Porch Delivers Q3 Adjusted EBITDA of $8.8
million GAAP net loss of $(5.7) million
Porch Group, Inc. (“Porch Group” or “the Company”)
(NASDAQ: PRCH), a leading vertical software company reinventing the
home services and insurance industries, today reported third
quarter results for the Company as of September 30, 2023, with
total revenue of $129.6 million, which increased 67% compared to
the prior year, and Adjusted EBITDA of $8.8 million, which
increased $19.7 million compared to the prior year. GAAP net loss
of $(5.7) million, compared to $(84.5) million in the prior
year.
CEO Summary
"We are pleased to share our financial results with positive
Adjusted EBITDA of $8.8 million. In March 2022, we initially
communicated our important target to be Adjusted EBITDA profitable
in the second half of 2023, and we are well on our way to achieving
that target. We continue to focus on ongoing profitability, with
underwriting actions including premium per policy increases,
non-renewing policies where our data suggests they are higher risk
and deductible increases in our insurance business, launching new
software modules coupled with price increases in our software
businesses, capital allocation toward businesses that are
generating strong returns like our warranty business, and cost
reduction initiatives across the company.” Matt Ehrlichman, Chief
Executive Officer, Chairman and Founder.
Third Quarter 2023 Financial Results
- Total revenue of $129.6 million, an increase of 67% or $52.2
million (third quarter of 2022: $77.4 million), driven by the
Insurance Segment.
- Revenue less cost of revenue of $76.6 million, or 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, compared to $(84.5) million
for the third quarter of 2022.
- Adjusted EBITDA of $8.8 million, an increase from the prior
year (third quarter of 2022: loss of $(10.9) million). Positive in
both segments and benefiting from strong expense control.
- Gross written premium for the quarter in our Insurance segment
was $154 million with approximately 334 thousand policies.
- $458.4 million unrestricted cash plus investments at September
30, 2023.
- $57 million invested into Homeowners of America Insurance
Company ("HOA"), the wholly owned insurance carrier subsidiary, in
exchange for a $49 million surplus note and all rights to potential
claims stemming from the Vesttoo Ltd ("Vesttoo") fraud.
Third Quarter 2023 Operational Highlights
- 39% gross loss ratio and 58% 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,
2023
December 31, 2022
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 $458.4 million. Of this, the insurance
carrier, HOA, had unrestricted cash of $253.9 million and
investments of $92.9 million. Excluding HOA, Porch held $89 million
of unrestricted cash.
In the third quarter of 2023, Porch Group made a $57 million
cash investment in its wholly owned insurance carrier subsidiary
HOA to increase surplus, in exchange for i) a $49 million 10-year
term surplus note, with interest (SOFR +9.75%), principal payments,
and early redemption subject to sufficient capitalization levels at
HOA and TDI approval and ii) the purchase of all rights from HOA
for potential claims related to the fraud connected to Vesttoo and
others.
As of September 30, 2023, outstanding principal for convertible
debt was $558 million. This includes $333 million of the new 6.75%
Senior Secured Convertible Notes due October 2028 (the “2028
Notes”) and $225 million of the existing 0.75% Convertible Senior
Notes due September 2026 (the “2026 Notes”).
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 $41.2 million in provision for doubtful
accounts for the nine months ended September 30, 2023 in the
unaudited condensed consolidated financial statements.
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 35% gross loss ratio, which is equivalent to
approximately $160 of average claims cost per policy. This would be
higher than the $110 5-year average. Catastrophic weather events in
excess of historic trends occurring in the fourth quarter of the
year are excluded from guidance and from this target.
Revised 2023 guidance is as follows:
2023 Guidance
Revenue
~$415m
~50% YoY growth
(previously: ~$330m to $350m)
Revenue Less Cost of
Revenue
~$190m
(previously: ~$145m to $165m)
Adj. EBITDA1
~$(52)m
(previously: ~$(65)m to
$(50)m)
2023 Gross Written
Premium2
~$500m
(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
Seattle-based Porch Group, Inc., the vertical software and
insurance platform for the home, provides software and services to
approximately 30,700 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 Group 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 Group, 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. 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 September
30,
Nine Months Ended September
30,
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 September
30,
Nine Months Ended September
30,
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 September
30,
Nine Months Ended September
30,
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 the United States (“GAAP”) and may not be comparable
to or calculated in the same way as other similarly titled measures
and metrics used by other companies.
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, 2023
December 31, 2022
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 September
30,
Nine Months Ended September
30,
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 September
30,
Nine Months Ended September
30,
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
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