- Filed Annual Report on Form 10-K on March 16, 2022 -
- Reports $192.4 Million of Full Year 2021 Revenue, up 166% Year-Over-Year -
- Reiterates 2022 Guidance Provided on March 1, 2022 -
SEATTLE, March 16, 2022 (GLOBE NEWSWIRE) -- Porch Group, Inc. (“Porch” or “the Company”) (NASDAQ: PRCH), a leading vertical software company reinventing the home services and insurance industries, today filed its Annual Report on Form 10-K and reported audited financial results for the fourth quarter and full year ended December 31, 2021.
On March 1, 2022, the Company announced unaudited results for the fourth quarter and full year ended December 31, 2021. This press release updates and supersedes the press release issued on March 1, 2022 to reflect two adjustments to the Company’s financial results as a result of the completion of the 2021 audit.
Adjustments from preliminary to final results:
| ($ thousands) | Fourth quarter 2021 | Full year 2021 | |||||||||
| Preliminary | Change | Final | Preliminary | Change | Final | ||||||
| Revenue | 51,581 | - | 51,581 | 192,433 | - | 192,433 | |||||
| Operating loss | (20,846) | 2,473 | (18,373) | (85,838) | 2,473 | (83,365) | |||||
| GAAP net (loss) | (22,582) | 2,473 | (20,109) | (109,079) | 2,473 | (106,606) | |||||
| Adj. EBITDA (loss) | (7,848) | 2,473 | (5,375) | (26,493) | 2,473 | (24,020) | |||||
Operating expenses were reduced by approximately $2.5 million at our insurance carrier subsidiary related to the final determination of the amortization of deferred policy acquisition costs, and approximately $3.4 million of expense at our insurance carrier subsidiary was reclassified from general & administrative to cost of revenue. Aside from these two adjustments and related effects, there were no other changes to the 2021 information included in the March 1, 2022 press release. Please see tables included in this release for detailed comparison of unaudited to final audited results.
CEO Summary
“Two weeks ago, we announced our unaudited fourth quarter and full year 2021 earnings as well as provided guidance for 2022. I am pleased to now report our audited results for 2021,” said Matt Ehrlichman, Founder, Chairman and CEO. “We are excited about what is ahead and reiterate our guidance provided on March 1, 2022.”
Fourth Quarter 2021 Financial Results
- Includes impact of reduction in operating expenses related to final determination of amortization of deferred policy acquisition costs.
- Includes a one-time change in revenue recognition of Porch’s Homeowners of America (“HOA”) insurance business, adjusting approximately $7.5M of 2021 claims fees from revenue to a contra claims expense. This adjustment reflected the full period Porch owned HOA in 2021 and was applied in total to Q4 2021 results.
- Total revenue for the fourth quarter of 2021 was $51.6 million, an increase of 177% from $18.6 million in the fourth quarter of 2020.
- Revenue less cost of revenue for the fourth quarter 2021 was $37.4 million or 73% of total revenue, compared to $14.3 million or 77% of total revenue for the fourth quarter of 2020.
- Contribution margin was $19.0 million or 37% of total revenue, compared to $5.4 million or 29% of total revenue for the fourth quarter of 2020.
- GAAP net loss for the fourth quarter of 2021 totaled $20.1 million, compared to a GAAP net loss of $20.5 million for the fourth quarter of 2020.
- Adjusted EBITDA loss for the fourth quarter of 2021 totaled $5.4 million or -10% of total revenue, compared to an Adjusted EBITDA loss of $4.0 million or -22% of total revenue for the fourth quarter of 2020.
Segment Results for the Fourth Quarter 2021
- Vertical Software revenue for the quarter was $35.5 million, revenue less cost of revenue was $24.1 million or 68% of Vertical Software revenue, contribution margin was $14.0 million or 39% of Vertical Software revenue and Adjusted EBITDA was $3.2 million or 9% of Vertical Software revenue.
- Insurance revenue for the quarter was $16.1 million, revenue less cost of revenue was $13.3 million or 83% of Insurance revenue, contribution margin was $5.3 million or 33% of Insurance revenue and Adjusted EBITDA was $5.9 million or 37% of Insurance revenue.
- Includes impact of reduction in operating expenses related to final determination of amortization of deferred policy acquisition costs.
- Reflects the full year 2021 impact of HOA’s revenue recognition change.
- Insurance gross written premium for the quarter was $101 million with 304 thousand policyholders.
Fourth Quarter 2021 and Recent Operational Highlights
- Announced the acquisition of Floify, a leading SaaS provider for mortgage companies and loan officers.
- Homeowners of America, a Porch Group Subsidiary, continued its nationwide expansion plan, now operating in 15 states.
- Launched nationwide inspection pop-up conferences for home inspectors on its Inspection Fuel Tour.
- Announced the addition of a new Pay-At-Close module to its suite of software solutions provided to home inspection companies through its inspection software business, Inspection Support Network.
Fourth Quarter 2021 Key Performance Indicators (KPIs)
Software and services to companies:
- Average number of companies increased to 24,603 from 11,157 in Q4 2020.
- Average revenue per company per month increased 26% to $699 from $556 in Q4 2020.
Monetized services for consumers:
- Number of monetized services was 260,352 in Q4 2021, up from 169,949 in Q4 2020.
- Average revenue per monetized service was $132, a 35% increase from $98 in Q4 2020.
Full Year 2021 Audited Financial Results
- Includes impact of reduction in operating expenses related to final determination of amortization of deferred policy acquisition costs.
- Total revenue for the full year 2021 was $192.4 million, an increase of 166% from total revenue of $72.3 million for the full year 2020.
- Revenue less cost of revenue for the full year 2021 was $133.7 million or 69% of total revenue for the full year 2021, compared to $54.7 million or 76% of total revenue for the full year 2020.
- Contribution margin was $75.4 million for the full year 2021 or 39% of total revenue for the full year 2021, compared to $22.4 million or 31% of total revenue for the full year 2020.
- GAAP net loss for the full year of 2021 totaled $106.6 million, compared to a GAAP net loss of $54.0 million for the full year 2020.
- Adjusted EBITDA loss, a non-GAAP metric, for the full year 2021 totaled $24.0 or -12.5% of total revenue, an improvement on a percentage basis from the Adjusted EBITDA loss of $18.3 million or -25% of total revenue for the full year 2020.
Segment Results for the Full Year 2021
- Vertical Software revenue for the full year 2021 was $137.2 million, revenue less cost of revenue was $96.6 million or 70% of full year Vertical Software revenue, contribution margin was $57.4 or 42% of Vertical Software revenue, and Adjusted EBITDA was $20.7 million or 15% of Vertical Software revenue.
- Insurance revenue was $55.3 million, revenue less cost of revenue $37.1 million or 67% of Insurance revenue, contribution margin was $20.4 million or 37% of Insurance revenue and Adjusted EBITDA was $9.0 million or 16% of Insurance revenue.
- Includes impact of reduction in operating expenses related to final determination of amortization of deferred policy acquisition costs.
- Insurance gross written premium for the year was $307 million.
Acquisition of Residential Warranty Services
On February 28th Porch signed a definitive agreement for the acquisition of certain businesses relating to home warranty products and inspector-centric software and services from Residential Warranty Services, Inc. (“RWS”). Total consideration is $33 million including $29 million of cash, $4 million of Porch stock and additional contingent consideration tied to the performance of a recently launched business line. Of the total consideration, $4.95 million was paid at signing. Full year 2022 revenue impact to Porch is expected to be approximately $8 million, with approximately $10 million of expected annualized revenue. The acquisition is targeted to close in early Q2 2022.
Full Year 2022 Financial Outlook
Porch provides guidance based on current market conditions and expectations.
| 2022E Guidance1 |
| Gross Written Premium ~$600M (95% year-over-year growth) |
| Revenue ~$320M (66% year-over-year growth) |
| Revenue Less Cost of Revenue ~$210M (53% year-over-year growth) |
| Adj. EBITDA ~-9% and >-$26.5M (>400 basis points of Adj EBITDA margin improvement) |
1 Guidance includes impact of announced but not yet closed acquisitions of CSE and RWS
Porch is not providing reconciliations of expected Adjusted EBITDA margin or contribution margin for future periods to the most directly comparable measures prepared in accordance with GAAP because Porch is unable to provide these reconciliations without unreasonable effort because certain information necessary to calculate such measures on a GAAP basis is unavailable or dependent on the timing of future events outside of Porch’s control.
In preparing the Company’s financial statements as of and for the year ended December 31, 2021, the Company identified material weaknesses in its internal controls over financial reporting. While these material weaknesses create a reasonable possibility that an error in financial reporting may go undetected, no material adjustments, restatement or other revisions to previously issued financial statements are required. More information on these material weaknesses and Porch’s plans for remediation can be found in its Annual Report on Form 10-K filed on March 16, 2022.
About Porch Group
Seattle-based Porch Group, the vertical software platform for the home, provides software and services to more than 24,000 home services companies such as home inspectors, mortgage companies and loan officers, title companies, moving companies, real estate agencies, utility companies, and warranty companies. Through these relationships and its multiple brands, Porch provides a moving concierge service to homebuyers, helping them save time and make better decisions on critical services, including insurance, warranty, moving, security, TV/internet, home repair and improvement, and more. To learn more about Porch, visit porchgroup.com or porch.com.
Forward-Looking Statements
Certain statements in this release may be considered “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements generally relate to future events or Porch’s future financial or operating performance. For example, projections of future revenue, contribution margin, Adjusted EBITDA and other metrics, business strategy and plans, and anticipated impacts from pending or completed acquisitions, are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expect,” “intend,” “will,” “estimate,” “anticipate,” “believe,” “predict,” “potential” or “continue,” or the negatives of these terms or variations of them or similar terminology. Such forward-looking statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from those expressed or implied by such forward looking statements.
These forward-looking statements are based upon estimates and assumptions that, while considered reasonable by Porch and its management at the time they are made, are inherently uncertain. Factors that may cause actual results to differ materially from current expectations include, but are not limited to: (1) expansion plans and opportunities, including recently completed acquisitions as well as future acquisitions or additional business combinations; (2) costs related to being a public company; (3) litigation, complaints, and/or adverse publicity; (4) the impact of changes in consumer spending patterns, consumer preferences, local, regional and national economic conditions, crime, weather, demographic trends and employee availability; (5) further expansion into the insurance industry, and the related federal and state regulatory requirements; (6) privacy and data protection laws, privacy or data breaches, or the loss of data; (7) the duration and scope of the COVID-19 pandemic and its continued effect on the business and financial conditions of Porch; and (8) other risks and uncertainties described in Porch’s most recent Form 10-K and subsequent reports filed with the Securities and Exchange Commission (the “SEC”), such as Porch’s quarterly reports on Form 10-Q, as well as in its subsequent reports on Form 8-K, all of which are available on the SEC’s website at www.sec.gov.
Nothing in this release should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of such forward-looking statements will be achieved. You should not place undue reliance on forward-looking statements, which speak only as of the date of this release. Unless specifically indicated otherwise, the forward-looking statements in this release do not reflect the potential impact of any divestitures, mergers, acquisitions, or other business combinations that have not been completed as of the date of this release. Porch does not undertake any duty to update these forward-looking statements, whether as a result of changed circumstances, new information, future events or otherwise, except as may be required by law.
Non-GAAP Financial Measures
This release includes one or more non-GAAP financial measures, such as Adjusted EBITDA (loss), Adjusted EBITDA (loss) as a percentage of revenue, contribution margin, and average revenue per monetized service.
Porch defines Adjusted EBITDA (loss) as net income (loss) adjusted for interest expense, net, income taxes, other expenses, net, depreciation and amortization, certain non-cash long-lived asset impairment charges, stock-based compensation expense and acquisition-related impacts, including compensation to the sellers that requires future service, amortization of intangible assets, gains (losses) recognized on changes in the value of contingent consideration arrangements, if any, gain or loss on divestures and certain transaction costs. Adjusted EBITDA (loss) as a percentage of revenue is defined as Adjusted EBITDA (loss) divided by GAAP total revenue. Contribution margin is defined as revenue less all variable expenses, including cost of revenue, variable marketing and sales. Average revenue per monetized services in quarter is the average revenue generated per monetized service performed in a quarterly period. When calculating average revenue per monetized service in quarter, average revenue is defined as total quarterly monetized service revenues generated from monetized services.
Porch management uses these non-GAAP financial measures as supplemental measures of Porch’s operating and financial performance, for internal budgeting and forecasting purposes, to evaluate financial and strategic planning matters, and to establish certain performance goals for incentive programs. Porch believes that the use of these non-GAAP financial measures provides investors with useful information to evaluate Porch’s operating and financial performance and trends and in comparing Porch’s financial results with competitors, other similar companies and companies across different industries, many of which present similar non-GAAP financial measures to investors. However, Porch's definitions and methodology in calculating these non-GAAP measures may not be comparable to those used by other companies. In addition, Porch may modify the presentation of these non-GAAP financial measures in the future, and any such modification may be material.
You should not consider these non-GAAP financial measures in isolation, as a substitute to or superior to financial performance measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude specified income and expenses, some of which may be significant or material, that are required by GAAP to be recorded in Porch’s consolidated financial statements. Porch may also incur future income or expenses similar to those excluded from these non-GAAP financial measures, and Porch’s presentation of these measures should not be construed as an inference that future results will be unaffected by unusual or non-recurring items. In addition, these non-GAAP financial measures reflect the exercise of management judgment about which income and expense are included or excluded in determining these non-GAAP financial measures.
You should review the tables accompanying this release for reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measure. Porch is not providing reconciliations of non-GAAP financial measures for future periods to the most directly comparable measures prepared in accordance with GAAP. Porch is unable to provide these reconciliations without unreasonable effort because certain information necessary to calculate such measures on a GAAP basis is unavailable or dependent on the timing of future events outside of Porch’s control.
PORCH GROUP, INC.
Consolidated Balance Sheets
December 31, 2021 and 2020
(all numbers in thousands, except share amounts, audited)
| December 31, | |||||||||||||||
| 2021 | 2020 | ||||||||||||||
| Assets | |||||||||||||||
| Current assets | |||||||||||||||
| Cash and cash equivalents | $ | 315,741 | $ | 196,046 | |||||||||||
| Accounts receivable, net | 28,767 | 4,268 | |||||||||||||
| Short-term investments | 9,251 | — | |||||||||||||
| Reinsurance balance due | 228,416 | — | |||||||||||||
| Prepaid expenses and other current assets | 14,338 | 4,080 | |||||||||||||
| Restricted cash | 8,551 | 11,407 | |||||||||||||
| Total current assets | 605,064 | 215,801 | |||||||||||||
| Property, equipment, and software, net | 6,666 | 4,593 | |||||||||||||
| Operating lease right-of-use assets | 4,504 | — | |||||||||||||
| Goodwill | 225,654 | 28,289 | |||||||||||||
| Long-term investments | 58,324 | — | |||||||||||||
| Intangible assets, net | 129,830 | 15,961 | |||||||||||||
| Restricted cash, non-current | 500 | — | |||||||||||||
| Long-term insurance commissions receivable | 7,521 | 3,365 | |||||||||||||
| Other assets | 684 | 378 | |||||||||||||
| Total assets | $ | 1,038,747 | $ | 268,387 | |||||||||||
| Liabilities and Stockholders’ Equity | |||||||||||||||
| Current liabilities | |||||||||||||||
| Accounts payable | $ | 6,965 | $ | 9,203 | |||||||||||
| Accrued expenses and other current liabilities | 37,675 | 9,905 | |||||||||||||
| Deferred revenue | 201,085 | 5,208 | |||||||||||||
| Refundable customer deposit | 15,274 | 2,664 | |||||||||||||
| Current portion of long-term debt | 150 | 4,746 | |||||||||||||
| Losses and loss adjustment expense reserves | 61,949 | — | |||||||||||||
| Other insurance liabilities, current | 40,024 | — | |||||||||||||
| Total current liabilities | 363,122 | 31,726 | |||||||||||||
| Long-term debt | 414,585 | 43,237 | |||||||||||||
| Operating lease liabilities, non-current | 2,694 | — | |||||||||||||
| Refundable customer deposit, non-current | — | 529 | |||||||||||||
| Earnout liability, at fair value | 13,866 | 50,238 | |||||||||||||
| Private warrant liability, at fair value | 15,193 | 31,534 | |||||||||||||
| Other liabilities (includes $9,617 and $3,549 at fair value, respectively) | 12,242 | 3,798 | |||||||||||||
| Total liabilities | 821,702 | 161,062 | |||||||||||||
| Commitments and contingencies (Note 16) | |||||||||||||||
| Stockholders’ equity | |||||||||||||||
| Common stock, $0.0001 par value: | 10 | 8 | |||||||||||||
| Authorized shares – 400,000,000 and 400,000,000, respectively | |||||||||||||||
| Issued and outstanding shares – 97,961,597 and 81,669,151, respectively | |||||||||||||||
| Additional paid-in capital | 641,406 | 424,823 | |||||||||||||
| Accumulated other comprehensive loss | (259 | ) | — | ||||||||||||
| Accumulated deficit | (424,112 | ) | (317,506 | ) | |||||||||||
| Total stockholders’ equity | 217,045 | 107,325 | |||||||||||||
| Total liabilities and stockholders’ equity | $ | 1,038,747 | $ | 268,387 | |||||||||||
PORCH GROUP, INC.
Consolidated Statements of Operations
Years Ended December 31, 2021, 2020 and 2019
(all numbers in thousands, except share amounts, audited)
| 2021 | 2020 | 2019 | ||||||||||
| Revenue | $ | 192,433 | $ | 72,299 | $ | 77,595 | ||||||
| Operating expenses(1): | ||||||||||||
| Cost of revenue | 58,725 | 17,562 | 21,500 | |||||||||
| Selling and marketing | 84,273 | 41,665 | 56,220 | |||||||||
| Product and technology | 47,005 | 28,546 | 30,992 | |||||||||
| General and administrative | 85,795 | 28,199 | 52,011 | |||||||||
| Gain on divestiture of businesses | — | (1,442 | ) | 4,994 | ||||||||
| Total operating expenses | 275,798 | 114,530 | 165,717 | |||||||||
| Operating loss | (83,365 | ) | (42,231 | ) | (88,122 | ) | ||||||
| Other income (expense): | ||||||||||||
| Interest expense | (5,757 | ) | (14,734 | ) | (7,134 | ) | ||||||
| Change in fair value of earnout liability | (18,519 | ) | — | — | ||||||||
| Change in fair value of private warrant liability | (15,389 | ) | 2,427 | — | ||||||||
| Gain (loss) on extinguishment of debt | 5,110 | 5,748 | (483 | ) | ||||||||
| Investment income and realized gains, net of investment expenses | 701 | — | — | |||||||||
| Other income (expense), net | 340 | (6,931 | ) | (7,484 | ) | |||||||
| Total other income (expense) | (33,514 | ) | (13,490 | ) | (15,101 | ) | ||||||
| Loss before income taxes | (116,879 | ) | (55,721 | ) | (103,223 | ) | ||||||
| Income tax benefit (expense) | 10,273 | 1,689 | (96 | ) | ||||||||
| Net loss | $ | (106,606 | ) | $ | (54,032 | ) | $ | (103,319 | ) | |||
| Induced conversion of preferred stock | — | (17,284 | ) | — | ||||||||
| Net loss attributable to common stockholders | $ | (106,606 | ) | $ | (71,316 | ) | $ | (103,319 | ) | |||
| Loss per share - basic | $ | (1.14 | ) | $ | (1.96 | ) | $ | (3.31 | ) | |||
| Loss per share - diluted (Note 19) | $ | (1.14 | ) | $ | (2.03 | ) | $ | (3.31 | ) | |||
| Shares used in computing basic loss per share | 93,884,566 | 36,344,234 | 31,170,351 | |||||||||
| Shares used in computing diluted loss per share | 93,884,566 | 36,374,215 | 31,170,351 | |||||||||
(1) Amounts include stock-based compensation expense, as follows:
| 2021 | 2020 | 2019 | |||||||
| Cost of revenue | $ | 1 | $ | 2 | $ | 9 | |||
| Selling and marketing | 5,584 | 1,901 | 477 | ||||||
| Product and technology | 7,223 | 5,248 | 747 | ||||||
| General and administrative | 25,784 | 4,145 | 34,739 | ||||||
| $ | 38,592 | $ | 11,296 | $ | 35,972 | ||||
PORCH GROUP, INC.
Consolidated Statements of Comprehensive Loss
Years Ended December 31, 2021, 2020 and 2019
(all numbers in thousands, except share amounts, audited)
| Year Ended December 31, | ||||||||||||
| 2021 | 2020 | 2019 | ||||||||||
| Net loss | $ | (106,606 | ) | $ | (54,032 | ) | $ | (103,319 | ) | |||
| Other comprehensive income (loss): | ||||||||||||
| Current period change in net unrealized loss, net of tax | (259 | ) | — | — | ||||||||
| Comprehensive loss | $ | (106,865 | ) | $ | (54,032 | ) | $ | (103,319 | ) | |||
PORCH GROUP, INC.
Consolidated Statements of Stockholders’ Equity (Deficit)
Years Ended December 31, 2021, 2020 and 2019
(all numbers in thousands, except share amounts, audited)
| Redeemable Convertible | Additional | Total | |||||||||||||||||||||||||
| Preferred Stock | Common Stock | Paid-in | Accumulated | Stockholders’ | |||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Equity (Deficit) | |||||||||||||||||||||
| Balances as of January 1, 2019 | 42,104,419 | $ | 119,000 | 20,475,883 | $ | 205 | $ | 10,615 | $ | (160,662 | ) | $ | (149,842 | ) | |||||||||||||
| Retroactive application of recapitalization(1) | (42,104,419 | ) | (119,000 | ) | 8,937,724 | (202 | ) | 119,202 | — | 119,000 | |||||||||||||||||
| Adjusted balance, beginning of period | — | — | 29,413,607 | 3 | 129,817 | (160,662 | ) | (30,842 | ) | ||||||||||||||||||
| Cumulative effect of a change in accounting principle | — | — | — | — | — | 507 | 507 | ||||||||||||||||||||
| Net loss | — | — | — | — | — | (103,319 | ) | (103,319 | ) | ||||||||||||||||||
| Stock-based compensation | — | — | — | — | 35,972 | — | 35,972 | ||||||||||||||||||||
| Issuance of Series B and Series C redeemable convertible preferred stock(1) | — | — | 3,944,897 | — | 37,274 | — | 37,274 | ||||||||||||||||||||
| Issuance of common stock for acquisitions | — | — | 271,287 | — | 479 | — | 479 | ||||||||||||||||||||
| Adjustment to purchase price consideration | — | — | — | — | (290 | ) | — | (290 | ) | ||||||||||||||||||
| Issuance of common stock warrants | — | — | — | — | 168 | — | 168 | ||||||||||||||||||||
| Vesting of restricted stock awards issued for acquisitions | — | — | 516,539 | — | — | — | |||||||||||||||||||||
| Proceeds from issuance of redeemable convertible preferred stock warrants | — | — | — | — | 4 | — | 4 | ||||||||||||||||||||
| Exercise of stock options | — | — | 74,980 | — | 110 | — | 110 | ||||||||||||||||||||
| Shares repurchased | — | — | (23,488 | ) | — | (42 | ) | — | (42 | ) | |||||||||||||||||
| Balances as of December 31, 2019 | — | $ | — | 34,197,822 | $ | 3 | $ | 203,492 | $ | (263,474 | ) | $ | (59,979 | ) | |||||||||||||
| Net loss | — | — | — | — | — | (54,032 | ) | (54,032 | ) | ||||||||||||||||||
| Stock-based compensation | — | — | — | — | 10,660 | — | 10,660 | ||||||||||||||||||||
| Stock-based compensation - earnout | — | — | 1,976,332 | — | 636 | — | 636 | ||||||||||||||||||||
| Issuance of Series B and Series C redeemable convertible preferred stock(1) | — | — | 682,539 | — | 4,836 | — | 4,836 | ||||||||||||||||||||
| Conversion of convertible notes to Series C redeemable convertible preferred stock(1) | — | — | 198,750 | — | 1,436 | — | 1,436 | ||||||||||||||||||||
| Repurchase of redeemable convertible preferred stock | — | — | (75,162 | ) | — | (480 | ) | — | (480 | ) | |||||||||||||||||
| Issuance of common stock warrants | — | — | — | — | 44 | — | 44 | ||||||||||||||||||||
| Vesting of restricted stock awards issued for acquisitions | — | — | 472,141 | — | — | — | — | ||||||||||||||||||||
| Issuance of common stock for acquisitions | — | — | 785,330 | — | 6,898 | — | 6,898 | ||||||||||||||||||||
| Exercise of stock options and warrants | — | — | 505,711 | — | 1,029 | — | 1,029 | ||||||||||||||||||||
| Net share settlement of common stock options and restricted stock units | — | — | 1,189,911 | — | — | — | — | ||||||||||||||||||||
| Shareholder contribution | — | — | — | — | 17,584 | — | 17,584 | ||||||||||||||||||||
| Inducement to convert preferred stock | — | — | — | — | (17,284 | ) | — | (17,284 | ) | ||||||||||||||||||
| Impacts of recognition of contingent beneficial conversion feature | — | — | — | — | (5,208 | ) | — | (5,208 | ) | ||||||||||||||||||
| Conversion of common stock warrants into common stock | — | — | 1,705,266 | — | — | — | — | ||||||||||||||||||||
| Conversion of redeemable convertible preferred stock warrants into common stock | — | — | 702,791 | — | 11,029 | — | 11,029 | ||||||||||||||||||||
| Recapitalization and PIPE financing | — | — | 35,304,052 | 5 | 239,722 | — | 239,727 | ||||||||||||||||||||
| Tax impacts of recapitalization | — | — | — | — | 187 | — | 187 | ||||||||||||||||||||
| Earnout liability | — | — | 4,023,668 | — | (50,238 | ) | — | (50,238 | ) | ||||||||||||||||||
| Cancellation of redeemable convertible preferred stock repurchase liability | — | — | — | — | 480 | — | 480 | ||||||||||||||||||||
| Balances as of December 31, 2020 | — | $ | — | 81,669,151 | $ | 8 | $ | 424,823 | $ | (317,506 | ) | $ | 107,325 | ||||||||||||||
(1) Issuance of redeemable convertible preferred stock and convertible preferred stock warrants have been retroactively restated to give effect to the recapitalization transaction.
PORCH GROUP, INC.
Consolidated Statements of Stockholders’ Equity (Deficit) - Continued
Years Ended December 31, 2021, 2020 and 2019
(all numbers in thousands, except share amounts, audited)
| Accumulated | ||||||||||||||||||||||
| Additional | Other | Total | ||||||||||||||||||||
| Common Stock | Paid-in | Accumulated | Comprehensive | Stockholders’ | ||||||||||||||||||
| Shares | Amount | Capital | Deficit | Loss | Equity | |||||||||||||||||
| Balances as of January 1, 2021 | 81,669,151 | $ | 8 | $ | 424,823 | $ | (317,506 | ) | $ | — | $ | 107,325 | ||||||||||
| Net loss | — | — | — | (106,606 | ) | (259 | ) | (106,865 | ) | |||||||||||||
| Stock-based compensation | — | — | 15,631 | — | — | 15,631 | ||||||||||||||||
| Stock-based compensation - earnout | — | — | 22,961 | — | — | 22,961 | ||||||||||||||||
| Issuance of common stock for acquisitions | 2,042,652 | 1 | 35,706 | — | — | 35,707 | ||||||||||||||||
| Contingent consideration for acquisitions | — | — | 6,685 | — | — | 6,685 | ||||||||||||||||
| Reclassification of earnout liability upon vesting | — | — | 54,891 | — | — | 54,891 | ||||||||||||||||
| Reclassification of private warrant liability upon exercise | — | — | 31,730 | — | — | 31,730 | ||||||||||||||||
| Vesting of restricted stock awards | 2,549,223 | — | — | — | — | — | ||||||||||||||||
| Exercise of stock warrants | 11,521,412 | 1 | 126,768 | — | — | 126,769 | ||||||||||||||||
| Exercise of stock options | 1,700,557 | — | 4,326 | — | — | 4,326 | ||||||||||||||||
| Income tax withholdings | (1,521,398 | ) | — | (28,940 | ) | — | — | (28,940 | ) | |||||||||||||
| Capped call transactions | — | — | (52,913 | ) | — | — | (52,913 | ) | ||||||||||||||
| Transaction costs | — | — | (262 | ) | — | — | (262 | ) | ||||||||||||||
| Balances as of December 31, 2021 | 97,961,597 | $ | 10 | $ | 641,406 | $ | (424,112 | ) | $ | (259 | ) | $ | 217,045 | |||||||||
PORCH GROUP, INC.
Consolidated Statements of Cash Flows
Years Ended December 31, 2021, 2020 and 2019
(all numbers in thousands, except share amounts, audited)
| Year Ended December 31, | ||||||||||||
| 2021 | 2020 | 2019 | ||||||||||
| Cash flows from operating activities: | ||||||||||||
| Net loss | $ | (106,606 | ) | $ | (54,032 | ) | $ | (103,319 | ) | |||
| Adjustments to reconcile net loss to net cash used in operating activities | ||||||||||||
| Depreciation and amortization | 16,386 | 6,644 | 7,377 | |||||||||
| Amortization of operating lease right-of-use assets | 1,861 | — | — | |||||||||
| Loss on sale and impairment of long-lived assets | 595 | 895 | 1,088 | |||||||||
| Loss (gain) on extinguishment of debt | (5,110 | ) | (5,748 | ) | 483 | |||||||
| Loss on remeasurement of debt | — | 895 | 6,159 | |||||||||
| Loss (gain) on divestiture of businesses | — | (1,442 | ) | 4,994 | ||||||||
| Loss on remeasurement of Legacy Porch warrants | — | 2,584 | 2,090 | |||||||||
| Loss on remeasurement of private warrant liability | 15,389 | (2,427 | ) | — | ||||||||
| Loss (gain) on remeasurement of contingent consideration | (2,244 | ) | 1,700 | (300 | ) | |||||||
| Loss on remeasurement of earnout liability | 18,519 | — | — | |||||||||
| Stock-based compensation | 38,592 | 11,296 | 35,972 | |||||||||
| Amortization of premium/accretion of discount, net | 369 | — | — | |||||||||
| Net realized losses on investments | 67 | — | — | |||||||||
| Interest expense (non-cash) | 2,387 | 7,488 | 2,369 | |||||||||
| Other | 1,055 | (23 | ) | 580 | ||||||||
| Change in operating assets and liabilities, net of acquisitions and divestitures | ||||||||||||
| Accounts receivable | (2,905 | ) | 203 | (1,840 | ) | |||||||
| Reinsurance balance due | (15,343 | ) | — | — | ||||||||
| Prepaid expenses and other current assets | (5,323 | ) | (2,587 | ) | 603 | |||||||
| Accounts payable | (11,779 | ) | 4,092 | 2,361 | ||||||||
| Accrued expenses and other current liabilities | (15,981 | ) | (15,946 | ) | 7,704 | |||||||
| Losses and loss adjustment expense reserves | (22,417 | ) | — | — | ||||||||
| Other insurance liabilities, current | 14,396 | — | — | |||||||||
| Deferred revenue | 53,556 | 2,206 | (803 | ) | ||||||||
| Refundable customer deposits | (3,545 | ) | (3,521 | ) | 6,122 | |||||||
| Long-term insurance commissions receivable | (4,156 | ) | (3,365 | ) | — | |||||||
| Operating lease liabilities, non-current | (2,141 | ) | — | — | ||||||||
| Other | (399 | ) | 2,419 | (975 | ) | |||||||
| Net cash used in operating activities | (34,777 | ) | (48,669 | ) | (29,335 | ) | ||||||
| Cash flows from investing activities: | ||||||||||||
| Purchases of property and equipment | (972 | ) | (279 | ) | (478 | ) | ||||||
| Capitalized internal use software development costs | (3,719 | ) | (2,601 | ) | (4,096 | ) | ||||||
| Purchases of short-term and long-term investments | (24,006 | ) | — | — | ||||||||
| Maturities, sales of short-term and long-term investments | 21,694 | — | — | |||||||||
| Acquisitions, net of cash acquired | (256,430 | ) | (7,791 | ) | 116 | |||||||
| Divestiture of businesses net of cash disposed | — | — | (750 | ) | ||||||||
| Net cash used in investing activities | (263,433 | ) | (10,671 | ) | (5,208 | ) | ||||||
| Cash flows from financing activities: | ||||||||||||
| Proceeds from recapitalization and PIPE financing | — | 305,133 | — | |||||||||
| Distribution to stockholders | — | (30,000 | ) | — | ||||||||
| Transaction costs - recapitalization | (262 | ) | (5,652 | ) | — | |||||||
| Proceeds from debt issuance, net of fees | 413,537 | 66,190 | 31,300 | |||||||||
| Repayments of principal and related fees | (46,965 | ) | (81,640 | ) | (202 | ) | ||||||
| Proceeds from issuance of redeemable convertible preferred stock, net of fees | — | 4,714 | 3,274 | |||||||||
| Capped call transactions | (52,913 | ) | — | — | ||||||||
| Proceeds from exercises of warrants | 126,741 | — | — | |||||||||
| Proceeds from exercises of stock options and Legacy Porch warrants | 4,288 | 911 | 114 | |||||||||
| Income tax withholdings paid upon vesting of restricted stock units | (28,877 | ) | — | — | ||||||||
| Repurchase of stock | — | (42 | ) | — | ||||||||
| Net cash provided by financing activities | 415,549 | 259,614 | 34,486 | |||||||||
| Net change in cash, cash equivalents, and restricted cash | $ | 117,339 | $ | 200,274 | $ | (57 | ) | |||||
| Cash, cash equivalents, and restricted cash, beginning of period | $ | 207,453 | $ | 7,179 | $ | 7,236 | ||||||
| Cash, cash equivalents, and restricted cash end of period | $ | 324,792 | $ | 207,453 | $ | 7,179 | ||||||
PORCH GROUP, INC.
Consolidated Statements of Cash Flows - Continued
Years Ended December 31, 2021, 2020 and 2019
(all numbers in thousands, except share amounts, audited)
| Year Ended December 31, | |||||||||
| 2021 | 2020 | 2019 | |||||||
| Supplemental disclosures | |||||||||
| Cash paid for interest | $ | 2,662 | $ | 9,103 | $ | 3,466 | |||
| Reduction of earnout liability due to a vesting event | $ | 54,891 | $ | — | $ | — | |||
| Non-cash consideration for acquisitions | $ | 52,761 | $ | 9,295 | $ | 479 | |||
| Conversion of redeemable convertible preferred stock warrants into common stock | $ | — | $ | 11,029 | $ | — | |||
| Earnout liability | $ | — | $ | 50,238 | $ | — | |||
| Private warrant liability | $ | — | $ | 31,534 | $ | — | |||
| Capital contribution from a shareholder - inducement to convert preferred stock to common | $ | — | $ | 17,284 | $ | — | |||
| Non-cash inducement to convert preferred stock to common | $ | — | $ | 17,284 | $ | — | |||
| Debt discount for warrants issued (non-cash) | $ | — | $ | 1,215 | $ | 3,700 | |||
| Cancelation of a convertible promissory note on divestiture of a business | $ | — | $ | 2,724 | $ | — | |||
| Conversion of debt to redeemable convertible preferred stock (non-cash) | $ | — | $ | 1,436 | $ | 34,105 | |||
| Capital contribution from a shareholder - guarantee of debt | $ | — | $ | 300 | $ | — | |||
PORCH GROUP, INC.
Adjusted EBITDA (loss)
Three Months Ended December 31, 2021
(all numbers in thousands)
| CORPORATE | INSURANCE | VERTICAL SOFTWARE | Consolidated | |||||||||||||||
| Adjusted EBITDA (loss) | $ | (14,476 | ) | $ | 5,922 | $ | 3,180 | $ | (5,375 | ) | ||||||||
| N/A | 37% | 9% | -10% | |||||||||||||||
| Less: | ||||||||||||||||||
| Acquisition and related expense | 795 | 29 | - | 824 | ||||||||||||||
| Loss on re-measurement of warrants | (2,132 | ) | - | - | (2,132 | ) | ||||||||||||
| Loss on re-measurement of earnout liability | 3,131 | - | - | 3,131 | ||||||||||||||
| Revaluation of contingent consideration | (2,427 | ) | - | 563 | (1,864 | ) | ||||||||||||
| Non-cash bonus expense | (1,378 | ) | - | - | (1,378 | ) | ||||||||||||
| Non-cash stock-based compensation | 6,489 | 400 | 2,342 | 9,231 | ||||||||||||||
| Non-cash long-lived asset impairment charge | 50 | - | 285 | 335 | ||||||||||||||
| Other, net | (38 | ) | 0 | (78 | ) | (115 | ) | |||||||||||
| Depreciation and amortization | 597 | 1,001 | 4,000 | 5,598 | ||||||||||||||
| Income tax expense (benefit) | (1,135 | ) | 778 | 2 | (356 | ) | ||||||||||||
| Interest expense | 1,348 | 444 | (332 | ) | 1,460 | |||||||||||||
| Net income (loss) | $ | (19,775 | ) | $ | 3,269 | $ | (3,603 | ) | $ | (20,109 | ) | |||||||
PORCH GROUP, INC.
Adjusted EBITDA
Twelve Months Ended December 31, 2021
(all numbers in thousands)
| CORPORATE | INSURANCE | VERTICAL SOFTWARE | Consolidated | ||||||||||||||
| Adjusted EBITDA (loss) | $ | (53,760 | ) | $ | 9,007 | $ | 20,733 | $ | (24,020 | ) | |||||||
| N/A | 16% | 15% | -12.5% | ||||||||||||||
| Less: | |||||||||||||||||
| Acquisition and related expense | 5, 331 | 29 | - | 5,360 | |||||||||||||
| Loss on re-measurement of warrants | 15,389 | - | - | 15,389 | |||||||||||||
| Loss on re-measurement of earnout liability | 18,519 | - | - | 18,519 | |||||||||||||
| Revaluation of contingent consideration | (2,807 | ) | - | 563 | (2,244 | ) | |||||||||||
| Non-cash stock-based compensation | 33,180 | 876 | 4,537 | 38,592 | |||||||||||||
| Non-cash long-lived asset impairment charge | 252 | - | 298 | 550 | |||||||||||||
| Other, net | (81 | ) | (1 | ) | (259 | ) | (340 | ) | |||||||||
| Loss on extinguishment of debt | (5,099 | ) | - | (11 | ) | (5,110 | ) | ||||||||||
| Depreciation and amortization | 2,915 | 3,432 | 10,039 | 16,386 | |||||||||||||
| Income tax benefit | (8,139 | ) | (1,788 | ) | (346 | ) | (10,273 | ) | |||||||||
| Interest expense | 4,739 | 508 | 510 | 5,757 | |||||||||||||
| Net income (loss) | $ | (117,959 | ) | $ | 5,950 | $ | 5,402 | $ | (106,606 | ) | |||||||
PORCH GROUP, INC.
Monetized Services Revenue
Three Months and Year Ended December 31, 2021
(all numbers in thousands)
| 2021 | 2021 | ||||||||
| Monetized Services Revenue | $ | 34,366 | $ | 137,383 | |||||
| Other Operating Revenue | 17,215 | 55,050 | |||||||
| Total Revenue | $ | 51,581 | $ | 192,433 | |||||
PORCH GROUP, INC.
Revenue Less Cost of Revenue and Contribution Margin
Three Months Ended December 31, 2021
(all numbers in thousands)
| CORPORATE | INSURANCE | VERTICAL SOFTWARE | Consolidated | ||||||||||||||||||
| Revenue | $ | - | $ | 16,060 | $ | 35,520 | $ | 51,581 | |||||||||||||
| Cost of Revenue | $ | - | $ | 2,725 | $ | 11,412 | $ | 14,137 | |||||||||||||
| Revenue Less Cost of Revenue | $ | - | $ | 13,335 | $ | 24,108 | $ | 37,443 | |||||||||||||
| N/A | 83% | 68% | 73% | ||||||||||||||||||
| Revenue | $ | - | $ | 16,060 | $ | 35,520 | $ | 51,581 | |||||||||||||
| Cost of Revenue | $ | - | $ | 2,725 | $ | 11,412 | $ | 14,137 | |||||||||||||
| Sales & Marketing (Variable) | $ | 287 | $ | 8,065 | $ | 10,089 | $ | 18,440 | |||||||||||||
| Contribution Margin | $ | (287 | ) | $ | 5,271 | $ | 14,019 | $ | 19,003 | ||||||||||||
| N/A | 33% | 39% | 37% | ||||||||||||||||||
| Sales & Marketing (Fixed) | $ | 905 | $ | 473 | $ | 3,816 | $ | 5,195 | |||||||||||||
| Product & Technology | $ | 6,003 | $ | 621 | $ | 6,223 | $ | 12,847 | |||||||||||||
| General & Administrative | $ | 11,407 | $ | (64 | ) | $ | 7,991 | $ | 19,335 | ||||||||||||
| Total Operating Expenses | $ | 18,602 | $ | 11,820 | $ | 39,531 | $ | 69,954 | |||||||||||||
| Operating Loss | $ | (18,602 | ) | $ | 4,240 | $ | (4,011 | ) | $ | (18,373 | ) | ||||||||||
PORCH GROUP, INC.
Revenue Less Cost of Revenue and Contribution Margin
Twelve Months Ended December 31, 2021
(all numbers in thousands)
| CORPORATE | INSURANCE | VERTICAL SOFTWARE | Consolidated | ||||||||||||||
| Revenue | $ | - | $ | 55,283 | $ | 137,150 | $ | 192,433 | |||||||||
| Cost of Revenue | $ | - | $ | 18,133 | $ | 40,591 | $ | 58,724 | |||||||||
| Revenue Less Cost of Revenue | $ | - | $ | 37,150 | $ | 96,559 | $ | 133,709 | |||||||||
| N/A | 67% | 70% | 69% | ||||||||||||||
| Revenue | $ | - | $ | 55,283 | $ | 137,150 | $ | 192,433 | |||||||||
| Cost of Revenue | $ | - | $ | 18,133 | $ | 40,591 | $ | 58,724 | |||||||||
| Sales & Marketing (Variable) | $ | 2,444 | $ | 16,763 | $ | 39,111 | $ | 58,317 | |||||||||
| Contribution Margin | $ | (2,444 | ) | $ | 20,388 | $ | 57,448 | $ | 75,392 | ||||||||
| N/A | 37% | 42% | 39% | ||||||||||||||
| Sales & Marketing (Fixed) | $ | 5,416 | $ | 7,059 | $ | 13,479 | $ | 25,954 | |||||||||
| Product & Technology | $ | 26,675 | $ | 1,055 | $ | 19,276 | $ | 47,005 | |||||||||
| General & Administrative | $ | 58,100 | $ | 8,284 | $ | 19,414 | $ | 85,798 | |||||||||
| Total Operating Expenses | $ | 92,635 | $ | 51,293 | $ | 131,870 | $ | 275,798 | |||||||||
| Operating Loss | $ | (92,635 | ) | $ | 3,990 | $ | 5,280 | $ | (83,365 | ) | |||||||
Comparison of Preliminary Results to Final Results
Fourth Quarter 2021
| ($ thousands) | Insurance | Vertical Software | Total | |||||||||
| Preliminary | Final | Preliminary | Final | Preliminary | Final | |||||||
| Revenue | 16,060 | 16,060 | 35,520 | 35,520 | 51,581 | 51,581 | ||||||
| Revenue Less Cost of Revenue | 16,775 | 13,335 | 24,108 | 24,108 | 40,883 | 37,443 | ||||||
| Revenue Less Cost of Revenue % | 104% | 83% | 68% | 68% | 79% | 73% | ||||||
| Contribution Margin | 8,711 | 5,271 | 14,019 | 14,019 | 22,443 | 19,003 | ||||||
| Contribution Margin % | 54% | 33% | 39% | 39% | 44% | 37% | ||||||
| GAAP net (loss) | N/A | N/A | N/A | N/A | (22,582) | (20,109) | ||||||
| Adj. EBITDA (loss) | 3,449 | 5,922 | 3,180 | 3,180 | (7,848) | (5,375) | ||||||
| Adj. EBITDA % | 21% | 37% | 9% | 9% | -15% | -10% | ||||||
Operating expenses were reduced by approximately $2.5 million at our insurance carrier subsidiary related to the final determination of the amortization of deferred policy acquisition costs, and approximately $3.4 million of expense at our insurance carrier subsidiary was reclassified from general & administrative to cost of revenue.
Full Year 2021
| ($ thousands) | Insurance | Vertical Software | Total | |||||||||
| Preliminary | Final | Preliminary | Final | Preliminary | Final | |||||||
| Revenue | 55,283 | 55,283 | 137,150 | 137,150 | 192,433 | 192,433 | ||||||
| Revenue Less Cost of Revenue | 40,590 | 37,150 | 96,559 | 96,559 | 137,149 | 133,709 | ||||||
| Revenue Less Cost of Revenue % | 73% | 67% | 70% | 70% | 71% | 69.5% | ||||||
| Contribution Margin | 23,828 | 20,388 | 57,448 | 57,448 | 78,832 | 75,392 | ||||||
| Contribution Margin % | 43% | 37% | 42% | 42% | 41% | 39.2% | ||||||
| GAAP net (loss) | N/A | N/A | N/A | N/A | (109,079) | (106,606) | ||||||
| Adj. EBITDA (loss) | 6,533 | 9,007 | 20,733 | 20,733 | (26,493) | (24,020) | ||||||
| Adj. EBITDA % | 12% | 16% | 15% | 15% | -13.8% | -12.5% | ||||||
Operating expenses were reduced by approximately $2.5 million at our insurance carrier subsidiary related to the final determination of the amortization of deferred policy acquisition costs, and approximately $3.4 million of expense at our insurance carrier subsidiary was reclassified from general & administrative to cost of revenue.
Investor Relations Contacts:
Walter Ruddy, Head of Investor Relations & Treasury
Porch Group, Inc.
(206) 715-2369
walter@porch.com
Matt Glover/Alex Thompson
Gateway Group, Inc.
(949) 574-3860
PRCH@gatewayir.com
Porch Press contact:
Catherine Adcock
Gateway Group, Inc.
(949) 386-6332
PRCH@gatewayir.com
