul 2023 bis Jul 2024