Porch Group Reports (PRCH)
Porch (PRCH)
reported its first quarter as a public company this week. The numbers are a little messy due to divestments and acquisitions over the last year, but the bottom line is that the quarter was good and the company is well-positioned for the year ahead. Making all the necessary adjustments, revenue in Q4 was up 34% to $19.5 million and up 28% to $73.2 million for the full year 2020.Management said the average revenue per company in Q4 rose 32% to $583 from $450 in the year ago quarter, and that the average number of companies rose from 10,800 to 11,150. A major change is that Porch began to monetize insurance on a per sale bases with its in-house insurance agency and not on a per quote basis. This drove average revenue per monetized service up 36% to $103 in Q4. The company expects the Homeowners of America (HOA) insurance acquisition to close in the second quarter. Moving into the back of the year and into 2022 this should be a significant growth driver as they’ll expand licenses beyond HOA’s current six states into many more.
For 2021, revenue guidance was raised to $175 million from $170 million (up 140%), with 25% coming from B2B SaaS fees, 65% from B2B2C move-related services and 10% from post-move services.
Management also discussed how PRCH has yet to be fully understood by the analyst community, in part because it went public via SPAC and not the traditional IPO, so there wasn’t a big roadshow that generated analyst coverage. This should come in time. When it does, analyst should note that Porch is both a software company and a company with transaction revenue, which typically earn higher valuations. Also, with a growing insurance business PRCH could be compared to other insurance technology stocks, which earn decent multiples as well.
Bottom line, the quarter was about as expected and suggests the company is off to a good start. Here’s looking forward to much more progress in 2021. BUY