Just weeks after SPAC went public, Porch announced today that it has made four acquisitions totaling $ 122 million. Most important here is likely the $ 100 million acquisition of Homeowners of America, which will move Porch deeper into the home insurance space. In addition, Porch is acquiring the mover marketing and data platform V12 as well as the house inspection service Palm-Tech and iRoofing, a SaaS application for roofers, for 22 million US dollars. Porch did not disclose the purchase prices for the latter two companies.
You can still think of Porch as a marketplace for home improvement and repair services – and that’s exactly how it started when it first launched about seven years ago. Although the company still offers these services a few years after its introduction in 2013, it has set itself the goal of building a so-called “vertical software platform for the home”. Through a series of acquisitions, Porch Group now includes Porch.com as well as services such as HireAHelper, the Inspection Support Network for home inspectors, Kandela for providing moving services and an insurance broker in the form of Elite Insurance Group. In one form or another, Porch’s tools are now used – either 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 through a traditional IPO. However, he noted that on the increasingly popular SPAC route, he was able to add a year to his schedule, which in turn allows the company to complete the acquisitions announced today.
“In total, we had a $ 323 million fundraiser that now enables us not only to be a publicly traded company, but also to be very well capitalized. When we pick up this year we can make acquisitions that we think will be a really good fit for Porch, ”Ehrlichman said. While Porch’s forecast for 2021 sales was previously $ 120 million, this forecast now updates that forecast to $ 170 million based on these acquisitions. That would mean Porch would increase its sales by around 134% year over year between 2020 and 2021.
As the company had previously stated in its public documents, it was always planned to go deeper into insurance for 2021. As Ehrlichman noted, today Porch sees itself more as a vertical software company that uses Insurtech on top of its services to create recurring revenue streams. And because Porch already offers such a wide range of services, the customer acquisition costs for these services are essentially zero.
Porch was already a licensed insurance broker. With Homeowners of America, the company is acquiring a company that is both an insurance carrier and a managing general agent.
“We are able to capture the full economic value of the consumer by helping them get insurance for their new home, and we can really control that experience to delight them. When we wrap all of the technology we’ve invested in into this experience, we can make it easy and instant to get the right insurance for your new home at the right price. And because we have all this data about the house that nobody else has – from the inspection we know if the roof is old, we know if the hot water system is going to break soon and all the appliances – we know all this data and that’s just give us a huge advantage in insurance. “
Indeed, many of these acquisitions are about data. Knowing so much about so many customers, Porch can give acquired companies 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 is licensed in 31. The company has a network of more than 800 agencies. Porch expects to expand the company’s network and geographic location in the coming months. “Because we have it [customer acquisition cost]-free demand across the country, one of the options for us is simply to expand it across the country, ”Ehrlichman explained.
At V12, Porch focuses on the company’s marketing and data platform. The acquisition is intended to help meet the medium-term goal of building a US $ 200 million revenue stream in this area. However, V12 has and will continue to offer services in multiple industries, including automotive. The main focus of the platform is to help brands find the right time to reach a particular consumer – possibly before they decide to buy a new car or move. Since Porch’s existing data is layered in addition to the existing functions of V12, the company assumes that it can expand these functions and Porch cannot offer mover marketing either, but also what Ehrlichman calls “pro-mover” -Designated services.
“V12 anchors what we call our marketing software department. One focus is mover marketing. There will be enormous differentiation there in the long term. But there are a number of other things that they’re working on that are going to have really nice growth vectors, and they’re going to keep pushing those, ”Ehrlichman said.
The two smaller acquisitions of iRoofing and Palm-Tech are more similar to some of the previous acquisitions the company made in the contractor and inspection sectors. As with these previous acquisitions, the plan is to help them grow faster, including through integration into the entire Porch group of products.
“Our business is and will be very frequent or recurring in nature,” he said veranda CFO Marty Heimbigner. “Almost all of our sales, including those of these new acquisitions, are consistent and predictable. This repeat revenue is also a high margin with less than 20% cost of sales and is expected to grow more than 30% per year on our platform. We therefore believe that these deals will be of great benefit to our shareholders. “