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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 9, 2022

PORCH GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware

  

001-39142

  

83-2587663

(State or other jurisdiction
of incorporation)

(Commission File Number)

(IRS Employer
Identification No.)

411 1st Avenue S., Suite 501

Seattle, Washington

98104

(Address of principal executive offices)

(Zip Code)

(855) 767-2400

(Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

  

Trading

Symbol(s)

  

Name of each exchange
on which registered

Common stock, par value $0.0001

PRCH

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Item 1.02. Termination of a Material Definitive Agreement.

As previously disclosed, on September 2, 2021, Porch.com, Inc. (“Buyer”), a subsidiary of Porch Group, Inc. (the “Company”), entered into a Stock Purchase Agreement (the “Purchase Agreement”) with Covéa Coopérations S.A., a French société anonyme (“Seller”), to acquire all of the shares of GMF Financial Services Corporation, which owns all of the issued and outstanding stock of Civil Service Employees Insurance Company, CSE Safeguard Insurance Company, CSE Insurance Services, Inc. and CSE Group Services Company, a California-based personal lines insurer focused on property and auto, for a purchase price of $48.6 million in cash, subject to certain adjustments (the “Transaction”).

Buyer and Seller have mutually determined not to proceed with the Transaction, and on August 8, 2022, Buyer and Seller entered into a termination agreement, pursuant to which the parties agreed to terminate the Purchase Agreement effective immediately pursuant to Section 7.1(d) of the Purchase Agreement. In addition, on August 8, 2022, Buyer’s external counsel submitted a letter to the California Department of Insurance withdrawing the Form A Applications filed by Buyer and the other applicants with respect to the Transaction.

The foregoing description of the Purchase Agreement does not purport to be complete and is qualified in its entirety by the terms and conditions of the full text of the Purchase Agreement, which was previously filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission on September 9, 2021.

Item 2.02. Results of Operations and Financial Condition.

On August 9, 2022, Porch Group, Inc. (the “Company”) issued an earnings release announcing financial results for the quarter ended June 30, 2022. The full text of the press release issued in connection with the announcement is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

Item 7.01. Regulation FD Disclosure.

On August 9, 2022, the Company will host an earnings call at 5:00 p.m. Eastern time to discuss its financial results for the quarter ended June 30, 2022. Live and archived webcasts of the presentation will also be available on the Company’s investor relations website at https://ir.porchgroup.com.

On August 9, 2022, the Company posted supplemental investor materials on its investor relations website. The Company uses its investor relations website as a means of disclosing material non-public information, announcing upcoming investor conferences and for complying with its disclosure obligations under Regulation FD. Accordingly, investors should monitor Porch Group’s investor relations website in addition to following Porch Group press releases, SEC filings and public conference calls and webcasts.

The information in this Current Report on Form 8-K and the exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

Exhibit
No.

   

Description

99.1

Press Release, dated August 9, 2022

104

Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

PORCH GROUP, INC.

By:

/s/ Martin L. Heimbigner

Name:

Martin L. Heimbigner

Title:

Chief Financial Officer

Date: August 9, 2022

Exhibit 99.1

Porch Group Reports Second Quarter 2022 Results

- Reports $70.8 Million of Revenue, up 38% Year-Over-Year

- Executes Mutual Termination of CSE Insurance Acquisition, Increasing Expected End-of-Year Unrestricted Cash Position by Approximately $50 Million

- Provides Updated 2022 Guidance

SEATTLE, August 9, 2022 – Porch Group, Inc. (“Porch Group” or “the Company”) (NASDAQ: PRCH), a leading vertical software company reinventing the home services and insurance industries, today reported second-quarter results for the Company as of June 30, 2022, with revenues of $70.8 million, compared to second-quarter 2021 revenues of $51.3 million, highlighting both organic growth and the strength of businesses acquired in the prior twelve month period. For the six months ended June 30, 2022, Porch Group reported revenues of $133.3 million, compared to $78.1 million in 2021.

CEO Summary

“Porch Group delivered solid revenues and operating performance in the second quarter, and we are continuing to execute on our strategy of providing software to more home services companies involved in the home buying process while helping consumers with key services such as insurance,” said Matt Ehrlichman, founder and Chief Executive Officer of Porch Group, Inc. “Our continued growth, despite impacts from inflation and a slowdown in the housing market, highlights the recurring nature of our insurance and software revenues and our strong strategic position. As we move into the second half of the year, macroeconomic headwinds may persist, but we look forward to continued improvement in revenue and margins, advancing the integrations of our acquired business units, and progressing our capital-light, differentiated home insurance business model. We are laser-focused on driving the business toward profitability, without sacrificing progress against our key strategic growth initiatives.”

Second Quarter 2022 Financial Results

Total revenue for the second quarter of 2022 was $70.8 million, an increase of $19.5 million from $51.3 million in the second quarter of 2021.
Revenue less cost of revenue for the second quarter of 2022 was $42.2 million or 59.6% of total revenue, compared to $31.8 million or 62.0% of total revenue for the second quarter of 2021.
GAAP net loss for the second quarter of 2022 totaled $26.4 million, compared to a GAAP net loss of $16.3 million for the second quarter of 2021.
Adjusted EBITDA loss for the second quarter of 2022 totaled $14.3 million or -20.2% of total revenue, compared to an Adjusted EBITDA loss of $9.9 million or -19.3% of total revenue for the second quarter of 2021. Second quarter profitability has been and is expected to continue to be lower than the second half of the year due to the seasonality of insurance loss costs primarily in Texas, concentrated in the second-quarter months, as well as an increase in Sarbanes-Oxley-related consulting expense to ensure controls work is completed with time for testing ahead of the year-end audit.

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Segment Results for the Second Quarter 2022

Vertical Software revenue for the quarter was $42.8 million, revenue less cost of revenue was $30.8 million or 72.0% of Vertical Software revenue, and GAAP net loss was $2.7 million. Adjusted EBITDA for the second quarter was $6.0 million, or 14.1% of Vertical Software revenue.
Insurance revenue for the quarter was $28.0 million, revenue less cost of revenue was $11.4 million or 40.8% of Insurance revenue, and GAAP net loss was $6.9 million. Adjusted EBITDA loss for the second quarter was $5.1 million, or (18.1)% of Insurance revenue.
Insurance gross written premium for the quarter was $145 million with 379 thousand policies.

Second Quarter 2022 and Recent Operational Highlights

Homeowners of America, a Porch Group subsidiary, continued its nationwide expansion plan, now operating in 20 states
Completed the acquisition of the home warranty and inspection software and services business of Residential Warranty Services.
Completed a bolt-on acquisition of Home Inspector Pro, an inspection software company that is expected to strengthen Porch Group’s SaaS offerings in the home inspection vertical.
Ended the quarter with approximately $282 million in cash and cash equivalents

Second Quarter 2022 Key Performance Indicators (KPIs)

Software and services to companies:

Average companies in quarter increased to 28,730 from 17,120 in the second quarter of 2021.
Average revenue per account per month in quarter decreased to $821 from $933 in the second quarter of 2021, driven in part by macroeconomic impacts to the move and post-move businesses.

Monetized services for consumers:

Number of monetized services in quarter was 331,889 in the second quarter of 2022, up from 302,462 in the second quarter of 2021.
Average revenue per monetized service in quarter was $158, a 33.9% increase from $118 in the second quarter of 2021.

Mutual Termination of CSE Insurance Acquisition Agreement

On August 8, 2022, Porch Group executed a mutual termination agreement with Covéa Coopérations S.A. to terminate the acquisition of CSE Insurance and simultaneously withdrew its application for approval to acquire CSE from the California Department of Insurance. No breakup fees are owed by either party as a result of the termination. Porch Group had previously assumed a mid-2022 closing and anticipated offering auto insurance from CSE to Porch Group’s homeowner insurance customers. These assumptions have been removed from the 2022 financial guidance displayed below, with total expected cash at year-end increasing by approximately $50 million.

“Given the change in the market and the increase in the cost of capital, we are confident there are other ways to deploy the approximately $50 million in cash that would have been used for purchase price and look forward to creating long-term value for Porch Group shareholders,” Ehrlichman said.

2


Full Year 2022 Financial Outlook

Porch Group provides updated guidance based on current market conditions and expectations, with the CSE acquisition no longer included and auto insurance no longer anticipated to be offered in 2022.

Previous 2022E Guidance

Updated 2022E Guidance

Revenue

~$320M

∆ Drivers

Removal of CSE acquisition

Small macroeconomic adjustment

Increase of ~$50M unrestricted cash at EOY (CSE purchase price)

Revenue

~$290M

Vertical Software Revenue

~$190M

Insurance Revenue

~$130M

Vertical Software Revenue

~$175M

Insurance Revenue

~$115M

Revenue Less Cost of Revenue

~$210M

Revenue Less Cost of Revenue

~$195M

Adj. EBITDA

~-9% and > -$26.5M

Adj. EBITDA

~-10% and >-$30.0M

Gross Written Premium ARR at YE 20221

~$600M

Gross Written Premium Recorded in 20221

~$520M

1 2022 gross written premium (“GWP”) guidance is stated as the expected full-year GWP for 2022 and is the total premium written across Homeowners of America, Porch Group’s insurance agency, and warranty products for the face value of one year’s premium, before deductions for reinsurance and ceding commissions. Previous GWP guidance was based on a year-end run rate. Porch Group has updated this metric to now guide to the actual GWP for the 2022 year.

Porch Group is not providing reconciliations of expected Adjusted EBITDA margin 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 (August 9, 2022) at 5:00 p.m. Eastern time (2:00 p.m. Pacific time). The presentation will be accompanied by a slide presentation available on the Investor Relations section of the Company’s website. A question-and-answer session will follow management’s prepared remarks.

All are invited to listen to the event by registering for the webinar here.

A replay of the webinar will also be available in the Investors section of Porch Group’s corporate website.

About Porch Group

Seattle-based Porch Group Inc, the vertical software platform for the home, provides software and services to more than 28,700 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,

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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.

Investor Relations Contact:

Emily Lear, Head of Investor Relations
Porch Group, Inc.
(701) 214-8177
emilylear@porch.com

Porch Group Press Contact:
Catherine Adcock
Gateway Group, Inc.
(949) 386-6332
PRCH@gatewayir.com

Forward-Looking Statements

Certain statements in this release may be considered “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements generally relate to future events or Porch Group’s future financial or operating performance. For example, forward-looking statements include projections of future revenue, revenue less cost of revenue, gross written premium, Adjusted EBITDA (loss), and other metrics, business strategy and plans, and anticipated impacts from pending or completed acquisitions. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expect,” “intend,” “will,” “estimate,” “anticipate,” “believe,” “predict,” “potential” or “continue,” or the negatives of these terms or variations of them or similar terminology. Such forward-looking statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from those expressed or implied by such forward-looking statements.

These forward-looking statements are based upon estimates and assumptions that, while considered reasonable by Porch Group and its management at the time they are made, are inherently uncertain.  Factors that may cause actual results to differ materially from current expectations include, but are not limited to:  (1) expansion plans and opportunities, including recently completed acquisitions as well as future acquisitions or additional business combinations; (2) costs related to being a public company; (3) litigation, complaints, and/or adverse publicity; (4) the impact of changes in consumer spending patterns, consumer preferences, local, regional and national economic conditions, crime, weather, demographic trends and employee availability; (5) further expansion into the insurance industry, and the related federal and state regulatory requirements; (6) privacy and data protection laws, privacy or data breaches, or the loss of data; (7) the duration and scope of the COVID-19 pandemic and its continued effect on the business and financial conditions of Porch Group; and (8) other risks and uncertainties described in the Companys most recent Form 10-K and subsequent reports filed with the Securities and Exchange Commission (the SEC), such as Porch Groups quarterly reports on Form 10-Q, as well as in its subsequent reports on Form 8-K, all of which are available on the SECs 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

4


speak only as of the date of this release. Unless specifically indicated otherwise, the forward-looking statements in this release do not reflect the potential impact of any divestitures, mergers, acquisitions, or other business combinations that have not been completed as of the date of this release. Porch Group does not undertake any duty to update these forward-looking statements, whether as a result of changed circumstances, new information, future events or otherwise, except as may be required by law.

Non-GAAP Financial Measures

This release includes one or more non-GAAP financial measures, such as Adjusted EBITDA (loss), Adjusted EBITDA (loss) as a percentage of revenue, and average revenue per monetized service.

Porch Group defines Adjusted EBITDA (loss) as net income (loss) adjusted for interest expense, net, income taxes, other expenses, net, depreciation and amortization, certain non-cash long-lived asset impairment charges, stock-based compensation expense and acquisition-related impacts, including compensation to the sellers that requires future service, amortization of intangible assets, gains (losses) recognized on changes in the value of contingent consideration arrangements, if any, gain or loss on divestitures and certain transaction costs. Adjusted EBITDA (loss) as a percentage of revenue is defined as Adjusted EBITDA (loss) divided by GAAP total revenue. Average revenue per monetized services in quarter is the average revenue generated per monetized service performed in a quarterly period. When calculating average revenue per monetized service in quarter, average revenue is defined as total quarterly monetized service transaction revenues generated from monetized services.

Porch Group management uses these non-GAAP financial measures as supplemental measures of the Companys operating and financial performance, for internal budgeting and forecasting purposes, to evaluate financial and strategic planning matters, and to establish certain performance goals for incentive programs.  Porch Group believes that the use of these non-GAAP financial measures provides investors with useful information to evaluate the Companys operating and financial performance and trends and in comparing Porch Groups financial results with competitors, other similar companies and companies across different industries, many of which present similar non-GAAP financial measures to investors. However, Porch Group's definitions and methodology in calculating these non-GAAP measures may not be comparable to those used by other companies.  In addition, the Company may modify the presentation of these non-GAAP financial measures in the future, and any such modification may be material.

You should not consider these non-GAAP financial measures in isolation, as a substitute to or superior to financial performance measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude specified income and expenses, some of which may be significant or material, that are required by GAAP to be recorded in Porch Groups consolidated financial statements. The Company may also incur future income or expenses similar to those excluded from these non-GAAP financial measures, and the Companys 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. The Company is not providing reconciliations of non-GAAP financial measures for future periods to the most directly comparable measures prepared in accordance with GAAP.  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 its control.

5


The following tables reconcile Adjusted EBITDA (loss) to operating loss for the periods presented (dollar amounts in thousands):

    

Three Months Ended June 30, 

Six Months Ended June 30, 

    

2022

    

2021

    

2022

    

2021

Segment adjusted EBITDA (loss):

Vertical Software

$

6,038

$

8,107

$

9,022

$

11,258

Insurance

 

(5,068)

 

(2,951)

 

(1,782)

 

(2,443)

Corporate and Other

 

(15,237)

 

(15,073)

 

(28,577)

 

(28,334)

Total segment adjusted EBITDA (loss)

 

(14,267)

 

(9,925)

 

(21,337)

 

(19,519)

Reconciling items:

Depreciation and amortization

(6,416)

(3,894)

(12,899)

(6,356)

Non-cash stock-based compensation expense

(9,702)

(7,035)

(15,556)

(24,160)

Acquisition and related expense

(214)

(1,056)

(1,110)

(1,784)

Non-cash long-lived asset impairment charge

(72)

(70)

(139)

Revaluation of contingent consideration

(1,481)

(574)

(4,686)

(220)

Investment income and realized gains

(243)

(387)

(440)

(397)

Non-cash bonus expense

1,526

Operating loss

$

(30,797)

$

(22,943)

$

(56,098)

$

(52,575)

6


PORCH GROUP, INC.

Monetized Services Revenue

(all numbers in thousands, unaudited)

    

Three Months Ended June 30, 

    

Six Months Ended June 30, 

    

2022

    

2021

    

2022

    

2021

Monetized services revenue

$

52,388

$

35,702

$

97,159

$

52,515

Other operating revenue

18,381

15,638

36,171

25,568

Total revenue

$

70,769

$

51,340

$

133,330

$

78,083

PORCH GROUP, INC.

Revenue Less Cost of Revenue

(all numbers in thousands, unaudited)

Three Months Ended June 30, 2022

Corporate

Insurance

Vertical Software

Consolidated

Revenue

$

$

27,956

$

42,813

$

70,769

Less: Cost of revenue

(16,549)

(12,009)

(28,558)

Revenue less cost of revenue

$

$

11,407

$

30,804

$

42,211

Revenue less cost of revenue as a percentage of revenue

N/A

41

%  

72

%  

60

%  

Six Months Ended June 30, 2022

Corporate

Insurance

Vertical Software

Consolidated

Revenue

$

$

55,829

$

77,501

$

133,330

Less: Cost of revenue

(27,997)

(21,750)

(49,747)

Revenue less cost of revenue

$

$

27,832

$

55,751

$

83,583

Revenue less cost of revenue as a percentage of revenue

N/A

50

%  

72

%  

63

%  

7


PORCH GROUP, INC.

Unaudited Condensed Consolidated Balance Sheets

(all numbers in thousands, except share amounts)

    

June 30, 2022

    

December 31, 2021

Assets

 

 

  

Current assets

 

  

 

  

Cash and cash equivalents

$

271,003

$

315,741

Accounts receivable, net

 

38,474

 

28,767

Short-term investments

8,165

9,251

Reinsurance balance due

273,971

228,416

Prepaid expenses and other current assets

 

22,621

 

14,338

Restricted cash

10,574

8,551

Total current assets

 

624,808

 

605,064

Property, equipment, and software, net

 

9,984

 

6,666

Operating lease right-of-use assets

6,052

4,504

Goodwill

 

273,831

 

225,654

Long-term investments

56,228

58,324

Intangible assets, net

 

136,575

 

129,830

Restricted cash, non-current

 

500

 

500

Long-term insurance commissions receivable

10,461

7,521

Other assets

 

1,519

 

684

Total assets

$

1,119,958

$

1,038,747

 

  

 

  

Liabilities and Stockholders’ Equity

 

  

 

  

Current liabilities

 

  

 

  

Accounts payable

$

7,739

$

6,965

Accrued expenses and other current liabilities

 

47,967

 

37,675

Deferred revenue

 

243,425

 

201,085

Refundable customer deposit

 

19,246

 

15,274

Current portion of long-term debt

 

150

 

150

Losses and loss adjustment expense reserves

88,894

61,949

Other insurance liabilities, current

61,516

40,024

Total current liabilities

 

468,937

 

363,122

Long-term debt

 

416,568

 

414,585

Operating lease liabilities, non-current

3,622

2,694

Earnout liability, at fair value

100

13,866

Private warrant liability, at fair value

926

15,193

Other liabilities (includes $29,858 and $9,617 at fair value, respectively)

 

30,825

 

12,242

Total liabilities

 

920,978

 

821,702

Commitments and contingencies (Note 12)

 

  

 

  

Stockholders’ equity

 

  

 

  

Common stock, $0.0001 par value:

 

10

 

10

Authorized shares – 400,000,000 and 400,000,000, respectively

 

  

 

  

Issued and outstanding shares – 99,440,528 and 97,961,597, respectively

Additional paid-in capital

 

659,814

 

641,406

Accumulated other comprehensive loss

(4,559)

(259)

Accumulated deficit

 

(456,285)

 

(424,112)

Total stockholders’ equity

 

198,980

 

217,045

Total liabilities and stockholders’ equity

$

1,119,958

$

1,038,747

8


PORCH GROUP, INC.

Unaudited Condensed Consolidated Statements of Operations

(all numbers in thousands, except share amounts)

    

Three Months Ended June 30, 

Six Months Ended June 30, 

    

2022

    

2021

    

2022

    

2021

Revenue

$

70,769

$

51,340

$

133,330

$

78,083

Operating expenses(1):

 

  

 

  

 

  

 

  

Cost of revenue

 

28,558

 

19,500

 

49,747

 

25,429

Selling and marketing

 

28,826

 

23,122

 

54,569

 

37,762

Product and technology

 

15,777

 

11,050

 

30,009

 

22,841

General and administrative

 

28,405

 

20,611

 

55,103

 

44,625

Total operating expenses

 

101,566

 

74,283

 

189,428

 

130,658

Operating loss

 

(30,797)

 

(22,943)

 

(56,098)

 

(52,575)

Other income (expense):

 

  

 

  

 

  

 

  

Interest expense

 

(1,858)

 

(1,216)

 

(4,151)

 

(2,439)

Change in fair value of earnout liability

2,587

(4,032)

13,766

(22,801)

Change in fair value of private warrant liability

4,078

(4,303)

14,267

(20,212)

Gain on extinguishment of debt

8,243

8,243

Investment income and realized gains, net of investment expenses

243

387

440

397

Other expense, net

 

(162)

 

(165)

 

(107)

 

(91)

Total other income (expense)

 

4,888

 

(1,084)

 

24,215

 

(36,904)

Loss before income taxes

 

(25,909)

 

(24,027)

 

(31,883)

 

(89,479)

Income tax benefit (expense)

 

(468)

 

7,731

 

(290)

 

8,081

Net loss

$

(26,377)

$

(16,296)

$

(32,173)

$

(81,398)

Loss per share - basic and diluted (Note 15)

$

(0.27)

$

(0.17)

$

(0.33)

$

(0.89)

 

  

 

  

 

  

 

  

Shares used in computing basic and diluted loss per share

 

97,142,163

 

95,221,928

 

96,611,294

 

91,483,053


(1)

Amounts include stock-based compensation expense, as follows:

Three Months Ended June 30, 

Six Months Ended June 30, 

    

2022

    

2021

    

2022

    

2021

Cost of revenue

    

$

    

$

$

$

1

Selling and marketing

 

1,270

 

1,424

 

1,902

 

3,506

Product and technology

 

1,840

 

1,836

 

2,977

 

4,154

General and administrative

 

6,592

 

3,382

 

10,677

 

15,816

$

9,702

$

6,642

$

15,556

$

23,477

9


PORCH GROUP, INC.

Unaudited Condensed Consolidated Statements of Comprehensive Loss

(all numbers in thousands, audited)

    

Three Months Ended June 30, 

Six Months Ended June 30, 

    

2022

    

2021

    

2022

    

2021

Net loss

$

(26,377)

$

(16,296)

$

(32,173)

$

(81,398)

Other comprehensive loss:

 

 

 

 

Current period change in net unrealized loss, net of tax

(1,785)

 

267

 

(4,300)

 

267

Comprehensive loss

$

(28,162)

$

(16,029)

$

(36,473)

$

(81,131)

10


PORCH GROUP, INC.

Unaudited Condensed Consolidated Statements of Stockholders’ Equity (Deficit)

(all numbers in thousands)

Accumulated

Additional 

Other

Total 

Common Stock

 

Paid-in 

 

Accumulated 

 

Comprehensive

 

Stockholders’

Shares

Amount

 

Capital

Deficit

Loss

 

Equity

Balances as of December 31, 2021

 

97,961,597

$

10

$

641,406

$

(424,112)

$

(259)

$

217,045

Net loss

 

 

 

 

(5,796)

 

 

(5,796)

Other comprehensive income

 

 

(2,515)

(2,515)

Stock-based compensation

 

 

 

5,854

 

 

 

5,854

Contingent consideration for acquisitions

 

 

 

530

 

 

530

Vesting of restricted stock awards

245,855

Exercise of stock options

 

185,685

 

 

473

 

 

473

Income tax withholdings

 

(95,951)

 

 

(712)

 

 

(712)

Balances as of March 31, 2022

98,297,186

$

10

$

647,551

$

(429,908)

$

(2,774)

$

214,879

Net loss

(26,377)

(26,377)

Other comprehensive income

(1,785)

(1,785)

Stock-based compensation

9,702

9,702

Issuance of common stock for acquisitions

628,660

3,552

3,552

Vesting of restricted stock units

563,406

Exercise of stock options

88,772

219

219

Income tax withholdings

(137,496)

(1,210)

(1,210)

Balances as of June 30, 2022

99,440,528

$

10

$

659,814

$

(456,285)

$

(4,559)

$

198,980

Accumulated

Additional 

Other

Total 

Common Stock

 

Paid-in 

 

Accumulated 

 

Comprehensive

 

Stockholders’

    

Shares

Amount

 

Capital

Deficit

Loss

 

Equity

Balances as of December 31, 2020

 

81,669,151

$

8

$

424,823

$

(317,506)

$

$

107,325

Net loss

 

 

 

 

(65,101)

 

 

(65,101)

Stock-based compensation

 

 

 

4,462

 

 

 

4,462

Stock-based compensation - earnout

12,373

12,373

Issuance of common stock for acquisitions

90,000

1,169

1,169

Reclassification of earnout liability upon vesting

25,815

25,815

Vesting of restricted stock awards

 

2,078,102

 

 

 

 

 

Exercise of stock warrants

8,087,623

1

93,007

93,008

Exercise of stock options

 

593,106

 

 

355

 

 

 

355

Income tax withholdings

(1,062,250)

(16,997)

(16,997)

Transaction costs

(402)

(402)

Balances as of March 31,2021

91,455,732

$

9

$

544,605

$

(382,607)

$

$

162,007

Net loss

(16,296)

(16,296)

Other comprehensive income

267

267

Stock-based compensation

2,466

2,466

Stock-based compensation - earnout

4,176

4,176

Issuance of common stock for acquisitions

1,292,441

28,372

28,372

Reclassification of private warranty liability upon exercise

16,843

16,843

Vesting of restricted stock awards

33,182

Exercise of stock warrants

2,862,312

1

33,761

33,762

Exercise of stock options

946,392

2,227

2,227

Income tax withholdings

(296,643)

(5,194)

(5,194)

Transaction costs

140

140

Balances as of June 30, 2021

96,293,416

$

10

$

627,396

$

(398,903)

$

267

$

228,770

11


PORCH GROUP, INC.

Unaudited Condensed Consolidated Statements of Cash Flows

(all numbers in thousands)

Six Months Ended June 30, 

    

2022

    

2021

Cash flows from operating activities:

  

 

  

Net loss

$

(32,173)

$

(81,398)

Adjustments to reconcile net loss to net cash used in operating activities

 

 

  

Depreciation and amortization

 

12,899

 

6,356

Amortization of operating lease right-of-use assets

604

803

Loss on sale and impairment of long-lived assets

169

126

Gain on extinguishment of debt

 

 

(8,243)

Loss (gain) on remeasurement of private warrant liability

 

(14,267)

 

20,212

Loss (gain) on remeasurement of contingent consideration

 

4,686

 

(314)

Loss (gain) on remeasurement of earnout liability

(13,766)

22,801

Stock-based compensation

 

15,556

 

23,477

Amortization of investment premium/accretion of discount, net

1,132

654

Net realized losses on investments

138

Interest expense (non-cash)

 

2,339

 

67

Other

 

80

 

(1,479)

Change in operating assets and liabilities, net of acquisitions and divestitures

 

 

  

Accounts receivable

 

(9,907)

 

(5,017)

Reinsurance balance due

(45,555)

(94,883)

Prepaid expenses and other current assets

 

(7,758)

 

1,654

Accounts payable

 

(4,226)

 

(21,417)

Accrued expenses and other current liabilities

 

2,358

 

(3,292)

Losses and loss adjustment expense reserves

26,945

29,655

Other insurance liabilities, current

21,492

76,474

Deferred revenue

 

37,610

 

15,824

Refundable customer deposits

 

3,972

 

(1,273)

Deferred income tax benefit

(8,153)

Long-term insurance commissions receivable

 

(2,940)

 

(2,775)

Operating lease liabilities, non-current

(1,368)

(886)

Other

 

(326)

 

255

Net cash used in operating activities

 

(2,306)

 

(30,772)

Cash flows from investing activities:

 

  

 

  

Purchases of property and equipment

 

(1,539)

 

(539)

Capitalized internal use software development costs

 

(3,496)

 

(1,510)

Purchases of short-term and long-term investments

 

(13,561)

 

(9,476)

Maturities, sales of short-term and long-term investments

12,241

8,110

Acquisitions, net of cash acquired

(32,049)

(127,883)

Net cash used in investing activities

 

(38,404)

 

(131,298)

Cash flows from financing activities:

 

  

 

  

Repayments of principal and related fees

 

(150)

 

(150)

Proceeds from line of credit

1,000

Proceeds from exercises of warrants

 

 

126,772

Proceeds from exercises of stock options

692

2,544

Income tax withholdings paid upon vesting of restricted stock units

(1,922)

(22,126)

Payments of acquisition-related contingent consideration

(1,625)

Net cash (used) provided by financing activities

 

(2,005)

 

107,040

Net change in cash, cash equivalents, and restricted cash

$

(42,715)

$

(55,030)

Cash, cash equivalents, and restricted cash, beginning of period

$

324,792

$

207,453

Cash, cash equivalents, and restricted cash end of period

$

282,077

$

152,423

12