Just weeks after its SPAC IPO, Porch announced today that it has made four acquisitions, worth a total of $ 122 million. Most notable here is arguably the $ 100 million acquisition of Homeowners of America, which takes Porch deeper into the home insurance space. Additionally, Porch is also acquiring the V12 data and marketing mover platform for $ 22 million, as well as Palm-Tech home inspection service and iRoofing, a SaaS application for roofing contractors. Porch did not disclose the acquisition prices for the latter two companies.
You might still think of Porch as a marketplace for home repair and improvement services - and that's how it started when it launched about seven years ago. Yet, while it still offers these services, a couple of years after its 2013 launch, the company decided to build what it now calls a "vertical software platform for the home." Through a series of acquisitions, the Porch Group now includes Porch.com, as well as services such as HireAHelper, Inspection Support Network for home inspectors, Kandela for providing services on the go, and an insurance broker in the form of Elite Insurance Group. In one form or another, Porch's tools are now used, directly or indirectly, by two-thirds of US homebuyers every month.
As Porch founder and CEO Matt Ehrlichman told me, he originally planned to go public with his company through a traditional IPO. He noted that following the increasingly popular SPAC route, however, allowed him to increase his timeline by one year, which in turn now allows the company to make the acquisitions announced today.
"In total, we had a $ 323 million fundraiser that now allows us not only to be a public company with public currency, but to be well capitalized. And resuming that year allows us to be able to go and pursue acquisitions that we think fit really well with Porch, "Ehrlichman told me. While Porch's lead for his 2021 revenue was previously $ 120 million, It is now updating that guide to $ 170 million based on these acquisitions, which would mean Porch would increase its revenue by roughly 134% year-over-year between 2020 and 2021.
As the company previously exposed in its public documents, the plan for 2021 was always to delve further into insurance. Indeed, as Ehrlichman noted, Porch these days tends to think of itself as a vertical software company that overlays insurtech on its services in order to create a recurring revenue stream. And because Porch already offers such a broad range of services, its customer acquisition costs are essentially nil for these services.
Porch was already a licensed insurance broker. With Homeowners of America, he is acquiring a company that is both an insurance company and a general management agent.
"We are able to capture all the economic value from the consumer as we help them take out insurance for their new home and we can really control that experience to delight them. By wrapping all the technology we've invested in around that experience, we can make it extremely simple and straightforward to be able to get the right insurance at the right price for your new home. And since we have all this data about the house that no one else has - from the inspection we know if the roof is old, we know if the hot water system will soon break and all the appliances - we know all this data and so it just offers us a great advantage in the field of insurance ".
Indeed, data is the subject of many of these acquisitions. Because Porch knows so much about so many customers, it is able to provide companies it acquires access to relevant data, which in turn helps them offer additional services and make smarter decisions.
Homeowners of America currently operates in six states (Texas, Arizona, North Carolina, South Carolina, Virginia and Georgia) and has a license in 31. So far it has a network of over 800 agencies and Porch plans to expand the network. and the geographical area of the company. reach in the coming months. "Because we did it [customer acquisition cost]- free demand nationwide, one of the opportunities for us is simply to expand that demand nationwide, "Ehrlichman explained.
As for the V12, Porch's focus is on the company's mover marketing and data platform. The acquisition is expected to help it meet its medium-term goal of creating a revenue stream of $ 200 million in this area. However, V12 offers services across multiple verticals, including in the automotive sector, and will continue to do so. The overall goal of the platform is to help brands identify the right time to reach a particular consumer, perhaps before they decide to buy a new car or move. With Porch's existing data overlaid with existing V12 capabilities, the company expects to be able to expand these capabilities and will also allow Porch not to offer engine marketing but also what Ehrlichman called "pro-mover" services.
"V12 is the anchor of what we call our marketing software division. A key focus of this is mover marketing. That's where it will have a huge differentiation in the long run. But there are a number of other things they are working on that will have really interesting growth vectors, and will continue to push them, "Ehrlichman said.
As for the two smaller acquisitions of iRoofing and Palm-Tech, these are more similar to some of the company's previous acquisitions in the contractor and inspection verticals. As with those previous acquisitions, the plan is to help them grow faster, in part by integrating them into the Porch Group product family.
"Our business is and continues to be highly recurring or recurring in nature," he said Front porch CFO Marty Heimbigner. "Nearly all of our revenues, including those from these new acquisitions, are consistent and predictable. This repeat turnover is also a high margin with a cost of turnover below 20% and is expected to grow more than 30% annually on our platform. Therefore, we believe these agreements are very beneficial for our shareholders. "
