Porch Group Reports Third Quarter 2023 Results
- Porch Group reported a significant increase in total revenue of $129.6 million, up 67% compared to the prior year, driven by the Insurance Segment and a mix shift towards higher margin businesses in the Vertical Software segment.
- The company also achieved positive Adjusted EBITDA of $8.8 million, showing a substantial improvement from the prior year, and reported a GAAP net loss of $(5.7) million, a significant decrease from $(84.5) million in the prior year.
- The increase in Adjusted EBITDA and the focus on ongoing profitability through underwriting actions and cost reduction initiatives signal a positive financial outlook for the company.
- Porch Group's strong financial results and positive trends in the business have led to an increase in its full year 2023 guidance, with a reiterated target of achieving Adjusted EBITDA profitability in the second half of the year and in future years on a full year basis.
- None.
Porch Delivers Q3 Adjusted EBITDA of
GAAP net loss of
CEO Summary
"We are pleased to share our financial results with positive Adjusted EBITDA of
Third Quarter 2023 Financial Results
-
Total revenue of
$129.6 million 67% or$52.2 million $77.4 million -
Revenue less cost of revenue of
$76.6 million 59% of total revenue (third quarter of 2022:$44.4 million 57% of total revenue). Increase driven by premium per policy increases and other underwriting actions in the Insurance segment and a mix shift towards higher margin businesses in the Vertical Software segment. -
GAAP net loss of
$(5.7) million $(84.5) million -
Adjusted EBITDA of
$8.8 million $(10.9) million -
Gross written premium for the quarter in our Insurance segment was
$154 million -
$458.4 million -
$57 million $49 million
Third Quarter 2023 Operational Highlights
-
39% gross loss ratio and58% combined loss ratio, demonstrating the substantial impact of our unique data. - Approved in 12 states to use our unique property data in insurance pricing which improves risk accuracy so we can better price policies for customers.
- Sharing demand with third party agencies, with shared commissions, continues to progress nicely and perform well.
- Continue to launch new products across our software businesses to create more value for customers coupled with price increases.
The following table presents financial highlights of the Company’s third quarter 2023 results compared to the third quarter 2022 (dollars are in millions):
Third Quarter 2023 |
|
Insurance |
Vertical Software |
Corporate |
Consolidated |
|||||||||||||
Revenue |
|
$ |
95.2 |
|
$ |
34.3 |
|
$ |
— |
|
$ |
129.6 |
|
|||||
Year-over-year growth |
|
|
195 |
% |
|
(24 |
)% |
|
— |
% |
|
67 |
% |
|||||
Revenue less cost of revenue |
|
$ |
50.7 |
|
$ |
25.9 |
|
$ |
— |
|
$ |
76.6 |
|
|||||
Year-over-year growth |
|
|
263 |
% |
|
(15 |
)% |
|
— |
% |
|
72 |
% |
|||||
As % of revenue |
|
|
53 |
% |
|
75 |
% |
|
— |
% |
|
59 |
% |
|||||
GAAP net loss |
|
|
|
|
$ |
(5.7 |
) |
|||||||||||
Adjusted EBITDA (loss) |
(1) |
$ |
19.0 |
|
$ |
3.2 |
|
$ |
(13.4 |
) |
$ |
8.8 |
|
|||||
Adjusted EBITDA (loss) as a percent of revenue |
(2) |
|
20 |
% |
|
9 |
% |
|
— |
% |
|
7 |
% |
|||||
Third Quarter 2022 |
|
Insurance |
Vertical Software |
Corporate |
Consolidated |
|||||||||||||
Revenue |
|
$ |
32.3 |
|
$ |
45.0 |
|
$ |
— |
|
$ |
77.4 |
|
|||||
Revenue less cost of revenue |
|
$ |
14.0 |
|
$ |
30.4 |
|
$ |
— |
|
$ |
44.4 |
|
|||||
As % of revenue |
|
|
43 |
% |
|
68 |
% |
|
— |
% |
|
57 |
% |
|||||
GAAP net loss |
|
|
|
|
$ |
(84.5 |
) |
|||||||||||
Adjusted EBITDA (loss) |
(1) |
$ |
(0.9 |
) |
$ |
5.5 |
|
$ |
(15.6 |
) |
$ |
(10.9 |
) |
|||||
Adjusted EBITDA (loss) as a percent of revenue |
(2) |
|
(3 |
)% |
|
12 |
% |
|
— |
% |
|
(14 |
)% |
|||||
____________________________________________ |
||
(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 September 30, |
|||||||||
|
|
2023 |
|
2022 |
|
Change |
|||||
Gross Written Premium (in millions) |
|
$ |
154 |
|
|
$ |
157 |
|
|
(2 |
)% |
Policies in Force (in thousands) |
|
|
334 |
|
|
|
391 |
|
|
(15 |
)% |
Annualized Revenue per Policy (unrounded) |
|
$ |
1,139 |
|
|
$ |
300 |
|
|
280 |
% |
Annualized Premium per Policy (unrounded) |
|
$ |
1,762 |
|
|
$ |
1,276 |
|
|
38 |
% |
Premium Retention Rate |
|
|
100 |
% |
|
|
105 |
% |
|
|
|
Gross Loss Ratio |
|
|
39 |
% |
|
|
74 |
% |
|
|
|
Average Companies in Quarter (unrounded) |
|
|
30,675 |
|
|
|
30,951 |
|
|
(1 |
)% |
Average Revenue per Account per Month in Quarter (unrounded) |
|
$ |
1,436 |
|
|
$ |
833 |
|
|
72 |
% |
Monetized Services in Quarter (unrounded) |
|
|
225,096 |
|
|
|
318,452 |
|
|
(29 |
)% |
Average Revenue per Monetized Service in Quarter (unrounded) |
|
$ |
510 |
|
|
$ |
185 |
|
|
176 |
% |
____________________________________________ |
||
(1) |
Definitions of the key performance indicators presented in this table are included on page 9 of this release. |
|
Balance Sheet Information
(dollars are in millions) |
|
September 30,
|
|
December 31,
|
|
Change |
|||||
Cash and cash equivalents |
|
$ |
343.0 |
|
|
$ |
215.1 |
|
|
59 |
% |
Investments |
|
|
115.4 |
|
|
|
91.6 |
|
|
26 |
% |
Cash, cash equivalents and investments |
|
$ |
458.4 |
|
|
$ |
306.7 |
|
|
49 |
% |
The Company ended the third quarter of 2023 with unrestricted cash plus investments of
In the third quarter of 2023, Porch Group made a
As of September 30, 2023, outstanding principal for convertible debt was
Update on Vesttoo Matter
In the third quarter of 2023, HOA, a subsidiary of Porch Group, discovered that Vesttoo Ltd (“Vesttoo”), which arranged capital for one of our reinsurance contracts, faced allegations of fraudulent activity in connection with collateral it provided to HOA and certain other third parties. HOA terminated the associated contract on August 4, 2023, with an effective date of July 1, 2023. Porch recognized a charge of
In September 2023, HOA was placed under temporary supervision by the Texas Department of Insurance ("TDI"). The supervision order provides the TDI with more visibility and control during uncertain periods and to ensure there are sufficient plans to build capital surplus at the carrier. Following this, Demotech, Inc. withdrew the financial stability rating.
Following the period end, HOA was released from temporary supervision by the Texas Department of Insurance. The supervision period lasted for approximately two months, while the TDI became sufficiently comfortable with HOA’s operations and financial position post-Vesttoo.
Full Year 2023 Financial Outlook
Porch Group increases its previously provided full year 2023 guidance based on current market conditions and expectations. Taking into consideration the strong results from the third quarter of 2023 and the positive trends in the business.
The Company also reiterated its Adjusted EBITDA profitability target in the second half of the year and in future years on a full year basis. This assumes cat weather in Q4 is in line with historic trends with a
Revised 2023 guidance is as follows:
2023 Guidance |
|
Revenue
~
(previously: |
|
Revenue Less Cost of Revenue
(previously: |
|
Adj. EBITDA1
(previously: |
|
2023 Gross Written Premium2
(unchanged) |
1 |
Adjusted EBITDA is a non-GAAP measure. |
|
2 |
2023 gross written premium (“GWP”) guidance is stated as the expected full-year GWP for 2023 and is 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. |
Porch Group is not providing reconciliations of expected Adjusted EBITDA (loss) 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, November 7, 2023, 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 here. A replay of the webinar will also be available in the Investor Relations section of the Porch Group’s corporate website at ir.porchgroup.com.
About Porch Group
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. Although the Company believes that its plans, intentions, and expectations reflected in or suggested by these forward-looking statements are reasonable, the Company cannot assure you that it will achieve or realize these plans, intentions, or expectations. Forward-looking statements are inherently subject to risks, uncertainties, assumptions, and other factors which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Generally, statements that are not historical facts, including statements concerning the Company’s 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 “believes,” “estimates,” “expects,” “projects,” “forecasts,” “may,” “will,” “should,” “seeks,” “plans,” “scheduled,” “anticipates,” “intends,” or similar expressions.
These forward-looking statements are based upon estimates and assumptions that, while considered reasonable by the Company 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, and managing growth, to build a consumer brand; (2) the incidence, frequency, and severity of weather events, extensive wildfires, and other catastrophes; (3) economic conditions, especially those affecting the housing, insurance, and financial markets; (4) expectations regarding revenue, cost of revenue, operating expenses, and the ability to achieve and maintain future profitability; (5) 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; (6) the Company’s 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; (7) the uncertainty and significance of the known and unknown effects on the Company's insurance carrier subsidiary, Homeowners of America Insurance Company (“HOA”), and the Company due to the termination of a reinsurance contract following the allegations of fraud against Vesttoo Ltd. (“Vesttoo”), including, but not limited to, the implications from Demotech, Inc.’s (“Demotech”) withdrawal of HOA’s financial stability rating and the length of time before the rating is restored; the outcome of Vesttoo’s Chapter 11 bankruptcy proceedings; the Company's ability to successfully pursue claims arising out of the alleged 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 HOA’s ability to maintain a healthy surplus; (8) 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; (9) reliance on strategic, proprietary relationships to provide the Company 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; (10) the ability to develop new, or enhance existing, products, services, and features and bring them to market in a timely manner; (11) changes in capital requirements, and the ability to access capital when needed to provide statutory surplus; (12) 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; (13) retaining and attracting skilled and experienced employees; (14) costs related to being a public company; and (15) other risks and uncertainties discussed in Part I, Item 1A, “Risk Factors,” in the Company’s 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, and in Part II, Item 1A, “Risk Factors,” in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, as well as those discussed elsewhere in this report, including in Part II, Item 1A, “Risk Factors,” and in subsequent reports filed with the Securities and Exchange Commission (“SEC”), 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. The Company 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 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
|
|
Nine Months Ended
|
|||||||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|||||||||
Net loss |
$ |
(5,744 |
) |
$ |
(84,476 |
) |
$ |
(131,447 |
) |
$ |
(121,086 |
) |
||||
Interest expense |
|
10,267 |
|
|
2,152 |
|
|
21,230 |
|
|
6,504 |
|
||||
Income tax provision (benefit) |
|
116 |
|
|
(22 |
) |
|
34 |
|
|
268 |
|
||||
Depreciation and amortization |
|
6,272 |
|
|
8,675 |
|
|
18,501 |
|
|
21,574 |
|
||||
Mark-to-market losses (gains) |
|
(1,557 |
) |
|
398 |
|
|
(1,777 |
) |
|
(22,949 |
) |
||||
Gain on extinguishment of debt |
|
— |
|
|
— |
|
|
(81,354 |
) |
|
— |
|
||||
Impairment loss on intangible assets and goodwill |
|
— |
|
|
57,057 |
|
|
57,232 |
|
|
57,057 |
|
||||
Impairment loss on property, equipment, and software |
|
— |
|
|
30 |
|
|
254 |
|
|
101 |
|
||||
Stock-based compensation expense |
|
6,979 |
|
|
5,089 |
|
|
20,277 |
|
|
20,645 |
|
||||
Loss (gain) on reinsurance contract (1) |
|
(7,043 |
) |
|
— |
|
|
41,201 |
|
|
— |
|
||||
Other expense (income), net |
|
(1,185 |
) |
|
(70 |
) |
|
(3,525 |
) |
|
37 |
|
||||
Restructuring costs |
|
712 |
|
|
— |
|
|
2,789 |
|
|
— |
|
||||
Acquisition and other transaction costs |
|
22 |
|
|
261 |
|
|
408 |
|
|
1,583 |
|
||||
Non-cash bonus expense |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
||||
Adjusted EBITDA (Loss) |
$ |
8,839 |
|
$ |
(10,906 |
) |
$ |
(56,177 |
) |
$ |
(36,266 |
) |
||||
Adjusted EBITDA (Loss) as a percentage of revenue |
|
7 |
% |
|
(14 |
)% |
|
(18 |
)% |
|
(17 |
)% |
||||
______________________________________ |
||
(1) |
Loss on reinsurance contract relates to one reinsurer. |
|
|
Three Months Ended
|
|
Nine Months Ended
|
|||||||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|||||||||
Segment Adjusted EBITDA (Loss): |
|
|
|
|
|
|
|
|||||||||
Vertical Software |
$ |
3,179 |
|
|
$ |
5,545 |
|
|
$ |
4,599 |
|
|
$ |
14,081 |
|
|
Insurance |
|
19,038 |
|
|
|
(859 |
) |
|
|
(19,328 |
) |
|
|
(6,253 |
) |
|
Subtotal |
|
22,217 |
|
|
|
4,686 |
|
|
|
(14,729 |
) |
|
|
7,828 |
|
|
Corporate and other |
|
(13,378 |
) |
|
|
(15,592 |
) |
|
|
(41,448 |
) |
|
|
(44,094 |
) |
|
Adjusted EBITDA (Loss) |
$ |
8,839 |
|
|
$ |
(10,906 |
) |
|
$ |
(56,177 |
) |
|
$ |
(36,266 |
) |
|
The following table presents Segment Adjusted EBITDA (Loss) as a percentage of segment revenue for the periods presented:
|
Three Months Ended
|
|
Nine Months Ended
|
|||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|||||
Segment Adjusted EBITDA (Loss): |
|
|
|
|
|
|
|
|||||
Vertical Software |
9.3 |
% |
|
12.3 |
% |
|
4.7 |
% |
|
11.5 |
% |
|
Insurance |
20.0 |
% |
|
(2.7 |
)% |
|
(8.9 |
)% |
|
(7.0 |
)% |
|
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.
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 Revenue per Account per Month in Quarter — We view our ability to increase revenue generated from existing customers as a key component of our growth strategy. Average Revenue per Account per Month in Quarter is defined as the average revenue per month generated across all home services company customer accounts in a quarterly period. Average Revenue per Account per Month in Quarter is derived from all customers and total revenue.
Monetized Services in Quarter — 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 in Quarter is defined as the total number of unique 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 a quarterly period.
Average Revenue per Monetized Service in Quarter — 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 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 service transaction revenues generated from monetized services.
PORCH GROUP, INC. |
||||||||
Condensed Consolidated Balance Sheets (Unaudited) |
||||||||
(all numbers in thousands, except share amounts) |
||||||||
|
|
|
|
|
||||
|
|
September 30,
|
|
December 31,
|
||||
Assets |
|
|
|
|||||
Current assets |
|
|
|
|||||
Cash and cash equivalents |
$ |
343,008 |
|
|
$ |
215,060 |
|
|
Accounts receivable, net |
|
26,890 |
|
|
|
26,438 |
|
|
Short-term investments |
|
28,679 |
|
|
|
36,523 |
|
|
Reinsurance balance due |
|
98,491 |
|
|
|
299,060 |
|
|
Prepaid expenses and other current assets |
|
45,981 |
|
|
|
20,009 |
|
|
Restricted cash |
|
18,706 |
|
|
|
13,545 |
|
|
Total current assets |
|
561,755 |
|
|
|
610,635 |
|
|
Property, equipment, and software, net |
|
15,660 |
|
|
|
12,240 |
|
|
Goodwill |
|
191,907 |
|
|
|
244,697 |
|
|
Long-term investments |
|
86,689 |
|
|
|
55,118 |
|
|
Intangible assets, net |
|
91,952 |
|
|
|
108,255 |
|
|
Long-term insurance commissions receivable |
|
13,673 |
|
|
|
12,265 |
|
|
Other assets |
|
5,748 |
|
|
|
5,847 |
|
|
Total assets |
$ |
967,384 |
|
|
$ |
1,049,057 |
|
|
|
|
|
|
|||||
Liabilities and Stockholders’ Equity (Deficit) |
|
|
|
|||||
Current liabilities |
|
|
|
|||||
Accounts payable |
$ |
9,054 |
|
|
$ |
6,268 |
|
|
Accrued expenses and other current liabilities |
|
42,257 |
|
|
|
39,742 |
|
|
Deferred revenue |
|
265,483 |
|
|
|
270,690 |
|
|
Refundable customer deposits |
|
19,424 |
|
|
|
20,142 |
|
|
Current debt |
|
1,647 |
|
|
|
16,455 |
|
|
Losses and loss adjustment expense reserves |
|
129,775 |
|
|
|
100,632 |
|
|
Other insurance liabilities, current |
|
54,183 |
|
|
|
61,710 |
|
|
Total current liabilities |
|
521,823 |
|
|
|
515,639 |
|
|
Long-term debt |
|
431,186 |
|
|
|
425,310 |
|
|
Operating lease liabilities, non-current |
|
1,897 |
|
|
|
2,536 |
|
|
Earnout liability, at fair value |
|
44 |
|
|
|
44 |
|
|
Private warrant liability, at fair value |
|
87 |
|
|
|
707 |
|
|
Derivative liability, at fair value |
|
26,310 |
|
|
|
— |
|
|
Other liabilities |
|
23,217 |
|
|
|
25,468 |
|
|
Total liabilities |
|
1,004,564 |
|
|
|
969,704 |
|
|
Commitments and contingencies |
|
|
|
|||||
Stockholders’ equity (deficit) |
|
|
|
|||||
Common stock |
|
10 |
|
|
|
10 |
|
|
Additional paid-in capital |
|
690,024 |
|
|
|
670,537 |
|
|
Accumulated other comprehensive loss |
|
(7,643 |
) |
|
|
(6,171 |
) |
|
Accumulated deficit |
|
(719,571 |
) |
|
|
(585,023 |
) |
|
Total stockholders’ equity (deficit) |
|
(37,180 |
) |
|
|
79,353 |
|
|
Total liabilities and stockholders’ equity (deficit) |
$ |
967,384 |
|
|
$ |
1,049,057 |
|
|
PORCH GROUP, INC. |
||||||||||||||||
Condensed Consolidated Statements of Operations (Unaudited) |
||||||||||||||||
(all numbers in thousands, except share amounts) |
||||||||||||||||
|
|
|
||||||||||||||
|
Three Months Ended
|
Nine Months Ended
|
||||||||||||||
|
2023 |
2022 |
2023 |
2022 |
||||||||||||
Revenue |
$ |
129,556 |
|
$ |
77,353 |
|
$ |
315,690 |
|
$ |
211,835 |
|
||||
Operating expenses: |
|
|
|
|
||||||||||||
Cost of revenue |
|
52,961 |
|
|
32,940 |
|
|
185,566 |
|
|
87,407 |
|
||||
Selling and marketing |
|
40,135 |
|
|
30,580 |
|
|
107,357 |
|
|
85,817 |
|
||||
Product and technology |
|
14,446 |
|
|
14,437 |
|
|
43,891 |
|
|
44,446 |
|
||||
General and administrative |
|
28,659 |
|
|
25,083 |
|
|
77,267 |
|
|
79,979 |
|
||||
Provision for (recovery of) doubtful accounts |
|
(6,844 |
) |
|
174 |
|
|
42,111 |
|
|
381 |
|
||||
Impairment loss on intangible assets and goodwill |
|
— |
|
|
57,057 |
|
|
57,232 |
|
|
57,057 |
|
||||
Total operating expenses |
|
129,357 |
|
|
160,271 |
|
|
513,424 |
|
|
355,087 |
|
||||
Operating income (loss) |
|
199 |
|
|
(82,918 |
) |
|
(197,734 |
) |
|
(143,252 |
) |
||||
Other income (expense): |
|
|
|
|
||||||||||||
Interest expense |
|
(10,267 |
) |
|
(2,152 |
) |
|
(21,230 |
) |
|
(6,504 |
) |
||||
Change in fair value of earnout liability |
|
— |
|
|
43 |
|
|
— |
|
|
13,809 |
|
||||
Change in fair value of private warrant liability |
|
260 |
|
|
124 |
|
|
620 |
|
|
14,391 |
|
||||
Change in fair value of derivatives |
|
510 |
|
|
— |
|
|
(2,440 |
) |
|
— |
|
||||
Gain on extinguishment of debt |
|
— |
|
|
— |
|
|
81,354 |
|
|
— |
|
||||
Investment income and realized gains, net of investment expenses |
|
2,485 |
|
|
335 |
|
|
4,492 |
|
|
775 |
|
||||
Other income (expense), net |
|
1,185 |
|
|
70 |
|
|
3,525 |
|
|
(37 |
) |
||||
Total other income (expense) |
|
(5,827 |
) |
|
(1,580 |
) |
|
66,321 |
|
|
22,434 |
|
||||
Loss before income taxes |
|
(5,628 |
) |
|
(84,498 |
) |
|
(131,413 |
) |
|
(120,818 |
) |
||||
Income tax benefit (provision) |
|
(116 |
) |
|
22 |
|
|
(34 |
) |
|
(268 |
) |
||||
Net loss |
$ |
(5,744 |
) |
$ |
(84,476 |
) |
$ |
(131,447 |
) |
$ |
(121,086 |
) |
||||
|
|
|
|
|
||||||||||||
Net loss per share - basic and diluted |
$ |
(0.06 |
) |
$ |
(0.86 |
) |
$ |
(1.37 |
) |
$ |
(1.25 |
) |
||||
|
|
|
|
|
||||||||||||
Shares used in computing basic and diluted net loss per share |
|
96,366,613 |
|
|
97,792,485 |
|
|
95,770,676 |
|
|
97,009,351 |
|
||||
The following table summarizes the classification of stock-based compensation expense in the unaudited condensed consolidated statements of operations.
|
Three Months Ended
|
|
Nine Months Ended
|
|||||||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|||||||||
Selling and marketing |
$ |
1,087 |
|
|
$ |
1,690 |
|
|
$ |
3,028 |
|
|
$ |
3,592 |
|
|
Product and technology |
|
1,947 |
|
|
|
911 |
|
|
|
4,650 |
|
|
|
3,888 |
|
|
General and administrative |
|
3,945 |
|
|
|
2,488 |
|
|
|
12,599 |
|
|
|
13,165 |
|
|
Total stock-based compensation expense |
$ |
6,979 |
|
|
$ |
5,089 |
|
|
$ |
20,277 |
|
|
$ |
20,645 |
|
|
PORCH GROUP, INC. |
||||||||
Unaudited Condensed Consolidated Statements of Cash Flows |
||||||||
(all numbers in thousands) |
||||||||
|
|
|
||||||
|
|
Nine Months Ended September 30, |
||||||
|
|
2023 |
|
2022 |
||||
Cash flows from operating activities: |
|
|
|
|||||
Net loss |
$ |
(131,447 |
) |
|
$ |
(121,086 |
) |
|
Adjustments to reconcile net loss to net cash provided by (used in) operating activities |
|
|
|
|||||
Depreciation and amortization |
|
18,501 |
|
|
|
21,574 |
|
|
Provision for (recovery of) doubtful accounts |
|
42,111 |
|
|
|
381 |
|
|
Impairment loss on intangible assets and goodwill |
|
57,232 |
|
|
|
57,057 |
|
|
Gain on extinguishment of debt |
|
(81,354 |
) |
|
|
— |
|
|
Change in fair value of private warrant liability |
|
(620 |
) |
|
|
(14,391 |
) |
|
Change in fair value of contingent consideration |
|
(3,597 |
) |
|
|
5,251 |
|
|
Change in fair value of earnout liability and derivatives |
|
2,440 |
|
|
|
(13,809 |
) |
|
Stock-based compensation |
|
20,277 |
|
|
|
20,645 |
|
|
Interest expense (non-cash) |
|
20,214 |
|
|
|
2,287 |
|
|
Other |
|
1,002 |
|
|
|
3,809 |
|
|
Change in operating assets and liabilities, net of acquisitions and divestitures |
|
|
|
|||||
Accounts receivable |
|
(1,344 |
) |
|
|
(6,971 |
) |
|
Reinsurance balance due |
|
159,368 |
|
|
|
(71,180 |
) |
|
Prepaid expenses and other current assets |
|
(25,972 |
) |
|
|
(5,295 |
) |
|
Accounts payable |
|
2,778 |
|
|
|
(248 |
) |
|
Accrued expenses and other current liabilities |
|
(9,323 |
) |
|
|
(8,001 |
) |
|
Losses and loss adjustment expense reserves |
|
29,143 |
|
|
|
38,349 |
|
|
Other insurance liabilities, current |
|
(7,527 |
) |
|
|
15,921 |
|
|
Deferred revenue |
|
(4,696 |
) |
|
|
71,600 |
|
|
Refundable customer deposits |
|
(12,248 |
) |
|
|
2,510 |
|
|
Long-term insurance commissions receivable |
|
(1,408 |
) |
|
|
(4,409 |
) |
|
Other assets and liabilities, net |
|
1,368 |
|
|
|
(4,346 |
) |
|
Net cash provided by (used in) operating activities |
|
74,898 |
|
|
|
(10,352 |
) |
|
Cash flows from investing activities: |
|
|
|
|||||
Purchases of property and equipment |
|
(776 |
) |
|
|
(1,986 |
) |
|
Capitalized internal use software development costs |
|
(6,923 |
) |
|
|
(5,803 |
) |
|
Purchases of short-term and long-term investments |
|
(59,851 |
) |
|
|
(19,446 |
) |
|
Maturities, sales of short-term and long-term investments |
|
35,321 |
|
|
|
17,794 |
|
|
Acquisitions, net of cash acquired |
|
(1,974 |
) |
|
|
(37,003 |
) |
|
Net cash used in investing activities |
|
(34,203 |
) |
|
|
(46,444 |
) |
|
Cash flows from financing activities: |
|
|
|
|||||
Proceeds from line of credit |
|
— |
|
|
|
5,000 |
|
|
Proceeds from advance funding |
|
319 |
|
|
|
15,115 |
|
|
Repayments of advance funding |
|
(2,962 |
) |
|
|
(17,571 |
) |
|
Proceeds from issuance of debt |
|
116,667 |
|
|
|
10,000 |
|
|
Repayments of principal |
|
(10,150 |
) |
|
|
(150 |
) |
|
Cash paid for debt issuance costs |
|
(4,650 |
) |
|
|
— |
|
|
Repurchase of stock |
|
(5,608 |
) |
|
|
— |
|
|
Other |
|
(1,202 |
) |
|
|
(3,396 |
) |
|
Net cash provided by financing activities |
|
92,414 |
|
|
|
8,998 |
|
|
Net change in cash, cash equivalents, and restricted cash |
$ |
133,109 |
|
|
$ |
(47,798 |
) |
|
Cash, cash equivalents, and restricted cash, beginning of period |
$ |
228,605 |
|
|
$ |
324,792 |
|
|
Cash, cash equivalents, and restricted cash end of period |
$ |
361,714 |
|
|
$ |
276,994 |
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20231107363957/en/
Investor Relations Contact:
Lois Perkins, Head of Investor Relations
Porch Group, Inc.
Loisperkins@porch.com
Source: Porch Group, Inc.
FAQ
What is the total revenue reported by Porch Group for Q3 2023?
What is the Adjusted EBITDA reported by Porch Group for Q3 2023?
What is the GAAP net loss reported by Porch Group for Q3 2023?
What is the company's full year 2023 guidance?
