Q4 2020 Porch Group Inc Earnings Call
At that time, we also increased our 2021 guidance from 120 million on revenue to $170 million revenue to account for on revenue from our acquisitions of homeowners on America, our HOA and V 12.
We'll share today, how 2020 results came in ahead of previous top and bottom line guidance.
How we're seeing faster than expected growth in Q1, 2021.
And while the previous 2021 guidance of 134% year over year growth is strong.
We'll be further increasing our 2021 forecast and expect even faster growth.
So the performance is driven by six key pillars of our unique unique strategy that I'll walk through here on slide five.
First similar to other vertical software company peers, we continue to ramp software sales to more companies and up sell additional modules to these companies to grow revenues, while we continue to maintain very low monthly churn rates.
As a result of our efforts to invest in increased growth, we're starting to see record numbers of new company sales and continue to see extremely high net promoter scores.
Second we continue to increase access to valuable consumers and B to B to C transaction revenue by successfully converting more companies to our pay with customer access price model.
When company by our software and receive initial on boarding and training, we're seeing the vast majority of them choose to pay with transactions and customer access and when they do so we generate significantly more revenue than if they paid only with SaaS fees.
We also unlocked a much larger tam by being able to help the their consumers with high value recurring and reoccurring services needed for their homes.
As we integrate transaction monetization of newer software solutions like palm tack or I roofing, which we acquired earlier this year, we expect to see this trend continue.
The third key pillar to our strategy of increasing the b to B to C transaction revenue, we earn per consumer.
By offering additional services these consumers need by increasing conversion rates and growing revenue per service sold we expect to continue to see revenue per consumer growth.
This in turn continues to increase the value of each company, which then further improved already strong unit economics.
Fourth the pillar on the services, we provide consumers.
That core service really is insurance.
And our focus is to continue to scale, our insure tech business with its unique advantages.
Insurance is one of the most valuable services and one of the largest tam related to the home and it creates strong recurring revenue per consumer.
Our vertical software and consumer access pricing model provides our insure Tech division with this reoccurring stream of low CAC homebuyers, who are required to buy insurance for their new home.
In addition, our software platform provides us very unique property details, which creates significant advantages in underwriting and pricing.
We're excited about the pending acquisition of HOA, which is expected to close in Q2, which will extend from operating as an insurance agency as we use today to a managing general agent and carrier.
We believe we'll be able to dramatically improve the value proposition for insurance customers and make the purchasing of insurance easier than it's ever been before.
That's we're helping brands and advertisers to improve their mover marketing advertising by connecting them with homebuyers uniquely early in the moving process.
And early days of bringing day 12 into the porch umbrella, we're already seeing exciting opportunities and strong results in pilot programs.
And lastly, we continue to identify a strategic and accretive acquisitions that are able to grow faster and with higher margins once once plugged into the porch platform.
So with that I'll turn it over to Marty Heimbigner, our CFO to discuss our financial results for the fourth quarter and for the full year 2020.
Thanks, Matt and good afternoon, everyone.
Turning now to our financial results for the fourth quarter and the full year ended December 31 2020.
And our last update in mid January we shared preliminary guidance for the full year 2020.
As Matt commented on in his opening remarks, our final results came in better than this guidance.
With us achieving more than $73 million in revenue and.
And a $17 5 million adjusted EBITDA loss, which is a negative 24% adjusted EBITDA margin for the full year.
On slide seven you can see that our total revenue in the fourth quarter saw year over year increase of 34% to $19 5 million.
From $14 5 million.
In Q4 2019.
On a pro forma basis to account for the removal of past divestitures.
For the full year 2020 on a pro forma basis adjusting for the removal of past divestitures.
Our total revenue increased 28% to $73 2 million.
Head of the $72 million guidance, we had previously provided.
In Q4, we saw growth improving as compared to Q2 and Q3 2020.
And shortly Matt we'll update on what we have seen in Q1 2021, thus far.
We are seeing even more acceleration in our growth rate than we had anticipated.
Our cost of revenue percentage for the fourth quarter 2020 was 22%.
For the full year 2020 cost of revenue percentage was 24%, which was in line with our guidance.
As a vertical software company our margin profile is very strong, whether we monetize with SaaS fees transactions or both.
We expect our cost of revenues to fluctuate slightly from the mid to high <unk>.
Our adjusted EBITDA margin for the fourth quarter improved to negative 17% from.
From negative 56% the prior year.
For the full year 2020.
Adjusted EBITDA margin.
Yeah.
Improved to 20 negative 24% from negative 57% in 2019 pro forma.
And ahead of our recent guidance of negative 25% per the year.
The net loss for 2020 was a negative $51 6 million, which was better than the range that we had provided between negative 53 million to negative $55 million.
With the primary difference between adjusted EBITDA and net income related to interest expense.
Noncash expenses, such as stock based compensation.
Acquisition related items.
<unk> merger transaction bonuses and depreciation.
Overall in every measure we are pleased with our Q4 and 2020 performance.
Now, let's turn to the balance sheet and the capital structure on slide eight.
Going through its back in addition to the common shares issued can bring with it earn out shares.
The management incentive pool public and private warrants.
And for porch, we quickly executed on acquisitions.
The largest of which homeowners of America is expected to close in Q2.
Subject to customary closing conditions and regulatory approval.
So it will take a moment to ensure clarity.
As we look forward there are two upcoming events that will have a meaningful impact on cash.
First the warrants, which will have a positive impact.
As part of the stack IPO and corresponding merger with <unk> acquisition Corp.
Porch inherited a total of $14 3 million warrants.
Under the warrant agreement that <unk> entered into at the time of its IPO porch issued notice to redeem all outstanding public warrants on April 16.
Since our stock traded above $18 per share for 20 days in a 30 day consecutive period.
We expect holders of these warrants will exercise them for cash prior to the redemption day.
If they do so it would increase our cash position by a total of approximately $165 million versus 2020 year end.
This assumes that all warrants are cash exercise.
That holders of the private warrants could choose not to exercise the warrants, which reduced the amount of cash received by us and reduce the number of expected shares of our stock outstanding.
Second we anticipate completing the homeowners America acquisition in Q2 subject to customary closing conditions and regulatory approval with a purchase price of $80 million in cash and $20 million in stock.
So after accounting for all of this as well as the Q1 acquisitions such as <unk> 12, we anticipate adding approximately $230 million on cash and $40 million of long term debt upon the exercise of all warrants and the closing of the HOA transaction.
Our expected.
Excited about how this cash position will allow us day execute against our M&A pipeline.
In terms of our capital structure, we assume that when all of these transactions are completed there will be approximately 97 million shares outstanding this.
This includes 4 million earn out shares that are included in current shares outstanding but are not yet achieved that.
The full exercise of $14 3 million warrants.
Which may end up lower depending on the number of unexercised private one.
And slightly more than 1 million shares for the HOA acquisition.
When team Rs used best our team options, both best in our exercise it will be added to the total shares outstanding.
This relates to that price back porch options, and <unk>, which rolled over and the $11 million share management incentive pool from this back merger agreement.
Some of which will be granted soon with long term investing and some of which will be granted over the next number of years.
This completes my financial summary, and now like to turn the call over to Matthew Nagel, Our Chief operating officer, who will provide an update on our key performance indicators for Q4 2020 in Q1 2021.
Matthew.
Thank you Marty.
Great to be here with you all.
I'm responsible for the day to day operations of porch group and helping our leaders built successful and rapidly growing businesses.
Porch is organized on a decentralized operating model, where we have divisions that our business units reported into.
Our businesses are able to move quickly and entrepreneur early with a playbook and infrastructure to benefit from best practices as we scale.
When we acquire a company our decentralized operating model helps us manage the cost.
And risks associated with integration.
Generally look to integrate acquisitions, firstly into our central data platform and then secondly into our homeowner experience in order to monetize b to B to C transaction.
This in turn allows our businesses to quickly increase the value of each company using our vertical software, thus unlocking improved unit economics, and thus accelerating growth substantially.
Overall.
Our vertical software platform with SaaS and transaction monetization is working extremely well.
We have significant and deep competitive moats, a massive tam and more growth levers than traditionally price SaaS company, which we expect to allow us to continue to grow rapidly for a long period of time.
I'll now provide an update on our Kpis for Q4 and full year 2020.
As well as provide a preview into the strong performance, we're seeing from Q1.
At this point has good visibility.
Starting in mid March 2020, we saw headwinds in terms of the number of companies using our software due to COVID-19.
In particular in the whole inspection industry, where the community is often sole proprietors over 60 years old.
While home sales bounce back by the end of June and we're strong.
Stock companies, putting their business on pause until Covid vaccines were distributed.
In Q4 2020, the average number of companies was approximately 11150 <unk>.
Up from 10800 in Q3 2020.
In Q1, we have seen acceleration of this metric with more than 12000 companies active as of the end of February.
Looking at the average revenue per month on slide 10, we have seen significant growth year over year, and our ability to provide more value and generate more revenue from each company.
Revenue per company increases as we help companies using our software to grow as.
As we launch and up sell additional modules, where we charge <unk> SaaS fee.
As we have more of these companies paying us with transaction.
And as we then generate more b to B to C revenue from each consumer we are introduced to.
In Q4, 2020, we saw approximately $583 and revenue per company per month on average.
Up from approximately $450 in Q4 2019.
A 32% year over year increase.
For Q1 2021 through February we are seeing approximately $600 and revenue per company per month, which would be up from approximately $460 in Q1 2020.
Now on slide 11.
We will look at transaction revenue.
Only which is predominantly b to b to C move related services with only approximately 10% of 2021 revenue is expected to be postponed on services.
As you can see we saw approximately 170000 monetize services in Q4 2020.
Which is approximately flat with the number of services from Q4 2019.
As a reminder, and as we've discussed in the past.
It is not apples to apples to compare this metric in 2020 to 2019 as late December 2019 is when we launched our in House insurance agency moving us from monetizing insurance on a per lead or per.
Coat basis to then monetizing insurance on a per sale basis.
Correspondingly, we saw an average revenue per monetize service of $103 in Q4 of 2020 versus $78 in Q4 2019.
We continue to have success generating more revenue per monetize service as we focus on higher value services.
After the closing of the pending HOA transaction, which we expect in Q2, we plan to start expanding HOA from the six state it operates in today.
A process that will take some time given insurance regulatory approvals.
<unk> generates approximately two X higher commission rates than our in House insurance agency.
And so with this ongoing state expansion. We are excited about the opportunity to continue to show significant increases in the value per monetize service.
This completes my summary of our Kpis I would now like to turn the call back over to Matt to provide an update on guidance for 2021, and the operational initiatives that porch will be spearheading during the year.
Thanks, Matthew Thanks, Marty.
So we're certainly pleased with the positive results. The momentum has certainly continued into 2021.
And you'll be able to see on the next set of slides, we're raising our full year 2021 outlook based upon this momentum.
Typically I will say on our quarterly earnings calls on going we will not provide guidance for the current quarter. However, since Q on obviously on tomorrow. We would also like to make some high level comments about the Q1 outlook.
At this time, we expect to record approximately $23 million in revenue in Q1, 2021, which is approximately <unk>, 5% year over year growth versus Q1, 2020 pro forma revenue excluding past divestitures.
This rapid growth exceeded our internal expectations.
As we look forward to the rest of 2021. This growth rate is only expected to improve once HOA closes and as we begin to compare year over year performance to the 2020 quarters.
That were impacted by Covid.
On slide 14 to give you a sense for what Q1 growth would have looked like had we assumed HOA day 12, and other announced acquisitions at all closed on January one 2021, we would have expected approximately $34 million in revenue for Q1 on 170% year over year growth.
This would have been even better if not for the unique cold weather events in Texas in February.
As you think about the full year book.
The full year Q1 is always the quarter that contributes the least to overall annual revenue due to seasonality.
In 2019, and 2020 Q on accounted for 15% and 20% of full year revenue respectively.
So turning to the full year on here on slide 15 as.
As a result of this outperformance what we're seeing in underlying metrics across the business and based on our expectations throughout the year, we are increasing our 2021 revenue guidance to 175 million, which represents a 140% year over year growth.
If you set aside the $50 million.
Guidance increased due to HOA and B 12, we're still seeing revenue growth of more than 70% for the year.
With this increased revenue guidance. This shows that our business is expected to grow at a four year CAGR of 69% as illustrated here on slide 16.
The growth is coming from each area of our strategy selling software to more companies upselling more modules to companies generating higher <unk> SaaS fees.
Access to transactions from our companies and then generating more revenue per consumer where were introduced to.
On the $175 million in revenue expected in 2021, we reiterate our expectation around the revenue distribution with approximately 25% from <unk> SaaS fees proxy.
Nearly 65% of revenue from B to B to C move related services, which includes recurring insurance revenue and approximately 10% of revenues from post new services.
Our business is a very high margin software business here on slide 17, we continue to see cost of revenues in the mid to high 20% range, where we're reiterating the guidance. We previously provided in January with contribution margins for 2021 expected to be 40% up from.
31% in 2020.
In terms of the contribution margin, which we define as revenues less all variable expenses are you on close process identified certain 2020 expenses to move from below the contribution margin to above the <unk> line.
These were already factored into 2021, so there's no changes from 40% 2021 guidance.
In terms of adjusted EBITDA as stated we will continue to operate our our adjusted EBITDA margin to show really meaningful improvements each year. So.
So from 2019 to 2020, our adjusted EBITDA margin improved from negative 57% to negative <unk> 24 per cent for 2020, one we're reiterating our guidance and expect to operate our adjusted EBITDA margin to negative 10% to negative 16% for the year.
Q on Q4 always our lowest adjusted EBITDA margin quarters, given seasonality with Q2 and Q3 is the strongest.
We remain very confident on our long term, 25% adjusted EBITDA margin targets, while still being able to invest aggressively in R&D as we go.
So in summary porch group is growing very well Q4 came in ahead of guidance on the top and bottom line or increase revenue guide of $175 million for 2021 project, 140% year over year growth, our businesses consistent and predictable with vast majority of revenue recurring will reoccur.
Brian.
Projected Q1, 2021 revenue of approximately 85% year over year growth versus 2020 pro forma is a great start to the year and again like I mentioned of our announced acquisitions had been closed effective January one we would have projected around 170% growth for this quarter.
We're demonstrating the ability to continue to show meaningful improvement each year with our adjusted EBITDA as a percentage of revenue, while still investing aggressively in the business to deepen our long term competitive moats.
So before I conclude I just want to provide a few final thoughts here.
A handful of notes.
And first I want to express my sincere thanks to the entire team at porch group have been working diligently in the wake of the pandemic. We're very pleased with the operational performance and it's a testament to their skill and ability and our company core values.
As Marty mentioned earlier this month, we announced we will be redeeming all outstanding public warrants, which will occur on April 16th.
We are excited about how this can help on our M&A efforts, we're laser focused on capital allocation and deploying capital on the places that will drive the strongest long term returns whether through organic investment or through M&A.
As you mentioned the <unk> acquisition remains on track to close in Q2 subject to customary closing conditions and regulatory approval we.
We're positioned to move quickly and execute our plan, which includes expanding the states that HOA operation, which could meaningfully increase our effective take rate in recurring revenue.
Given the regulations around insurance this process will take a year or more.
Right. After closing, we will be making meaningful improvements on the HOA value propositional, such as providing a cobranded moving concierge and fantastic handyman services for maintenance.
Longer term by combining fortunate fast early in our low cash access to homebuyers.
With our unique property data and with HOA is strong pricing and claims experience. We do believe porch has the potential to become one of the largest insurer tax and insurance companies with significant and durable advantages that will help us drive rapid long term and profitable growth.
Gross written.
Premium or GWB and continue to be forecast at $270 million for the full year 2021 between HOA imports combined.
And looking back at 2020 for the full year final accident.
<unk> gross loss ratio was a very strong 59%.
It's been a great first quarter as a public company. We're tackling one of the largest markets that exists. We are on the early stages and I feel like we've just started the second chapter on this journey.
And as we say here at porch on.
Sure.
So with that we're happy to turn the call over for questions, Matt Glover to you.
Thanks, Matt It looks like we have about 25 or so minutes for Q&A. So as a reminder, if you'd like to ask a question. Please submit it through the Q&A function on zoom will do our best to take questions in the time remaining.
All right. We've got a lot of good questions. Here are first question is from Daniel Kronos from benchmark.
How much <unk> revenue is embedded in the Q1 guide.
I can start us off Marty.
And if there's anything else.
We had communicated before we closed the <unk> acquisition that that that company represented $20 million in revenue on that business does not have a lot of seasonality that's $20 million for the year of 2021.
Net acquisition closed middle of January so that kind of gives you a sense for how much we side, it's fairly small.
Obviously HOA did not close in Q1, as we talked about and then the other twos two acquisition palm checking on roofing or are extremely small so immaterial to the results.
Okay.
Next question is Paul to that Delta from Daniel from benchmark, Owensby bulk handling or planning to handle the upcoming changes.
Martin you on second.
Ma'am.
I am not sure what the I D F changes.
So.
Magic and asked them to clarify that'd be great Yeah, Yes, Daniel.
Send us clarifying message that'd be great. We will take another question from Jason Prior from Craig Hallum, You mentioned the desire to expand HOA beyond six states can you give any color on what resources are needed to do that and how quickly you can deploy another day for perhaps how many states you can deploy this year.
Sure happy to.
Take that.
He is currently operating in six states today and upon closing we will be actively seeking to expand into new states.
That said rolling out across states does take time. Our goal is to have launched an additional 10 to 15 additional states by the end of 2021 with continued expansion occurring in 'twenty 'twenty two one.
One thing to note as most of these will be late in the year and then ramping up the business in the state does take time, so we expect little impact in 2021.
But through the 2021 expansion efforts.
We have stated we do think <unk> growth will be in line.
And accretive to our target 30% growth rates. The following year. There are certain states as you can imagine that will be harder will take longer such as California, because it's more regulated and complicated the other states like Florida that are fairly unique and so we may continue to operate those as an independent agency for <unk>.
While.
In terms of resources, when we announced the HOA acquisition, we have built on the investments per state expansion into the earnings guidance.
The HOA its historic margins will absorb the state expansion efforts and so from a porch perspective. The net is there's not an incremental costs. This year due to state expansion.
Thank you Matthew.
Question from Ben Sherlund from Cantor Fitzgerald, you saw some nice sequential acceleration on revenue per company.
It looks like as though average number of companies about lower to return to normalized growth can you walk us through how you were seeing or how you see growth in number of companies using porch in a post vaccine world I can take that one too.
We are seeing an increase in the number of companies as.
As I mentioned in Q1, we have over 12000 in February.
We've started to make investments to increase the number of companies, including seeing record sales on a monthly basis in key parts of our business. We're also seeing businesses come back on line in anticipation of post Covid, we have very strong unit economics, and we expect to continue to invest in growth of the number of new company.
And I'd say, we're very encouraged by the trends, we're seeing right now.
Okay.
Thanks, Matthew we have a question from Michael Dahl from Northland any update on mover marketing.
Sure happy to take that Mike.
A couple of different things. So we're early days, obviously with Vito.
<unk> 12, getting plugged into the porch, the porch system and be able to utilize our really unique early insights to movers. So as a reminder, you'll be 12 will drive mover solutions, but for brands and advertisers, but it would be post smooth and so they're able to bring now on mover product that that goes brands and advertisers the ability to access.
Those those.
Those consumers earlier I will say, we're not going to make any announcements now, but there are some really exciting.
Things happening in early pilots is that data is being used.
<unk> jointly the porch and of the 12 data from some top brands.
Running running pilots to be able to see how effective that is we've gotten comments that it's by far the most effective mover marketing that they have seen.
So we're excited I mean, it we're seeing the pizza is certainly playing out it is early days, but like we've commented when we announced the <unk> acquisition. We felt like we were going to be able to accelerate that business and have it be a strong growth business for us going forward in 'twenty 'twenty two on.
Thanks, Matt We've got a question here from Jason <unk> from Oppenheimer can you talk about how the mix by vertical you are currently seeing in Q1 compared to the second half of 2020.
Sure. There is two different ways. If you think about that Jason in terms of verticals, though I'm not sure which angle you're asking so I'll answer both one is when we go and sell software into different vertical markets like home inspection moving now roofing after utility companies a variety of others.
We're continuing to magic on on how we are deploying more sales and marketing that really is the primary way that we deploy sales and marketing to go sell software into these companies.
We are investing across across the board I will say that some of our core verticals like home inspection, where we have very strong unit economics are seeing some of the best results. So that's one way we think about it. The other is when we get access to the consumer which types of services are we having the most successful so between insurance are moving to the internet.
Net security and again, we will layer in more services for consumers as we go electricity on warranty or solar et cetera.
We're seeing good growth across on I will say, obviously, we talk about insurance as being a big focus clearly, we're seeing very strong growth there.
We expect to continue to particularly as well.
Later on HOA moving also though is something that we have put a lot of energy into be able to help consumers with really any type of move whether it's just labor only whether it's coordinated at full service move for them, including the trucks or storage units and so we are seeing very strong growth with that particular service also.
Now we've got a question here from an investor what is baked into guidance in terms of revenue synergies and contribution from HOA and be 12.
Basically.
Because our entities operate decentralized we did not.
Baked into our guidance any synergies from either HOA or be 12 in 2021.
We do expect that as the interaction on our platform.
That we will be able to accelerate the growth of both of those companies.
Through 2022 and beyond.
Marty we have a question here from Ryan Tomasello from <unk> can you discuss the M&A pipeline in more detail what types of deals from us attractive accretive to the force platform.
Back to continued investment in niche insure tech space.
Sure. Thanks, Ryan I'll take it.
So there are yes, we are we're excited about the pipeline, obviously nothing to announce here today, but but we're making making good progress we've talked about on the past on Theres five primary areas.
That we are focused on so <unk>.
Vertical software companies on our existing vertical <unk>.
Vertical software companies in new adjacent verticals in the home services space, particularly where there's latent value on the demand in the data that our platform can unlock that can't be unlocked independently.
Three is yes.
To ensure tacking on insurance.
Category, obviously, we've made certain investments there, but there's there's just this massive opportunity for us given how many homebuyers we have access to.
Early and given all of this property data that we have and so there are things that we'll continue to look at their leering and new services into this this reoccurring flow of homebuyers that we have is a very natural thing for us to do just to be able to further monetize and further delight these consumers and so.
There's new services that we could look at and we could build that organically or we could look at M&A and then lastly mover marketing.
12 is obviously the anchor of what we're doing there, but there could be other tuck ins for us.
About a follow up from Daniel pronounced from benchmark, how should we think about seasonality for the entire company.
Should we think about the revenue cadence over the year.
We gave on the snapshot in terms of Q1.
And we can certainly provide obviously the stores are out there in terms of each quarter and the percentage of revenue, but generally Q1, we see it again on that.
That 15% to 20% of full year revenue and depending on if you look at 2019 or 2020.
Q4 is also a bit lower as we continue to ramp up.
The recurring revenue is like with insurance, if that's growing or life with what we're doing and move or marketing.
That seasonality will continue to.
A slow down or be slightly depressed overall cross across the year.
But that's what we've seen in the past so Q2 and Q3 are the strongest quarters for us each year.
Now we've got a question from an investor how do you think about food you compare part too.
Hmm.
So well.
Well, there's a few different things I'd probably comment on there.
Sometimes I still talk to investors occasionally get questions on are we.
How are you like one of the home services marketplaces and I just.
Still shake my head because I've not done a good enough job.
Making sure people really understand what we're what we are which is again a vertical software company focused on certain key services like insurance I will say that that is getting less and less versus nine months ago. When we started the process.
Taking on taking becoming public.
But.
Our peers are other vertical software companies.
There is there is a variety of companies that are similar to us certainly the vertical software companies.
Net monetize with SaaS fees and transactions when we launched that model five plus years ago fewer number of software companies had layered on transaction monetization you can see in other industries that trend is happening and.
You can compare us these vertical software companies and there is a huge GAAP and value and multiples versus where we are in vertical software companies, but if you look at the software company to monetize those SaaS fees and transactions there is even a bigger GAAP.
I think the other set of things to look at is just in and ensure tech space. Obviously, we're starting to provide and we will continue to provide some of the.
Metrics and some of the visibility into where our insure tech platform is $270 million of gross written premium 50.
59% gross loss ratio I mean, it just.
<unk> stands out from the pack candidly and imagine that those those companies had tax free demand or have this reoccurring flow of data that nobody else has about about properties.
Just tremendously.
And very Durably unique so that I think that there'll be other set of companies to compressco.
Thanks, Matt a question from Ken Wong from Guggenheim previously projected a approximate $4 million of headwind from Covid in 2020 with year now completed any updates on the potential pandemic impact in 2020, and how are you thinking about the timing of any reversal of that headwind.
So yes, most of that headwind, yes, we think that that is about right in terms of what the total impact was I think the vast majority of that was in Q2 theres certain graphs. So we've provided previously just showing how volumes of home sales and transactions fell off a cliff there was really right around kind of mid to late March and then had fully recovered bottomed.
Middle of April on a fully recovered by the end of June so that period of time was whether it was the biggest impact but like Matthew had talked about we did continue to see impacts with companies.
Essentially kind of small cell provider company that just kept their businesses on pause.
Understandably, but but we don't generate obviously the <unk> SaaS fees from those companies when they're not operating so it has been great here on Q1 to see what we would've expected, but seeing those metrics really bounce back in those those folks coming back back online but that.
Net is about right in terms of the environment.
Follow up question from Micron at all.
Existing home sales remain robust how do we know pork is getting its fair share.
Well I think there's a few things be able to look at.
Obviously, we'll provide and continue to provide.
Full year guidance and then some of the underlying metrics both number of companies in the revenue we're generating per company and then what we're seeing in terms of monetize services on the revenue per monetized service and that will be able to give you a sense for where we are well occasionally continue to provide an update into just the percentages of home inspections that we are continuing to.
See the last public metric, we provided there was 28% of all home inspections running through our software platform and throughout the year, we will do a day.
<unk> two with different parts of our business to really really go and more deeply for our investors and analysts and we'll be able to get income.
Give a deeper look at some of those things, but I'll say.
But the numbers are clearly showing us that we're getting certainly more than our fair share and that it continues to grow and we expect it will continue to given our unit economics on our ability to continue to expand the number of companies and then and then through that access to homebuyers.
Okay.
Paul from Jason Craig Craig Hallum can you give more clarity on what segments of the business are driving early outperformance in driving the increase in guidance for the year.
Yeah, it's not one thing specifically again I would if youre looking at segments, Jason I would answer it the same way, which is theres two ways to break it out looking at verticals like home inspection moving et cetera.
And from where we're seeing more penetration again, what we're seeing is good growth across these.
Got home inspections, probably the place where it's the strongest performance just because of our our deep penetration there and the moats that we have in the unit economics of due to just investing very aggressively but we're seeing we're seeing good performance across each of those verticals, we sell software too on the backend in terms of where we deliver services insurance again.
The fastest growing moving would be the second fastest growing security in TV on our goods and services for us, but insurance and moving would be the two largest impacts.
Matt We've got a question from an Investor you. Previously mentioned you believe tiers are valued at higher multiples why do you believe porch is valued at a lower multiple currently.
Well Marty I'll take this on maybe but.
On the chime in if you have any other thoughts.
Look I think that there's pros and cons of going public through a stock.
For us one of the big Pros as we were able to get the company public a full year earlier than we could have if we had gone through a traditional IPO.
And the math made great sense because.
Well, we were able to get those four acquisitions done that we'd announced in January which are really important to our plan on just continuing to be able to be aggressive.
We're certainly able to make choices that are the right choices to make as a public company and so we're excited and we're excited about that.
But on the flipside, you enter into the public markets and we didn't.
We have built in analyst support and Theres a lot of just the awareness and the marketing and look I think the reality is that all takes care of itself. If the reality, if we continue to invest and execute.
It takes care of itself I do think that.
Some investors are waiting to see kind of get a glimpse into Q1, because obviously we stated the business is going to grow very quickly here in 2021, and just being able to see that.
The business is growing 85% year over year on Q1, our again normalized for getting the acquisitions and January one 170% year over year, and so I think that.
That can certainly helped us to give people the confidence and conviction that that model on the engine is working really well.
We have a follow up from Ben Kantor as a as a fall.
All up it seems like Orchard long runway to grow the number of home inspections managed supports inspection software can you walk us through your thoughts on growing your share the home on spectrum market and the value of these relationships ships bring to the platform.
Sure I can take that one first of all our inspection relationships are very valuable as we mentioned before the LTV to CAC is incredibly strong in that part of our business I mean, the great thing is we have a very strong footprint today on the inspection industry and Thats really due to our industry leading software platform we.
Continue to make investments this year, we're making investments sales marketing product and M&A such as the Palm Tech report writer and we can do that because we have the strong unit economics, we have a great position to build from.
And as you mentioned, we do still see a lot of growth and opportunity on that part of our business.
Both on the number of companies that we can bring on board and how much.
Transaction revenue, we can generate from those those companies. So I would say, we're very excited about the growth prospects of that part of our business I don't think to say it's hard we have a value from this is just hard to compete with when you go on to say Hey, It's best in class software you can use the core software for free.
We're going to be able to provide you a solution that you can give to your consumers to help make the move easy and raise your NPS by 20 points and Oh by the way, we can be able to put jobs back on your calendar because we work across all these different industries and not only that not even that they are paying money.
No.
Money for the core software, they're worth dramatically more to us than anybody else like Matthew was talking about where we can then go to market through a variety of tactics.
So that's the engine that we can build on our flywheel. We can build that we've demonstrated across a number of different different industries, but obviously, we're furthest along on the home inspection.
Uh huh.
Question from an investor when did beat well close the call by roofing and Palm Tech close.
Middle of GI Murphy, Yes, I roofing closed on December 30, <unk> got it in right at the end of the year there.
And then.
The 12.
Closed on January 12, the HOA deal was also.
<unk> on January 13.
On that and you ask about contact was.
October 20th.
Thanks Marty.
All from Basin helps me on Opco, Andrew commented at a recent conference we expect revenue growth of eight 9% versus 12% Q4, how would you compare what youre seeing from monetize services in Q4 versus Q1 of 2000 per watt.
Okay.
Yeah. Thanks, Thanks for the question trying to trying to get a sense for what to expect for other people.
On the.
Sure.
Well I mean, we you can look at certainly the overall.
Growth rates.
We haven't provided obviously that particular metric yet, but clearly we're seeing very.
Very strong growth here through Q1 across a number number of metrics. So more to come obviously growth will be announcing Q on giving all the details here.
A short six weeks or so.
But.
Is it will give you the full visibility, but clearly you can just kind of extrapolate from the revenue growth that we're seeing.
We're seeing good notes on number of company's revenue per company, and then and then kind of the underlying underlying transaction details.
Got a question from Robert Derrington, Andrew Congratulations on us the per quarter and fantastic enhancements to your balance sheet. Obviously HOA is the bigger deal at the four recent acquisitions looking forward from an operational perspective.
What is your willingness to do further M&A during 2021, how should we think about M&A with porch group over the next from under two years.
Yes, we just think we are going to continue to be active where the deals make sense. We're certainly not going to knock on a force anything, but where it's a strategic bet, where it's accretive on a standalone basis on where we believe there's a lot of synergies like we've been able to show through past acquisitions, where we can dramatically accelerate the growth of the business.
It just makes great sense for our shareholders, we will always balance like I mentioned before deploying capital against M&A versus organic.
Levers, but we've proven that M&A can be very very accretive for us and so we'll continue to we'll continue to look where theres. Good fits the reality is that some of these businesses are just worth more as part of porch than it is on a standalone basis, which is how we can we can do deals we've done on the path. So.
Robert I would say, yes, we would expect to continue to be active here as we go in 2021.
And I would say ongoing 2022, if youre looking over a couple year period.
And frankly ongoing I just think our platform naturally allows us to be able to look at M&A as one of the additional growth levers of the business and so as long as we continue to see that being true, which I can't see how that would change we'll continue to be active there its muscle that we've built in our company we've got strong.
People and capabilities there and so it's one of those six growth levers that we talked about at the beginning.
Okay. We've got a question from an investor in <unk> regarding HOA why does the HOA generate a <unk> higher conviction in your in House agency.
So.
It just depends on where where you play in the value chain.
For insurance so as Matthew mentioned previously before December of 2019, we were monetizing insurance on a per liter per quote basis, and then we launched our in House insurance Agency and we became license across all 50 states, we could be able to quote and sell insurance to a consumer in here, we make generally around 13%.
14% commissions on average.
13% to 14% of the total premium and Thats year, one and ongoing each year and that's how we've been operating.
<unk> is one level deeper in the value chain and they have both an MGA entity or managing general agent as well as a carrier entity.
That allows them to be able to be deeper where they're at their own insurance product right. Now we sell third party carrier insurance products. One thing, we really like about HOA as they push virtually all the vast majority of that that risk out of third party reinsurers, but they're able to get meaningfully higher commissions are on two X higher Commission.
The imports gets today as as an agency. So just playing deeper in the value chain is it really is a really meaningful opportunity for us.
A couple a couple of last note on it HOA has already been a carrier and a partner of ours in our agency panel. So we already see in the states that it operates.
How much business, we're driving to HOA and it's substantial.
Very competitive like we look at lots of different options in the insurance space, where we are on M&A. It makes sense.
Just a great great fit for us.
So we already have great visibility into the performance as Mandy talked about one of the big opportunities is now to take HOA, which is only in six states today and to be able to expand it across many more states and that'll be a process, but but as we do it and that will just really now on an additional growth lever for us where we can be able to generate meaningfully more commissions again.
Year, one and ongoing each year, so meaningfully higher recurring revenue per consumer as we as we expand the number of states with her.
We've got time for maybe one or two more questions can you. Please talk about how cookies going away on the impact to be 12 business separately, how is a rising mortgage rate environment impact your business I can take the first one also hit on the <unk> question.
So first thing is the Charles reliance on mobile data apparatus Teekay is minimal.
And thats, because we get data from multiple sources omni channel.
And mobile is a small part of the total.
As it relates to cookies V 12 has cookie less clusters that use data science and so they are actually able to identify identity without cookies and so theres certainly from a competitive scenario there could be some benefit us over time of that.
Of course.
VA is that changing landscape around privacy policy or with evaluating the supply of third party data.
There's always been successful navigating those changes it's been there's been a lot of changes recently.
And they are able to keep their third party datasets flowing because they use multiple sources of data and so we will continue to watch that landscape very closely and make sure we're set up to support our customers.
Okay.
But from an investor do you see any competitors trying to replicate your vertical software plus marketplace model.
No.
The short answer.
It is variety of vertical software companies that are layering in transactions in other markets that are out there that we think are great peers, but no porch is really unique in the home space.
Okay.
Got time for about one more question, Matt any update on progress on the customer is paying for SaaS versus transaction and customer access.
And any update on where SaaS pricing might be weak.
Yes, so two comments there so.
We will provide updates.
Just qualitative updates as we go it's not specific public metrics that we're reporting on each quarter I will say that we're getting better and better at being able to generate revenue through both transactions and <unk> SaaS seats, and we've talked about this we're layering in more modules or tools to be able to monetize them.
Weighted which really is the goal obviously the priority is the transaction monetization given such deeper pockets and such larger Tam, but ideally we can monetize in both ways.
We've talked about how we could increase the price of the <unk> SaaS fees of the core software that's something for some of our businesses that it is in the roadmap for this year is the right thing to let the pandemic get behind US we don't want to be doing that still in the middle of the dynamic, but assuming things continue to normalize here in the country and.
The world that is that its something thats on there on there.
List of initiatives here for this year.
Thanks, Matt that's all the time, we have for Q&A I'll turn it back over to Matt for closing remarks.
Well I just I just want to thank thanks folks for attending I mean, it's as we talked about it's been a been a great quarter.
Three months or so into being a public company, but I think you can start to get a sense for how rapidly we're going to move.
If we're going to be in our ambition to build something really big and just in our ability to execute we have a very strong team I'm excited to be able to introduce you to more of that team as we go throughout the year some of the folks that lead our different divisions are incredibly strong.
And I think that will continue to provide great great confidence, but we feel very good about how we're set up around the growth for this year and how we're set up strategically with our with our deep competitive moat for for building something very big over the long term.
With that we will end the call. Thank you very much and look forward to follow up conversations.
Okay.