Porch Group Reports Fourth Quarter 2023 Results
- Strong fourth-quarter earnings with total revenue of $114.6 million, a 79% increase from the prior year.
- GAAP net loss improved to $2.5 million, and Adjusted EBITDA rose to $11.7 million.
- CEO highlighted profitability growth, new SaaS products, and cost control achievements.
- Operational highlights included improved loss ratios, new product launches, and a focus on ESG initiatives.
- Collaboration agreement signed with Aon Corp. and the sale of EIG completed.
- Full-year 2024 guidance includes revenue of $450m to $490m and Adjusted EBITDA of $1m to $10m.
- None.
Insights
The reported figures from Porch Group indicate a substantial 79% increase in total revenue and a significant improvement in GAAP net loss, from $35.5 million to $2.5 million. When evaluating the financial health and operational efficiency of a company, such metrics are crucial. The Adjusted EBITDA also saw a remarkable turnaround, swinging from a loss to a positive $11.7 million. The insurance segment appears to be the primary driver of this growth, which is notable given the competitive landscape of the insurance industry.
Investors should consider the company's gross written premium and policies in force, which have both decreased, possibly indicating challenges in market penetration or customer retention. However, the premium per policy has increased significantly, suggesting a strategic shift towards more profitable or lower-risk policies. The cash and cash equivalents position is robust, having increased by 20%, which provides financial stability and opportunities for strategic investments or debt servicing. The sale of EIG and repurchase of notes are strategic moves that could streamline operations and improve the balance sheet. However, the high outstanding principal for convertible debt is a concern that needs to be monitored closely.
The reported operational highlights, such as the 36% gross loss ratio and 49% combined loss ratio, are indicators of efficient underwriting and risk management. These ratios are particularly important in the insurance industry, as they reflect the company's ability to price policies appropriately and manage claims effectively. The approval in 13 states to use proprietary property data in pricing is a strategic advantage that could lead to more accurate risk assessment and competitive pricing.
The introduction of new products, such as the title software product, HVAC micro-warranty and back office software for small inspection companies, suggests innovation and a focus on expanding the product suite. These ventures could open up new revenue streams and strengthen Porch Group's position in the market. Additionally, the local full-service offering in the moving business could capture a larger market share due to its higher margin potential. The release of the first ESG report indicates a commitment to sustainability, which might appeal to socially conscious investors and customers.
The growth projections for full year 2024, with revenue expected to increase by 5% to 14%, reflect a cautiously optimistic outlook, likely taking into account the current economic climate and market conditions. The target of achieving Adjusted EBITDA profitability on a full-year basis is a positive signal to investors about the company's confidence in its business model and cost control measures. However, it is essential to consider the broader economic factors such as interest rates, inflation and consumer behavior, which can impact the insurance and software industries.
The 63% gross loss ratio target aligns with industry norms and indicates that Porch Group is aiming to maintain underwriting discipline. The strategic partnership with Aon and the divestiture of EIG reflect a focus on optimizing the business model, which could improve operational efficiency and profitability. These actions, alongside the current cash reserves, provide a cushion against potential economic downturns and enable strategic flexibility.
Porch Delivers Strong Fourth Quarter Earnings, Ahead of Expectations
CEO Summary
"We are excited to share our financial results, far exceeding the second half profitability target we provided around two years ago, with Adjusted EBITDA of
Fourth Quarter 2023 Financial Results
-
Total revenue of
$114.6 million 79% or$50.5 million $64.1 million -
Revenue less cost of revenue of
$79.9 million 70% of total revenue, an increase of82% compared to prior year (fourth quarter 2022:$43.9 million 69% of total revenue). Increase driven by premium per policy increases, underwriting actions, and non-renewal of higher risk policies in the Insurance segment. -
GAAP net loss of
$2.5 million $35.5 million -
Adjusted EBITDA of
$11.7 million $25.0 million $13.3 million -
Gross written premium for the quarter in our Insurance segment was
$112 million -
$397.6 million
Fourth Quarter 2023 Operational Highlights
-
36% gross loss ratio and49% combined loss ratio, an improvement from prior year driven by underwriting actions, non-renewal of higher risk policies, and the fourth quarter34% increase in premium per policy. - Approved in 13 states to use Porch's unique property data in insurance pricing which improves risk accuracy to provide better priced policies for customers.
- Launching new products continues, with an important new title software product, HVAC micro-warranty and back office software for small inspection companies introduced and additional a new utilities partnership.
- Moving business executing a local full-service offering, which is higher margin and a larger market opportunity.
- Released first ESG report, sharing the foundation for its ESG journey.
- Admitted into Deloitte's Technology Fast 500 2023.
____________________________________________ |
||
| (1) |
Adjusted EBITDA of |
|
The following tables present financial highlights of the Company’s fourth quarter and full year 2023 results compared to the fourth quarter and full year results of 2022 (dollars are in millions):
Fourth Quarter 2023 (unaudited) |
|
Insurance |
|
Vertical Software |
|
Corporate |
|
Consolidated |
||||||||
Revenue |
|
$ |
86.9 |
|
|
$ |
27.7 |
|
|
$ |
— |
|
|
$ |
114.6 |
|
Year-over-year growth |
|
|
179 |
% |
|
|
(16 |
)% |
|
|
— |
% |
|
|
79 |
% |
Revenue less cost of revenue |
|
$ |
57.9 |
|
|
$ |
22.0 |
|
|
$ |
— |
|
|
$ |
79.9 |
|
Year-over-year growth |
|
|
192 |
% |
|
|
(9 |
)% |
|
|
— |
% |
|
|
82 |
% |
As % of revenue |
|
|
67 |
% |
|
|
79 |
% |
|
|
— |
% |
|
|
70 |
% |
GAAP net loss |
|
|
|
|
|
|
|
$ |
(2.5 |
) |
||||||
Adjusted EBITDA (loss) |
(1) |
$ |
31.6 |
|
|
$ |
(0.3 |
) |
|
$ |
(19.7 |
) |
|
$ |
11.7 |
|
Adjusted EBITDA (loss) as a percent of revenue |
(2) |
|
36 |
% |
|
|
(1 |
)% |
|
|
— |
% |
|
|
10 |
% |
Fourth Quarter 2022 (unaudited) |
|
Insurance |
|
Vertical Software |
|
Corporate |
|
Consolidated |
||||||||
Revenue |
|
$ |
31.2 |
|
|
$ |
33.0 |
|
|
$ |
— |
|
|
$ |
64.1 |
|
Revenue less cost of revenue |
|
$ |
19.8 |
|
|
$ |
24.1 |
|
|
$ |
— |
|
|
$ |
43.9 |
|
As % of revenue |
|
|
64 |
% |
|
|
73 |
% |
|
|
— |
% |
|
|
69 |
% |
GAAP net loss |
|
|
|
|
|
|
|
$ |
(35.5 |
) |
||||||
Adjusted EBITDA (loss) |
(1) |
$ |
0.7 |
|
|
$ |
1.1 |
|
|
$ |
(15.1 |
) |
|
$ |
(13.3 |
) |
Adjusted EBITDA (loss) as a percent of revenue |
(2) |
|
2 |
% |
|
|
3 |
% |
|
|
— |
% |
|
|
(21 |
) % |
Year Ended December 31, 2023 (unaudited) |
|
Insurance |
|
Vertical Software |
|
Corporate |
|
Consolidated |
||||||||
Revenue |
|
$ |
305.2 |
|
|
$ |
125.1 |
|
|
$ |
— |
|
|
$ |
430.3 |
|
Year-over-year growth |
|
|
152 |
% |
|
|
(19 |
) % |
|
|
— |
% |
|
|
56 |
% |
Revenue less cost of revenue |
|
$ |
114.7 |
|
|
$ |
95.4 |
|
|
$ |
— |
|
|
$ |
210.1 |
|
Year-over-year growth |
|
|
95 |
% |
|
|
(13 |
) % |
|
|
— |
% |
|
|
25 |
% |
As % of revenue |
|
|
38 |
% |
|
|
76 |
% |
|
|
— |
% |
|
|
49 |
% |
GAAP net loss |
|
|
|
|
|
|
|
$ |
(133.9 |
) |
||||||
Adjusted EBITDA (loss) |
(1) |
$ |
12.3 |
|
|
$ |
4.3 |
|
|
$ |
(61.1 |
) |
|
$ |
(44.5 |
) |
Adjusted EBITDA (loss) as a percent of revenue |
(2) |
|
4 |
% |
|
|
3 |
% |
|
|
— |
% |
|
|
(10 |
) % |
Year Ended December 31, 2022 (unaudited) |
|
Insurance |
|
Vertical Software |
|
Corporate |
|
Consolidated |
||||||||
Revenue |
|
$ |
121.0 |
|
|
$ |
154.9 |
|
|
$ |
— |
|
|
$ |
275.9 |
|
Revenue less cost of revenue |
|
$ |
58.8 |
|
|
$ |
109.6 |
|
|
$ |
— |
|
|
$ |
168.4 |
|
As % of revenue |
|
|
49 |
% |
|
|
71 |
% |
|
|
— |
% |
|
|
61 |
% |
GAAP net loss |
|
|
|
|
|
|
|
$ |
(156.6 |
) |
||||||
Adjusted EBITDA (loss) |
(1) |
$ |
(5.5 |
) |
|
$ |
14.7 |
|
|
$ |
(58.8 |
) |
|
$ |
(49.6 |
) |
Adjusted EBITDA (loss) as a percent of revenue |
(2) |
|
(5 |
) |
|
|
9 |
% |
|
|
— |
% |
|
|
(18 |
) % |
____________________________________________ |
||
| (1) | See Non-GAAP Financial Measures section for the definition and Adjusted EBITDA (loss) table for the reconciliation to GAAP net income (loss) |
|
| (2) | Adjusted EBITDA (loss) as a percent of revenue is calculated as Adjusted EBITDA (loss) divided by Revenue |
|
The following table presents the Company’s key performance indicators (1).
|
|
Three Months Ended December 31, |
|||||||||
|
|
2023 |
|
2022 |
|
% Change |
|||||
Gross Written Premium (in millions) |
|
$ |
112 |
|
|
$ |
131 |
|
|
(14 |
) % |
Policies in Force (in thousands) |
|
|
310 |
|
|
|
389 |
|
|
(20 |
) % |
Annualized Revenue per Policy (unrounded) |
|
$ |
1,120 |
|
|
$ |
347 |
|
|
223 |
% |
Annualized Premium per Policy (unrounded) |
|
$ |
1,861 |
|
|
$ |
1,391 |
|
|
34 |
% |
Premium Retention Rate |
|
|
96 |
% |
|
|
107 |
% |
|
|
|
Gross Loss Ratio |
|
|
36 |
% |
|
|
56 |
% |
|
|
|
Average Companies in Quarter (unrounded) |
|
|
29,919 |
|
|
|
30,860 |
|
|
(3 |
)% |
Average Monthly Revenue per Account in Quarter (unrounded) |
|
$ |
1,277 |
|
|
$ |
693 |
|
|
84 |
% |
Monetized Services (unrounded) |
|
|
219,657 |
|
|
|
212,992 |
|
|
3 |
% |
Average Quarterly Revenue per Monetized Service (unrounded) |
|
$ |
448 |
|
|
$ |
219 |
|
|
105 |
% |
_____________________________________ |
||
| (1) | Definitions of the key performance indicators presented in this table are included on page 10 of this release. |
|
Balance Sheet Information (unaudited)
(dollars are in millions) |
|
December 31,
|
|
December 31,
|
|
Change |
|||
Cash and cash equivalents |
|
$ |
258.4 |
|
$ |
215.1 |
|
20 |
% |
Investments |
|
|
139.2 |
|
|
91.6 |
|
52 |
% |
Cash, cash equivalents and investments |
|
$ |
397.6 |
|
$ |
306.7 |
|
30 |
% |
The Company ended the fourth quarter of 2023 with cash, cash equivalents and investments of
As of December 31, 2023, outstanding principal for convertible debt was
Post Balance Sheet Events
Following the period end, the Company signed a business collaboration agreement with Aon Corp. and Aon Re, Inc. ("Aon") to provide a variety of services to Porch Group companies, resulting in payments to Porch of approximately
The Company completed the sale of EIG, its insurance agency, on January 31, 2024 for
The Company repurchased
Full Year 2024 Financial Outlook
Full year 2024 guidance is as follows:
Full Year 2024 Guidance |
|
Revenue
|
|
Revenue Less Cost of Revenue
|
|
Adjusted EBITDA1
|
|
Gross Written Premium2
|
| 1 | Adjusted EBITDA is a non-GAAP measure. |
|
| 2 |
2024 gross written premium (“GWP”) guidance is stated as the expected full-year GWP for 2024 and is the total premium written by our licensed insurance carrier(s) (before deductions for reinsurance) and premiums from our home warranty offerings (for the face value of one year’s premium). Note, 2023 GWP includes approximately |
Porch Group provides full year 2024 guidance based on current market conditions and expectations. The Company reiterated its Adjusted EBITDA profitability target for 2024 and future years on a full year basis. Guidance assumes a
Porch Group is not providing reconciliations of expected Adjusted EBITDA for future periods to the most directly comparable measures prepared in accordance with GAAP because the Company 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 the Company’s control.
Conference Call
Porch Group management will host a conference call today March 7, 2024, at 5:00 p.m. Eastern time (2:00 p.m. Pacific time). The call will be accompanied by a slide presentation available on the Investor Relations section of the Company’s website at ir.porchgroup.com. A question-and-answer session will follow management’s prepared remarks.
All are invited to listen to the event by registering for the webinar, a replay of the webinar will also be available. See the Investor Relations section of the Porch Group’s corporate website at ir.porchgroup.com.
About Porch Group
Porch Group, Inc., ("Porch") is a homeowners insurance and vertical software platform. Porch's strategy to win in homeowners insurance is to leverage unique data for advantaged underwriting, provide the best services for homebuyers, and protect the whole home. The long-term competitive moats that create this differentiation comes from Porch's leadership in home services software-as-a-service and its deep relationships with approximately 30 thousand companies that are key to the home-buying transaction, such as home inspectors, mortgage, and title companies.
To learn more about Porch, visit ir.porchgroup.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. These statements are based on the beliefs and assumptions of management. Although we, Porch Group, Inc., believe that our plans, intentions, and expectations reflected in or suggested by these forward-looking statements are reasonable, we cannot assure you that we will achieve or realize these plans, intentions, or expectations. Forward-looking statements are inherently subject to risks, uncertainties, and assumptions. Generally, statements that are not historical facts, including statements concerning our possible or assumed future actions, business strategies, events, or results of operations, are forward-looking statements. These statements may be preceded by, followed by, or include the words “believe,” “estimate,” “expect,” “project,” “forecast,” “may,” “will,” “should,” “seek,” “plan,” “scheduled,” “anticipate,” “intend,” or similar expressions.
Forward-looking statements are not guarantees of performance. You should not put undue reliance on these statements which speak only as of the date hereof. 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. You should understand that the following important factors, among others, could affect our future results and could cause those results or other outcomes to differ materially from those expressed or implied in our forward-looking statements:
- expansion plans and opportunities, and managing growth, to build a consumer brand;
- the incidence, frequency, and severity of weather events, extensive wildfires, and other catastrophes;
- economic conditions, especially those affecting the housing, insurance, and financial markets;
- expectations regarding revenue, cost of revenue, operating expenses, and the ability to achieve and maintain future profitability;
- existing and developing federal and state laws and regulations, including with respect to insurance, warranty, privacy, information security, data protection, and taxation, and management’s interpretation of and compliance with such laws and regulations;
- our reinsurance program, which includes the use of a captive reinsurer, the success of which is dependent on a number of factors outside management’s control, along with reliance on reinsurance to protect against loss;
- the uncertainty and significance of the known and unknown effects on our insurance carrier subsidiary, Homeowners of America Insurance Company (“HOA”), and us due to the termination of a reinsurance contract following the fraud committed by Vesttoo Ltd. (“Vesttoo”), including, but not limited to, the outcome of Vesttoo’s Chapter 11 bankruptcy proceedings; our ability to successfully pursue claims arising out of the fraud, the costs associated with pursuing the claims, and the timeframe associated with any recoveries; HOA's ability to obtain and maintain adequate reinsurance coverage against excess losses; HOA’s ability to stay out of regulatory supervision and maintain its financial stability rating; and HOA’s ability to maintain a healthy surplus;
- uncertainties related to regulatory approval of insurance rates, policy forms, insurance products, license applications, acquisitions of businesses, or strategic initiatives, including the reciprocal restructuring, and other matters within the purview of insurance regulators;
- reliance on strategic, proprietary relationships to provide us with access to personal data and product information, and the ability to use such data and information to increase transaction volume and attract and retain customers;
- the ability to develop new, or enhance existing, products, services, and features and bring them to market in a timely manner;
- changes in capital requirements, and the ability to access capital when needed to provide statutory surplus;
- our ability to timely repay our outstanding indebtedness;
- the increased costs and initiatives required to address new legal and regulatory requirements arising from developments related to cybersecurity, privacy, and data governance and the increased costs and initiatives to protect against data breaches, cyber-attacks, virus or malware attacks, or other infiltrations or incidents affecting system integrity, availability, and performance;
- retaining and attracting skilled and experienced employees;
- costs related to being a public company; and
- other risks and uncertainties discussed in Part I, Item 1A, “Risk Factors,” in our Annual Report on Form 10-K (“Annual Report”) for the year ended December 31, 2022; in Part II, Item 1A, “Risk Factors,” in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023; in Part II, Item 1A, “Risk Factors,” in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2023; in Part II, Item 1A, "Risk Factors," in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, and in subsequent reports, including our Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission (“SEC”), all of which are available on the SEC’s website at www.sec.gov.
We caution you that the foregoing list may not contain all of the risks to forward-looking statements made in this release.
You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this release primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors, including those described in Item 1A, “Risk Factors,” and elsewhere in this release. We disclaim any obligation to update publicly any forward-looking statements, whether in response to new information, future events, or otherwise, except as required by applicable law.
Non-GAAP Financial Measures
This release includes non-GAAP financial measures, such as Adjusted EBITDA (Loss) and Adjusted EBITDA (Loss) as a percent of revenue.
We define Adjusted EBITDA (Loss) as net income (loss) adjusted for interest expense; income taxes; depreciation and amortization; gain or loss on extinguishment of debt; other expense (income), net; impairments of intangible assets and goodwill; provision for doubtful accounts related to reinsurance, or related recoveries; impairments of property, equipment, and software; stock-based compensation expense; mark-to-market gains or losses recognized on changes in the value of contingent consideration arrangements, earnouts, warrants, and derivatives; restructuring costs; acquisition and other transaction costs; and non-cash bonus expense. Adjusted EBITDA (Loss) as a percent of revenue is defined as Adjusted EBITDA (Loss) divided by total revenue.
Our management uses these non-GAAP financial measures as supplemental measures of our 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. We believe that the use of these non-GAAP financial measures provides investors with useful information to evaluate our operating and financial performance and trends and in comparing our financial results with competitors, other similar companies and companies across different industries, many of which present similar non-GAAP financial measures to investors. However, our definitions and methodology in calculating these non-GAAP measures may not be comparable to those used by other companies. In addition, we 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 our consolidated financial statements. We may also incur future income or expenses similar to those excluded from these non-GAAP financial measures, and the 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. We are not providing reconciliations of non-GAAP financial measures for future periods to the most directly comparable measures prepared in accordance with GAAP. We are unable to provide these reconciliations without unreasonable effort because certain information necessary to calculate such measures on a GAAP basis is unavailable or dependent on the timing of future events outside of our control.
The following tables reconcile Net loss to Adjusted EBITDA (Loss) for the periods presented (dollar amounts in thousands):
|
Three Months Ended December 31, |
|
Year Ended December 31, |
||||||||||||
(unaudited) |
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Net loss |
$ |
(2,486 |
) |
|
$ |
(35,473 |
) |
|
$ |
(133,933 |
) |
|
$ |
(156,559 |
) |
Interest expense |
|
10,598 |
|
|
|
2,219 |
|
|
|
31,828 |
|
|
|
8,723 |
|
Income tax provision |
|
588 |
|
|
|
574 |
|
|
|
622 |
|
|
|
842 |
|
Depreciation and amortization |
|
5,914 |
|
|
|
6,356 |
|
|
|
24,415 |
|
|
|
27,930 |
|
Mark-to-market losses (gains) |
|
774 |
|
|
|
1,585 |
|
|
|
(1,003 |
) |
|
|
(21,364 |
) |
Gain on extinguishment of debt |
|
— |
|
|
|
— |
|
|
|
(81,354 |
) |
|
|
— |
|
Impairment loss on intangible assets and goodwill |
|
— |
|
|
|
4,329 |
|
|
|
57,232 |
|
|
|
61,386 |
|
Impairment loss on property, equipment, and software |
|
— |
|
|
|
535 |
|
|
|
254 |
|
|
|
637 |
|
Stock-based compensation expense |
|
432 |
|
|
|
6,396 |
|
|
|
20,709 |
|
|
|
27,041 |
|
Loss (gain) on reinsurance contract (1) |
|
(5,159 |
) |
|
|
— |
|
|
|
36,042 |
|
|
|
— |
|
Other income, net |
|
(368 |
) |
|
|
(608 |
) |
|
|
(3,893 |
) |
|
|
(571 |
) |
Restructuring costs (2) |
|
1,226 |
|
|
|
647 |
|
|
|
4,015 |
|
|
|
647 |
|
Acquisition and other transaction costs |
|
144 |
|
|
|
104 |
|
|
|
552 |
|
|
|
1,687 |
|
Non-cash bonus expense |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Adjusted EBITDA (Loss) |
$ |
11,663 |
|
|
$ |
(13,336 |
) |
|
$ |
(44,514 |
) |
|
$ |
(49,601 |
) |
Adjusted EBITDA (Loss) as a percentage of revenue |
|
10 |
% |
|
|
(21 |
) % |
|
|
(10 |
) % |
|
|
(18 |
) % |
______________________________________ |
||
| (1) | Loss on reinsurance contract relates to one reinsurer. |
|
| (2) | Primarily consists of costs related to forming a reciprocal exchange. |
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
||||||||||||
(unaudited) |
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Segment Adjusted EBITDA (Loss) |
|
|
|
|
|
|
|
||||||||
Vertical Software |
$ |
(292 |
) |
|
$ |
1,078 |
|
|
$ |
4,307 |
|
|
$ |
14,678 |
|
Insurance |
|
31,648 |
|
|
|
704 |
|
|
|
12,320 |
|
|
|
(5,499 |
) |
Subtotal |
|
31,356 |
|
|
|
1,782 |
|
|
|
16,627 |
|
|
|
9,179 |
|
Corporate and other |
|
(19,693 |
) |
|
|
(15,118 |
) |
|
|
(61,141 |
) |
|
|
(58,780 |
) |
Adjusted EBITDA (Loss) |
$ |
11,663 |
|
|
$ |
(13,336 |
) |
|
$ |
(44,514 |
) |
|
$ |
(49,601 |
) |
The following table presents Segment Adjusted EBITDA (Loss) as a percentage of segment revenue for the periods presented:
|
Three Months Ended December 31, |
|
Year Ended December 31, |
||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||
Segment Adjusted EBITDA (Loss) as a Percentage of Revenue |
|||||||||||
Vertical Software |
(1.1 |
%) |
|
3.3 |
% |
|
3.4 |
% |
|
9.5 |
% |
Insurance |
36.4 |
% |
|
2.3 |
% |
|
4.0 |
% |
|
(4.5 |
) % |
Key Performance Indicators
In the management of these businesses, we identify, measure and evaluate various operating metrics. The key performance measures and operating metrics used in managing the businesses are discussed below. These key performance measures and operating metrics are not prepared in accordance with generally accepted accounting principles in
Gross Written Premium — We define Gross Written Premium as the total premium written by our licensed insurance carrier(s) (before deductions for reinsurance); premiums from our home warranty offerings (for the face value of one year’s premium); and premiums of policies placed with third-party insurance companies for which we earn a commission.
Policies in Force — We define Policies in Force as the number of in-force policies at the end of the period for the Insurance segment, including policies and warranties written by us and policies and warranties written by third parties for which we earn a commission.
Annualized Revenue per Policy — We define Annualized Revenue per Policy as quarterly revenue for the Insurance segment, divided by the number of Policies in Force in the Insurance segment, multiplied by four.
Annualized Premium per Policy — We define Annualized Premium per Policy as the total direct earned premium for HOA, our insurance carrier, divided by the number of active insurance policies at the end of the period, multiplied by four.
Premium Retention Rate — We define Premium Retention Rate as the ratio of our insurance carrier’s renewed premiums over the last four quarters to base premiums, which is the sum of the preceding year’s premiums that either renewed or expired.
Gross Loss Ratio — We define Gross Loss Ratio as our insurance carrier’s gross losses divided by the gross earned premium for the respective period on an accident year basis.
Average Companies in Quarter — We define Average Companies in Quarter as the straight-line average of the number of companies as of the end of period compared with the beginning of period across all of our home services verticals that (i) generate recurring revenue and (ii) generated revenue in the quarter. For new acquisitions, the number of companies is determined in the initial quarter based on the percentage of the quarter the acquired business is a part of Porch.
Average Monthly Revenue per Account in Quarter — We view our ability to increase revenue generated from existing customers as a key component of our growth strategy. Average Monthly Revenue per Account in Quarter is defined as the average revenue per month generated across all home services company customer accounts in a quarterly period. Average Monthly Revenue per Account in Quarter is derived from all customers and total revenue.
Monetized Services — We connect consumers with home services companies nationwide and offer a full range of products and services where homeowners can, among other things: (1) compare and buy home insurance policies (along with auto, flood and umbrella policies) and warranties with competitive rates and coverage; (2) arrange for a variety of services in connection with their move, from labor to load or unload a truck to full-service, long-distance moving services; (3) discover and install home automation and security systems; (4) compare internet and television options for their new home; (5) book small handyman jobs at fixed, upfront prices with guaranteed quality; and (6) compare bids from home improvement professionals who can complete bigger jobs. We track the number of monetized services performed through our platform each quarter and the revenue generated per service performed in order to measure market penetration with homebuyers and homeowners and our ability to deliver high-revenue services within those groups. Monetized Services is defined as the total number of services from which we generated revenue, including, but not limited to, new and renewing insurance and warranty customers, completed moving jobs, security installations, TV/Internet installations or other home projects, measured over the period.
Average Quarterly Revenue per Monetized Service — We believe that shifting the mix of services delivered to homebuyers and homeowners toward higher revenue services is an important component of our growth strategy. Average Quarterly Revenue per Monetized Service is the average revenue generated per monetized service performed in a quarterly period. When calculating Average Quarterly Revenue per Monetized Service, average revenue is defined as total quarterly service transaction revenues generated from monetized services.
PORCH GROUP, INC. Consolidated Balance Sheets (Unaudited) (all numbers in thousands) |
|||||||
|
December 31, |
||||||
|
2023 |
|
2022 |
||||
Assets |
|
|
|
||||
Current assets |
|
|
|
||||
Cash and cash equivalents |
$ |
258,418 |
|
|
$ |
215,060 |
|
Accounts receivable, net |
|
24,288 |
|
|
|
26,438 |
|
Short-term investments |
|
35,588 |
|
|
|
36,523 |
|
Reinsurance balance due |
|
83,582 |
|
|
|
299,060 |
|
Prepaid expenses and other current assets |
|
13,214 |
|
|
|
11,293 |
|
Deferred policy acquisition costs |
|
27,174 |
|
|
|
8,716 |
|
Restricted cash and cash equivalents |
|
38,814 |
|
|
|
13,545 |
|
Total current assets |
|
481,078 |
|
|
|
610,635 |
|
Property, equipment, and software, net |
|
16,861 |
|
|
|
12,240 |
|
Goodwill |
|
191,907 |
|
|
|
244,697 |
|
Long-term investments |
|
103,588 |
|
|
|
55,118 |
|
Intangible assets, net |
|
87,216 |
|
|
|
108,255 |
|
Long-term insurance commissions receivable |
|
13,429 |
|
|
|
12,265 |
|
Other assets |
|
5,314 |
|
|
|
5,847 |
|
Total assets |
$ |
899,393 |
|
|
$ |
1,049,057 |
|
|
|
|
|
||||
Liabilities and Stockholders’ Equity (Deficit) |
|
|
|
||||
Current liabilities |
|
|
|
||||
Accounts payable |
$ |
8,761 |
|
|
$ |
6,268 |
|
Accrued expenses and other current liabilities |
|
59,396 |
|
|
|
39,742 |
|
Deferred revenue |
|
248,683 |
|
|
|
270,690 |
|
Refundable customer deposits |
|
17,980 |
|
|
|
20,142 |
|
Current debt |
|
244 |
|
|
|
16,455 |
|
Losses and loss adjustment expense reserves |
|
95,503 |
|
|
|
100,632 |
|
Other insurance liabilities, current |
|
31,585 |
|
|
|
61,710 |
|
Total current liabilities |
|
462,152 |
|
|
|
515,639 |
|
Long-term debt |
|
435,495 |
|
|
|
425,310 |
|
Other liabilities |
|
37,429 |
|
|
|
28,755 |
|
Total liabilities |
|
935,076 |
|
|
|
969,704 |
|
Commitments and contingencies (Note 16) |
|
|
|
||||
Stockholders’ equity (deficit) |
|
|
|
||||
Common stock, |
|
10 |
|
|
|
10 |
|
Authorized shares – 400 million and 400 million, at December 31, 2023 and 2022, respectively |
|
|
|
||||
Issued and outstanding shares – 97.1 million and 98.5 million, at December 31, 2023 and 2022, respectively |
|
|
|
||||
Additional paid-in capital |
|
690,223 |
|
|
|
670,537 |
|
Accumulated other comprehensive loss |
|
(3,860 |
) |
|
|
(6,171 |
) |
Accumulated deficit |
|
(722,056 |
) |
|
|
(585,023 |
) |
Total stockholders’ equity (deficit) |
|
(35,683 |
) |
|
|
79,353 |
|
Total liabilities and stockholders’ equity (deficit) |
$ |
899,393 |
|
|
$ |
1,049,057 |
|
PORCH GROUP, INC. Consolidated Statements of Operations (Unaudited) (all numbers in thousands except per share amounts) |
|||||||||||||||
|
Three Months Ended December 31, |
|
Year Ended December 31, |
||||||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Revenue |
$ |
114,612 |
|
|
$ |
64,113 |
|
|
$ |
430,302 |
|
|
$ |
275,948 |
|
Operating expenses: |
|
|
|
|
|
|
|
||||||||
Cost of revenue |
|
34,677 |
|
|
|
20,170 |
|
|
|
220,243 |
|
|
|
107,577 |
|
Selling and marketing |
|
36,950 |
|
|
|
28,031 |
|
|
|
144,307 |
|
|
|
113,848 |
|
Product and technology |
|
14,611 |
|
|
|
15,119 |
|
|
|
58,502 |
|
|
|
59,565 |
|
General and administrative |
|
25,925 |
|
|
|
29,835 |
|
|
|
103,192 |
|
|
|
109,814 |
|
Provision for (recovery of) doubtful accounts |
|
(4,931 |
) |
|
|
424 |
|
|
|
37,180 |
|
|
|
805 |
|
Impairment loss on intangible assets and goodwill |
|
— |
|
|
|
4,329 |
|
|
|
57,232 |
|
|
|
61,386 |
|
Total operating expenses |
|
107,232 |
|
|
|
97,908 |
|
|
|
620,656 |
|
|
|
452,995 |
|
Operating income (loss) |
|
7,380 |
|
|
|
(33,795 |
) |
|
|
(190,354 |
) |
|
|
(177,047 |
) |
Other income (expense): |
|
|
|
|
|
|
|
||||||||
Interest expense |
|
(10,598 |
) |
|
|
(2,219 |
) |
|
|
(31,828 |
) |
|
|
(8,723 |
) |
Change in fair value of earnout liability |
|
44 |
|
|
|
13 |
|
|
|
44 |
|
|
|
13,822 |
|
Change in fair value of private warrant liability |
|
(1,064 |
) |
|
|
95 |
|
|
|
(444 |
) |
|
|
14,486 |
|
Change in fair value of derivatives |
|
(1,821 |
) |
|
|
— |
|
|
|
(4,261 |
) |
|
|
— |
|
Gain on extinguishment of debt |
|
— |
|
|
|
— |
|
|
|
81,354 |
|
|
|
— |
|
Investment income and realized gains, net of investment expenses |
|
3,793 |
|
|
|
399 |
|
|
|
8,285 |
|
|
|
1,174 |
|
Other income, net |
|
368 |
|
|
|
608 |
|
|
|
3,893 |
|
|
|
571 |
|
Total other income (expense) |
|
(9,278 |
) |
|
|
(1,104 |
) |
|
|
57,043 |
|
|
|
21,330 |
|
Loss before income taxes |
|
(1,898 |
) |
|
|
(34,899 |
) |
|
|
(133,311 |
) |
|
|
(155,717 |
) |
Income tax provision |
|
(588 |
) |
|
|
(574 |
) |
|
|
(622 |
) |
|
|
(842 |
) |
Net loss |
$ |
(2,486 |
) |
|
$ |
(35,473 |
) |
|
$ |
(133,933 |
) |
|
$ |
(156,559 |
) |
|
|
|
|
|
|
|
|
||||||||
Net loss per share - basic and diluted |
$ |
(0.03 |
) |
|
$ |
(0.36 |
) |
|
$ |
(1.39 |
) |
|
$ |
(1.61 |
) |
|
|
|
|
|
|
|
|
||||||||
Shares used in computing basic and diluted net loss per share |
|
96,896 |
|
|
|
98,366 |
|
|
|
96,057 |
|
|
|
97,351 |
|
The following table summarizes the classification of stock-based compensation expense in the unaudited consolidated statements of operations.
|
Three Months Ended December 31, |
|
Year Ended December 31, |
||||||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Selling and marketing |
$ |
323 |
|
|
$ |
1,263 |
|
|
$ |
3,351 |
|
|
$ |
4,855 |
|
Product and technology |
|
154 |
|
|
|
1,547 |
|
|
|
4,804 |
|
|
|
5,435 |
|
General and administrative |
|
(45 |
) |
|
|
3,586 |
|
|
12,554 |
|
|
16,751 |
|||
Total stock-based compensation expense |
$ |
432 |
|
|
$ |
6,396 |
|
|
$ |
20,709 |
|
|
$ |
27,041 |
|
PORCH GROUP, INC. Consolidated Statements of Cash Flows (Unaudited) (all numbers in thousands) |
|||||||
|
Year Ended December 31, |
||||||
|
2023 |
|
2022 |
||||
Cash flows from operating activities: |
|
|
|
||||
Net loss |
$ |
(133,933 |
) |
|
$ |
(156,559 |
) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities |
|
|
|
||||
Depreciation and amortization |
|
24,415 |
|
|
|
27,930 |
|
Provision for doubtful accounts |
|
37,180 |
|
|
|
805 |
|
Impairment loss on intangible assets and goodwill |
|
57,232 |
|
|
|
61,386 |
|
Gain on extinguishment of debt |
|
(81,354 |
) |
|
|
— |
|
Change in fair value of private warrant liability |
|
444 |
|
|
|
(14,486 |
) |
Change in fair value of contingent consideration |
|
(5,664 |
) |
|
|
6,944 |
|
Change in fair value of earnout liability and derivatives |
|
4,217 |
|
|
|
(13,822 |
) |
Stock-based compensation |
|
20,709 |
|
|
|
27,041 |
|
Non-cash interest expense |
|
20,756 |
|
|
|
2,270 |
|
Other |
|
1,057 |
|
|
|
3,590 |
|
Change in operating assets and liabilities, net of acquisitions and divestitures |
|
|
|
||||
Accounts receivable |
|
1,030 |
|
|
|
(4,886 |
) |
Reinsurance balance due |
|
179,436 |
|
|
|
(70,644 |
) |
Deferred policy acquisition costs |
|
(18,458 |
) |
|
|
(4,716 |
) |
Accounts payable |
|
2,491 |
|
|
|
(697 |
) |
Accrued expenses and other current liabilities |
|
(1,386 |
) |
|
|
(6,519 |
) |
Losses and loss adjustment expense reserves |
|
(5,129 |
) |
|
|
38,683 |
|
Other insurance liabilities, current |
|
(30,125 |
) |
|
|
21,686 |
|
Deferred revenue |
|
(21,583 |
) |
|
|
66,254 |
|
Refundable customer deposits |
|
(13,925 |
) |
|
|
6,537 |
|
Other assets and liabilities, net |
|
(3,481 |
) |
|
|
(8,533 |
) |
Net cash provided by (used in) operating activities |
|
33,929 |
|
|
|
(17,736 |
) |
Cash flows from investing activities: |
|
|
|
||||
Purchases of property and equipment |
|
(851 |
) |
|
|
(2,350 |
) |
Capitalized internal use software development costs |
|
(9,245 |
) |
|
|
(8,100 |
) |
Purchases of short-term and long-term investments |
|
(91,015 |
) |
|
|
(52,506 |
) |
Maturities, sales of short-term and long-term investments |
|
46,832 |
|
|
|
21,906 |
|
Acquisitions, net of cash acquired |
|
(1,974 |
) |
|
|
(38,628 |
) |
Net cash used in investing activities |
|
(56,253 |
) |
|
|
(79,678 |
) |
Cash flows from financing activities: |
|
|
|
||||
Proceeds from line of credit |
|
— |
|
|
|
5,000 |
|
Proceeds from advance funding |
|
319 |
|
|
|
18,643 |
|
Repayments of advance funding |
|
(4,133 |
) |
|
|
(22,746 |
) |
Proceeds from issuance of debt |
|
116,667 |
|
|
|
10,000 |
|
Repayments of principal |
|
(10,150 |
) |
|
|
(5,150 |
) |
Cash paid for debt issuance costs |
|
(4,694 |
) |
|
|
— |
|
Income tax withholdings paid upon vesting of restricted stock units |
|
(1,240 |
) |
|
|
(3,108 |
) |
Repurchase of stock |
|
(5,608 |
) |
|
|
(1,813 |
) |
Other |
|
(210 |
) |
|
|
401 |
|
Net cash provided by financing activities |
|
90,951 |
|
|
|
1,227 |
|
Net change in cash, cash equivalents, and restricted cash |
$ |
68,627 |
|
|
$ |
(96,187 |
) |
Cash, cash equivalents, and restricted cash, beginning of period |
$ |
228,605 |
|
|
$ |
324,792 |
|
Cash, cash equivalents, and restricted cash end of period |
$ |
297,232 |
|
|
$ |
228,605 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20240307892100/en/
Investor Relations Contact:
Lois Perkins, Head of Investor Relations
Porch Group, Inc.
Loisperkins@porch.com
Source: Porch Group, Inc.
FAQ
What was Porch Group's total revenue for the fourth quarter of 2023?
How much did Adjusted EBITDA increase by in the fourth quarter of 2023 compared to the prior year?
What were some operational highlights from the fourth quarter of 2023?
What collaboration agreement did Porch Group sign after the period end?
What is Porch Group's full-year 2024 revenue guidance range?
