Thank you for participating in Porch Group’s First Quarter 2021 Conference Call. Joining us today are Matt Ehrlichman, Porch Group CEO, Chairman and Founder; Marty Heimbigner, Porch Group CFO; Matthew Neagle, Porch Group COO; and Nicole Pelley, Porch Group's VP of Product.

Before we go further, I'd like to read the company's Safe Harbor statement within the meaning of the Private Securities Litigation Reform Act of 1995 that provides important cautions regarding forward-looking statements.

Today's discussion may contain forward-looking statements, including, but not limited to, statements regarding Porch's expectations or predictions of future financial or business performance or conditions, business strategy and plans, and anticipate impacts from pending or completed acquisitions.

Forward-looking statements are inherently subject to risks, uncertainties and assumptions, and they are not guarantees of performance. You should not put undue reliance on these statements.

You should understand that forward-looking statements involve risks and uncertainties, including the items discussed under the Risk Factors in Porch's recent public filings with the SEC as such factors may be updated from time to time in Porch’s subsequent filings with the SEC, which are available on the SEC website, may cause actual performance or -- results or performance to differ materially from those indicated by such statements.

Porch is under no obligation and expressly disclaims any obligation to update, alter or otherwise revise any forward-looking statement, whether as a result of circumstances, new information, future events or otherwise, except as required by law. In today's remarks, we'll also refer to certain non-GAAP financial measures.

Definitions of these non-GAAP financial measures are available in the legal disclaimers found on Slide 2 of the presentation. Also for a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures, please refer to the table beginning on Slide 26 of the presentation.

We will also refer to such legal disclaimer for additional information. I'd like to remind everyone that the webcast will be available for replay shortly after the conclusion of this presentation on the company's website at porchgroup.com.

For those of you that would like to submit a question during today’s presentation, please log into the webinar and submit it through the chat function on the same platform. Management will do its best to take questions within the allotted time. Porch Group has also made available a slide presentation that will follow on the presenters' commentary.

The presentation can be found on the company's website. And with that, let me turn the call over to Matt Ehrlichman, CEO, Chairman and Founder of Porch Group.

Matt?.

I appreciate it, Matt. Good afternoon to everybody that is on the call. Looking at Slide 4. As many of you know by now, Porch is a leading vertical software company, and with a Software as a Service fee, plus transaction monetization engine.

Our platform helps companies run and grow their businesses, and we help consumers of these software companies move and maintain their homes, with insurance being our core focus.

Because we generate revenue not just with the typical SaaS fees, but also with the B2B2C transaction revenues, these small businesses like home inspectors, moving companies, rooming companies become very valuable to us. This allows us to invest in product development and sales to bring more of these companies into the Porch platform.

I would like to start by highlighting our InsurTech division. As we're already one of the larger InsurTech companies in the industry based on gross written premium and with our growth rates and margins comparing certainly favorably.

We believe we have fundamental advantages with early access to virtually CAC free homebuyers who need insurance and the reoccurring stream of proprietary property data. This, in turn, can help us understand risk and pricing over time.

We'll expand further on our InsurTech business later, but we are certainly in an exciting spot with our unique, durable and transformational capabilities. So I was telling you what we are and what we do. I would like to show you next a little bit more and give you a little more color.

Last week, a few members of our customer-facing teams and designer delighted our leadership with a compilation of videos from real customers, and we thought it'd be fun to be able to share, just to give you that much more of a flavor for how we help consumers with their homes. [Audio/Video Presentation] So a few things to understand.

First, each of these consumers was introduced to us from a company using our software, which means we did not need to pay marketing dollars for that introduction. Second, the more services we help a consumer with, it actually leads to higher consumer satisfaction. And so for us, a satisfied consumer is a more valuable consumer.

And then third, as we help these consumers with more services, the companies, the core companies that are using our software, become increasingly more valuable to us, which, in turn, allows us to be able to sell and provide software to more of them.

So before I turn it over to Marty to discuss our financials, I'd love to reiterate first just our previously laid out priorities for 2021. So for us, it begins with the company. So we provide software, too. So our focus is on selling software to more companies where we become deeply embedded with those companies.

This includes upselling more SaaS modules into these companies, which will cover off more later in the call. Two, as more of these companies provide access to their consumers, it leads to, three, the more services we can provide to those consumers.

As I mentioned earlier, the happier the consumer, the more revenue we generate, which ultimately benefits both parties as well as helps the software companies look good. Four, we focus on insurance with these consumers.

And in particular, through the acquisition of Homeowners of America or HOA, we are now a full stack carrier and a managing general agent complemented with our existing agency. This is a key focus for us. Five, we're bringing in brands and advertisers to connect with homebuyers.

And lastly, we'll selectively use strategic M&A to continue to expand our platform. Our business is performing very well against each of these areas, and the results are strong. And with that, I'll turn it over to Marty Heimbigner, our CFO, to discuss Q1 and guidance for 2021..

Thanks, Matt. Turning now to our financial results for the quarter ended March 31, 2021. For the first quarter of 2021, our total revenue was $26.7 million compared with $15.1 million in the first quarter of 2020, an increase of 77% year-over-year.

Adjusting Q1 2020 revenues for past divestitures, total revenue increased from $12.6 million in Q1 2020 pro forma, which is 112% increase year-over-year. Our cost of revenue percentage for the first quarter of 2021 was 78%, and contribution margin was 41%, up materially from 5% in Q1 of 2020.

Our adjusted EBITDA loss improved to negative $9.6 million, about $2 million better than our initial internal expectations. Q1 has historically been the seasonally lowest quarter, and we remain on track for the full year adjusted EBITDA loss margin guidance we have provided.

These results would have been even better but for the cold weather crisis in Texas in February of this year in which fewer monetized services occurred in that part of the country. Now looking at Slide 9. The $26.7 million in revenue in Q1 2020 was meaningfully ahead of our expectations in a $23 million public guidance we had provided.

On the right-hand side of the slide, you can see that while we grew 112% year-over-year versus Q1 2020 pro forma, our growth would have been approximately 200% year-over-year if our acquisitions, Homeowners of America and V12, had occurred on January 1, 2021.

As a reminder, we closed our acquisition of V12 on January 12, and Homeowners of America was closed on April 6. Looking at our outlook, Slide 10. Given the momentum of our business, we are raising our revenue guidance to $178 million, up from $175 million in our prior guidance. This would be 147% year-over-year growth.

We are reiterating guidance related to our contribution margins and our adjusted EBITDA loss margin. Given certain transaction revenue has slightly higher cost of revenue, we see Q2 and Q3 with a bit lower revenue less cost of revenue margins than the full year, but better EBITDA loss margins.

For the full year, we expect approximately 72% revenue less cost of revenue. For the year, we will manage our business to a specific adjusted EBITDA loss percentage target.

So as revenue continues to perform ahead of our guidance, we will use some of the additional revenue gains to fund further key investment in sales and marketing and R&D to support our continued rapid growth. The team will discuss a few of these investment areas later in this call.

On Slide 11, in terms of how to think about the expected $178 million of -- in 2021 revenue, we had layered in $50 million for the HOA and V12 acquisitions. On the right side of the slide, you can see our anticipated 2021 revenue distribution has not changed. 90% of our business is from SaaS platform and the corresponding move-related services.

Only 10% of revenues we expect will be from post-move services.

To help provide color on our B2B software and services subscription revenue, of the $40 million to $45 million expected in 2021, which makes up about 25% of our entire revenue, $20 million was layered in for V12, and the balance is tied to our core software across our verticals as well as revenue from other B2B modules that Nicole will discuss later in this call.

As you can see here on Slide 12, as demonstrated by Q1's 41% contribution margin, which includes all variable costs, we are in a strong position with our 2021 margin targets. Before passing the baton, 2 last notes. First, from a cash used perspective.

Operating cash used largely aligns with our EBITDA loss with several million dollars annually of capitalized software costs and the interest expense related to our $42 million of outstanding long-term debt. I would like to highlight that in Q4 and Q1, we did have onetime paydowns of payables that increased the cash used in those periods.

As a private company prior to the SPAC merger closing, we maintained payables aged at a longer time period. And as of the end of Q1, we have now paid down and fully normalized our working capital position.

Second, consistent with other companies who have gone public through SPAC, we have reacted to the accounting statement by the SEC that came out in mid-April in which they now require recording a liability for private warrants associated with the SPAC and companies who went public through a SPAC.

For Porch, at this time, all of the public warrants and 45% of the private warrants are now exercised or redeemed and are behind us. And I should note that the exercise of both public and private warrants has resulted in $126.8 million in equity proceeds coming to the company in Q1 and here in Q2.

We will be filing amended 2020 Form 10-K tomorrow to reflect this change and other immaterial adjustments, and then we will file our first quarter 10-Q a day thereafter. I'll now turn the call over to our Chief Operating Officer, Matthew Neagle, to provide an update on our key performance indicators for Q1 2021..

first, we're seeing very strong record software sales. We had 278 companies that joined from the V12 acquisition that we announced, and we are seeing small business owners, in particular, inspectors, returning to work after receiving their COVID-19 vaccinations.

The total amount, we don't have a precise number, but we do see the economy starting to reopen, and we see that as a onetime positive impact that offset some of the slower growth in 2020. If you go to Slide 14. We're also seeing strong growth across our monetized services. We remain very focused on high-value move-related services.

But in Q1, we were pleasantly surprised that we saw an acceleration in our post-move services, which generate a lower revenue per service. This resulted in 20% growth in total monetized services. So we're up to 183,000 in Q1, and slight year-over-year growth in revenue per monetized services were about 92 in Q1.

I will note, though, that one of our key service providers, this is in security and home automation, did go through an internal system transition that had some impact on conversion rate in installation for security. And given that security is a fairly high-value service for us, this did have some impact on the revenue per monetized service in Q1.

But we do continue to expect the average revenue per monetized service increase over time as we focus on high-value services. In particular, as we look to Q2, we'll note the completion of the HOA acquisition, which happened in early April. This will increase our revenue per monetized service because we are now deeper in the value chain in insurance.

And given the recurring nature of insurance, we will see the number of monetized services grow as past year consumers renew their insurance the following year at high rates. On that note, I will say, we are excited about the early progress with the HOA acquisition.

Out of the gate, it's been exciting to see us sell into HOA at a higher percentage and also see a higher overall customer conversion rate as we make improvements to the purchasing process for HOA. And I'll pause to let Matt add some color specifically on Q2..

Thanks, Matthew. Thanks, Marty. Yes, I do want to add some additional color on Q2 and what we're seeing. I want to note, though, set expectations, we do not plan on providing quarterly guidance going forward, just annual guidance.

However, as we've listened to investors and in light of market volatility in the SPAC market, I do believe it's appropriate to provide more details this quarter. So first, in terms of revenue. To date, so far in the quarter, we are trending north of $45 million in revenue for Q2. And adjusted EBITDA loss is trending to be better in Q2 versus Q1.

So our business is ramping nicely and as anticipated. Second, in terms of KPIs, as Matthew noted, we are seeing a strong increase in both monetized services and revenue per monetized service.

Now that we can lead with HOA in certain states and generate significantly more revenue per insurance sales, we do so, we're seeing north of $120 per monetized service in Q2 and significantly higher monetized services, both due to HOA, both due to seasonality of our software companies and conversion rate improvements.

So this all flows through to companies where we're seeing so far in Q2, north of $900 in revenue per company per month and continued strong gains in the number of companies in our platform..

And the point I would make is, just as that revenue per company goes up, the LTV of that company goes up, which means the unit economics improve, which means we're in a position to invest more into sales and marketing and product development so that we can continue to grow the number of companies, and then through that, the number of monetized services..

Yes. That flywheel is really important for people to understand in terms of how we'll be able to continue to drive really strong growth from those. Thanks, Matthew. Okay. Let's talk about a few deep dives. And first, we do want to start, and I'd like to talk about insurance. I'm here on Slide 16.

So our InsurTech division is and will continue to be the core transactional monetization on top of our software platform. Now we wrap the experience for the consumer with many different services to make sure we do provide a high satisfaction experience for the consumer.

But given insurance is the most valuable service in the home, given it’s recurring, and we have these core advantages related to insurance we'll talk more about, we have focused on providing software to companies and in verticals when insurance is needed.

So as you can see here on the slide, top left, we're increasing our guidance now to $275 million of gross written premium between Homeowners of America and Porch for the full year 2021 for both companies.

We're seeing improved insurance conversion rates in the 6 states HOA as in today, and the timing of new potential state openings is ahead of schedule. You can see the states on the top right-hand corner where we plan to launch over the next 12 to 18 months.

There's a lot of work here, and it does take time given insurance is regulated, but the team is executing well against that plan.

Bottom left-hand corner, you can see that HOA seeds nearly all of its premiums and corresponding risk, approximately 90% to third-party reinsurance companies and generates commission and fee income consistent with our high margins. We're very happy, certainly, with that low-risk, high-margin model, and it maps well the Porch's economic profile.

So case in point, the right one to make would be in the February storms in Texas where HOA has the most -- its most concentration currently.

So while [ERE] occurred ahead of Porch acquiring HOA and any losses are absorbed by the seller and not Porch, it is good to point out that this not-seen-before event was largely covered through their reinsurance system.

So HOA used excess of loss insurance to recoup payments to cover losses beyond their attachment of only $1.6 million, which is what they work -- bear on their side. This shows the effectiveness of our risk transfer for catastrophes to our reinsurance partners, which is obviously a capability we're really excited about.

So lastly, in the bottom right-hand corner, the historic 59% gross loss ratio doesn't meaningfully impact the P&L this year.

But over time, one of the reasons we want to highlight it is it is very important because this type of best-in-class risk writing will have huge impact on having these durable relationships and improving economics from reinsurers.

Over time, as we integrate our property data into the decision-making around risk and pricing, we believe we will capture even more revenue and profits.

Given we get a large number of consumers who need insurance virtually CAC free, and we get a reoccurring stream of property data unique to what anyone else has, we have these long-term durable advantages that will help us build a massive InsurTech business. With that, I'll ask Nicole Pelley, VP of Product at Porch, to jump in with a few updates.

Nicole?.

Thanks, Matt, and hello, everyone. As Matt said, I lead Product for Porch, including our central platforms like our data platform and consumer experience. What I'd like to emphasize is that if our software companies love us, they don't leave our software. And the great thing is they love us.

That means we get a very consistent stream of B2B SaaS revenues and low-cost access to consumers when they are most valuable. So let me walk you through the updated NPS Scores across our companies to provide visibility into how strong our platform is. As you can see here on Slide 17, the scores largely speak for themselves.

Both companies and consumers love what we're doing. I'd like to highlight the latest NPS Score from ISN of 75 and the latest NPS Score from consumers who purchase insurance, which is also 75. We're really proud of the experiences we're creating, and we're excited because we're just getting started.

As Matt mentioned, one of the areas of our software strategy that's not well understood is how even when companies choose to get our core software for free in exchange for providing us with customer access, we can still rapidly grow B2B SaaS revenues by adding and upselling additional modules. This is going very well for us.

A few examples of the modules we offer today include our report writing software. So today, most inspectors use our CRM and ERP software to help run their businesses, but we now have the ability to also sell in a module that helps them with their inspection report generation.

Our repair estimate report to break down an inspector report and provide easy and quick estimates, this is something I love and I'm really excited about, it not only helps inspectors, but in particular, helps real estate agents and consumers save time by not having to get contractors out to the home to create estimates.

Now technology can do that for them. Our premium communication module to help with SMS and e-mail communications and automate those, and then payment processing..

And I would actually want to just take one note on payment processing because we haven't talked about it much with the group. But inspections, the other industries that we serve, are high-ticket size transactions.

So that does make payment processing a significant and very high-margin opportunity as we continue to drive payments online and as we continue to drive payments toward credit cards..

Great. So let's go ahead and cover some product and technology investments. Having 40% contribution margins in 2021, 41% already in Q1, has allowed us to aggressively invest in product while still showing very significant improvements in adjusted EBITDA loss margin.

While there are very many investments happening across the business, some that we're most excited about are what we show here on Slide 19. Our teams are doing great work across our vertical software to make sure we increase our lead and are difficult to compete with. Our InsurTech investments and data platform investments go hand-in-hand.

There's so much to do and so much opportunity as we create intelligence from our vast and unique property data and begin to use us in pricing, underwriting and the purchasing experience for insurance.

Within the next set of years, we expect our own insurance product to be available across the majority of the country, and we could present the majority of homebuyers with a proactive and [plannable insurance book]. We think this may fundamentally change how easy it can be to get the best insurance.

Lastly, the teams I work closely with are charged with moving forward on the consumer experience to build technology that helps every mover feel like a VIP. It's going to be a very exciting next couple of years..

Thank you, Nicole. Appreciate it. Yes, it was a great Q1, certainly, as you can see. Really solid start to 2021. We feel great about how Q2 and 2021 is shaping up. We feel great about some of the key things we're working on and about this year ahead. But more importantly, though, we feel excited about the future.

We have this predictable business with deep competitive moats and lots of levers to be able to drive growth into this massive market that we're going after. The strong revenue and margin growth demonstrate what our business model is able to produce. So with that, the management team would now love to take questions.

So operator, if you can please open up the line for Q&A, and appreciate it..

Thanks, Matt. So we have about 25 minutes for Q&A. We will start by taking Porch’s sell side analyst. John Campbell from Stephens..

Great work in the quarter..

John, good to see you..

Yes. Likewise. I love the customer testimonials. I don't think I've seen that on the earnings call. So it's -- you got to love the Zoom capability. So we really appreciate that..

Right, yes..

Exactly. So the growth in the average number of companies, that was really impressive.

I'm guessing you guys probably got a little bit of a lift in acquisitions, but what kind of main areas would you call out as the key drivers? And then I don't know if you've got this, but kind of organically, what that looked like ex acquisitions?.

Sure. I mean the thing that I think we can focus on is we did have a strong quarter. I mean we were up 25% Q4 versus Q1. One of the things we've indicated is that we're going to invest in our go-to-market because of the attractive LTV that we have. And so we're starting to see some acceleration in that engine.

We had record software sales across many of our businesses, and we're optimistic about our ability to continue to grow it. Now I don't think we're ready to say we can grow 25% every quarter. I think one of the things that's giving us a little bit of a tailwind is we're certainly feeling companies coming off the sidelines.

We're feeling companies who are gearing up with expectation that the economy is going to reopen, and that's giving us some lift. And then as we mentioned, we did get some from the V12 acquisition..

Yes. Okay. That's helpful. And then one more for me. It seems like the HOA deal is just already right off coming out of the gates pretty impressively for you guys thus far.

If you run through some of the numbers you guys gave us as far as what the pro forma revenue would have been, it looks like they're annualized into a pretty healthy growth rate for those guys.

So just curious, you guys touched on this a little bit, but where you're seeing that strength? And then what gives you kind of optimism to raise the gross written premium guidance for the year?.

Yes. I'll take that. We are excited about. I mean we're early days, I would say, John. I mean, clearly, we just finished the acquisition April 6, so it wasn't too long ago. But yes, I mean, insurance is a core engine for our business. We have just such a large opportunity with insurance.

And HOA is a core part of that, along with our agency that we've been building out over the last five years. And so no, it is exciting. Like we had talked about a little bit, we are -- as soon as we close, we've been building up, during this kind of interim period of time, this kind of execution plan.

So as soon as we close, we'll be able to start charging forward bolt-on state expansion and then also on driving more of the consumers that we interact with into our owned insurance product. And we are seeing gains there now.

Again, the thing I would just want to caution and make a bit clear, HOA today is only in 6 states, right, plugged into our system. And so even if we see higher conversion rate, there's not this massive amount of synergy overnight because it just takes time with the regulated insurance world to be able to get these additional states.

We've talked about in the past how we expect by the end of the year 10 to 15 additional states with it mostly backloaded. We are -- I hinted that, but we are seeing that to be perhaps a bit ahead of schedule, and we'll announce states as we open them as we go. But the team was ready to go.

They've done great work, and we're executing that part of the playbook very quickly. Why do we feel like we're able to raise that gross written premium guidance from $270 million to $275 million? I mean, clearly, we wouldn't have had to.

So we must be seeing underlying strength in the metrics, certainly, that just -- that gives a lot of confidence where we are early in the year to be able to early -- in the HOA experience to be able to raise that guidance. But we are -- we're seeing some fun things, certainly..

Yes. I would imagine getting people actually in the office that the state insurance department is probably a helpful thing in getting those licenses. So good luck on that front, and congrats again, guys..

Appreciate it, John. Thanks..

Thanks John. We'll now go to Dan Kurnos with Benchmark.

Dan?.

So maybe just a couple of housekeeping items first. Just did you talk about the contribution from V12 in the quarter just so we have a sense of maybe what was organic and what was inorganic? And then you talked about seeing already some acceleration, the post-move services, which I think is the longer tailed goal for the company.

Can you just talk about what kind of services, what's driving that and just how we should think about -- you kept your guide same in terms of percentages for the year. And obviously, those are lower revenue contribution.

But just how we think about the momentum you're seeing in that category already?.

You bet. Matthew, why don't I take the V12 question and perhaps you can take the services question and I can layer in. So V12, Dan, when we have significant acquisitions, we'll do this at the time of the acquisition, but we'll layer in the revenue into our plan, and we'll make that clear out of the gate.

We aren't ongoing going to break out acquired versus separate because we do expect to grow those businesses. And certainly, that growth is being driven from the Porch platform. Like with both HOA and V12, these are slow growth businesses that within part of Porch, it will take a little while, but we do expect to be able to accelerate that.

And certainly, we want that to be -- that's what Porch is created in terms of value for those businesses. But for V12 specifically, we layered in $20 million for the year -- for the calendar year. It isn't linear across the year. There is some ramp to that business.

So Q1 is certainly less than Q4 for that particular business, is that can give you some color in terms of kind of where the impact the V12 is how we think about that.

Matthew, do you want to take the services question?.

Yes. So we -- as we mentioned, we were pleasantly surprised with the acceleration of the growth of our post-move services, which tend to be lower-value services, especially because of the referral model that we use and the monetization rates that we get. In general, when we see a surge like that, it's pretty broad-based.

It's not a particular set of services. And it makes sense to us just that people are spending more time and money in improving and maintaining their homes, and there's some optimism because of the market that's reopening. We remain with our same forward guidance because high-value services remain such a focus for us, especially insurance.

And our insurance part of the business is growing very nicely, and we expect that going forward. As Matt mentioned, even though we don't break out the value of high-end -- sorry, the amount of high-value and low-value services, we are seeing strong performance so far in Q2.

Our rev per monetized service right now as of Q2 is above 120, and we also expect strong growth in the number of monetized services. So we'll see how much tailwind we get on the lower value, but our focus -- all eyes really for us around how we keep growing the high-value part of our business..

Got it. Fair enough. I think it was just kind of incremental to the story. Matt, again, and appreciate kind of the Q2 color. I think we kind of were understood sort of the seasonality.

But maybe even just over the balance of the year, if you could just kind of talk about -- I feel like probably Q4 is lower than Q3, so like Q1 and Q4 the low, and Q2 and Q3, is that the right way to think about it?.

Yes.

Marty, do you want to take seasonality?.

Yes. Definitely. Because our -- when you look at our pie chart, 65% of our revenue is from move-related services. And the second and third quarter, when the best weather in the -- throughout the United States, that's when most of the moves happen. And so you will see that seasonally high activity in those quarters and less on Q1 and Q4..

And I would -- just to give you a little even more color on it. We had communicated previously, in 2019, Q1 was 15% of full year revenue. In 2020, Q1 was 20% of full year revenue, but 2020 was an unusual year, obviously, because Q2 was so depressed with COVID. But yes, Q1 is the lowest, ramps up in Q2.

Q3 would be at the highest and then would take back down a bit in Q4..

Okay, perfect. And then -- and then I'll take a shot here with Nicole. Good to have you on, and Matt, obviously, feel free to jump in.

Can you give us a sense of what the current attach rates are and how much -- what the TAM is in terms of module upsell you think you have right now?.

Sure.

Matt, do you want you to take that one?.

I'm happy. I'm happy to. I mean you know, Dan, that we don't break out sort of conversion rates, but it's a great try, and I appreciate it. The -- I'll give you a few different things, which is we are seeing good things, clearly, across the business in terms of the momentum the team has. Obviously, our focus is on insurance.

And so most of the time and energy is figuring out how we can continue to drive more consumers, not only into insurance broadly, but into our owned insurance product. And we're giving color there. In terms of that, we're seeing good things in terms of our ability to drive that.

One of the surprises, though, things were maybe hopeful for, but we're certain of is that as we're now running tests with HOA, being able to put that and put the value prop of HOA really clearly into the consumer in front of the consumer, not only are we seeing a higher percentage of insurance buyers purchasing our owned insurance product, we've actually seen in certain tests a lift in overall conversion rate because we can be able to wrap HOA and provide handyman services.

So you can get a $39 dryer vent cleaning and $39 gutter cleaning and other just benefits that we can give to the consumer when they buy that particular insurance policy. There's so much running room ahead.

And this is something that Nicole and her team do spend a lot of time on, which is we still are accessing only a small fraction of the total opportunity per consumer.

And this is just going to be -- it's fun as a leader in the business because it's just years ahead of just incrementally getting wins and offering more services and providing a much better experience for the consumer. And so we'll continue to see for a long period of time those conversion rate improvements..

What about on the company side, Matt?.

In terms of acquiring new companies?.

No. In terms of attach rate for module upsell..

Yes. Yes. So I mean that, it depends on the module. Certain modules, payment processing, are perhaps a little bit further ahead and some new modules that we just recently have kind of made available like the report writing kind of tool for those inspectors. And so some of those modules we're actually seeing really good uptake, and that has an impact.

We've been talking about and providing color that we are seeing good momentum in terms of these B2B modules that we're layering in, which will drive continued strong growth in B2B software and services subscription revenues, even as we have more companies choosing to pay with transactions. So we are -- and you can see it show up in the numbers.

You'll continue to be able to see it show up in the numbers, and we're seeing good momentum there..

We'll go to Mike Grondahl with Northland Capital Markets.

Mike?.

Two questions.

One, to go from 11,000 to 14,000 companies, was that all home inspectors? Could you talk about some of the other verticals that are maybe where companies are growing, if you could, using your software?.

Sure. We certainly see growth in the inspection industry where we have the largest penetration, but we also are seeing growth in some of our other areas. We have a growing roofing software business. We have a growing report writer. We have a growing payment processing, and some of the payment processing, for example, can extend beyond inspection.

And then, of course, we're excited about the number of companies that V12 will be able to bring some of our data and services to, and they work off an even larger set of verticals than what I just indicated..

I would say historically, inspectors have been around half of the overall customer. So clearly, you're going to see the most growth coming from inspection. Moving companies is meaningful, and then it just kind of comes down from there.

But Matthew is right, we do expect -- this is, again, one of the things that we are excited about, certainly is there's so much running room in those existing markets. Like even in the inspection industry, 50%, give or take, of all inspectors aren't using back-end ERP and CRM software. So there's significant running room for us.

They are even in that industry. But you look at the other industries we're in today, we feel like we're just scratching the surface. And then there are new markets, there are verticals that we will look to expand into over time that are involved in the home buying process perhaps or have really valuable consumers and data flowing through.

And that kind of moment in time, those companies are involved with the consumer. So there's a lot of ways that we will continue to be able to grow the number of companies over time..

Got it. And then secondly, just any enhancements or modifications to the moving concierge, just trying to get a sense for kind of the direction that penetration is going and progress with the moving concierge..

Yes. I would say there's a lot of things that we're doing there, Mike, to continue to improve the customer experience. We're investing deeply in product, right, and making it easier for consumers to be able to engage with us in any way that they want to.

So that includes continued build-out of our mover dashboard and the ability for people to quickly and easily get quotes and to quickly and easily purchase services in addition to continuing to build out ways for the consumer can connect with us in the way that they want to, setting up appointments, video, things along those lines and just really making sure that we can meet the consumer where they are and make sure we're providing a really great experience for them to be able to help them with that really painful time of their life..

I'm going to layer 2 more quick things in there. I think that's exactly right. We have mentioned in the past how we will also be able to layer very systematically more services into those consumers as we move forward. So there's teams that are kind of working out ahead, and that's just a very kind of plannable thing that we'll do over time.

And then lastly, we have indicated that there are some really interesting step function opportunities. Nicole had mentioned it some -- during this call even, like insurance, where with our own insurance product, use that data to be able to put together ready to buy and quote for consumers, we can push out to all home buyers. Now that's a lot of work.

That's not just this year certainly at work. There's a lot that goes in to be able to do that well. But those types of opportunities Nicole and her team are focused on, certainly..

Thanks, Mike. We'll go to Jason Kreyer with Craig-Hallum.

Jason?.

A couple on the insurance side. So what is the time frame or maybe your progress in integrating some of that ISN inspecting data into HOA? And then you gave that 90% figure on the premiums you're seeing to third parties.

What is your target for that changing over time? I mean do you plan to utilize that data to take on more risk and have an idea where that number goes?.

Yes. Great question. So in terms of being able to build in property data, it is -- it's a lot of work. So it is 1 of those kind of core investment areas. We do not at all expect that to be a this year thing. Maybe in 2022, we'll start to be able to feel the benefit.

But even as you get that data in and structure and you run it through the actuarial teams, the data science teams, you still then have to go eventually through the regulatory process with kind of changes in pricing. And so that, again, takes time. So it's a very large opportunity for us. It's an important part of our strategy.

But certainly, it's a year or 2 at minimum before we can really start to feel impacts from that, but it is certainly a part of the future and part of what we're investing in. These are some of the choices that we can make as a company to really go after this massive opportunity ahead of us, and we are investing this year against that.

In terms of the percent that we see, we do not have plans to change that here, certainly in any time in the near term -- the foreseeable future. We think we really like the HOA model where they're exceeding 90%.

And it's just with very high margin, very low risk, very low volatility type model as we kind of expressed in the call as related to the Texas storms. We think that's very attractive for our just business as this vertical software company to have as high margin. I do think it's a good question.

We do talk about it internally where, over time, if we can identify that real pristine risk, clearly, our economics are better if we were to hold that risk and not see it. Clearly, we make significantly more revenue, significantly more profit dollars where to do so. But again, we have got time before we have to make that decision.

And right now, we're just going to do the blocking and tackling behind the scene to be able to make that choice in the future if we want to incrementally hold more..

Just a quick follow-up. So I appreciate you giving us the snapshot of the footprint and where you expect the footprint to go over the next year or so.

Just wondering how you think about that footprint in terms of buy versus build and if you see opportunities like an HOA out there that in prices in a comfortable range where that may be something you could pursue on an M&A basis?.

Yes. I think from an M&A perspective, we're -- we have nothing to announce today, certainly. But as we've talked about in the past, it is part of our growth strategy. And we are excited about the work the teams are doing to build out the pipeline.

There's a number of different categories that we would look at from insurance to other vertical software companies in our existing verticals or in new verticals, kind of expand us there, other services that we can layer in to consumers. So there's a variety of things that we would look at. Yes, insurance is one of those.

Too soon to tell if that's something that we want to do or if we just do that organically. Right now, the math that you saw is the team's organic plan, what they're executing against right now organically as they roll HOA out across many more states..

Thanks, Jason. We'll go to Ben Sherlund with Cantor..

So looking at the guidance for $275 million in gross written premium, you had previously disclosed that this was combined estimated premium sales for HOA and EIG.

Can you give us any color on what estimated premium sales for EIG were in 2020?.

We don't break out EIG, and we've not broken out insurance in the past. It is a question that we've gotten from investors. So as we go forward, yes, we would expect to break out revenues at some point here, probably this year in terms of the recurring revenue that we get from consumers, which is largely driven from insurance.

But we haven't done that to date. So nothing to share on that right now. Obviously, we're -- we were very excited about the growth in our agency insurance business ahead of the HOA acquisition. Obviously, HOA has historically been a really important partner of our agency in the states that we operate, and we have been an important partner of HOA.

We've been driving lots of work. So I will say, as we think about that $275 million gross written premium guide, that does de-dupe that revenue that our agency was driving into HOA. So that is -- looking at that from a unified insurance organization..

Okay. Great. That's helpful. And then just a quick second question. Have you guys seen any impacts from the recent IDFA changes on V12 in their business in the last few weeks? Or any color there would be great..

Nicole, do you want to take that one?.

Yes. I can take that one. So a couple of things that I would say there. V12, from a marketing perspective, has always taken a pretty holistic approach in making sure that we are looking at legislation and upcoming changes like what the change that Apple is making.

They've done -- we've done a lot there to help clients deal with the change in cookies and mobile IDs by implementing robust first-party data strategies, embracing many common ID innovations in the market and testing and scaling [cookie-less] targeting.

And we're constantly diversifying our supply chain to apps and SDKs to ensure that we're ahead of the changes such as those announced with iOS 14..

We got a question submitted from Ken Wong from Guggenheim. You saw a big sequential uptick in average number of companies to nearly 14,000.

How should we think about seasonal customer dynamics? Also, was this driven by any changes in go-to-market pricing or promotional activity that we should be aware of?.

Yes. So I can -- excuse me, share some perspective there. Yes, we did see very strong growth in Q1. As we had mentioned, up 28% year-over-year, up 25% in Q4. We do not expect 25% every quarter, but we are optimistic about our ability to continue to grow the number of companies. As we've indicated, we have a very attractive LTV.

That allows us to make investments into sales and marketing, which we're starting to see some of the impact of with some of our record sales performance this quarter, but also some longer-term investments around product and development, which should allow us to gain market share, both midterm and long-term because we're going to be able to invest more aggressively for longer than our competitors.

And we had a strong quarter that we attribute at least somewhat to momentum and optimism about the reopening of the economy. We know for sure that certain companies are coming off the sidelines or gearing up in order to take advantage of the reopening.

So I think all of those factors in combination with increase from V12 allowed us to have a very strong quarter in Q1..

Yes. Part of the question is around some of the pop-up conferences and trade shows we've talked about in the past. Our business leaders have used those tactics very effectively. And largely, that was all pause during the pandemic. We've not yet kicked that engine back into gear, but the teams are now doing the prep work.

Now that the vaccines are distributed, they are kind of gearing up to be able to kind of reengage there through those tactics. So more to come probably in the second half of the year..

We have a follow-up from Dan Kurnos with Benchmark..

Yes. Just to piggyback on that, Matt, a little bit. I know we're still super early days here, and I kind of left you with the app comment.

But how close are we to getting to the point where you really want to get the brand name out in front of consumer is more? Obviously, you're doing a great job, I would say, incentivizing your company customers to push the Porch product. And you want to touch on that a little bit, I think that might be helpful.

But whether it's through partnership, which we haven't talked about at all, whether it's through direct advertising so people get a better understanding, so when this thing kind of really ramps the consumer is, yes, no, I know who Porch is, instead, check this out. I got a concierge thing that's really sweet.

So maybe just some color there would be really helpful..

Yes. Happy to. It'll -- our strategy is pretty well laid out internally in terms of kind of the phase that we're in. Right now, we are squarely in go deeply embed ourselves into businesses by being their software company.

These very low churns, they have this very predictable reoccurring engine, not only of SaaS fees, but of consumer flow that at the key moment in time and really early so that we can layer in transactions. And that really is the focus this year of just continuing.

You can see it in the metrics, but adding more companies, opening up more verticals, we can run our playbook. And then what you have is there's just massive engine, right, you can go and be able build of off. That is clearly the priority for us right now.

As you do that, though -- and as an aside, if we were to have gone and tried to go direct-to-consumer and go and just build a brand, you wouldn't be even remotely close to being able to access the number of homebuyers that we do, especially as early as we can.

And so we've been able to build this really significant moat through that part of the strategy.

Now if you look forward 2, 3 years, there will be a transition where as we've rolled HOA out across all states -- or virtually all states, at some point, that can make good sense for us to be able to provide a Porch branding experience and be able to push that out.

And so that is part of the journey ahead, but it's not 2021, certainly, and it's not probably going to be a core focus for us in 2022 even, but it is one of those additional levers that we have out there to go try to build a really big company, which is certainly what we're trying to build. So yes, more to come there as we go..

Do you want to talk maybe a little bit about the incentivization maybe on the company side than to push it, just so people are aware of it because, obviously, you have higher attach rates when they do that?.

Yes.

No, it is really interesting that we see companies that when they are that much more engaged in the experience, and they're really talking to their customer about this great moving experience that the consumer gets when they use their inspection service, we see the conversion rates of those consumers materially above those when the inspector doesn't mention it, right? And so clearly, that is one of the levers that we're working through in testing is how do we get these companies to want to make sure that those consumers know of our service and appreciate and are really teed up effectively.

And that's just one of those levers that we can then drive and drive good growth from them..

And we have time for one more question. I'm going to take one that we got submitted from an investor. Can you clarify the $45 million reference for Q2? Is it $45 million in revenue to date in Q2 i.e.

$45 million of revenue up to May 15? Or is it $45 million your guidance for total revenue in Q2?.

Go ahead, Marty..

Yes. That's the guidance for the entire quarter. We wouldn't provide a quarter-to-date number, but that's what we're looking for the full Q2..

And to make sure that it was clear on what we said, which is so far based on how we're trending, it's trending north of $45 million for the second quarter..

Great. Well, thanks, everyone. It's end of our Q&A session. I'll turn it back to Matt Ehrlichman for closing remarks..

Thanks, everybody, for the questions. It's great to be underway into this, which should be a very, very solid 2021. Clearly, the team is executing on all cylinders. And we are excited, I'm excited about the performance that we're seeing across the board. Lots of work to do, clearly, but that's what's fun, that's what's exciting.

It's such a massive TAM and such a massive opportunity, and we're excited about how we're pursuing it and the strategy that we have. Thanks, everybody, for the time. I appreciate it, and we'll see you soon..