Q1 2022 Porch Group Inc Earnings Call
Including launching new products and new geographies.
As you May remember when we had first acquired HOA a little over a year ago. They were operating in six states.
With our most recent announcement of expansion into Nebraska, and Wyoming, We now offer our own insurance products in 17 states.
We're also integrating home warranty and maintenance services to create a full home protection plan.
Number five we will continue to build out our data platform and start to leverage <unk> unique insights to improve pricing for our insurance and warranty products.
I'm excited about what Adam will cover later on here in the insurance section again, we filed and received approval to use is first key data in our insurance pricing and flex it.
I'd say number six.
<unk> as it relates to our M&A priority.
As we discussed last quarter, given the shift in the cost of capital.
Importance of prioritizing scaling our systems and the relative public to private market valuation gaps that can exist.
We do view 2022 is a lighter year of M&A and one where a larger focus is going to be on the integration of prior acquisitions and financial controls of our financial reporting.
Certainly we remain excited about how our platform can accelerate growth the REIT acquired companies and we would look to focus more effort in capital here in the future once the market normalizes.
So with that I'll turn it over to Marty Heimbigner, our CFO to discuss our first quarter results.
Thanks, Matt and good afternoon, everyone as Matt mentioned, our business is performing very well and was able to report another strong quarter, putting us in an excellent position for the remainder of 2022 and is keeping us on track to achieve great results for our shareholders, including breakeven adjusted EBITDA.
For the second half of 2023 and.
In parallel we have accelerated key hires across the accounting and it organizations to address internal controls and compliance with our obligations under the Sarbanes Oxley law.
Looking at slide nine the year over year comparison of our first quarter results is impressive.
For the first quarter of 2022.
<unk> group's total revenue grew 134% to $62 6 million, an increase of $35 9 million from the prior year same quarter and ahead of expect patients.
In addition to the strong revenue performance revenue less cost of revenue of 66% in line with our expectations.
And adjusted EBITDA margin was a negative 11% a.
A 25 percentage point improvement from the prior year.
Adjusted EBITDA loss was approximately $7 million in Q1.
Nice year over year improvement.
Gross written premium was a healthy $102 million in Q1.
Which is our seasonally low quarter.
We provided annual guidance about eight weeks ago. When we were already had good visibility into Q1. We are certainly pleased with the performance of our business. So far this year and are affirming our full year 2022 guidance with revenue guidance of $320 million.
Up 66% year over year.
Revenue less cost of revenue, what we use as a measure of gross profitability.
$210 million.
Up 57% year over year.
2022, EBITDA guidance also remains unchanged at approximately a 400 basis points year over year margin improvement, which produces close to negative 9% adjusted EBITDA margin.
An improved full year adjusted EBITDA dollar performance.
We continue to invest in strategic growth initiatives as well as acquisition integrations.
To address our internal control environment.
Much of our cost structure is fixed and the underlying margins of our business are strong we are able to manage the growth of these expenses and to be confident in achieving our medium term goal of breakeven for the second half of 2023, and our long term target of 25% adjusted EBITDA margins.
Additionally, we are pleased with what we expect to be our $600 million gross written premium insurance business and we will share more about progress here later in the presentation.
Given the strong Q1, we are excited about the ongoing performance and momentum at porch.
With that I'll turn it over to our Chief operating officer, Matthew Nagel to discussing our operating segments and Kpis.
Thanks, Marty and Hello, everyone I agree we certainly feel good about how the business continues to perform and how it has performed over time as you see here on slide 11.
You can see a strong 66% year over year revenue growth that we expect in 2022, the most significant potential areas of positive upside to this year our initiatives such as the initial integrations with slow sign in the rollout of our app to consumers to all sectors.
Other factors that May impact our results include unusual weather, especially in Texas.
Which can be muted given our reinsurance strategy.
And also the timing of the CSC acquisition, which is assumed and remains on track for mid 2022.
We feel comfortable with the current expectations of softness within the housing market that had been built into guidance and our reinsurance relationships landed largely as expected for the 22 year.
I'll first jump in and share 2022 guidance for our operating segments and then report on our KC outperformance from Q1 2022.
Turning to slide 12, the most valuable strategic and re incurring elements of our revenues are growing the fastest.
We generate revenue from two segments overall, our vertical software segment is expected to produce approximately $190 million in revenue in 2022, we generate this revenue from our software through both <unk> SaaS fees.
And transactions.
The other high retention and recurring portion of our business is insurance segment revenue.
Which is also growing rapidly and.
It is expected to contribute 40% of overall revenue in 2022.
As one thinks about our current valuation.
A few things I believe are worth.
Minder.
You can see here on slide 13 that approximately half of our vertical software segment revenue or approximately 30% of overall company revenue comes from B to B subscription fees.
The monthly fees companies pay us for our software and services.
This revenue stream alone is expected to near $100 million this year.
It's high margin revenue.
We have built or acquired and accelerated the high quality, leading software companies in large key vertical markets with the three most important being ISN flow tie in right now.
So if purchased only revenue stream with the approximately $100 million of.
SaaS fees, the comps irrespective multiples for that business will be quite clear and represent a substantially higher market capitalism.
Similarly, we will highlight insurance on slide 14.
We will recognize revenue as a percentage of gross written premiums in the mid 20% range depending on the quarter.
This contrasts with a more traditional reinsurance approach that would have us recognize the vast majority of premiums as revenue and retain more risk overall.
This means our business requires less capital than would be expected to experience lower volatility.
With an expected risk levels in our P&L than other insurance companies.
Our insurance revenues become consistent.
More predictable and higher margin in this context.
If our business were only and insure tech business the industry multiples would be clear and considering our $600 million of gross written premium our capital light strategy or profitability and fast growth.
And our long term CAC and David David advantages on this basis alone valuation would also be a substantial step up.
Value will be recognized over time in the meantime, we will continue to execute effectively.
Nor the noise, despite any near term dislocation and though there arent any companies that do exactly what we do we are certain that the software plus insurance insurance combination is working well should continue to scale rapidly with high margins and gives us substantial long term advantages.
<unk>.
You can see our unique strategy continuing to work as we turn to our Kpis.
Beginning with companies here in slide 16, we saw growth in the average number of companies in the first quarter to more than $25500, which is up from approximately 24600 in Q4 2021.
Revenue per company per month in Q1 was approximately $817 per month.
Up approximately 28% from the same quarter prior year.
There is substantial runway to continue to drive growth in revenue per company as we continue to sell in more software modules to increase our <unk> SaaS seats.
As we get access to more consumers from these companies and as we then help these consumers with more services.
The opportunity here is large with many years of continuous improvement ahead.
As we noted in previous calls we expect net new company adds to continue to grow.
But more slowly in 2022 versus 2021.
What we saw between Q4 2021 in Q1 2022 is what we expect to be a reasonable and sustainable pace of growth during 2022.
While there were no acquisitions during Q1 I would note that Q2 will include our Ws, which will add approximately 1000 companies.
As you can see on slide 17 in Q1, we continued to see strong growth across all types of monetize services with us recording over 254000 for the quarter, representing 40% year over year growth.
We saw a $176 per monetize service at 91% increase year over year and a nice step up from Q4 2022, as we continue improving our insurance sales efforts insurance and home warranties are our fastest growing services with moving as the next.
Let's now jump into additional disclosure related to our two operating segments I'll take vertical software and Adam Cornick, the president of our insure Tech division can jump in to begin updates and a deep dive into our insurance business.
The left hand side of slide 18, we provide Q1 results for our vertical software segment.
We realized $34 $7 million in revenue, a 40% increase from the prior year.
And 55% of our total Q1 revenue.
Of this the majority of the <unk> SaaS fees with the substantial balance being transactional revenue, we generate from the consumers who work with the companies we serve.
Adjusted EBITDA margins for this segment are generally lower in Q4 in Q1, given the seasonal aspect of this business.
As a reminder, our software companies service more customers in Q2, and Q3, which then generates more transactional revenue for us in those quarters Q1 is also historically, our lowest quarter from a seasonality perspective.
And at almost a $140 million IRR, we are in a good spot against our full year guidance.
Adam over to you for our insurance segment.
Thanks Matthew.
On the right hand side, our insurance business continues to grow rapidly and demonstrates strong margins in Q1, 2022 grocery and premiums of $102 million. We do remind you that Q1 is a seasonally low quarter, each year and before adding <unk> and CSC.
Segment revenue was $27 9 million.
Given our capital light approach to insurance, the predictability of revenue and margins and retention rates are very similar to a typical <unk> SaaS fees as you can see that the underlying margins.
We derive much of our insurance segment revenue from insurance carrier commissions lean.
Reinsurance ceding commissions and fees.
Thus as you've seen we had strong underlying margins around 12% adjusted EBITDA margin.
We are different than others in our insurance businesses already nicely profitable despite rapid geographic expansion and product investments.
<unk> and our warranty business was profitable pre acquisition.
Our insurance agency has privileged and lower cost access to demand, which is typically one of the larger cost for a business like this.
Fundamentally we have a low CAC strong underwriting that will continue to improve with our proprietary data.
And given the strong underwriting history, lower volatility and capital requirements, all of which helps to create high margin opportunities.
Here on slide 19, with regard to our insurance specific kpis at the end of Q1, the approximately 338000 policies and we are generating an average of $330 of revenue per policy per year.
On a rolling 12 month basis as of March 31, 2022.
We had an 89% customer retention rate in our HOA business.
You can see now offer Olin insurance products in 17 states.
I will now dig into a few other topics related to insurance first an update on the PSC, The California insurance acquisition, we signed in the fall of 2020 yet.
We continue to work through regulatory process, and we still anticipate closing likely in mid 'twenty two.
Here on slide 21, we can see <unk> continued strong underlying underwriting performance.
Note. This is looking only at a homeless America carrier MGA. Our agency is not included here is they sell policies and risk distribution commissions without any underwriting.
Over the past five years, we have performed favorably compared to the Florida homeowners industry.
With an average 68% loss ratio versus the industry, 70%.
This includes the challenging year that Texas under our new songs such as Brazil.
Our 2021 loss ratio of 100% is driven by the severe weather events in Texas.
The state and it currently represents the majority of the carrier agreements.
Where the overall CAC is industry saw a 1%.
Loss ratios.
There are a couple of data points to see how well we have performed an underwriting over time.
You can see we have broken out our attritional loss ratio.
This is one lever in non catastrophe claims.
You can see in light blue that the performance here has been consistently exception, averaging 20% over the last five years.
Separately looking back at the prior full year period from 2017 to 2020, our average loss ratio was 60% versus the U S industry average of 70%.
These figures are industrywide comparisons, where we show there.
I would note if you look at some of the fastest growing tech enabled platforms, we compare you to morphine.
The reason, we believe our capital light model is attractive even with a high loss environment across the industry in 2021, our insurance segments still recorded a 16% positive adjusted EBITDA margin.
As we continue to expand our underwriting results will be less tied to taxes the geographic diversification.
As we continue to bring in more course proprietary data pricing accuracy will only continue to improve.
Our solid historical underwriting performance is important to maintaining our favorable relationships with our reinsurance partners and one of the reasons. We have performed as long as we have in our annual renewals and a different Mac difficult macro reinsurance spectrum.
Let's turn to slide 22 for an update on our capital light model into 2022 reinsurance rates.
Yes.
We are proud that our long term partnerships with our reinsurers as you can see here on slide 2022 over the prior three year period from 2019 through 2021.
You'll see over 91% gross written premium.
We strive to provide access to a profitable underwriting business far with insurance companies and this has allowed us to rapidly grow our business without the same needs of capital and we have this we retained premiums in line with the growth.
While 2021 was a challenging last year globally for reinsurance initiatives.
We're well positioned for reinsurance.
Given the better than industry underwriting results discussed in the previous slide we have maintained good relationships with reinsurers and our overall 2020 to reinsurance for fluctuation.
Our reinsurance program generally remains on January one and April for us for a quota share and excess of loss relationships expected in.
In total for 2022, we're retaining approximately 12% to 14% of premiums.
More than the previous year, given the reinsurance market, but in line with our expectations and what we had assumed in 2022 yet.
We have done this while effectively managing the cost of reinsurance and are effective ceding Commission again, both are in line with our expectations.
We believe this is different and better than the overall market because of strong historic underwriting results of our needs.
Strong growth with consistently profitable performance.
More underwriting advantages ahead as we utilize more of course is proprietary data to create value results.
As we've noted before we did put in place pricing increases in the advance of the 2022 renewals we have not seen any change in retention rates with these increases and we continue to grow the number of consumers that are helping with insurance and warranties, we feel good about the heat and insurance renewals and the 2020.
In light of the challenging backdrop for reinsurance there.
We're confident in our ability to continue to scale, our insurance operations and deliver for our consumers reinsurers independent agent and carrier partners.
Turning to page 23.
We're excited to share the product enhancements, which are now Roy for consumers using our qualified mortgage point of sales awful.
Now when the consumers are getting loans, we have integrated homeowners insurance, making easier for these homebuyers, who improving supplier.
We launched and data within the last month to provide one applicants and easy way to compare rates from multiple carriers.
We're excited to help Boeing offices to provide a better experience with higher conversions of our customers.
And to continue making the home buying process easier.
As always we first off we shift to a subset of customers, which is the parent steps we've seen positive reactions from loan officers and believe this is another example of how our unique capabilities simplify them.
Lastly, on slide 24, I wanted to get an exciting update on the first milestone of using <unk> proprietary property data to improve with pricing accuracy for homeless America customers as discussed in the past ports has unique data about property and use that when we have access to.
We are confident this data, we'll be able to lower the price for war risk consumers and raise the price of insurance for those with one <unk>.
We've now successfully demonstrated that we can leverage <unk> data in the home insurance under investing final new pricing changes and get approval from state regulators.
By utilizing our inspection data set in hand, and the 15 plus years of claims data, we were able to model file and implement new pricing.
So far the states of Arizona, Virginia, and Georgia have approved our use of relocation of water here as part of the crisis.
Our data shows that as the water heaters and <unk> basement.
Zero would incur lower claims costs, because if a hotline that heap leach elsewhere.
We have now built in the appropriate pricing based on location.
This is only one example of the data fields and inspection report can you cover for Nissan insurance underwriting.
Looking ahead, we continue bringing in more data and as are we.
Working to evaluate piping material we've condition system.
The number of issues identified in the home and more.
We will continue to refine our pricing models to drive profitable growth.
And this is just the start of what we will be able to incorporate to create advantages that are difficult for others to replicate.
Joining me insurance is first and foremost about pricing accuracy. When we have a long runway ahead to continue to improve and leverage our platform.
With that I'll turn it back over to Matt.
Thank you Adam.
I'm fired up about the work that's happening there that's great great progress.
I'll wrap up with a brief note of encouragement for our long term shareholders.
On the fundamentals and be patient.
The current short term equity market and our view is illogical, we have a business here that we expect to continue to grow revenues and margins nicely, but even more so has the opportunity to become a truly great generational company and a winner and multiple massive industries.
With our unit economic advantages that we have today, we believe we will win and providing software to key strategic home service verticals.
With our expected demand and data advantages, we believe we will be able to build one of the largest and most profitable amongst insurance companies over time.
So looking ahead, we have sufficient cash to execute on our strategy, we have more than four years prior to the maturity of our convertible note, we're prioritizing and making excellent progress on integrating past acquisitions and ensuring that the appropriate controls are in place.
And we continue to make strides toward having strong governance or just announced with shareholder friendly approach of board declassification.
We'll continue to do what we've done since we've gone public execute make substantial strategic progress the deepens, our competitive moats and deliver solid and consistent results.
We had a great.
Q1, I'm fired up for the remainder of 2022 and with that management team will take your questions. So Walter if you can go ahead and open up the line for Q&A I'd appreciate it.
Thanks, Matt we have approximately 30 minutes for questions. We'll start by taking questions from sell side analysts first question comes from Jason <unk> from Oppenheimer.
Okay.
Okay.
Okay.
Okay.
We'll move to John Campbell from Stephens.
Okay.
Hey, guys you hear me okay.
John how are you doing and doing well doing well thanks for taking my questions.
You guys have extended expanded HOA.
And a handful of states since the acquisition I know it takes a little bit of time to kind of get up and running in each state.
When the business and then the recurring revenue has to obviously build up over time, but we've looked at some of the HOA state filings pre ports.
And some of the states fee they launched and there was pretty impressive gross growth I feel like in the early stages. So im curious.
If you are seeing that with.
Those guys under your ownership.
So kind of with regards to guidance, if you're assuming any kind of kind of a new state impact for the full year.
I'll kick it off and then once you layer on top.
We have made great progress, obviously with geographic expansion that's been up.
One of the many things that out of those teams are focused and I think executed really well on so so kudos certainly to that team going from six states, which is where that company had been for quite a while to all of a sudden being now 17 states a little more than a year later.
Good accomplishment.
John one of the things that we do this when we first launched in our state.
The team has obviously all the models in place to say Hey. This is what we think is ideal pricing for this particular consumer in this particular home, but we actually artificially start on a more conservative place. So we increased the price to make sure that we just aren't making any mistakes and as they start to get the data feedback loop.
We'll then be able to start bringing pricing down in that process. It varies by state and the amount of data that we're seeing but give or take six months before you would really start to see much.
Much of a meaningful impact and then to your point as you start to sell more consumers from that state.
Significant portion of that revenue, you're recognizing over the course of Baffin 12 months because of spread out amongst yourselves.
Let's see.
So is there a significance in terms of what we're assuming for this year I would say, we're not being overly aggressive certainly in terms of how much we're betting on new states, but I would say we're in line with what we have seen.
And past performance.
Else I missed there you'd want us to layer on top of it.
Yes, I think I would just.
Some of that up by saying that we do all of those things is not described.
And we're comfortable with how that's panning out and sort of the guidance that we've given and how we're running the business. So we feel great about that.
About that approach and that's what's leading to the profitable growth that we have.
Makes sense and then Matt just as a follow up I mean as.
As much as I want you to take the gloves off and kind of fire back at the shorts and your stock I think you've taken the right kind of professional approach and obviously the continued strides in our business I think kind of speaks for itself Youre, a better man than me, but if I can maybe pull you into the arena for just a minute here.
What you just announced with the approval of the state data I think that's a pretty good evidence.
Kind of backing your long term vision, that's clearly an angle the shorts have taken.
Saying that the data is either worthless or you cannot use it.
So I was just maybe wanted to get your take a big step back and get your take on the extent and the type of data you're collecting on a daily basis, just for your software and then.
You kind of envision that transforming the model over time, just as a kind of a recap.
Yeah I appreciate the question John .
As I tell the team.
The best thing for Us to do is just like.
You said it well ignore the noise just execute back out of the business.
Feel very confident in what is ahead for the company and I think you can get people to know the business well you can see it showing up in the results I agree with you I think that.
We've talked about our insurance the two most important things are building a very large insurance company, one who can get access to consumers and demand and lower cost and obviously, we have a huge portion of the U S. Homebuyers that are going through our systems that lowers our cost.
And then secondly, as data that we can be able to price prospectively.
We haven't provided an update on our market share in the home inspection industry, but we will do that at some point here. This year because we're excited about our progress, but last last update 28% of all of the home inspections that happened in the country are flowing through our software system. It just means that we know a huge amount about.
Our properties.
And.
Unique.
Valuable information about properties because the persons in the home for three or four hours documenting everything about the home.
And so anyone I hear the questions occasionally about is this data valuable if any one of those people were to just go sit down with back with an insurance actuary our data scientists that does this for a living.
Wood.
It's almost disbelief when we tell those people that people don't think that information will be valuable because how could it not.
<unk> you have 40 pages of information about a home.
<unk> includes the type of pipe for the home.
Critically valuable information that we can be able to use to be able to price more effectively. So we're excited about it it will show up in our results over time and we'll just we'll just continue to operate and execute.
There anything I know you're excited about that initiative anything you'd want to add there as well.
Yes, I think you said it well I would say I'd like to talk less and show results more and this is a great place to do it.
Thanks, Michael.
Thanks, guys.
Thanks, Ron Thanks, John next question from Jason <unk> from Oppenheimer.
So first one of the things, we're hearing with insured taxis inflationary pressure.
So maybe talk about why you think you're well insulated from it or how you plan to manage it.
And then second.
I don't know if you already covered this because I'm multitasking, but.
Gross margins are obviously down a bunch year over year.
How much of it was the.
<unk> mix versus any other factors.
Adam do you want to take the inflationary question Mara.
Marty you can take gross margins that you'd like.
Right.
So Jason I think I think the place to focus as HOA given that the inflation in home values in the U S is really what's driving a lot of this so.
Two things to think about HOA uses the census constant quality price index to adjust the coverage a or home value.
Our reinsurance home division.
So as of today that index.
It's a publicly available index that we use.
Every renewal is increasing.
The home value by low double digits and there is a corresponding increase in premium. So we have that in place. We are aware of that inflationary metric of new designs with the HOA insurance products to take that into account.
And then in addition.
HOA files average price changes of low double digit percentages separately some of the inflation measures in 2021.
So when we put those two things together, we completely agree that inflation in the U S, particularly in homes is real or addressing them, both with the product design and without which future prices.
Marty.
Yes, Jason Youre correct on the revenue.
Less cost of revenue margin was 66% in the first quarter of 2022 versus 78% in the prior year that primarily reflects the fact that in April of 2021, we acquired homeowners of America and then later in the year in September we acquired.
American home protect our warranty business, so what youre seeing there.
Is that both the claims related expenses for the insurance business and the warranty business show up in cost of revenue in the first quarter of 2022. When you compare to 2021, we did not have a risk bearing entity, which we just had our insurance agency.
Business. So the prior year was more of a pure vertical software company with with our agency business and so that explains.
The lower cost of of.
Revenue less cost of revenue margin and just to reiterate Jason what we're seeing in Q1 is exactly what we had guided to for the year and what we had expected. So certainly nothing that was different than what we've communicated previously and then just put power. When you guys follow the 10-Q will there be pro forma and RV acquisitions or not.
We have a.
Segment disclosures in the.
The MTN a portion of the financial statements that provides further breakout on our segments.
Okay. Thank you thanks.
Thanks, Jason.
Thanks, Jason next question comes from Ryan Tomasello from K B W.
Hi, everyone. Thanks for taking the questions and congrats on the strong starts a year.
Nice to see the reaffirmed 2020 guidance.
This does conclude backdrop in housing.
Elaborating Additionally, idiosyncrasies across the business.
Can you say if youre.
Outlook for the year as change at all in specific areas.
The business, maybe with stronger trends in certain.
Segments.
Setting larger headwinds than others, if thats the case at all.
Yeah.
Yes, I can I can speak a little bit to that.
The as.
As we said in our prepared remarks, we are seeing some impact.
As a result of the slowing housing market, but we had anticipated.
Built into our guidance most the fact, the majority 70% of our revenue are rich.
Recurring revenue from either our software or our insurance.
If you get deeper in to say some of our inspection and real estate businesses.
Some of our pricing models, there are actually well insulated because around a per seat basis. As an example, so we will feel it a little bit there, but overall not enough to fundamentally change our guidance and not enough to have Mike This is doing better than that.
A lot of this we anticipated and built into our guidance for this year.
Got it.
It's on the <unk>.
<unk> managed service product launches data.
Realize it's still early days there, but are there any initial stab serves general commentary Nevada.
That rollout is going.
Catch rates and I guess, what the extent of the data actually is today across the whole portfolio.
Sure.
You can say, yes, you got it.
So we have launched it for an initial set of customers.
And as we always do we will we're rolling it out in a controlled manner, we want to ensure the experience for consumers and for loan officers is great.
While we don't share conversion rates publicly we are excited about the product.
Some of the things that we're hearing from loan officers.
They really love the UI.
It's a great use case.
Especially when borrowers need homeowners insurance a fab.
And then there is certain segments, such as our builder division, where you're working with builders, who just really dislike.
The manual insurance stuff and so they have found it really valuable.
But as seamlessly integrated into that experience and so we're super Super excited about it.
Okay.
Great. Thanks for taking the questions.
Thanks Ryan.
Thanks, Ryan next question comes from your call.
From Wedbush.
Yeah.
Hey, guys good afternoon.
First just on the on the reinsurance challenges and the relationships.
It sounds like they're kind of coming in as expected on the renewals, but at the same time your.
Hanging on to a little bit more of the unwritten premium.
Can you help us think about how.
That might trend.
Close to halfway through the year end.
Is that something you expect to kind of revert back to normal levels.
Given environment. This makes sense to hang onto more just I don't think about how that evolves.
Second half and maybe as we go into next year.
Adam I'll jump in and take that one.
Absolutely so.
The main thing I'd start with is is those contracts are almost always for a year. So we would not expect to see variations within the year of the contract it can be for more than one year in some cases.
I'm not familiar with anytime and everything less familiar.
So we didn't see any variation there.
That complaint.
And then our reinsurance program includes a couple of asset quota share and as well as excess velocity. We use those together so we might be seeing a little bit less of a quota share or buying more excess of loss, we think that protects us.
I don't have any view on what the right design yet will be for 2023, I think that's something that we'll tackle but we're really comfortable and the capability, we have and the ability to manage that.
Through strong partnerships and by taking advantage of those different levers.
Okay. Thanks, and then on the vertical software suddenly appreciating the overall, there's just less exposure to housing.
With your overall revenue, but just looking at the at the monetize services.
The growth it was down sequentially <unk> the growth slowed.
Year over year from <unk>.
Just can you just help us think through the moving pieces on the month as services is that the exposure youre talking about on the housing market seasonality.
But at the same time the revenue per monetized service was up.
Such as the I think it looks like kind of by far the highest ever.
Just whats going on there in that number.
Sure I can I can speak to this.
<unk>.
I'll start first with the revenue per monetize shortage.
Is.
Has been and continues to be a core strategy strategy for us to focus on high value services, most notably insurance and warranty.
Communicated we see upside in revenue per monetized service.
Because of that strategy of really focusing on those higher value services. So a lot of that is just.
The success and the expected impact of where we have been focused.
On higher value services.
In terms of number of monetize services. There is certainly seasonality at work between Q4 and Q1.
I don't want to say, we're seeing anything unexpected.
And I would certainly expect us to see material growth in Q2 in Q3.
But.
I don't know if you would add anything more to that map.
So I'd say its generally seasonality you can see.
In.
Previous areas typically you'll see a little bit of a tick back from from Q4 Q1. It's just that's just how the how the cycle works.
Okay. Thank you so much.
Thank you. Your next question comes from Justin niches from Vandenberg.
Hey, How's it runs.
Good thanks, Thanks for the question.
Yes, I was just hoping to.
First thinking a bit on the $600 million of gross written premiums.
Good.
That would maintain you know in this market, but what's it going to take for that to go up in terms of obviously more states, but going deeper or is it a head count thing you need to hire more people to get that up just hoping to get a little more there.
I mean, there's a lot of levers that are ahead of us to grow I was one of the reasons that we're in.
I'm just excited about dealt with us.
For the year, it looks like but I will go through a handful of them. It starts for us at being able to add more companies. So interestingly again, our core go to market is selling software to more companies those companies that provide us access to more and more consumers now.
When we bring new companies into our software the vast majority of those companies were also getting access to their consumer and introduce to the consumer but theres. Other tactics that we're deploying like we talked about with somebody insurance and bought by rolling out our consumer App, we can be able to get occupancy even pharma consumers to then help them with key services like insurance.
Which is what we focus on so theres multiple steps not fall, where we will continue to be able to.
Grow grow volume.
So we sell insurance too.
And then yes, youre exactly right. There is other things that we can do such as they are expanding into more geographies our own insurance products Theres, obviously, the opportunity to bundle warranty and to be able to cross sell both insurance and warranty together to fully protect a home there might be other insurance products that makes sense for us to be able to bundle for the for those.
Customers. So a number of different levers that we'll pull out as we go forward last comment would be that of that of our base of consumers that our insurance customers of ours. They renew at a very very high rates of 89% renewal rate, but we just noted so you get to roll that forward as we move into the next year.
Alright Thats helpful. Thank you and then switching gears a bit and I know, it's early that you just kind of.
We're testing it last quarter I mentioned that briefly this quarter. How is the early returns has been on the new ports after that.
Good connectivity just any update there would be helpful.
Sure.
What we can share is we're focused on rolling out the app to a larger set of customers.
We're currently in closed beta.
Feedbacks and very positive.
Positive lots of helpful thoughts on how we can improve the experience.
We remain very excited about the opportunity with our app.
We have a big opportunity to incorporate a lot of the data that we have to provide some unique consumer experiences.
And the update we can provide from a timing perspective is we're looking to move out of our closed beta in the middle of this year. So it's still early but we're excited.
And just in what we typically do as we go through as we did today certain deep dive each quarter at some point I would imagine we'll do a deep dive into the app.
If a product leader join and be able to provide deeper insight there. So I'd look forward about some point.
I appreciate the answer to the question Bert. Thank you thanks guys.
Next question comes from Dan <unk> from benchmark.
Hey, everybody.
Matt can we just double click on the.
On the data proof points in the quarter.
I think most of us thought that that was going to be.
Probably a back half and while it is great states.
Still what I would consider meaningfully ahead of schedule I'm sure, it's not had nor schedule but.
Kind of what I think people were anticipating you talked about kind of how that flows through but.
Is there any way to get maybe an updated framework for how you're thinking about the future opportunities there whether it's this year, whether it's <unk>, whether it's <unk> the bulk of it and obviously as you said changes typically take some time to flush through the system, but.
Do we actually start to see some of those proof points. This year, because I know that your prior guidance did not have any or I believe anyway that your prior guidance did not have any of the real data upside embedded into it. That's my first question, Yes, I think Dan I. Appreciate the question. So yes I was.
Excited to be able to share shortly.
Sure the upticks I think generally the expectation was for.
Late this year.
Even just having filed not gotten approval from states. So obviously alright.
Always good to have a few cards up one's sleep.
Yes.
There's a couple of different things I would think about so one is getting additional states. So we have gotten approval back from three states as other states. So we'd be able to take this first block of data on the first set of pricing work and rollout to more states and get approval.
We will provide updates.
Dates on that as we go.
The second block is using more data and so Adam and his in his section highlighting some of the additional data that we would be able to work on and bringing that through into additional filings as we would go to bring more data.
Get sequential approval from states no specific timing of our communicating yet on that but obviously the teams are already.
Part of work I'm, just to be able to get that organized structure and then flowing through to our actuarial and data science teams.
Last comment I'll make about Adam if you want to add anything.
We will provide updates as we go I mean, we want to make it really clear.
This data is going to be able to create value because we're very very confident and convicted that it well and so there's a number of things that we can share as we go and so I would expect at some point in this year provided another deep dive section to be able to give an update on what worked what we're saying.
Or anything else you want to add.
I think if any at this time I'd just add I'm excited and I'm really proud of the team to get it done understanding yes.
Awesome, and then Matt interesting kind of tweaks to your M&A outlook, I know you and I joke about.
Timing of all of that stuff I guess.
There's been a lot of commentary around <unk>.
Incremental investments in growth and as we look at the marketplace, Matt. It might also be helpful. Clearly you have a.
A lot of cash on the balance sheet. So.
You have flexibility.
How are you thinking about kind of that.
The puts and takes obviously I know you reaffirmed your guidance I know, where you want to kind of end up the year and consistent sort of upside to EBITDA, but by the same token. The later this year.
Let's say Thanksgiving last year.
<unk>.
There could be opportunities you've heard from other companies that marketing maybe it gets easier as other guys kind of callout So Jess.
Again, I'm trying to keep it higher level.
Outside of the framework and the guidance, you've given but just maybe help us understand your thought process. As you go deeper into this year and you start benefiting from a lot of the things like data that you've layered into place in 2021.
Yes. So a couple of quick thoughts will be one yes, we have $305 million in cash, leaving leaving in the first quarter here and so there is we're well capitalized to be able to go and run our plan certainly we can choose to use that for M&A, but again. It just usually takes our view six to 12 months or valuation.
Multiples are going to probably move into private companies I'll say certainly we are.
We have zero interest in using equity even quite a while ago to go.
And do acquisitions and so now it just it makes no sense right.
We think the prudent thing to do is just a really clean solid year just go execute.
And do our thing maybe there is some something small to do but I wouldn't expect anything substantial from an M&A.
And then see where that where the robust here as we as we look at the end of the year and that could present some interesting opportunities.
<unk>.
Alright, guys. Thanks I appreciate it is a nice start to me or not.
Thanks <unk> next question comes from Mark shipped off mute.
Guys can you hear me okay.
I appreciate I. Appreciate you taking my question. My question for you on the relatively new clothes module I was just wondering if you could just give us an update on some of the progress we're making starting up.
Some large home inspection companies from the new model.
Yes, I can just take that briefly we're continuing to make progress there we're continuing to make updates to the consumer payment experience. It's obviously, a really unique consumer experience to be able to tell.
Youre inspection fee, which is non trivial and bring it into the close and rocket into your mortgage.
We're happy with progress right now and the team is working hard talking two instructors to get them signed up for it but nothing nothing formal to report out in terms of setting up margins I will just say, yes. They have signed up some of the largest inspectors, which we think is going to be.
Just a very telling.
Set of wins, so more to come Im sure as we go throughout the year.
Okay, great. Thank you.
Thanks Mark.
Thanks, Mark next question comes from Ben Sherlund from Cantor.
Hi, guys. Thanks for taking my questions.
Maybe one on the consumer marketing funnel and then I have a follow up.
The new drivers.
Initial presentations as a public company, we disclosed a few metrics to help estimate how many customers you have marketing rights through ISN.
A lot has changed since then and any data points you can provide on how Thats final has changed since 2020.
Great question.
Aren't providing anything new today on it but it would be something we can we can note.
A deep dive as the funnel the only thing I think Ben it is useful to note. There is with some of the technology work that we've done.
You can.
Leapfrogged really where are we where we have been we talked about the consumer App. As an example, if you provide that to all of the consumers that are going to your inspector as well. That's the way that you can get access to a far larger number of people quickly or same thing as we embed insurance in the floor.
Now just in front of all of those consumers right and so there are some things that we're able to do.
Leveraging technology, just to create a better experience easier home purchasing experience for these consumers.
But we certainly are excited about but behind the behind the scenes the same blocking and tackling.
Virtually all new companies that come on board.
We're getting access to those consumers during that implementation phase.
So similar to what we talked about the past.
Okay, Great that's helpful.
One on the revenue drivers looking through the filings with the acquisitions you made in 2021, you breakout do 12, HOA Rhino H P. M. Qualify. There's also a line in there for a little over $32 million or other acquisitions that contributed about $18 5 million to reported 2021 revenue.
Can you help us understand what these acquisitions were.
Yes, there is.
Some things that we've done that are very.
Small typically that.
Some for a competitive reasons, we wouldn't highlight publicly.
So it's little things, we've done in that bucket.
Is there any color you can provide on what.
Segment, they would fall into.
I mean for the most part the things that would be.
Most of the acquisitions, we just generally about our company is in the vertical software segment. The things that we've done in the insurance segment, obviously homeowners of America American home protect for the warranty space and more recently our Ws.
Things that we have.
We've talked about from the insurance segment.
Okay. Thanks, guys.
Okay.
Thanks, Ben next question comes from Michael Dahl from Northland.
Hey, Thanks, guys. Two quick questions one just as it relates to the home inspection offering that you have.
Are you seeing any change in activity any change in the per transaction fee or kind of customer leads that you're getting for free.
In the industry are they are they waiving home inspections or are you seeing any anything around that.
Sure I can I can speak a little bit to that.
I mean.
Some of the changes that we're seeing as well.
We're building out additional modules, we're seeing a pretty complete solution set come together, which is just giving us more opportunities to engage with inspectors.
Good time for us to engage right before they get busy in the peak season.
In certain areas. The market is still hot certainly some of the leading indicators are that there is some there's some slowdown and so.
We don't yet see a fundamental change say in the behavior of inspectors that we have.
Highlighted in the past in competitive markets, sometimes it works against us because people will waive inspections and so as the market softens youll see less of that what that means is it just some of the ups and downs are muted a little bit for us.
Got it.
And then any quick update on move our marketing.
Yes.
I am excited we're excited about mover marketing.
We have some big logos, which we haven't disclosed publicly that Si.
Signed up for that program.
Our <unk> team if you check out their site.
Our fully organized around move or marketing offering.
And we are unique in the space, we have the best data for people, who want to do that type of marketing and we're just building out.
The offerings and the team.
But it's an exciting unique opportunity that we have in addition to some of the other stuff that we talk so yes, I would encourage you to go to be 12 data dot com and take a look like it is.
It's a unique offering that we have for brands and advertisers in the market given.
But our knowledge to who these people are that are buying homes far earlier than anybody else and there's some great data actually on that site in terms of impacts.
That we've seen from other advertisers or customers. So that's what I'd point you to.
Great. Thank you.
Thanks, Mike with that I'll turn it back to that ramp up with his final remarks I appreciate the questions.
Again to the <unk> team, who is listening great quarter, great to start the year.
We're just going to stay on track to what we do.
With that again, thanks, everybody for joining we appreciate it the rest of the day vigor.
Yeah.
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Okay.
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