1. Description of Business and Summary of Significant
Description of Business
Porch Group, Inc. (“Porch Group,” “Porch” or the “Company”) is a
vertical software platform for the home, providing software and
services to approximately 30,600 companies and small businesses.
Porch is a values-driven company whose mission is
to simplify the home with insurance at the center.
The Company’s Insurance segment, with approximately 376,000
insurance and warranty policies in force, operates both as an
insurance carrier underwriting home insurance policies, and as an
agent selling home and auto insurance for over 20 major and
regional insurance companies. The Insurance Segment also includes
Porch’s warranty service offerings, and includes a captive
reinsurance provider. The Vertical Software segment provides
software and services to home services companies, such as home
inspectors, mortgage companies and loan officers, title companies,
moving companies, real estate agencies, utility companies, and
Unaudited Interim Financial Statements
The accompanying unaudited condensed consolidated financial
statements include the accounts of Porch Group, Inc. and its
subsidiaries. All significant intercompany balances and
transactions have been eliminated in consolidation. Certain
information and footnote disclosures normally included in annual
consolidated financial statements prepared in accordance with U.S.
generally accepted accounting principles (“GAAP”) have been
condensed or omitted pursuant to the rules and
regulations of the Securities and Exchange Commission (“SEC”)
regarding interim financial reporting. Accordingly, these unaudited
condensed consolidated financial statements and notes should be
read in conjunction with the Annual Report on Form 10-K for the
fiscal year ended December 31, 2022, filed with the SEC on March
16, 2023. The information as of December 31, 2022, included in
the unaudited condensed consolidated balance sheets was derived
from the Company’s audited consolidated financial statements.
The unaudited condensed consolidated financial statements included
in this Quarterly Report on Form 10-Q (this “Quarterly Report”)
were prepared on the same basis as the audited consolidated
financial statements and, in the opinion of management, reflect all
adjustments (all of which are of a normal recurring nature)
considered necessary to present fairly the Company’s financial
position, results of operations, comprehensive loss, stockholders’
equity, and cash flows for the periods and dates presented. The
results of operations for the three months ended
March 31, 2023, are not necessarily indicative of the
results that may be expected for the year ending December 31, 2023,
or any other interim period or future year.
Comprehensive loss consists of adjustments related to unrealized
gains and losses on available-for-sale securities.
Use of Estimates
The preparation of financial statements in conformity with GAAP
requires management to make estimates, judgments, and assumptions
that affect the amounts reported and disclosed in the unaudited
condensed consolidated financial statements and accompanying notes.
On an ongoing basis, these estimates, which include, but are not
limited to, impairment losses on intangible assets and goodwill,
estimated variable consideration for services performed, estimated
lifetime value of insurance agency commission revenue, current
estimate for credit losses, depreciable lives for property and
equipment, the valuation of and useful lives for acquired
intangible assets, the valuation allowance on deferred tax assets,
assumptions used in stock-based compensation expense, unpaid losses
for insurance claims and loss adjustment expenses, contingent
consideration, earnout liabilities and private warrant liabilities,
are evaluated by management. Actual results could differ materially
from those estimates, judgments, and assumptions.