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On August 16, 2021, Porch Group announced a $35 million acquisition of Rynoh, reported 200% year-over-year revenue growth for the second quarter, disclosed a larger quarterly GAAP net loss, named two new directors and said its $8.1 million Paycheck Protection Program (PPP) loan had been forgiven. These were separate developments, not one measure of the company’s financial performance.
What Porch bought for $35 million
Porch said it was acquiring Rynoh, a software provider serving title companies. Contemporary reporting put the purchase price at $35 million: $31.5 million paid in cash at closing, with the remaining $3.5 million due in April 2023. GeekWire reported the deal terms; Porch described Rynoh as a leading provider of title-company software in its Q2 2021 earnings release.
The Rynoh transaction is distinct from a separate $33 million Residential Warranty Services transaction described in Porch’s preliminary full-year 2021 announcement. The two deals should not be conflated.
Why Porch said Q2 revenue rose 200%
For the quarter ended June 30, 2021, Porch reported revenue of $51.3 million, compared with $17.1 million in Q2 2020. The 200% increase is a year-over-year comparison of those quarterly amounts—not full-year growth. Porch’s CEO attributed part of the company’s growth strategy to acquisitions, and the company had completed the Homeowners of America acquisition in April 2021. The Q2 results alone do not isolate how much of the revenue increase came from acquisitions versus other sources.
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Did Porch’s losses increase?
Yes. Porch reported a Q2 2021 GAAP net loss of $16.3 million, compared with a $6.3 million GAAP net loss in Q2 2020. The company also said weather-related insurance claims added approximately $4 million to cost of revenue compared with historical second-quarter periods with average weather. That cost was one disclosed factor, not an explanation for the entire year-over-year change in net loss.
Porch separately reported a $10.3 million loss in Adjusted EBITDA, a non-GAAP measure. Adjusted EBITDA and GAAP net loss use different definitions and are not interchangeable.
Who joined and left Porch’s board?
Porch named Rachel Lam and Maurice Tulloch as directors. Lam co-founded and is managing partner of Imagination Capital and previously served as a managing director at Time Warner Investments Group. Tulloch was formerly group CEO of Aviva. Thomas Hennessy and Margaret Whelan were leaving the board; both had served on the board of PropTech Acquisition Corporation, Porch’s SPAC merger partner, according to GeekWire’s contemporaneous account.
Was Porch’s PPP loan forgiven?
Yes. Porch’s $8.1 million PPP loan was forgiven in full in June 2021. In its SEC filing, Porch said it wrote off the principal and unpaid interest and recorded a gain on extinguishment. Forgiveness was an accounting event; it was not revenue from Porch’s ordinary operations. The filing documents the forgiveness but does not, by itself, establish an independent assessment of the company’s eligibility for the program. Porch’s Form 10-Q describes the accounting.
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At the time of the August 2021 announcement, Porch raised its full-year 2021 revenue outlook from $178 million to $184 million, a forecast then described as implying 155% year-over-year growth. That was guidance, not a realized result or a current forecast.
Later, Porch’s audited full-year 2021 release reported revenue of $192.4 million, up from $72.3 million in 2020, and a GAAP net loss of $109.1 million, compared with $54.0 million in 2020. Those are annual figures, not Q2 results. The March 16, 2022 audited release superseded Porch’s March 1 preliminary full-year results after two audit adjustments. The audited release is the appropriate source for the final annual figures.
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