Last week, Porch announced definitive plans to acquire four new companies for over $122M; Homeowners of America, V12, Palm-Tech, and iRoofing will soon be joining the Porch Group portfolio to bolster what was already an impressive stack of homeowner tools. Per the announcement, Porch will be acquiring Managing General Agent, Homeowners of America (HOA) for $100M and mover marketing/data platform, V12, for $22M; Porch did not disclose the acquisition price for Palm-Tech or iRoofing.
Why this transaction?
The York IE team chose this as our transaction of the week to discuss Porch’s transition to a public company via Special Purpose Acquisition Company (SPAC) and how the switch enables them to execute strategic M&A. Originally, Porch was a marketplace for home improvements and repair services; recently though, they pivoted to building a vertical SaaS company for homeowners, offering a platform with a stack of tools used by approximately 50% of US homeowners. For Porch, these acquisitions were largely about the relevant data companies like HOA and V12 had to offer. By leveraging existing customer data with their newly acquired relevant data, Porch will be able to offer additional services and make smarter decisions across verticals.
Porch Group’s Homeowners of America acquisition allows the company to penetrate the massive insurance industry by offering B2B2C insurance on top of their vertical SaaS platform; Porch Group says they are positioned to be one of the fastest-growing InsurTech companies in the market. On the other hand, the V12 acquisition will enable Porch Group to leverage their early access to mover data against V12’s technology platforms and marketing programs; V12 will bring life to Porch Group’s unique data and transform the combined data sets into new data products and programs that marketers won’t find anywhere else. As for the acquisitions of Palm-Tech and iRoofing, these transactions are similar to previous deals Porch Group has made to expand upon their contractor and inspection verticals. With the help of Porch Group, a publicly-traded company, these acquisition companies now have access to capital enabling R&D, to build more products, as well as expansion on GTM strategies.
Consistent Revenue, Consistent Growth
Given their CAC-free demand all across the country, Porch Group has the ability to expand acquired company networks across the nation with relative ease. Even with the addition of their latest acquisitions, Porch Group operates a business model that is highly recurring in nature; adding to this, Porch Group says their repeat revenue is also high margin, with less than 20% cost of revenue, and expects revenue to continue growing at an annual rate of 30%. Porch’s decision to go public via SPAC has opened many doors, the company received a $323M cash injection to help aid target acquisitions and pursue companies that fit well within Porch Group’s portfolio. Porch Group’s 2021 guidance had revenue at $120M; since the latest acquisitions, they have since updated guidance to $170M to reflect the addition. Per the Porch Group, these updated guidance figures represent nearly 134% YoY revenue growth for 2020 and 2021; these numbers further validate their recent strategic M&A, given the access Porch Group has to capital, to continue making acquisitions like the ones mentioned above.