Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2023 | Aug. 04, 2023 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-39142 | |
Entity Registrant Name | Porch Group, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 83-2587663 | |
Entity Address, Address Line One | 411 1st Avenue S. | |
Entity Address, Address Line Two | Suite 501 | |
Entity Address, City or Town | Seattle | |
Entity Address State Or Province | WA | |
Entity Address, Postal Zip Code | 98104 | |
City Area Code | 855 | |
Local Phone Number | 767-2400 | |
Title of 12(b) Security | Common Stock, par value $0.0001 per share | |
Trading Symbol | PRCH | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 98,431,801 | |
Entity Central Index Key | 0001784535 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Current assets | ||
Cash and cash equivalents | $ 265,573 | $ 215,060 |
Accounts receivable, net | 24,715 | 26,438 |
Short-term investments | 26,151 | 36,523 |
Reinsurance balance due | 272,467 | 299,060 |
Prepaid expenses and other current assets | 29,665 | 20,009 |
Restricted cash | 39,277 | 13,545 |
Total current assets | 657,848 | 610,635 |
Property, equipment, and software, net | 14,768 | 12,240 |
Operating lease right-of-use assets | 3,698 | 4,201 |
Goodwill | 191,907 | 244,697 |
Long-term investments | 66,579 | 55,118 |
Intangible assets, net | 96,826 | 108,255 |
Long-term insurance commissions receivable | 13,502 | 12,265 |
Other assets | 2,015 | 1,646 |
Total assets | 1,047,143 | 1,049,057 |
Current liabilities | ||
Accounts payable | 9,330 | 6,268 |
Accrued expenses and other current liabilities | 33,873 | 39,742 |
Deferred revenue | 256,617 | 270,690 |
Refundable customer deposits | 19,929 | 20,142 |
Current debt | 5,439 | 16,455 |
Losses and loss adjustment expense reserves | 165,709 | 100,632 |
Other insurance liabilities, current | 112,849 | 61,710 |
Total current liabilities | 603,746 | 515,639 |
Long-term debt | 426,965 | 425,310 |
Operating lease liabilities, non-current | 2,137 | 2,536 |
Earnout liability, at fair value | 44 | 44 |
Private warrant liability, at fair value | 347 | 707 |
Derivative liability, at fair value | 26,820 | |
Other liabilities (includes $21,328 and $24,546 at fair value, respectively) | 23,826 | 25,468 |
Total liabilities | 1,083,885 | 969,704 |
Commitments and contingencies (Note 12) | ||
Stockholders' equity (deficit) | ||
Common stock, $0.0001 par value: Authorized shares - 400,000,000 and 400,000,000, respectively Issued and outstanding shares - 98,168,956 and 98,455,838, respectively | 10 | 10 |
Additional paid-in capital | 683,151 | 670,537 |
Accumulated other comprehensive loss | (6,076) | (6,171) |
Accumulated deficit | (713,827) | (585,023) |
Total stockholders' equity (deficit) | (36,742) | 79,353 |
Total liabilities and stockholders' equity (deficit) | $ 1,047,143 | $ 1,049,057 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Condensed Consolidated Balance Sheets | ||
Other liabilities | $ 21,328 | $ 24,546 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common Stock, Shares Authorized | 400,000,000 | 400,000,000 |
Common stock, shares issued | 98,168,956 | 98,455,838 |
Common stock, shares outstanding | 98,168,956 | 98,455,838 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Condensed Consolidated Statements of Operations | ||||
Revenue | $ 98,765 | $ 70,915 | $ 186,134 | $ 134,482 |
Operating expenses: | ||||
Cost of revenue | 81,330 | 29,251 | 132,605 | 54,467 |
Selling and marketing | 34,637 | 29,160 | 67,222 | 55,237 |
Product and technology | 15,495 | 15,777 | 29,445 | 30,009 |
General and administrative | 22,779 | 28,297 | 48,608 | 54,896 |
Provision for doubtful accounts | 48,718 | 108 | 48,955 | 207 |
Impairment loss on intangible assets and goodwill | 55,211 | 57,232 | ||
Total operating expenses | 258,170 | 102,593 | 384,067 | 194,816 |
Operating loss | (159,405) | (31,678) | (197,933) | (60,334) |
Other income (expense): | ||||
Interest expense | (8,775) | (1,925) | (10,963) | (4,352) |
Change in fair value of earnout liability | 2,587 | 13,766 | ||
Change in fair value of private warrant liability | 15 | 4,078 | 360 | 14,267 |
Change in fair value of derivatives | (2,950) | (2,950) | ||
Gain on extinguishment of debt | 81,354 | 81,354 | ||
Investment income and realized gains, net of investment expenses | 1,249 | 243 | 2,007 | 440 |
Other income (expense), net | 1,578 | (162) | 2,340 | (107) |
Total other income (expense) | 72,471 | 4,821 | 72,148 | 24,014 |
Loss before income taxes | (86,934) | (26,857) | (125,785) | (36,320) |
Income tax benefit (provision) | (29) | (468) | 82 | (290) |
Net loss | $ (86,963) | $ (27,325) | $ (125,703) | $ (36,610) |
Loss per share - basic (Note 15) | $ (0.91) | $ (0.28) | $ (1.32) | $ (0.38) |
Loss per share - diluted (Note 15) | $ (0.91) | $ (0.28) | $ (1.32) | $ (0.38) |
Weighted-average shares used in computing net loss attributable per share to common stockholders: | ||||
Shares used in computing basic loss per share | 95,731,850 | 97,142,163 | 95,472,277 | 96,611,294 |
Shares used in computing diluted loss per share | 95,731,850 | 97,142,163 | 95,472,277 | 96,611,294 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Consolidated Statements of Comprehensive Loss | ||||
Net loss | $ (86,963) | $ (27,325) | $ (125,703) | $ (36,610) |
Other comprehensive income (loss): | ||||
Current period change in net unrealized loss, net of tax | (780) | (1,785) | 95 | (4,300) |
Comprehensive loss | $ (87,743) | $ (29,110) | $ (125,608) | $ (40,910) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Stockholders' Equity (Deficit) - USD ($) $ in Thousands | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total |
Beginning Balance at Dec. 31, 2021 | $ 10 | $ 641,406 | $ (424,112) | $ (259) | $ 217,045 |
Beginning Balance (in shares) at Dec. 31, 2021 | 97,961,597 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net loss | (36,610) | (36,610) | |||
Other comprehensive (loss) income, net of tax | (4,300) | (4,300) | |||
Stock-based compensation | 15,556 | 15,556 | |||
Issuance of common stock for acquisitions | 3,552 | 3,552 | |||
Issuance of common stock for acquisitions (in shares) | 628,660 | ||||
Contingent consideration for acquisitions | 530 | 530 | |||
Vesting of restricted stock awards (in shares) | 809,261 | ||||
Exercise of stock options | 692 | 692 | |||
Exercise of stock options (in shares) | 274,457 | ||||
Income tax withholdings | (1,922) | (1,922) | |||
Income tax withholdings (in shares) | (233,447) | ||||
Ending Balance at Jun. 30, 2022 | $ 10 | 659,814 | (460,722) | (4,559) | 194,543 |
Ending Balance (in shares) at Jun. 30, 2022 | 99,440,528 | ||||
Beginning Balance at Mar. 31, 2022 | $ 10 | 647,551 | (433,397) | (2,774) | 211,390 |
Beginning Balance (in shares) at Mar. 31, 2022 | 98,297,186 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net loss | (27,325) | (27,325) | |||
Other comprehensive (loss) income, net of tax | (1,785) | (1,785) | |||
Stock-based compensation | 9,702 | 9,702 | |||
Issuance of common stock for acquisitions | 3,552 | 3,552 | |||
Issuance of common stock for acquisitions (in shares) | 628,660 | ||||
Vesting of restricted stock awards (in shares) | 563,406 | ||||
Exercise of stock options | 219 | 219 | |||
Exercise of stock options (in shares) | 88,772 | ||||
Income tax withholdings | (1,210) | (1,210) | |||
Income tax withholdings (in shares) | (137,496) | ||||
Ending Balance at Jun. 30, 2022 | $ 10 | 659,814 | (460,722) | (4,559) | 194,543 |
Ending Balance (in shares) at Jun. 30, 2022 | 99,440,528 | ||||
Beginning Balance at Dec. 31, 2022 | $ 10 | 670,537 | (585,023) | (6,171) | 79,353 |
Beginning Balance (in shares) at Dec. 31, 2022 | 98,206,323 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net loss | (125,703) | (125,703) | |||
Other comprehensive (loss) income, net of tax | 95 | 95 | |||
Stock-based compensation | 13,298 | 13,298 | |||
Vesting of restricted stock awards (in shares) | 1,922,960 | ||||
Exercise of stock options | 8 | 8 | |||
Exercise of stock options (in shares) | 4,519 | ||||
Income tax withholdings | (883) | (883) | |||
Income tax withholdings (in shares) | (568,688) | ||||
Repurchases of common stock | (3,101) | (3,101) | |||
Repurchases of common stock (in shares) | (1,396,158) | ||||
Proceeds from sale of common stock | 191 | 191 | |||
Ending Balance at Jun. 30, 2023 | $ 10 | 683,151 | (713,827) | (6,076) | (36,742) |
Ending Balance (in shares) at Jun. 30, 2023 | 98,168,956 | ||||
Beginning Balance at Mar. 31, 2023 | $ 10 | 677,426 | (626,864) | (5,296) | 45,276 |
Beginning Balance (in shares) at Mar. 31, 2023 | 97,018,032 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net loss | (86,963) | (86,963) | |||
Other comprehensive (loss) income, net of tax | (780) | (780) | |||
Stock-based compensation | 6,404 | 6,404 | |||
Vesting of restricted stock awards (in shares) | 1,627,546 | ||||
Income tax withholdings | (679) | (679) | |||
Income tax withholdings (in shares) | (476,622) | ||||
Ending Balance at Jun. 30, 2023 | $ 10 | $ 683,151 | $ (713,827) | $ (6,076) | $ (36,742) |
Ending Balance (in shares) at Jun. 30, 2023 | 98,168,956 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Cash flows from operating activities: | ||
Net loss | $ (125,703) | $ (36,610) |
Adjustments to reconcile net loss to net cash used in operating activities | ||
Depreciation and amortization | 12,229 | 12,899 |
Provision for doubtful accounts | 48,955 | 207 |
Impairment loss on intangible assets and goodwill | 57,232 | |
Gain on extinguishment of debt | (81,354) | |
Gain on remeasurement of private warrant liability | (360) | (14,267) |
Loss (gain) on remeasurement of contingent consideration | (2,810) | 4,686 |
Loss (gain) on remeasurement of earnout liability and derivatives | 2,950 | (13,766) |
Stock-based compensation | 13,298 | 15,556 |
Interest expense (non-cash) | 9,828 | 2,339 |
Other | 805 | 1,916 |
Change in operating assets and liabilities, net of acquisitions and divestitures | ||
Accounts receivable | 1,030 | (7,483) |
Reinsurance balance due | (21,651) | (40,835) |
Prepaid expenses and other current assets | (9,656) | (7,090) |
Accounts payable | 2,929 | (4,226) |
Accrued expenses and other current liabilities | (10,906) | 1,005 |
Losses and loss adjustment expense reserves | 65,077 | 26,945 |
Other insurance liabilities, current | 51,139 | 21,492 |
Deferred revenue | (13,491) | 38,167 |
Refundable customer deposits | (8,061) | (457) |
Long-term insurance commissions receivable | (1,237) | (2,940) |
Other | 980 | (1,694) |
Net cash used in operating activities | (8,777) | (4,156) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (672) | (1,539) |
Capitalized internal use software development costs | (4,735) | (3,496) |
Purchases of short-term and long-term investments | (23,602) | (13,561) |
Maturities, sales of short-term and long-term investments | 23,033 | 12,241 |
Acquisitions, net of cash acquired | (1,974) | (32,049) |
Net cash used in investing activities | (7,950) | (38,404) |
Cash flows from financing activities: | ||
Proceeds from line of credit | 1,000 | |
Proceeds from advance funding | 316 | 10,690 |
Repayments of advance funding | (2,683) | (8,840) |
Proceeds from issuance of debt | 116,667 | |
Repayments of principal | (10,150) | (150) |
Cash paid for debt issuance costs | (4,610) | |
Proceeds from exercises of stock options | 8 | 692 |
Income tax withholdings paid upon vesting of restricted stock units | (883) | (1,922) |
Proceeds from sale of common stock | 191 | |
Payments of acquisition-related contingent consideration | (276) | (1,625) |
Repurchase of stock | (5,608) | |
Net cash provided by (used in) financing activities | 92,972 | (155) |
Net change in cash, cash equivalents, and restricted cash | 76,245 | (42,715) |
Cash, cash equivalents, and restricted cash, beginning of period | 228,605 | 324,792 |
Cash, cash equivalents, and restricted cash end of period | 304,850 | 282,077 |
Supplemental schedule of non-cash financing activities | ||
Non-cash reduction in advanced funding arrangement obligations | 7,848 | |
Supplemental disclosures | ||
Cash paid for interest | 2,276 | 1,587 |
Income tax refunds received | $ 2,300 | |
Non-cash consideration for acquisitions | 21,607 | |
Cash payable for acquisition | $ 5,000 |
Description of Business and Sum
Description of Business and Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2023 | |
Description of Business and Summary of Significant Accounting Policies | |
Description of Business and Summary of Significant Accounting Policies | 1. Description of Business and Summary of Signifi cant Accounting Policies Description of Business Porch Group, Inc. (“Porch Group,” “Porch,” the “Company,” “we,” “our,” “us”) is a vertical software platform for the home, providing software and services to approximately 30,700 companies and small businesses. We are a values-driven company whose mission is to simplify the home with insurance at the center. Our Insurance segment, with approximately 358,000 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 warranty service offerings and 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 individuals. 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 our 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 our financial position, results of operations, comprehensive loss, stockholders’ equity (deficit), and cash flows for the periods and dates presented. The results of operations for the three and six months ended June 30, 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. Certain prior period amounts have been reclassified to conform to the current year's presentation. Comprehensive Loss 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. Concentrations Financial instruments which potentially subject us to credit risk consist principally of cash, money market accounts on deposit with financial institutions, money market funds, certificates of deposit and fixed-maturity securities, as well as receivable balances in the course of collection. Our insurance carrier subsidiary has exposure and remains liable in the event of insolvency of its reinsurers. Management and its reinsurance intermediary regularly assess the credit quality and ratings of its reinsurer counterparties. One reinsurer represented 39% of our total reinsurance balance due as of June 30, 2023. Substantially all of our insurance-related revenues in the Insurance segment are derived from customers in Texas (which represent approximately 62% of such revenues in the six months ended June 30, 2023), South Carolina (which represent approximately 10% of such revenues in the six months ended June 30, 2023), North Carolina, Georgia, Virginia, and Arizona, which could be adversely affected by economic conditions, an increase in competition, local weather events, or environmental impacts and changes. No individual customer represented more than 10% of total revenue for the three and six months ended June 30, 2023 or 2022. As of June 30, 2023, and December 31, 2022, no individual customer accounted for 10% or more of total accounts receivable. As of June 30, 2023, we held approximately $262.0 million of cash with four U.S. commercial banks. Cash, Cash Equivalents and Restricted Cash We consider all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. We maintain cash balances that may exceed the insured limits by the Federal Deposit Insurance Corporation. Restricted cash equivalents as of June 30, 2023 includes $29.1 million held by our captive reinsurance business as collateral for the benefit of Homeowners of America (“HOA”), $1.3 million held in certificates of deposits and money market mutual funds pledged to the Department of Insurance in certain states as a condition of our Certificate of Authority for the purpose of meeting obligations to policyholders and creditors, $6.5 million in funds held for the payment of possible warranty claims as required under regulatory guidelines in seventeen states, and $2.4 million related to acquisition indemnifications. Restricted cash equivalents as of December 31, 2022, includes $5.1 million held by our captive reinsurance business as collateral for the benefit of HOA, $1.0 million held in money market mutual funds pledged to the Department of Insurance in certain states as a condition of its Certificate of Authority for the purpose of meeting obligations to policyholders and creditors, $5.0 million in funds held for the payment of possible warranty claims as required under regulatory guidelines in nineteen states, and $2.4 million related to acquisition indemnifications. The reconciliation of cash and cash equivalents to amounts presented in the unaudited condensed consolidated statements of cash flows are as follows: June 30, 2023 December 31, 2022 Cash and cash equivalents $ 265,573 $ 215,060 Total restricted cash 39,277 13,545 Cash, cash equivalents, and restricted cash $ 304,850 $ 228,605 Accounts Receivable and Long-term Insurance Commissions Receivable Accounts receivable consist principally of amounts due from enterprise customers, other corporate partnerships, and individual policyholders. We estimate allowances for uncollectible receivables based on the creditworthiness of our customers, historical trend analysis, and macro-economic conditions. Consequently, an adverse change in those factors could affect our estimate of allowance for doubtful accounts. The allowance for uncollectible receivables at June 30, 2023, and December 31, 2022, was $0.8 million and $0.5 million, respectively. Long-term insurance commissions receivable balance consists of the estimated commissions from policy renewals expected to be collected. We record the amount of renewal insurance commissions expected to be collected in the next twelve months as current accounts receivable. Goodwill We test goodwill for impairment for each reporting unit on an annual basis or more frequently when events or changes in circumstances indicate the fair value of a reporting unit is below its carrying value. We have the option to perform a qualitative assessment to determine if an impairment is more likely than not to have occurred. If we can support the conclusion that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then a quantitative impairment test would not be necessary. If we cannot support such a conclusion or we do not elect to perform the qualitative assessment, then we perform a quantitative assessment. If a quantitative goodwill impairment assessment is performed, we utilize a combination of market and income valuation approaches. If the fair value of a reporting unit is less than its carrying value, an impairment loss is recorded to the extent that the fair value of the reporting unit is less than its carrying value. We have selected October 1 as the date to perform annual impairment testing. Determining the fair value of a reporting unit is judgmental in nature and involves the use of significant estimates and assumptions to evaluate the impact of operating and macroeconomic changes on each reporting unit. The fair value of each reporting unit was estimated using a combination of income and market valuation approaches using publicly traded company multiples in similar businesses. Such fair value measurements are based predominately on Level 3 inputs. This analysis requires significant judgments including an estimate of future cash flows which is dependent on internally developed forecasts, estimation of the long-term rate of growth for our business, estimation of the useful life over which cash flows will occur, and determination of our weighted average cost of capital, which is risk-adjusted to reflect the specific risk profile of the reporting unit being tested. The weighted average cost of capital used in our most recent impairment test was risk-adjusted to reflect the specific risk profile of the reporting units and ranged from 13% to 18%. See Note 6 for a discussion of the impairment analysis. Impairment of Long-Lived Assets We review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be fully recoverable. Events that trigger a test for recoverability include a significant decrease in the market price for a long-lived asset, significant negative industry or economic trends, an accumulation of costs significantly in excess of the amount originally expected for the acquisition, a current-period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset, or a sustained decrease in share price. When a triggering event occurs, a test for recoverability is performed, comparing projected undiscounted future cash flows to the carrying value of the asset group. If the test for recoverability identifies a possible impairment, the asset group’s fair value is measured relying primarily on an income approach. An impairment charge is recognized for the amount by which the carrying value of the asset group exceeds its estimated fair value. Management identifies the asset group which includes the potentially impaired long-lived asset, at the lowest level at which there are separate, identifiable cash flows. During the first and second quarters of 2023, we identified various qualitative factors that collectively indicated triggering events including a sustained decrease in stock price, increased costs due to inflationary pressures, and a deterioration of the macroeconomic environment in the housing and real estate industry. We used an income approach to determine that the estimated fair value of a certain asset group was less than its carrying value, which resulted in impairment charges of $2.0 million, primarily related to acquired technology, trademarks and tradenames, and customer relationships for certain businesses within the Vertical Software segment. Impairment charges are included in impairment loss on intangible assets and goodwill We estimate the fair value of an asset group using the income approach. Such fair value measurements are based predominately on Level 3 inputs. Inherent in our development of cash flow projections are assumptions and estimates derived from a review of our operating results, business plan forecasts, expected growth rates, and cost of capital, similar to those a market participant would use to assess fair value. We also make certain assumptions about future economic conditions and other data. Many of these factors used in assessing fair value are outside the control of management and these assumptions and estimates may change in future periods. Deferred Policy Acquisition Costs We capitalize deferred policy acquisitions costs (“DAC”) which consist primarily of commissions, premium taxes and policy underwriting and production expenses that are directly related to the successful acquisition by our insurance subsidiary of new or renewal insurance contracts. DAC are amortized on a straight-line basis over the terms of the policies to which they relate, which is generally one year. DAC is also reduced by ceding commissions paid by reinsurance companies which represent recoveries of acquisition costs. DAC is periodically reviewed for recoverability and adjusted if necessary. Future investment income is considered in determining the recoverability of DAC. As of June 30, 2023, and December 31, 2022, DAC of $17.9 million and $8.7 million is included in prepaid expenses and other current assets. Amortized deferred acquisition costs included in sales and marketing expense, amounted to $9.3 million and $4.2 million, for the three months ended June 30, 2023 and 2022, respectively, and $18.6 million and $7.2 million, for the six months ended June 30, 2023 and 2022, respectively. Fair Value of Financial Instruments Fair value principles require disclosures regarding the manner in which fair value is determined for assets and liabilities and establishes a three-tiered fair value hierarchy into which these assets and liabilities must be grouped, based upon significant levels of inputs as follows: Level 1 Observable inputs, such as quoted prices (unadjusted) in active markets for identical assets or liabilities at the measurement date; Level 2 Observable inputs, other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. This may include active markets for similar assets and liabilities, quoted prices in markets that are not highly active, or other inputs that are observable or can be corroborated by observable market data; and Level 3 Unobservable inputs that are arrived at by means other than current observable market activity. The level of the least observable significant input used in assessing the fair value determines the placement of the entire fair value measurement in the hierarchy. Management’s assessment of the significance of a particular input to the fair value measurement requires the use of judgment specific to the asset or liability. Other Insurance Liabilities, Current The following table details the components of other insurance liabilities, current, on the unaudited condensed consolidated balance sheets: As of June 30, 2023 As of December 31, 2022 Ceded reinsurance premiums payable $ 77,051 $ 29,204 Commissions payable, reinsurers and agents 6,650 21,045 Advance premiums 10,383 8,668 Funds held under reinsurance treaty 1,715 1,851 General and accrued expenses payable 17,050 942 Other insurance liabilities, current $ 112,849 $ 61,710 Income Taxes Provisions for income taxes for the three months ended June 30, 2023, and 2022, were less than $0.1 million and $0.5 million, respectively, and the effective tax rates for these periods were less than 0.1% and 1.7%, respectively. The difference between our effective tax rates for the 2023 periods and the U.S. statutory rate of 21% was primarily due to a full valuation related to our net deferred tax assets and impact of acquisitions on our valuation allowance. Provisions for income taxes for the six months ended June 30, 2023 and 2022, were a $0.1 million benefit and a $0.3 million expense, respectively, and the effective tax rates for these periods were 0.1% expense and 0.8% benefit, respectively. The difference between our effective tax rates for the 2022 periods and the U.S. statutory rate of 21% was primarily due to a full valuation allowance related to our net deferred tax assets. |
Revenue
Revenue | 6 Months Ended |
Jun. 30, 2023 | |
Revenue | |
Revenue | 2. Revenue Disaggregation of Revenue Total revenues consisted of the following: Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Vertical Software segment Software and service subscriptions $ 17,524 $ 19,847 $ 34,333 $ 37,078 Move-related transactions 12,246 17,458 20,015 29,586 Post-move transactions 4,665 5,235 8,714 10,280 Total Vertical Software segment revenue 34,435 42,540 63,062 76,944 Insurance segment Insurance and warranty premiums, commissions and policy fees 64,330 28,375 123,072 57,538 Total Insurance segment revenue 64,330 28,375 123,072 57,538 Total revenue (1) $ 98,765 $ 70,915 $ 186,134 $ 134,482 (1) Revenue recognized during the three months ended June 30, 2023 and 2022, includes revenue of $54.8 million and $18.2 million, respectively, which is accounted for separately from the revenue from contracts with customers. Revenue accounted separately from the revenue from contracts with customers for the six months ended June 30, 2023 and 2022, was $105.0 million and $39.0 million, respectively. Disclosures Related to Contracts with Customers Timing may differ between the satisfaction of performance obligations and the invoicing and collection of amounts related to contracts with customers. Liabilities are recorded for amounts that are collected in advance of the satisfaction of performance obligations. To the extent a contract exists, as defined by ASC 606, these liabilities are classified as deferred revenue. To the extent that a contract does not exist, as defined by ASC 606, these liabilities are classified as refundable customer deposits. Refundable customer deposits related to contracts with customers were not material at June 30, 2023, and December 31, 2022. Contract Assets - Insurance Commissions Receivable A summary of the activity impacting the contract assets during the six months ended June 30, 2023, is presented below: Contract Assets Balance at December 31, 2022 $ 15,521 Estimated lifetime value of commissions on insurance policies sold by carriers 3,792 Cash receipts (2,285) Balance at June 30, 2023 $ 17,028 As of June 30, 2023, $3.5 million of contract assets are expected to be collected within the next 12 months and therefore are included in current accounts receivable on the unaudited condensed consolidated balance sheets. The remaining $13.5 million of contract assets are expected to be collected in the following periods and are included in long-term insurance commissions receivable on the unaudited condensed consolidated balance sheets. Deferred Revenue A summary of the activity impacting deferred revenue balances during the six months ended June 30, 2023, is presented below: Vertical Software Deferred Revenue Balance at December 31, 2022 $ 3,874 Revenue recognized (8,613) Additional amounts deferred 8,695 Balance at June 30, 2023 $ 3,956 Deferred revenue on the unaudited condensed consolidated balance sheet as of June 30, 2023, and December 31, 2022, include $252.7 million and $266.8 million, respectively, of deferred revenue related to the Insurance segment. Remaining Performance Obligations The amount of the transaction price allocated to performance obligations to be satisfied at a later date, which is not recorded in the unaudited condensed consolidated balance sheets, is immaterial as of June 30, 2023, and December 31, 2022. We have applied the practical expedients provided for in the accounting standards, and does not present revenue related to unsatisfied performance obligations for (i) contracts with an original expected length of one year amount which it has the right to invoice for services performed. Additionally, we exclude amounts related to performance obligations that are billed and recognized as they are delivered. Warranty Revenue and Related Balance Sheet Disclosures Payments received in advance of warranty services provided are included in refundable customer deposits or deferred revenue based upon the cancellation and refund provisions within the respective agreement. At June 30, 2023, we had $19.6 million, $3.6 million and $3.0 million of refundable customer deposits, deferred revenue, and non-current deferred revenue, respectively. At December 31, 2022, we had $20.0 million, $4.4 million and $1.9 million of refundable customer deposits, deferred revenue and non-current deferred revenue, respectively. For the three months ended June 30, 2023 and 2022, we incurred $1.3 million and $0.3 million, respectively, in expenses related to warranty claims. For the six months ended June 30, 2023 and 2022, we incurred $2.5 million and $0.7 million, respectively, in expenses related to warranty claims. |
Investments
Investments | 6 Months Ended |
Jun. 30, 2023 | |
Investments | |
Investments | 3. Investments The following table summarizes investment income and realized gains and losses on investments during the periods presented. Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Investment income, net of investment expenses $ 1,278 $ 313 $ 2,103 $ 578 Realized gains on investments 7 4 11 6 Realized losses on investments (36) (74) (107) (144) Investment income and realized gains (losses), net of investment expenses $ 1,249 $ 243 $ 2,007 $ 440 The following table summarizes the amortized cost, fair value, and unrealized gains and losses of investment securities. As of June 30, 2023 Gross Unrealized Amortized Cost Gains Losses Fair Value U.S. Treasuries $ 28,407 $ 1 $ (361) $ 28,047 Obligations of states, municipalities and political subdivisions 11,846 4 (1,178) 10,672 Corporate bonds 35,236 38 (2,879) 32,395 Residential and commercial mortgage-backed securities 17,607 16 (1,328) 16,295 Other loan-backed and structured securities 5,710 4 (393) 5,321 Total investment securities $ 98,806 $ 63 $ (6,139) $ 92,730 As of December 31, 2022 Gross Unrealized Amortized Cost Gains Losses Fair Value U.S. Treasuries $ 35,637 $ 5 $ (320) $ 35,322 Obligations of states, municipalities and political subdivisions 11,549 2 (1,326) 10,225 Corporate bonds 31,032 32 (2,837) 28,227 Residential and commercial mortgage-backed securities 12,790 11 (1,268) 11,533 Other loan-backed and structured securities 6,804 6 (476) 6,334 Total investment securities $ 97,812 $ 56 $ (6,227) $ 91,641 The amortized cost and fair value of securities at June 30, 2023, by contractual maturity, are shown in the following table. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. As of June 30, 2023 Remaining Time to Maturity Amortized Cost Fair Value Due in one year or less $ 25,920 $ 25,802 Due after one year through five years 19,481 17,895 Due after five years through ten years 25,245 23,099 Due after ten years 4,843 4,318 Residential and commercial mortgage-backed securities 17,607 16,295 Other loan-backed and structured securities 5,710 5,321 Total $ 98,806 $ 92,730 Other-Than-Temporary Impairment We regularly review our individual investment securities for other-than-temporary impairment. We consider various factors in determining whether each individual security is other-than-temporarily impaired, including: - the financial condition and near-term prospects of the issuer, including any specific events that may affect its operations or earnings; - the extent to which the market value of the security has been below its cost or amortized cost; - general market conditions and industry or sector-specific factors; - nonpayment by the issuer of its contractually obligated interest and principal payments; and - our intent and ability to hold the investment for a period of time sufficient to allow for the recovery of costs. Securities with gross unrealized loss position, aggregated by investment category and length of time the individual securities have been in a continuous loss position, are as follows: Less Than Twelve Months Twelve Months or Greater Total Gross Gross Gross Unrealized Fair Unrealized Fair Unrealized Fair As of June 30, 2023 Loss Value Loss Value Loss Value U.S. Treasuries $ (182) $ 25,500 $ (179) $ 2,232 $ (361) $ 27,732 Obligations of states, municipalities and political subdivisions (79) 2,060 (1,099) 8,145 (1,178) 10,205 Corporate bonds (530) 12,546 (2,349) 18,045 (2,879) 30,591 Residential and commercial mortgage-backed securities (292) 8,365 (1,036) 7,319 (1,328) 15,684 Other loan-backed and structured securities (109) 1,039 (284) 3,677 (393) 4,716 Total securities $ (1,192) $ 49,510 $ (4,947) $ 39,418 $ (6,139) $ 88,928 Less Than Twelve Months Twelve Months or Greater Total Gross Gross Gross Unrealized Fair Unrealized Fair Unrealized Fair As of December 31, 2022 Loss Value Loss Value Loss Value U.S. Treasuries $ (127) $ 10,748 $ (193) $ 9,824 $ (320) $ 20,572 Obligations of states, municipalities and political subdivisions (929) 6,258 (397) 3,504 (1,326) 9,762 Corporate bonds (1,623) 16,531 (1,214) 10,328 (2,837) 26,859 Residential and commercial mortgage-backed securities (687) 6,565 (581) 4,952 (1,268) 11,517 Other loan-backed and structured securities (359) 4,633 (117) 1,094 (476) 5,727 Total securities $ (3,725) $ 44,735 $ (2,502) $ 29,702 $ (6,227) $ 74,437 At June 30, 2023, and December 31, 2022, there were 470 and 483 securities, respectively, in an unrealized loss position. Of these securities, 380 had been in an unrealized loss position for 12 months or longer as of June 30, 2023. We believe there were no fundamental issues such as credit losses or other factors with respect to any of our available-for-sale securities. The unrealized losses on investments in fixed-maturity securities were caused primarily by interest rate changes. It is expected that the securities would not be settled at a price less than par value of the investments. Because the declines in fair value are attributable to changes in interest rates or market conditions and not credit quality, and because we have the ability and intent to hold our available-for-sale investments until a market price recovery or maturity, we do not consider any of our investments to be other-than-temporarily impaired at June 30, 2023. |
Fair Value
Fair Value | 6 Months Ended |
Jun. 30, 2023 | |
Fair Value | |
Fair Value | 4. Fair Value The following table summarizes the fair value measurements of assets and liabilities that are measured at fair value on a recurring basis. Fair Value Measurement as of June 30, 2023 Total Level 1 Level 2 Level 3 Fair Value Assets Money market mutual funds $ 74,073 $ — $ — $ 74,073 Debt securities: U.S. Treasuries 28,047 — — 28,047 Obligations of states and municipalities — 10,672 — 10,672 Corporate bonds — 32,395 — 32,395 Residential and commercial mortgage-backed securities — 16,295 — 16,295 Other loan-backed and structured securities — 5,321 — 5,321 $ 102,120 $ 64,683 $ — $ 166,803 Liabilities, Noncurrent Contingent consideration - business combinations $ — $ — $ 21,328 $ 21,328 Contingent consideration - earnout — — 44 44 Private warrant liability — — 347 347 Embedded derivatives — — 26,820 26,820 $ — $ — $ 48,539 $ 48,539 Fair Value Measurement as of December 31, 2022 Total Level 1 Level 2 Level 3 Fair Value Assets Money market mutual funds $ 6,619 $ — $ — $ 6,619 Debt securities: U.S. Treasuries 35,322 — — 35,322 Obligations of states and municipalities — 10,225 — 10,225 Corporate bonds — 28,227 — 28,227 Residential and commercial mortgage-backed securities — 11,533 — 11,533 Other loan-backed and structured securities — 6,334 — 6,334 $ 41,941 $ 56,319 $ — $ 98,260 Liabilities Contingent consideration - business combinations $ — $ — $ 24,546 $ 24,546 Contingent consideration - earnout — — 44 44 Private warrant liability — — 707 707 $ — $ — $ 25,297 $ 25,297 Financial Assets Money market mutual funds are valued at the closing price reported by the fund sponsor from an actively traded exchange. As the funds are generally maintained at a net asset value which does not fluctuate, cost approximates fair value. These are included as a Level 1 measurement in the table above. The fair values for available-for-sale fixed- maturity securities are based upon prices provided by an independent pricing service. We have reviewed these prices for reasonableness and have not adjusted any prices received from the independent provider. Level 2 securities represent assets whose fair value is determined using observable market information such as previous day trade prices, quotes from less active markets or quoted prices of securities with similar characteristics. There were no transfers Contingent Consideration – Business Combinations We estimated the fair value of the business combination contingent consideration related to the Floify acquisition in October 2021 and triggered by stock price milestones using the Monte Carlo simulation method. The fair value is based on the simulated market price of our common stock over the maturity date of the contingent consideration. As of June 30, 2023, the key inputs used to determine the fair value of $15.1 million included the stock price of $1.38, strike price of $36.00, discount rate of 14.4% and volatility of 100%. As of December 31, 2022, the key inputs used in the determination of the fair value of $15.5 million included the stock price of $1.88, strike price of $36.00, discount rate of 10.3% and volatility of 95%. We estimated the fair value of the business combination contingent consideration based on specific metrics related to the acquisition of Residential Warranty Services (“RWS”) in April 2022, using the discounted cash flow method. The fair value is based on a percentage of revenue over the maturity date of the contingent consideration. As of June 30, 2023, the key inputs used to determine the fair value of $9.0 million were management’s cash flow estimates and the discount rate of 16%. As of December 31, 2022, the key inputs used to determine the fair value of $9.0 million were management’s cash flow estimates and the discount rate of 17%. Contingent Consideration – Earnout We estimated the fair value of the earnout contingent consideration using the Monte Carlo simulation method. The fair value of $0.1 million is based on the simulated market price of our common stock until the maturity date of the contingent consideration and increased by certain employee forfeitures. As of June 30, 2023, the key inputs used to determine the fair value included exercise price of $22.00, volatility of 100%, forfeiture rate of 15%, and stock price of $1.38 As of December 31, 2022, the key inputs used in the determination of the fair value included exercise price of $22.00, volatility of 100%, forfeiture rate of 15% and stock price of $1.88. Private Warrants We estimated the fair value of the private warrants using the Black-Scholes-Merton option pricing model. As of June 30, 2023, the key inputs used to determine the fair value included exercise price of $11.50, expected volatility of 95%, remaining contractual term of 2.48 years, and stock price of $1.38. As of December 31, 2022, the key inputs used to determine the fair value included exercise price of $11.50, expected volatility of 90%, remaining contractual term of 2.98 years, and stock price of $1.88. Embedded Derivatives In connection with the issuance of senior secured convertible notes in April 2023 (see Note 7) and in accordance with Accounting Standards Codification 815-15, Derivatives and Hedging – Embedded Derivatives, ● Repurchase option. If more than $30 million principal remains outstanding on June 14, 2026, holders have the right to require us to repurchase for cash on June 15, 2026, all or any portion of the notes at a repurchase price equal to 106.5% of the principal amount of the notes to be repurchased, plus accrued interest. ● Fundamental change option. If we undergo a fundamental change, as defined in the indenture and subject to certain conditions, holders have the right to require us to repurchase for cash all or any portion of the notes at a repurchase price equal to 105.25% of the principal amount of the notes to be repurchased, plus accrued interest. A fundamental change includes events such as a change in control, recapitalization, liquidation, dissolution, or delisting. ● Asset sale repurchase option. If we sell assets, we must offer to repurchase for cash a portion of the notes equal to 50% of the aggregate net cash sales proceeds in excess of $20 million at a repurchase price equal to 100% of the principal, plus accrued interest. The inputs for determining fair value of the embedded derivatives are classified as Level 3 inputs. Level 3 fair value is based on unobservable inputs based on the best information available. These inputs include the probabilities of a repurchase, a fundamental change qualifying asset sales Level 3 Rollforward Fair value measurements categorized within Level 3 are sensitive to changes in the assumptions or methodology used to determine fair value, and such changes could result in a significant increase or decrease in the fair value. The changes for Level 3 items measured at fair value on a recurring basis using significant unobservable inputs are as follows: Contingent Contingent Consideration - Private Consideration - Business Embedded Warrant Earnout Combinations Derivatives Liability Fair value as of December 31, 2022 $ 44 $ 24,546 $ — $ 707 Additions — — 23,870 — Settlements — (408) — — Change in fair value, loss (gain) included in net loss (1) — (2,810) 2,950 (360) Fair value as of June 30, 2023 $ 44 $ 21,328 $ 26,820 $ 347 Contingent Contingent Consideration - Private Consideration - Business Warrant Earnout Combinations Liability Fair value as of December 31, 2021 $ 13,866 $ 9,617 $ 15,193 Additions — 15,555 — Settlements — — — Change in fair value, loss (gain) included in net loss (1) (13,766) 4,686 (14,267) Fair value as of June 30, 2022 $ 100 $ 29,858 $ 926 (1) Changes in fair value of contingent consideration related to business combinations are included in general and administrative expenses in the unaudited condensed consolidated statements of operations. Ch anges in fair value of the earnout contingent consideration and private warrant liability are disclosed separately in the unaudited condensed consolidated statements of operations. Changes in the fair value of the embedded derivatives are included in change in fair value of derivatives in the unaudited condensed consolidated statements of operations. Fair Value Disclosure As of June 30, 2023, and December 31, 2022, the fair value of the 2026 Notes (see Note 7) is $72.0 million and $238.6 million, respectively. The decrease of $166.6 million is primarily due to the decline in the stock price at June 30, 2023, as compared to December 31, 2022. As of June 30, 2023, the fair value of the 2028 Notes (see Note 7) was $216.7 million. The fair values of the line of credit, advance funding arrangement and other notes approximate the unpaid principal balance. All debt, other than the convertible notes which are Level 2, is considered a Level 3 measurement. |
Property, Equipment, and Softwa
Property, Equipment, and Software | 6 Months Ended |
Jun. 30, 2023 | |
Property, Equipment, and Software | |
Property, Equipment, and Software | 5. Property, Equipment, and Software Property, equipment, and software, net, consists of the following: June 30, December 31, 2023 2022 Software and computer equipment $ 8,266 $ 8,326 Furniture, office equipment, and other 1,708 2,118 Internally developed software 20,017 17,128 Leasehold improvements 1,178 1,178 31,169 28,750 Less: Accumulated depreciation and amortization (16,401) (16,510) Property, equipment, and software, net $ 14,768 $ 12,240 Depreciation and amortization expense related to property, equipment, and software was $1.2 million and $1.0 million for the three months ended June 30, 2023 and 2022, respectively, and $2.4 million and $2.0 million for the six months ended June 30, 2023 and 2022, respectively. |
Intangible Assets and Goodwill
Intangible Assets and Goodwill | 6 Months Ended |
Jun. 30, 2023 | |
Intangible Assets and Goodwill | |
Intangible Assets and Goodwill | 6. Intangible Assets and Goodwill Intangible Assets Intangible assets are stated at cost or acquisition-date fair value less accumulated amortization and impairment. The following table summarizes intangible assets as of June 30, 2023. Weighted Accumulated Average Intangible Amortization Intangible Useful Life Assets, And Assets, (in years) gross Impairment Net Customer relationships 9.0 $ 69,505 $ (19,494) $ 50,011 Acquired technology 5.0 36,041 (19,175) 16,866 Trademarks and tradenames 10.0 23,443 (5,609) 17,834 Non-compete agreements 3.0 616 (431) 185 Value of business acquired 1.0 400 (400) — Renewal rights 6.0 9,734 (2,764) 6,970 Insurance licenses Indefinite 4,960 — 4,960 Total intangible assets $ 144,699 $ (47,873) $ 96,826 The following table summarizes intangible assets as of December 31, 2022. Weighted Average Intangible Intangible Useful Life Assets, Accumulated Assets, (in years) gross Amortization Net Customer relationships 9.0 $ 69,730 $ (15,079) $ 54,651 Acquired technology 5.0 37,932 (16,468) 21,464 Trademarks and tradenames 10.0 25,071 (5,724) 19,347 Non-compete agreements 3.0 619 (407) 212 Value of business acquired 1.0 400 (400) — Renewal rights 6.0 9,734 (2,113) 7,621 Insurance licenses Indefinite 4,960 — 4,960 Total intangible assets $ 148,446 $ (40,191) $ 108,255 The aggregate amortization expense related to intangibles was $4.9 million and $5.4 million for the three months ended June 30, 2023 and 2022, respectively, and $9.8 million and $10.9 million for the six months ended June 30, 2023 and 2022, respectively. During the six months ended June 30, 2023, we recorded impairment charges of $2.0 million, primarily related to acquired technology, trademarks and tradenames, and customer relationships for an asset group within the Vertical Software segment. Impairment charges are included in impairment loss on intangible assets and goodwill in the unaudited condensed consolidated statements of operations. Goodwill The following table summarizes the changes in the carrying amount of goodwill for the six months ended June 30, 2023. Goodwill Balance as of December 31, 2022, net of accumulated impairment of $43.8 million $ 244,697 Acquisition 2,421 Impairment loss (55,211) Balance as of June 30, 2023, net of accumulated impairment of $99.0 million $ 191,907 During the first and second quarters of 2023, management identified various qualitative factors that collectively indicated triggering events, including a sustained decrease in stock price, increased costs due to inflationary pressures, hardening of the reinsurance markets, volatile weather, and a deterioration of the macroeconomic environment in the housing and real estate and insurance industries. We performed a valuation of the Vertical Software and Insurance reporting units using a combination of market and income approaches based on peer performance and discounted cash flow or dividend discount model methodologies. The goodwill impairment analysis required significant judgments to calculate the fair value of the reporting units, including internal forecasts and determination of weighted average cost of capital. Management considers historical experience and all available information at the time the fair values are estimated. Assumptions are subject to a high degree of judgment and complexity. The results of the quantitative impairment assessment as of March 31, 2023, indicated that the fair value of our Vertical Software reporting unit exceeded its carrying value by less than 5%, and the fair value of our Insurance reporting unit exceeded its carrying value by less than 10%. The results of the quantitative impairment assessment as of June 30, 2023, indicated that the carrying value of the Insurance reporting unit exceeded its estimated fair value. As such, we determined that the goodwill allocated to the Insurance reporting unit was impaired as of June 30, 2023. Impairment charges are included in impairment loss on intangible assets and goodwill in the unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2023. The results of the quantitative impairment assessment as of June 30, 2023, indicated that the fair value of our Vertical Software reporting unit exceeded its carrying value by less than 10%. As a result, our remaining goodwill balance is at risk of future impairment. We monitor our reporting units at risk of impairment for interim impairment indicators and believe that the estimates and assumptions used in the calculations are reasonable as of June 30, 2023. We also reconcile the fair value of our reporting units to our market capitalization. Should the fair value of any of our reporting units fall below its carrying amount because of reduced operating performance, market declines including a deterioration of the macroeconomic environment in the housing and real estate or insurance industries, changes in the discount rate, or other adverse conditions, goodwill impairment charges may be necessary in future periods. |
Debt
Debt | 6 Months Ended |
Jun. 30, 2023 | |
Debt | |
Debt | 7. Debt The following tables summarize outstanding debt as of June 30, 2023, and December 31, 2022. Debt Unaccreted Issuance Carrying Principal Discount Costs Value Convertible senior notes, due 2026 $ 225,000 $ — $ (3,909) $ 221,091 Convertible senior notes, due 2028 333,334 (122,877) (4,707) 205,750 Advance funding arrangement 5,321 (32) — 5,289 Other notes 300 (26) — 274 Balance as of June 30, 2023 $ 563,955 $ (122,935) $ (8,616) $ 432,404 Debt Unaccreted Issuance Carrying Principal Discount Costs Value Convertible senior notes, due 2026 $ 425,000 $ — $ (8,508) $ 416,492 Advance funding arrangement 15,670 (760) — 14,910 Term loan facility, due 2029 10,000 — — 10,000 Other notes 450 (87) — 363 Balance as of December 31, 2022 $ 451,120 $ (847) $ (8,508) $ 441,765 Convertible Senior Notes Interest expense recognized related to the 0.75% Convertible Senior Notes due 2026 (the “2026 Notes”) was approximately $0.9 million and $1.4 million for the three months ended June 30, 2023 and 2022, respectively, and $2.2 million and $2.7 million for the six months ended June 30, 2023 and 2022, respectively, including contractual interest expense and amortization of debt issuance costs. The effective interest rate for the 2026 Notes is 1.3%. In April 2023, we issued $333 million of 6.75% Senior Secured Convertible Notes due in 2028 (the “2028 Notes”) in a private placement transaction. We used a portion of the net proceeds from the 2028 Notes to repurchase $200 million of the 2026 Notes and to fund the repayment of $9.7 million outstanding under the term loan facility, in each case plus accrued and unpaid interest thereon and related fees and expenses. In connection with the partial repurchase of the 2026 Notes, we recognized an $81.4 million gain on extinguishment of debt, calculated as the difference between the reacquisition price and the net carrying amount of the portion of the 2026 Notes that was extinguished. The 2028 Notes are convertible into cash, shares of common stock, or a combination of cash and shares of common stock at our election at an initial conversion rate of 39.9956 shares of common stock per $1,000 principal amount of the 2028 Notes, which is equivalent to an initial conversion price of approximately $25.00 per share. The 2028 Notes are senior secured obligations, accrue interest at a rate of 6.75%, payable semi-annually in arrears on April 1 and October 1 of each year, beginning on October 1, 2023, and were initially issued at 95% of par value. The 2028 Notes will mature on October 1, 2028, unless earlier repurchased, redeemed or converted. Prior to the close of business on the business day immediately preceding July 1, 2028, the 2028 Notes will be convertible at the option of the holders only upon the satisfaction of certain conditions and during certain periods. Thereafter, until the close of business on the second scheduled trading day immediately preceding the maturity date, the 2028 Notes will be convertible at the option of the holders at any time regardless of these conditions. Interest expense recognized related to the 2028 Notes was approximately $7.3 million in the three and six months ended June 30, 2023, including $4.4 million contractual interest expense and $2.9 million amortization of debt issuance costs and discount. The effective interest rate for the 2028 Notes is 17.9%. Advance Funding Arrangement For certain home warranty contracts, we participate in financing arrangements with third-party financers that provide us with the contract premium upfront, less a financing fee. Third-party financers collect installment payments from the warranty contract customer which satisfy our repayment obligation over a portion of the contract term. We remain obligated to repay the third-party financer if a customer cancels its warranty contract prior to full repayment of the advance funding amount we received. As part of the arrangement, we pay financing fees, which are collected by the third-party financers upfront and are initially recognized as a debt discount. Financing fees are amortized as interest expense under the effective interest method. The implied interest rate varies per contract and is generally approximately Term Loan Facility In April 2023, the term loan facility was repaid in full by using a portion of the proceeds received from the 2028 Notes. |
Equity and Warrants
Equity and Warrants | 6 Months Ended |
Jun. 30, 2023 | |
Equity and Warrants | |
Equity and Warrants | 8. Equity and Warrants Common Shares Outstanding and Common Stock Equivalents The following table summarizes our fully diluted capital structure. June 30, December 31, 2023 2022 Issued and outstanding common shares 96,118,956 96,405,838 Earnout shares 2,050,000 2,050,000 Total common shares issued and outstanding 98,168,956 98,455,838 Common shares reserved for future issuance: Private warrants 1,795,700 1,795,700 Stock options (Note 9) 3,717,192 3,862,918 Restricted and performance stock units and awards (Note 9) 13,244,675 6,230,165 2020 Equity Plan pool reserved for future issuance (Note 9) 8,045,331 11,189,745 Convertible senior notes, due 2026 (1) 8,999,010 16,998,130 Convertible senior notes, due 2028 13,331,893 — Contingently issuable shares in connection with acquisitions (2) 13,969,860 10,631,558 Total shares of common stock outstanding and reserved for future issuance 161,272,617 149,164,054 (1) In connection with the September 16, 2021, issuance of the 2026 Notes, we used a portion of the proceeds to pay for the capped call transactions, which are expected to generally reduce the potential dilution to our common stock. The capped call transactions allow us to purchase shares of our common stock at a strike price of $25 per share, which is equal to the conversion price of the 2026 Notes and 2028 Notes. The capped call transactions are designed to limit the amount of dilution of our common stock upon conversion of the notes. The maximum number of shares purchasable by us under the capped call transactions is 16,998,130 . The options that underly the capped call transactions expire on September 15, 2026. (2) In connection with the acquisitions of Floify and HOA, we provided an obligation to issue a certain amount of common stock to the extent specified market conditions are met in the future. Contingently issuable shares are calculated in accordance with the purchase agreement, assuming they would be issuable if the end of the reporting periods were the end of the contingency period. Repurchases of Common Shares In October 2022, our board of directors approved a share repurchase program authorizing management to repurchase up to $15 million of our common stock and/or convertible notes. Repurchases under this program were permitted from time to time on the open market between November 10, 2022, and June 30, 2023, at prevailing market prices, in privately negotiated transactions, in block trades, and/or through other permissible means. During the six months ended June 30, 2023, we repurchased and canceled 1,396,158 shares with a total cost of $3.1 million (including commissions). The cost paid to repurchase shares in excess of the par value is charged to accumulated deficit in the unaudited condensed consolidated balance sheet as of June 30, 2023. The repurchase of $200 million of the 2026 Notes as described in Note 7 was done under separate authorization and was not part of the $15 million share repurchase program. Warrants There was no activity related to public and private warrants during the six months ended June 30, 2023. Number of Number of Common Warrants Shares Issued Balances as of December 31, 2022 1,795,700 11,521,412 Exercised — — Canceled — — Balances as of June 30, 2023 1,795,700 11,521,412 |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jun. 30, 2023 | |
Stock-Based Compensation | |
Stock-Based Compensation | 9. Stock-Based Compensation The following table summarizes the classification of stock-based compensation expense in the unaudited condensed consolidated statements of operations. Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Selling and marketing $ 896 $ 1,270 $ 1,941 $ 1,902 Product and technology 1,254 1,840 2,703 2,977 General and administrative 4,254 6,592 8,654 10,677 Total stock-based compensation expense $ 6,404 $ 9,702 $ 13,298 $ 15,556 Under our 2020 Stock Incentive Plan, which replaced the 2012 Equity Incentive Plan in December 2020, employees, directors and consultants are eligible for grants of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock awards (“RSAs”), restricted stock units (“RSUs”), performance restricted stock units (“PRSUs”), and other stock awards, collectively referred to as “Awards.” The following table summarizes Award activity for the six months ended June 30, 2023: Number of Number of Performance Number of Restricted Restricted Options Stock Units Stock Units Balances as of December 31, 2022 3,862,918 5,309,241 920,924 Granted — 5,591,534 3,135,073 Vested (1,164,592) — Exercised (4,519) — — Forfeited, canceled or expired (141,207) (547,505) — Balances as of June 30, 2023 3,717,192 9,188,678 4,055,997 |
Reinsurance
Reinsurance | 6 Months Ended |
Jun. 30, 2023 | |
Reinsurance | |
Reinsurance | 10. Reinsurance 2023 Program Our third-party quota share reinsurance program is split into three separate placements to maximize coverage and cost efficiency. The 2023 Coastal Program covers our business in certain Texas coastal regions and the Houston metropolitan area and is placed at 42% of subject property and casualty losses (“P&C losses”), as well as all business in South Carolina which is placed at 7% of P&C losses. The 2023 Core Program, which covers the portion of our business not in the Coastal Program, is placed at 49.5% of P&C losses of our remaining business in Texas and 48% of P&C losses of our business in other states. In addition, the Combined Program covers all of our business and is placed at 5% of P&C losses. All programs are effective for the period January 1, 2023, through December 31, 2023, or March 31, 2024, and are subject to certain limits and exclusions, which vary by participating reinsurer. Property catastrophe excess of loss treaties were placed on April 1, 2023, and limited our net retention to $8 million per occurrence. The five layers provide coverage up to a net loss of $440 million. We also place reinstatement premium protection to cover any reinstatement premiums due on the first four layers. The effects of reinsurance on premiums written and earned for the three and six months ended June 30, 2023 and 2022, were as follows: Three Months Ended June 30, 2023 2022 Written Earned Written Earned Direct premiums $ 121,540 $ 116,397 $ 124,914 $ 93,082 Ceded premiums (67,387) (72,166) (117,926) (83,095) Net premiums $ 54,153 $ 44,231 $ 6,988 $ 9,987 Six Months Ended June 30, 2023 2022 Written Earned Written Earned Direct premiums $ 218,413 $ 231,221 $ 212,037 $ 177,400 Ceded premiums (65,121) (146,840) (178,562) (154,822) Net premiums $ 153,292 $ 84,381 $ 33,475 $ 22,578 Our 2023 third-party quota share program was placed at a reduced ceding percentage as compared to the 2022 program, which resulted in a portfolio transfer and lower ceded written premiums in the six months ended June 30, 2023. The effects of reinsurance on incurred losses and loss adjustment expense (“LAE”) for the three and six months ended June 30, 2023 and 2022, were as follows: Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Direct losses and LAE $ 137,591 $ 74,617 $ 227,606 $ 142,838 Ceded losses and LAE (66,442) (60,133) (113,598) (119,106) Net losses and LAE $ 71,149 $ 14,484 $ 114,008 $ 23,732 The detail of reinsurance balances due is as follows: June 30, 2023 December 31, 2022 Ceded unearned premium $ 147,297 $ 203,157 Losses and LAE reserve 89,296 76,999 Reinsurance recoverable 29,260 18,765 Other 6,614 139 Reinsurance balance due $ 272,467 $ 299,060 |
Unpaid Losses and Loss Adjustme
Unpaid Losses and Loss Adjustment Reserve | 6 Months Ended |
Jun. 30, 2023 | |
Unpaid Losses and Loss Adjustment Reserve | |
Unpaid Losses and Loss Adjustment Reserve | 11. Unpaid Losses and Loss Adjustment Reserve The following table summarizes the changes in the reserve balances for unpaid losses and LAE, gross of reinsurance for the six months ended June 30, 2023: Reserve for unpaid losses and LAE, at December 31, 2022 $ 100,632 Reinsurance recoverables on losses and LAE (76,999) Reserve for unpaid losses and LAE reserve, net of reinsurance recoverables at December 31, 2022 23,633 Add provisions (reductions) for losses and LAE occurring in: Current year 110,624 Prior years 3,384 Net incurred losses and LAE during the current year 114,008 Deduct payments for losses and LAE occurring in: Current year (44,510) Prior years (16,718) Net claim and LAE payments during the current year (61,228) Reserve for losses and LAE, net of reinsurance recoverables, at end of period 76,413 Reinsurance recoverables on losses and LAE 89,296 Reserve for unpaid losses and LAE at June 30, 2023 $ 165,709 As a result of additional information on claims occurring in prior years becoming available to management, changes in estimates of provisions of losses and loss adjustment expenses were made resulting in an increase of $3.4 million for the six months ended June 30, 2023. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2023 | |
Commitments and Contingencies. | |
Commitments and Contingencies | 12. Commitments and Contingencies From time to time we are or may become subject to various legal proceedings arising in the ordinary course of business, including proceedings initiated by users, other entities, or regulatory bodies. Estimated liabilities are recorded when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. In many instances, we are unable to determine whether a loss is probable or to reasonably estimate the amount of such a loss and, therefore, the potential future losses arising from a matter may differ from the amount of estimated liabilities we have recorded in the financial statements covering these matters. We review our estimates periodically and make adjustments to reflect negotiations, estimated settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular matter. Cases under Telephone Consumer Protection Act Porch and/or an acquired entity, GoSmith.com, are party to twelve legal proceedings alleging violations of the automated calling and/or internal and National Do Not Call restrictions of the Telephone Consumer Protection Act of 1991 and a related Washington state law claim. The proceedings were commenced as mass tort actions by a single plaintiffs’ law firm in December 2019 and April/May 2020 in federal district courts throughout the United States. One of the actions was dismissed with prejudice and was appealed to the Ninth Circuit Court of Appeals. On October 12, 2022, in a split decision, the Ninth Circuit Court of Appeals reversed. The remaining cases were consolidated in the United States District Court for the Western District of Washington, where Porch resides. Plaintiffs filed a motion for leave to file a second amended complaint, which was granted in part and is due to be filed July 2023. Defendants’ motion to dismiss is due September 2023. The case is otherwise stayed pending resolution of the defendants’ forthcoming motion. Plaintiffs seek actual, statutory, and/or treble damages, injunctive relief, and reasonable attorneys’ fees and costs. These actions are at an early stage in the litigation process. It is not possible to determine the likelihood of an unfavorable outcome of these disputes, although it is reasonably possible that the outcome of these actions may be unfavorable. Further, it is not possible to estimate the range or amount of potential loss (if the outcome should be unfavorable). We intend to contest these cases vigorously. Other In addition, in the ordinary course of business, Porch Group and its subsidiaries are (or may become) parties to litigation involving property, personal injury, contract, intellectual property and other claims, as well as stockholder derivative actions, class action lawsuits and other matters. The amounts that may be recovered in such matters may be subject to insurance coverage. Although the results of legal proceedings and claims cannot be predicted with certainty, neither Porch Group nor any of its subsidiaries is currently a party to any legal proceedings the outcome of which, we believe, if determined adversely to us, would individually or in the aggregate have a material adverse effect on the business, financial condition or results of operations. |
Business Combinations
Business Combinations | 6 Months Ended |
Jun. 30, 2023 | |
Business Combinations. | |
Business Combinations | 13. Business Combinations On April 1, 2022, we entered into a stock and membership interest purchase agreement with Residential Warranty Services (“RWS”) to acquire its home warranty and inspection software and services businesses. On that date, we completed the acquisition of substantially all of the operations of RWS except for those in Florida and California, which were subject to certain regulatory and other approvals. The acquisitions of the Florida and California operations were closed on March 17, 2023. We paid approximately $2.1 million in cash to acquire $0.2 million of cash and current assets and $0.2 million of customer relationships with an estimated useful life of three years. The estimated value of the customer relationships intangible asset was calculated using the income approach. The aggregate transaction costs of $0.1 million are primarily comprised of legal and due diligence fees and are included in general and administrative expenses on the unaudited condensed consolidated statements of operations. The results of operations for each acquisition are included in our consolidated financial statements from the date of acquisition onwards. |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2023 | |
Segment Information | |
Segment Information | 14. Segment Information We have two reportable segments that are also operating segments: Vertical Software and Insurance. Reportable segments were identified based on how the chief operating decision-maker (“CODM”) manages the business, makes operating decisions, and evaluates operating and financial performance. Our chief executive officer acts as the CODM and reviews financial and operational information for the two reportable segments. Operating segments are components of an enterprise for which separate discrete financial information is available and operational results are regularly evaluated by the CODM for the purposes of making decisions regarding resource allocation and assessing performance. The Vertical Software segment primarily consists of a vertical software platform for the home that provides software and services to home services companies such as home inspectors, mortgage companies and loan officers, title companies, moving companies, real estate agents, utility companies, and individuals. The Insurance segment operates both as an insurance carrier underwriting home insurance policies and as an agent selling home and auto insurance. The Insurance segment also includes warranty service offerings and a captive reinsurance provider. The following table summarizes revenue by segment. Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Vertical Software $ 34,435 $ 42,540 $ 63,062 $ 76,944 Insurance 64,330 28,375 123,072 57,538 Total revenue $ 98,765 $ 70,915 $ 186,134 $ 134,482 Our segment operating and financial performance measure is Segment Adjusted EBITDA (Loss). Segment Adjusted EBITDA (Loss) is defined as revenue less the following expenses associated with each segment: cost of revenue, sales and marketing, product and technology, general and administrative expenses, and provision for doubtful accounts. Segment Adjusted EBITDA (Loss) also excludes non-cash items or items that management does not consider reflective of ongoing core operations. We do not allocate shared expenses to the reportable segments. These expenses are included in the “Corporate and other” row in the following reconciliation. “Corporate and other” includes shared expenses such as sales and marketing; certain product and technology; accounting; human resources; legal; general and administrative; and other income, expenses, gains and losses that are not allocated in assessing segment performance due to their function. Such transactions are excluded from the reportable segments’ results but are included in consolidated results. The reconciliation of Segment Adjusted EBITDA (Loss) to consolidated loss from operations below includes the effects of corporate and other items that the CODM does not consider in assessing segment performance. The following table provides financial information for the two reportable segments and a reconciliation to consolidated financial information for the periods presented. Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Segment Adjusted EBITDA (Loss): Vertical Software $ 1,816 $ 5,652 $ 1,420 $ 8,536 Insurance (31,181) (5,609) (38,366) (5,394) Subtotal (29,365) 43 (36,946) 3,142 Reconciling items: Corporate and other (13,769) (15,048) (28,070) (28,503) Depreciation and amortization (6,214) (6,416) (12,229) (12,899) Non-cash stock-based compensation expense (6,404) (9,702) (13,298) (15,556) Restructuring costs (1,093) — (2,077) — Acquisition and other transaction costs (258) (357) (386) (1,322) Impairment loss on intangible assets and goodwill (55,211) — (57,232) — Loss on reinsurance contract (1) (48,244) — (48,244) — Non-cash losses and impairment of property, equipment and software (254) — (254) (70) Revaluation of contingent consideration 2,656 (1,481) 2,810 (4,686) Investment income and realized gains (1,249) (243) (2,007) (440) Non-cash bonus expense — 1,526 — — Operating loss $ (159,405) $ (31,678) $ (197,933) $ (60,334) (1) The CODM does not review assets on a segment basis. All of our revenue is generated in the United States except for an immaterial amount. As of June 30, 2023, and December 31, 2022, we did not have material assets located outside of the United States. |
Net Loss Per Share
Net Loss Per Share | 6 Months Ended |
Jun. 30, 2023 | |
Net Loss Per Share | |
Net Loss Per Share | 15. Net Loss Per Share Basic and diluted net loss per share attributable to common stockholders is presented in conformity with the two-class method required for participating securities. Under the two-class method, basic net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share attributable to common stockholders adjusts basic earnings per share for the potentially dilutive impact of stock options, RSUs, PRSUs, RSAs, convertible notes, earnout shares and warrants. As we have reported losses for all periods presented, all potentially dilutive securities are antidilutive and, accordingly, basic net loss per share equals diluted net loss per share. The following table summarizes the computation of basic and diluted net loss attributable per share to common stockholders for the three and six months ended June 30, 2023 and 2022: Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Numerator: Net loss used to compute net loss per share - basic and diluted: $ (86,963) $ (27,325) $ (125,703) $ (36,610) Denominator: Weighted average shares outstanding used to compute loss per share - basic and diluted: 95,731,850 97,142,163 95,472,277 96,611,294 Loss per share - basic and diluted $ (0.91) $ (0.28) $ (1.32) $ (0.38) The following table discloses securities that were not included in the computation of diluted net loss per share because to do so would have been antidilutive for the periods presented: Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Stock options 3,717,192 4,429,426 3,717,192 4,429,426 Restricted stock units and awards 9,188,678 5,331,673 9,188,678 5,331,673 Performance restricted stock units 4,055,997 1,825,719 4,055,997 1,825,719 Public and private warrants 1,795,700 1,795,700 1,795,700 1,795,700 Earnout shares 2,050,000 2,050,000 2,050,000 2,050,000 Convertible debt (1) 22,330,903 16,998,130 22,330,903 16,998,130 Contingently issuable shares in connection with acquisitions (2) 13,969,860 2,792,457 13,969,860 2,792,457 (1) (2) |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2023 | |
Subsequent Events. | |
Subsequent Events | 16. Subsequent Events In the third quarter of 2023, HOA, a subsidiary of Porch Group, discovered that Vesttoo Ltd (“Vesttoo”), which arranged capital for one of our reinsurance contracts, faced allegations of fraudulent activity in connection with collateral it provided to HOA and certain other third parties. We immediately began investigating the rapidly evolving situation and have been moving quickly to analyze the impact on our business. Additionally, we have communicated and met with regulators and other key stakeholders regarding the evolving situation. This reinsurance agreement provided partial quota share coverage as well as up to approximately $175 million in a catastrophic event. As a result of its findings, and in accordance with the terms of the reinsurance agreement, HOA terminated its reinsurance contract with the reinsurer on August 4, 2023, with an effective date of July 1, 2023. Had the contract not been terminated, the contract would have expired on December 31, 2023. Following the effective date of the termination, HOA seized available liquid collateral in the amount of approximately $47.6 million from a reinsurance trust, of which HOA was the beneficiary. In addition, HOA is evaluating and intends to pursue all available legal claims and remedies to enforce its rights under the letter of credit required by the reinsurance agreement in the amount of $300 million as additional collateral, and to seek recovery of all losses and damages incurred as a result of terminating the reinsurance agreement due to allegations of fraudulent activity by third parties. We concluded this subsequent event provides additional evidence about conditions that existed at the balance sheet date and accounted for it as a recognized subsequent event. Since the Company’s request to draw on the letter of credit was not fulfilled and advisors to the issuing bank have alleged the letter of credit is invalid, we recognized a charge of $48.2 million in provision for doubtful accounts in the unaudited condensed consolidated statements of operations, calculated as the net asset due under the reinsurance contract (as we have the legal right of offset) of $95.8 million as of June 30, 2023, before adjustment, less the $47.6 million collateral received from a trust in July 2023. Following the provision for doubtful accounts recognized for the three months ended June 30, 2023, the net assets on the unaudited condensed consolidated balance sheet at June 30, 2023, is equal to the HOA has already secured supplemental reinsurance coverage in the amount of approximately $42 million and is currently seeking additional supplemental reinsurance coverage (whether from Porch Group’s captive reinsurer, third parties or a combination thereof) in order to maintain adequate coverage in future periods against potential excess losses in the event of a severe weather event, and to satisfy regulatory and rating agency requirements. |
Description of Business and S_2
Description of Business and Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2023 | |
Description of Business and Summary of Significant Accounting Policies | |
Unaudited Interim Financial Statements | 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 our 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 our financial position, results of operations, comprehensive loss, stockholders’ equity (deficit), and cash flows for the periods and dates presented. The results of operations for the three and six months ended June 30, 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. Certain prior period amounts have been reclassified to conform to the current year's presentation. |
Comprehensive Loss | Comprehensive Loss Comprehensive loss consists of adjustments related to unrealized gains and losses on available-for-sale securities. |
Use of Estimates | 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. |
Concentrations | Concentrations Financial instruments which potentially subject us to credit risk consist principally of cash, money market accounts on deposit with financial institutions, money market funds, certificates of deposit and fixed-maturity securities, as well as receivable balances in the course of collection. Our insurance carrier subsidiary has exposure and remains liable in the event of insolvency of its reinsurers. Management and its reinsurance intermediary regularly assess the credit quality and ratings of its reinsurer counterparties. One reinsurer represented 39% of our total reinsurance balance due as of June 30, 2023. Substantially all of our insurance-related revenues in the Insurance segment are derived from customers in Texas (which represent approximately 62% of such revenues in the six months ended June 30, 2023), South Carolina (which represent approximately 10% of such revenues in the six months ended June 30, 2023), North Carolina, Georgia, Virginia, and Arizona, which could be adversely affected by economic conditions, an increase in competition, local weather events, or environmental impacts and changes. No individual customer represented more than 10% of total revenue for the three and six months ended June 30, 2023 or 2022. As of June 30, 2023, and December 31, 2022, no individual customer accounted for 10% or more of total accounts receivable. As of June 30, 2023, we held approximately $262.0 million of cash with four U.S. commercial banks. |
Cash, Cash Equivalents and Restricted Cash | Cash, Cash Equivalents and Restricted Cash We consider all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. We maintain cash balances that may exceed the insured limits by the Federal Deposit Insurance Corporation. Restricted cash equivalents as of June 30, 2023 includes $29.1 million held by our captive reinsurance business as collateral for the benefit of Homeowners of America (“HOA”), $1.3 million held in certificates of deposits and money market mutual funds pledged to the Department of Insurance in certain states as a condition of our Certificate of Authority for the purpose of meeting obligations to policyholders and creditors, $6.5 million in funds held for the payment of possible warranty claims as required under regulatory guidelines in seventeen states, and $2.4 million related to acquisition indemnifications. Restricted cash equivalents as of December 31, 2022, includes $5.1 million held by our captive reinsurance business as collateral for the benefit of HOA, $1.0 million held in money market mutual funds pledged to the Department of Insurance in certain states as a condition of its Certificate of Authority for the purpose of meeting obligations to policyholders and creditors, $5.0 million in funds held for the payment of possible warranty claims as required under regulatory guidelines in nineteen states, and $2.4 million related to acquisition indemnifications. The reconciliation of cash and cash equivalents to amounts presented in the unaudited condensed consolidated statements of cash flows are as follows: June 30, 2023 December 31, 2022 Cash and cash equivalents $ 265,573 $ 215,060 Total restricted cash 39,277 13,545 Cash, cash equivalents, and restricted cash $ 304,850 $ 228,605 |
Accounts Receivable and Long-term Insurance Commissions Receivable | Accounts Receivable and Long-term Insurance Commissions Receivable Accounts receivable consist principally of amounts due from enterprise customers, other corporate partnerships, and individual policyholders. We estimate allowances for uncollectible receivables based on the creditworthiness of our customers, historical trend analysis, and macro-economic conditions. Consequently, an adverse change in those factors could affect our estimate of allowance for doubtful accounts. The allowance for uncollectible receivables at June 30, 2023, and December 31, 2022, was $0.8 million and $0.5 million, respectively. Long-term insurance commissions receivable balance consists of the estimated commissions from policy renewals expected to be collected. We record the amount of renewal insurance commissions expected to be collected in the next twelve months as current accounts receivable. |
Goodwill | Goodwill We test goodwill for impairment for each reporting unit on an annual basis or more frequently when events or changes in circumstances indicate the fair value of a reporting unit is below its carrying value. We have the option to perform a qualitative assessment to determine if an impairment is more likely than not to have occurred. If we can support the conclusion that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then a quantitative impairment test would not be necessary. If we cannot support such a conclusion or we do not elect to perform the qualitative assessment, then we perform a quantitative assessment. If a quantitative goodwill impairment assessment is performed, we utilize a combination of market and income valuation approaches. If the fair value of a reporting unit is less than its carrying value, an impairment loss is recorded to the extent that the fair value of the reporting unit is less than its carrying value. We have selected October 1 as the date to perform annual impairment testing. Determining the fair value of a reporting unit is judgmental in nature and involves the use of significant estimates and assumptions to evaluate the impact of operating and macroeconomic changes on each reporting unit. The fair value of each reporting unit was estimated using a combination of income and market valuation approaches using publicly traded company multiples in similar businesses. Such fair value measurements are based predominately on Level 3 inputs. This analysis requires significant judgments including an estimate of future cash flows which is dependent on internally developed forecasts, estimation of the long-term rate of growth for our business, estimation of the useful life over which cash flows will occur, and determination of our weighted average cost of capital, which is risk-adjusted to reflect the specific risk profile of the reporting unit being tested. The weighted average cost of capital used in our most recent impairment test was risk-adjusted to reflect the specific risk profile of the reporting units and ranged from 13% to 18%. See Note 6 for a discussion of the impairment analysis. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets We review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be fully recoverable. Events that trigger a test for recoverability include a significant decrease in the market price for a long-lived asset, significant negative industry or economic trends, an accumulation of costs significantly in excess of the amount originally expected for the acquisition, a current-period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset, or a sustained decrease in share price. When a triggering event occurs, a test for recoverability is performed, comparing projected undiscounted future cash flows to the carrying value of the asset group. If the test for recoverability identifies a possible impairment, the asset group’s fair value is measured relying primarily on an income approach. An impairment charge is recognized for the amount by which the carrying value of the asset group exceeds its estimated fair value. Management identifies the asset group which includes the potentially impaired long-lived asset, at the lowest level at which there are separate, identifiable cash flows. During the first and second quarters of 2023, we identified various qualitative factors that collectively indicated triggering events including a sustained decrease in stock price, increased costs due to inflationary pressures, and a deterioration of the macroeconomic environment in the housing and real estate industry. We used an income approach to determine that the estimated fair value of a certain asset group was less than its carrying value, which resulted in impairment charges of $2.0 million, primarily related to acquired technology, trademarks and tradenames, and customer relationships for certain businesses within the Vertical Software segment. Impairment charges are included in impairment loss on intangible assets and goodwill We estimate the fair value of an asset group using the income approach. Such fair value measurements are based predominately on Level 3 inputs. Inherent in our development of cash flow projections are assumptions and estimates derived from a review of our operating results, business plan forecasts, expected growth rates, and cost of capital, similar to those a market participant would use to assess fair value. We also make certain assumptions about future economic conditions and other data. Many of these factors used in assessing fair value are outside the control of management and these assumptions and estimates may change in future periods. |
Deferred Policy Acquisition Costs | Deferred Policy Acquisition Costs We capitalize deferred policy acquisitions costs (“DAC”) which consist primarily of commissions, premium taxes and policy underwriting and production expenses that are directly related to the successful acquisition by our insurance subsidiary of new or renewal insurance contracts. DAC are amortized on a straight-line basis over the terms of the policies to which they relate, which is generally one year. DAC is also reduced by ceding commissions paid by reinsurance companies which represent recoveries of acquisition costs. DAC is periodically reviewed for recoverability and adjusted if necessary. Future investment income is considered in determining the recoverability of DAC. As of June 30, 2023, and December 31, 2022, DAC of $17.9 million and $8.7 million is included in prepaid expenses and other current assets. Amortized deferred acquisition costs included in sales and marketing expense, amounted to $9.3 million and $4.2 million, for the three months ended June 30, 2023 and 2022, respectively, and $18.6 million and $7.2 million, for the six months ended June 30, 2023 and 2022, respectively. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair value principles require disclosures regarding the manner in which fair value is determined for assets and liabilities and establishes a three-tiered fair value hierarchy into which these assets and liabilities must be grouped, based upon significant levels of inputs as follows: Level 1 Observable inputs, such as quoted prices (unadjusted) in active markets for identical assets or liabilities at the measurement date; Level 2 Observable inputs, other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. This may include active markets for similar assets and liabilities, quoted prices in markets that are not highly active, or other inputs that are observable or can be corroborated by observable market data; and Level 3 Unobservable inputs that are arrived at by means other than current observable market activity. The level of the least observable significant input used in assessing the fair value determines the placement of the entire fair value measurement in the hierarchy. Management’s assessment of the significance of a particular input to the fair value measurement requires the use of judgment specific to the asset or liability. |
Other Insurance Liabilities, Current | Other Insurance Liabilities, Current The following table details the components of other insurance liabilities, current, on the unaudited condensed consolidated balance sheets: As of June 30, 2023 As of December 31, 2022 Ceded reinsurance premiums payable $ 77,051 $ 29,204 Commissions payable, reinsurers and agents 6,650 21,045 Advance premiums 10,383 8,668 Funds held under reinsurance treaty 1,715 1,851 General and accrued expenses payable 17,050 942 Other insurance liabilities, current $ 112,849 $ 61,710 |
Income Taxes | Income Taxes Provisions for income taxes for the three months ended June 30, 2023, and 2022, were less than $0.1 million and $0.5 million, respectively, and the effective tax rates for these periods were less than 0.1% and 1.7%, respectively. The difference between our effective tax rates for the 2023 periods and the U.S. statutory rate of 21% was primarily due to a full valuation related to our net deferred tax assets and impact of acquisitions on our valuation allowance. Provisions for income taxes for the six months ended June 30, 2023 and 2022, were a $0.1 million benefit and a $0.3 million expense, respectively, and the effective tax rates for these periods were 0.1% expense and 0.8% benefit, respectively. The difference between our effective tax rates for the 2022 periods and the U.S. statutory rate of 21% was primarily due to a full valuation allowance related to our net deferred tax assets. |
Description of Business and S_3
Description of Business and Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Description of Business and Summary of Significant Accounting Policies | |
Schedule of cash, cash equivalents and restricted cash | June 30, 2023 December 31, 2022 Cash and cash equivalents $ 265,573 $ 215,060 Total restricted cash 39,277 13,545 Cash, cash equivalents, and restricted cash $ 304,850 $ 228,605 |
Schedule of components of other insurance liabilities, current | As of June 30, 2023 As of December 31, 2022 Ceded reinsurance premiums payable $ 77,051 $ 29,204 Commissions payable, reinsurers and agents 6,650 21,045 Advance premiums 10,383 8,668 Funds held under reinsurance treaty 1,715 1,851 General and accrued expenses payable 17,050 942 Other insurance liabilities, current $ 112,849 $ 61,710 |
Revenue (Tables)
Revenue (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Revenue | |
Schedule of disaggregation of revenue | Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Vertical Software segment Software and service subscriptions $ 17,524 $ 19,847 $ 34,333 $ 37,078 Move-related transactions 12,246 17,458 20,015 29,586 Post-move transactions 4,665 5,235 8,714 10,280 Total Vertical Software segment revenue 34,435 42,540 63,062 76,944 Insurance segment Insurance and warranty premiums, commissions and policy fees 64,330 28,375 123,072 57,538 Total Insurance segment revenue 64,330 28,375 123,072 57,538 Total revenue (1) $ 98,765 $ 70,915 $ 186,134 $ 134,482 (1) Revenue recognized during the three months ended June 30, 2023 and 2022, includes revenue of $54.8 million and $18.2 million, respectively, which is accounted for separately from the revenue from contracts with customers. Revenue accounted separately from the revenue from contracts with customers for the six months ended June 30, 2023 and 2022, was $105.0 million and $39.0 million, respectively. |
Summary of the activity impacting the contract assets | Contract Assets Balance at December 31, 2022 $ 15,521 Estimated lifetime value of commissions on insurance policies sold by carriers 3,792 Cash receipts (2,285) Balance at June 30, 2023 $ 17,028 |
Summary of the activity impacting deferred revenue | Vertical Software Deferred Revenue Balance at December 31, 2022 $ 3,874 Revenue recognized (8,613) Additional amounts deferred 8,695 Balance at June 30, 2023 $ 3,956 |
Investments (Tables)
Investments (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Investments | |
Schedule of gain and losses on investments | Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Investment income, net of investment expenses $ 1,278 $ 313 $ 2,103 $ 578 Realized gains on investments 7 4 11 6 Realized losses on investments (36) (74) (107) (144) Investment income and realized gains (losses), net of investment expenses $ 1,249 $ 243 $ 2,007 $ 440 |
Summary of amortized cost, market value and unrealized gains (losses) of debt securities | As of June 30, 2023 Gross Unrealized Amortized Cost Gains Losses Fair Value U.S. Treasuries $ 28,407 $ 1 $ (361) $ 28,047 Obligations of states, municipalities and political subdivisions 11,846 4 (1,178) 10,672 Corporate bonds 35,236 38 (2,879) 32,395 Residential and commercial mortgage-backed securities 17,607 16 (1,328) 16,295 Other loan-backed and structured securities 5,710 4 (393) 5,321 Total investment securities $ 98,806 $ 63 $ (6,139) $ 92,730 As of December 31, 2022 Gross Unrealized Amortized Cost Gains Losses Fair Value U.S. Treasuries $ 35,637 $ 5 $ (320) $ 35,322 Obligations of states, municipalities and political subdivisions 11,549 2 (1,326) 10,225 Corporate bonds 31,032 32 (2,837) 28,227 Residential and commercial mortgage-backed securities 12,790 11 (1,268) 11,533 Other loan-backed and structured securities 6,804 6 (476) 6,334 Total investment securities $ 97,812 $ 56 $ (6,227) $ 91,641 |
Summary of remaining time to maturity | As of June 30, 2023 Remaining Time to Maturity Amortized Cost Fair Value Due in one year or less $ 25,920 $ 25,802 Due after one year through five years 19,481 17,895 Due after five years through ten years 25,245 23,099 Due after ten years 4,843 4,318 Residential and commercial mortgage-backed securities 17,607 16,295 Other loan-backed and structured securities 5,710 5,321 Total $ 98,806 $ 92,730 |
Summary of securities with gross unrealized loss position | Less Than Twelve Months Twelve Months or Greater Total Gross Gross Gross Unrealized Fair Unrealized Fair Unrealized Fair As of June 30, 2023 Loss Value Loss Value Loss Value U.S. Treasuries $ (182) $ 25,500 $ (179) $ 2,232 $ (361) $ 27,732 Obligations of states, municipalities and political subdivisions (79) 2,060 (1,099) 8,145 (1,178) 10,205 Corporate bonds (530) 12,546 (2,349) 18,045 (2,879) 30,591 Residential and commercial mortgage-backed securities (292) 8,365 (1,036) 7,319 (1,328) 15,684 Other loan-backed and structured securities (109) 1,039 (284) 3,677 (393) 4,716 Total securities $ (1,192) $ 49,510 $ (4,947) $ 39,418 $ (6,139) $ 88,928 Less Than Twelve Months Twelve Months or Greater Total Gross Gross Gross Unrealized Fair Unrealized Fair Unrealized Fair As of December 31, 2022 Loss Value Loss Value Loss Value U.S. Treasuries $ (127) $ 10,748 $ (193) $ 9,824 $ (320) $ 20,572 Obligations of states, municipalities and political subdivisions (929) 6,258 (397) 3,504 (1,326) 9,762 Corporate bonds (1,623) 16,531 (1,214) 10,328 (2,837) 26,859 Residential and commercial mortgage-backed securities (687) 6,565 (581) 4,952 (1,268) 11,517 Other loan-backed and structured securities (359) 4,633 (117) 1,094 (476) 5,727 Total securities $ (3,725) $ 44,735 $ (2,502) $ 29,702 $ (6,227) $ 74,437 |
Fair Value (Tables)
Fair Value (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Fair Value | |
Schedule of fair value measurements of liabilities measured at fair value on recurring basis | The following table summarizes the fair value measurements of assets and liabilities that are measured at fair value on a recurring basis. Fair Value Measurement as of June 30, 2023 Total Level 1 Level 2 Level 3 Fair Value Assets Money market mutual funds $ 74,073 $ — $ — $ 74,073 Debt securities: U.S. Treasuries 28,047 — — 28,047 Obligations of states and municipalities — 10,672 — 10,672 Corporate bonds — 32,395 — 32,395 Residential and commercial mortgage-backed securities — 16,295 — 16,295 Other loan-backed and structured securities — 5,321 — 5,321 $ 102,120 $ 64,683 $ — $ 166,803 Liabilities, Noncurrent Contingent consideration - business combinations $ — $ — $ 21,328 $ 21,328 Contingent consideration - earnout — — 44 44 Private warrant liability — — 347 347 Embedded derivatives — — 26,820 26,820 $ — $ — $ 48,539 $ 48,539 Fair Value Measurement as of December 31, 2022 Total Level 1 Level 2 Level 3 Fair Value Assets Money market mutual funds $ 6,619 $ — $ — $ 6,619 Debt securities: U.S. Treasuries 35,322 — — 35,322 Obligations of states and municipalities — 10,225 — 10,225 Corporate bonds — 28,227 — 28,227 Residential and commercial mortgage-backed securities — 11,533 — 11,533 Other loan-backed and structured securities — 6,334 — 6,334 $ 41,941 $ 56,319 $ — $ 98,260 Liabilities Contingent consideration - business combinations $ — $ — $ 24,546 $ 24,546 Contingent consideration - earnout — — 44 44 Private warrant liability — — 707 707 $ — $ — $ 25,297 $ 25,297 |
Schedule of Level 3 items measured at fair value on a recurring basis | Contingent Contingent Consideration - Private Consideration - Business Embedded Warrant Earnout Combinations Derivatives Liability Fair value as of December 31, 2022 $ 44 $ 24,546 $ — $ 707 Additions — — 23,870 — Settlements — (408) — — Change in fair value, loss (gain) included in net loss (1) — (2,810) 2,950 (360) Fair value as of June 30, 2023 $ 44 $ 21,328 $ 26,820 $ 347 Contingent Contingent Consideration - Private Consideration - Business Warrant Earnout Combinations Liability Fair value as of December 31, 2021 $ 13,866 $ 9,617 $ 15,193 Additions — 15,555 — Settlements — — — Change in fair value, loss (gain) included in net loss (1) (13,766) 4,686 (14,267) Fair value as of June 30, 2022 $ 100 $ 29,858 $ 926 (1) Changes in fair value of contingent consideration related to business combinations are included in general and administrative expenses in the unaudited condensed consolidated statements of operations. Ch anges in fair value of the earnout contingent consideration and private warrant liability are disclosed separately in the unaudited condensed consolidated statements of operations. Changes in the fair value of the embedded derivatives are included in change in fair value of derivatives in the unaudited condensed consolidated statements of operations. |
Property, Equipment, and Soft_2
Property, Equipment, and Software (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Property, Equipment, and Software | |
Schedule of property, equipment, and software net | June 30, December 31, 2023 2022 Software and computer equipment $ 8,266 $ 8,326 Furniture, office equipment, and other 1,708 2,118 Internally developed software 20,017 17,128 Leasehold improvements 1,178 1,178 31,169 28,750 Less: Accumulated depreciation and amortization (16,401) (16,510) Property, equipment, and software, net $ 14,768 $ 12,240 |
Intangible Assets and Goodwill
Intangible Assets and Goodwill (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Intangible Assets and Goodwill | |
Schedule of intangible assets | Intangible assets are stated at cost or acquisition-date fair value less accumulated amortization and impairment. The following table summarizes intangible assets as of June 30, 2023. Weighted Accumulated Average Intangible Amortization Intangible Useful Life Assets, And Assets, (in years) gross Impairment Net Customer relationships 9.0 $ 69,505 $ (19,494) $ 50,011 Acquired technology 5.0 36,041 (19,175) 16,866 Trademarks and tradenames 10.0 23,443 (5,609) 17,834 Non-compete agreements 3.0 616 (431) 185 Value of business acquired 1.0 400 (400) — Renewal rights 6.0 9,734 (2,764) 6,970 Insurance licenses Indefinite 4,960 — 4,960 Total intangible assets $ 144,699 $ (47,873) $ 96,826 The following table summarizes intangible assets as of December 31, 2022. Weighted Average Intangible Intangible Useful Life Assets, Accumulated Assets, (in years) gross Amortization Net Customer relationships 9.0 $ 69,730 $ (15,079) $ 54,651 Acquired technology 5.0 37,932 (16,468) 21,464 Trademarks and tradenames 10.0 25,071 (5,724) 19,347 Non-compete agreements 3.0 619 (407) 212 Value of business acquired 1.0 400 (400) — Renewal rights 6.0 9,734 (2,113) 7,621 Insurance licenses Indefinite 4,960 — 4,960 Total intangible assets $ 148,446 $ (40,191) $ 108,255 |
Summary of changes in the carrying amount of goodwill | Goodwill Balance as of December 31, 2022, net of accumulated impairment of $43.8 million $ 244,697 Acquisition 2,421 Impairment loss (55,211) Balance as of June 30, 2023, net of accumulated impairment of $99.0 million $ 191,907 |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Debt | |
Schedule of debt | Debt Unaccreted Issuance Carrying Principal Discount Costs Value Convertible senior notes, due 2026 $ 225,000 $ — $ (3,909) $ 221,091 Convertible senior notes, due 2028 333,334 (122,877) (4,707) 205,750 Advance funding arrangement 5,321 (32) — 5,289 Other notes 300 (26) — 274 Balance as of June 30, 2023 $ 563,955 $ (122,935) $ (8,616) $ 432,404 Debt Unaccreted Issuance Carrying Principal Discount Costs Value Convertible senior notes, due 2026 $ 425,000 $ — $ (8,508) $ 416,492 Advance funding arrangement 15,670 (760) — 14,910 Term loan facility, due 2029 10,000 — — 10,000 Other notes 450 (87) — 363 Balance as of December 31, 2022 $ 451,120 $ (847) $ (8,508) $ 441,765 |
Equity and Warrants (Tables)
Equity and Warrants (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Equity and Warrants | |
Summary of fully diluted capital structure | June 30, December 31, 2023 2022 Issued and outstanding common shares 96,118,956 96,405,838 Earnout shares 2,050,000 2,050,000 Total common shares issued and outstanding 98,168,956 98,455,838 Common shares reserved for future issuance: Private warrants 1,795,700 1,795,700 Stock options (Note 9) 3,717,192 3,862,918 Restricted and performance stock units and awards (Note 9) 13,244,675 6,230,165 2020 Equity Plan pool reserved for future issuance (Note 9) 8,045,331 11,189,745 Convertible senior notes, due 2026 (1) 8,999,010 16,998,130 Convertible senior notes, due 2028 13,331,893 — Contingently issuable shares in connection with acquisitions (2) 13,969,860 10,631,558 Total shares of common stock outstanding and reserved for future issuance 161,272,617 149,164,054 (1) In connection with the September 16, 2021, issuance of the 2026 Notes, we used a portion of the proceeds to pay for the capped call transactions, which are expected to generally reduce the potential dilution to our common stock. The capped call transactions allow us to purchase shares of our common stock at a strike price of $25 per share, which is equal to the conversion price of the 2026 Notes and 2028 Notes. The capped call transactions are designed to limit the amount of dilution of our common stock upon conversion of the notes. The maximum number of shares purchasable by us under the capped call transactions is 16,998,130 . The options that underly the capped call transactions expire on September 15, 2026. (2) In connection with the acquisitions of Floify and HOA, we provided an obligation to issue a certain amount of common stock to the extent specified market conditions are met in the future. Contingently issuable shares are calculated in accordance with the purchase agreement, assuming they would be issuable if the end of the reporting periods were the end of the contingency period. |
Schedule of warrant activity | Number of Number of Common Warrants Shares Issued Balances as of December 31, 2022 1,795,700 11,521,412 Exercised — — Canceled — — Balances as of June 30, 2023 1,795,700 11,521,412 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Stock-Based Compensation | |
Schedule of stock-based compensation expense | Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Selling and marketing $ 896 $ 1,270 $ 1,941 $ 1,902 Product and technology 1,254 1,840 2,703 2,977 General and administrative 4,254 6,592 8,654 10,677 Total stock-based compensation expense $ 6,404 $ 9,702 $ 13,298 $ 15,556 |
Schedule of related to stock option, RSU and PRSU activity | Number of Number of Performance Number of Restricted Restricted Options Stock Units Stock Units Balances as of December 31, 2022 3,862,918 5,309,241 920,924 Granted — 5,591,534 3,135,073 Vested (1,164,592) — Exercised (4,519) — — Forfeited, canceled or expired (141,207) (547,505) — Balances as of June 30, 2023 3,717,192 9,188,678 4,055,997 |
Reinsurance (Tables)
Reinsurance (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Reinsurance | |
Schedule of effects of reinsurance on premiums written, earned, incurred losses and LAE | The effects of reinsurance on premiums written and earned for the three and six months ended June 30, 2023 and 2022, were as follows: Three Months Ended June 30, 2023 2022 Written Earned Written Earned Direct premiums $ 121,540 $ 116,397 $ 124,914 $ 93,082 Ceded premiums (67,387) (72,166) (117,926) (83,095) Net premiums $ 54,153 $ 44,231 $ 6,988 $ 9,987 Six Months Ended June 30, 2023 2022 Written Earned Written Earned Direct premiums $ 218,413 $ 231,221 $ 212,037 $ 177,400 Ceded premiums (65,121) (146,840) (178,562) (154,822) Net premiums $ 153,292 $ 84,381 $ 33,475 $ 22,578 Our 2023 third-party quota share program was placed at a reduced ceding percentage as compared to the 2022 program, which resulted in a portfolio transfer and lower ceded written premiums in the six months ended June 30, 2023. The effects of reinsurance on incurred losses and loss adjustment expense (“LAE”) for the three and six months ended June 30, 2023 and 2022, were as follows: Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Direct losses and LAE $ 137,591 $ 74,617 $ 227,606 $ 142,838 Ceded losses and LAE (66,442) (60,133) (113,598) (119,106) Net losses and LAE $ 71,149 $ 14,484 $ 114,008 $ 23,732 |
Schedule of reinsurance balances due | June 30, 2023 December 31, 2022 Ceded unearned premium $ 147,297 $ 203,157 Losses and LAE reserve 89,296 76,999 Reinsurance recoverable 29,260 18,765 Other 6,614 139 Reinsurance balance due $ 272,467 $ 299,060 |
Unpaid Losses and Loss Adjust_2
Unpaid Losses and Loss Adjustment Reserve (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Unpaid Losses and Loss Adjustment Reserve | |
Schedule of changes in the reserve balances for unpaid losses and LAE, gross of reinsurance | Reserve for unpaid losses and LAE, at December 31, 2022 $ 100,632 Reinsurance recoverables on losses and LAE (76,999) Reserve for unpaid losses and LAE reserve, net of reinsurance recoverables at December 31, 2022 23,633 Add provisions (reductions) for losses and LAE occurring in: Current year 110,624 Prior years 3,384 Net incurred losses and LAE during the current year 114,008 Deduct payments for losses and LAE occurring in: Current year (44,510) Prior years (16,718) Net claim and LAE payments during the current year (61,228) Reserve for losses and LAE, net of reinsurance recoverables, at end of period 76,413 Reinsurance recoverables on losses and LAE 89,296 Reserve for unpaid losses and LAE at June 30, 2023 $ 165,709 |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Segment Information | |
Schedule of revenue by segment | Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Vertical Software $ 34,435 $ 42,540 $ 63,062 $ 76,944 Insurance 64,330 28,375 123,072 57,538 Total revenue $ 98,765 $ 70,915 $ 186,134 $ 134,482 |
Schedule of financial information of reportable segments and reconciliations to consolidated financial information | The following table provides financial information for the two reportable segments and a reconciliation to consolidated financial information for the periods presented. Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Segment Adjusted EBITDA (Loss): Vertical Software $ 1,816 $ 5,652 $ 1,420 $ 8,536 Insurance (31,181) (5,609) (38,366) (5,394) Subtotal (29,365) 43 (36,946) 3,142 Reconciling items: Corporate and other (13,769) (15,048) (28,070) (28,503) Depreciation and amortization (6,214) (6,416) (12,229) (12,899) Non-cash stock-based compensation expense (6,404) (9,702) (13,298) (15,556) Restructuring costs (1,093) — (2,077) — Acquisition and other transaction costs (258) (357) (386) (1,322) Impairment loss on intangible assets and goodwill (55,211) — (57,232) — Loss on reinsurance contract (1) (48,244) — (48,244) — Non-cash losses and impairment of property, equipment and software (254) — (254) (70) Revaluation of contingent consideration 2,656 (1,481) 2,810 (4,686) Investment income and realized gains (1,249) (243) (2,007) (440) Non-cash bonus expense — 1,526 — — Operating loss $ (159,405) $ (31,678) $ (197,933) $ (60,334) (1) |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Net Loss Per Share | |
Schedule of earnings per share, basic and diluted | Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Numerator: Net loss used to compute net loss per share - basic and diluted: $ (86,963) $ (27,325) $ (125,703) $ (36,610) Denominator: Weighted average shares outstanding used to compute loss per share - basic and diluted: 95,731,850 97,142,163 95,472,277 96,611,294 Loss per share - basic and diluted $ (0.91) $ (0.28) $ (1.32) $ (0.38) |
Description of Business and S_4
Description of Business and Summary of Significant Accounting Policies - Description of Business (Details) | Jun. 30, 2023 company item |
Common Stock and Redeemable Convertible Preferred Stock | |
Number of Companies, service provided | 30,700 |
Minimum | |
Common Stock and Redeemable Convertible Preferred Stock | |
Number of insurance and warranty policies in force | 358,000 |
Number of Insurance Companies served | company | 20 |
Description of Business and S_5
Description of Business and Summary of Significant Accounting Policies - Concentrations (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2023 USD ($) item | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Number of commercial banks | item | 4 |
Percentage of insurance subsidiary's total insurance receivables | 39% |
Restricted cash equivalents | $ | $ 29.1 |
Cash and Cash Equivalents | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Cash in bank | $ | $ 262 |
Accounts Receivable | Customer Concentration Risk | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Number of reinsurers | item | 1 |
Revenue Benchmark | Geographic Concentration Risk | Customers in Texas | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Insurance related revenues percentage | 62% |
Revenue Benchmark | Geographic Concentration Risk | Customers in South Carolina | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Insurance related revenues percentage | 10% |
Description of Business and S_6
Description of Business and Summary of Significant Accounting Policies - Cash and cash equivalents (Details) $ in Thousands | Jun. 30, 2023 USD ($) state | Dec. 31, 2022 USD ($) state | Jun. 30, 2022 USD ($) | Dec. 31, 2021 USD ($) |
Description of Business and Summary of Significant Accounting Policies | ||||
Restricted cash pledged as collateral | $ 5,100 | |||
Restricted cash pledged against obligations to policyholders and creditors | $ 1,300 | 1,000 | ||
Restricted funds held for payment of possible warranty claims | $ 6,500 | $ 5,000 | ||
Number of states regulatory guidelines of warranty claims | state | 17 | 19 | ||
Indemnification hold back cost | $ 2,400 | $ 2,400 | ||
Cash and cash equivalents | 265,573 | 215,060 | ||
Total restricted cash | 39,277 | 13,545 | ||
Cash, cash equivalents and restricted cash | $ 304,850 | $ 228,605 | $ 282,077 | $ 324,792 |
Description of Business and S_7
Description of Business and Summary of Significant Accounting Policies - Accounts Receivable and Long term Insurance Commissions Receivable (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Movement Analysis of Deferred Policy Acquisition Costs [Roll Forward] | |||||
Allowance for uncollectible receivables | $ 0.8 | $ 0.8 | $ 0.5 | ||
Deferred policy acquisition costs | 17.9 | 17.9 | $ 8.7 | ||
Amortized deferred acquisition costs | $ 9.3 | $ 4.2 | $ 18.6 | $ 7.2 |
Description of Business and S_8
Description of Business and Summary of Significant Accounting Policies - Goodwill and Impairment (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2023 USD ($) | |
Property, Plant and Equipment [Line Items] | |
Impairment of intangible assets | $ 2 |
Impairment, Intangible Asset, Finite-Lived, Statement of Income or Comprehensive Income [Extensible Enumeration] | Goodwill and Intangible Asset Impairment |
Minimum | |
Property, Plant and Equipment [Line Items] | |
Weighted average cost of capital for impairment test | 13% |
Maximum | |
Property, Plant and Equipment [Line Items] | |
Weighted average cost of capital for impairment test | 18% |
Description of Business and S_9
Description of Business and Summary of Significant Accounting Policies - Other Insurance Liabilities, Current (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Description of Business and Summary of Significant Accounting Policies | ||
Ceded reinsurance premiums payable | $ 77,051 | $ 29,204 |
Commissions payable, reinsurers and agents | 6,650 | 21,045 |
Advance premiums | 10,383 | 8,668 |
Funds held under reinsurance treaty | 1,715 | 1,851 |
General and accrued expenses payable | 17,050 | 942 |
Other insurance liabilities, current | $ 112,849 | $ 61,710 |
Description of Business and _10
Description of Business and Summary of Significant Accounting Policies - Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Income tax expense (benefit) | $ 29 | $ 468 | $ (82) | $ 290 |
Effective income tax rate | 1.70% | 0.10% | (0.80%) | |
U.S. federal statutory tax rate | 21% | 21% | ||
Maximum | ||||
Income tax expense (benefit) | $ 100 | |||
Effective income tax rate | 0.10% |
Revenue - Disaggregation of Rev
Revenue - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 98,765 | $ 70,915 | $ 186,134 | $ 134,482 |
Vertical Software | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 34,435 | 42,540 | 63,062 | 76,944 |
Insurance | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 64,330 | 28,375 | 123,072 | 57,538 |
Software and service subscriptions | Vertical Software | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 17,524 | 19,847 | 34,333 | 37,078 |
Move-related transactions | Vertical Software | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 12,246 | 17,458 | 20,015 | 29,586 |
Post-move transactions | Vertical Software | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 4,665 | 5,235 | 8,714 | 10,280 |
Insurance and warranty premiums, commissions and policy fees | Insurance | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 64,330 | 28,375 | 123,072 | 57,538 |
Revenue Not from Contract with Customer | $ 54,800 | $ 18,200 | $ 105,000 | $ 39,000 |
Revenue - Contract Assets (Deta
Revenue - Contract Assets (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2023 USD ($) | |
Change in Contract with Customer, Asset [Abstract] | |
Balance at beginning of the year | $ 15,521 |
Estimated lifetime value of commissions on insurance policies sold by carriers | 3,792 |
Cash receipts | (2,285) |
Balance at end of the year | 17,028 |
Long-term accounts receivable | 13,500 |
Accounts Receivable Current | |
Change in Contract with Customer, Asset [Abstract] | |
Balance at end of the year | $ 3,500 |
Revenue - Contract Liabilities
Revenue - Contract Liabilities - Activity Impacting Deferred Revenue (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2023 USD ($) | |
Vertical Software | |
Change in Contract with Customer, Liability | |
Beginning balance | $ 3,874 |
Revenue recognized | (8,613) |
Additional amounts deferred | 8,695 |
Ending balance | $ 3,956 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-07-01 | |
Change in Contract with Customer, Liability | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 12 months |
Revenue - Contract Liabilitie_2
Revenue - Contract Liabilities - Warranty Revenue and Related Balance Sheet Disclosures (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Disaggregation of Revenue [Line Items] | |||||
Current refundable customer deposits related to outstanding extended service contracts | $ 19.6 | $ 19.6 | $ 20 | ||
Refundable Customer Deposits Related To Amounts Received In Advance Of Warranty Services Provided, Current | 3.6 | 3.6 | 4.4 | ||
Refundable Customer Deposits Related To Amounts Received In Advance Of Warranty Services Provided, Noncurrent | 3 | 3 | $ 1.9 | ||
Warranty Claims Expense | $ 1.3 | $ 0.3 | $ 2.5 | $ 0.7 |
Revenue - Contract Liabilitie_3
Revenue - Contract Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Disaggregation of Revenue [Line Items] | ||
Deferred revenue | $ 256,617 | $ 270,690 |
Insurance | ||
Disaggregation of Revenue [Line Items] | ||
Deferred revenue | $ 252,700 | $ 266,800 |
Investments - Investment Income
Investments - Investment Income, Realized and Unrealized Gains and Losses on Investments (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Investments | ||||
Investment income, net of investment expenses | $ 1,278 | $ 313 | $ 2,103 | $ 578 |
Realized gains on investments | 7 | 4 | 11 | 6 |
Realized losses on investments | (36) | (74) | (107) | (144) |
Investment income and realized gains (losses), net of investment expenses | $ 1,249 | $ 243 | $ 2,007 | $ 440 |
Investments - Amortized Cost, F
Investments - Amortized Cost, Fair Value and Unrealized Gains and (Losses) (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Net Investment Income [Line Items] | ||
Amortized Cost | $ 98,806 | $ 97,812 |
Gross Unrealized, Gains | 63 | 56 |
Gross Unrealized, Losses | (6,139) | (6,227) |
Fair value | 92,730 | 91,641 |
U.S. Treasuries | ||
Net Investment Income [Line Items] | ||
Amortized Cost | 28,407 | 35,637 |
Gross Unrealized, Gains | 1 | 5 |
Gross Unrealized, Losses | (361) | (320) |
Fair value | 28,047 | 35,322 |
Obligations of states, municipalities and political subdivisions | ||
Net Investment Income [Line Items] | ||
Amortized Cost | 11,846 | 11,549 |
Gross Unrealized, Gains | 4 | 2 |
Gross Unrealized, Losses | (1,178) | (1,326) |
Fair value | 10,672 | 10,225 |
Corporate bonds. | ||
Net Investment Income [Line Items] | ||
Amortized Cost | 35,236 | 31,032 |
Gross Unrealized, Gains | 38 | 32 |
Gross Unrealized, Losses | (2,879) | (2,837) |
Fair value | 32,395 | 28,227 |
Residential and commercial mortgage-backed securities | ||
Net Investment Income [Line Items] | ||
Amortized Cost | 17,607 | 12,790 |
Gross Unrealized, Gains | 16 | 11 |
Gross Unrealized, Losses | (1,328) | (1,268) |
Fair value | 16,295 | 11,533 |
Other loan-backed and structured securities | ||
Net Investment Income [Line Items] | ||
Amortized Cost | 5,710 | 6,804 |
Gross Unrealized, Gains | 4 | 6 |
Gross Unrealized, Losses | (393) | (476) |
Fair value | $ 5,321 | $ 6,334 |
Investments - Amortized Cost an
Investments - Amortized Cost and Fair Value of Securities by Contractual Maturity (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Amortized Cost | ||
Due in one year or less | $ 25,920 | |
Due after one year through five years | 19,481 | |
Due after five years through ten years | 25,245 | |
Due after ten years | 4,843 | |
Amortized Cost | 98,806 | $ 97,812 |
Fair Value | ||
Due in one year or less | 25,802 | |
Due after one year through five years | 17,895 | |
Due after five years through ten years | 23,099 | |
Due after ten years | 4,318 | |
Fair value | 92,730 | 91,641 |
Residential and commercial mortgage-backed securities | ||
Amortized Cost | ||
Without single maturity date | 17,607 | |
Amortized Cost | 17,607 | 12,790 |
Fair Value | ||
Without single maturity date | 16,295 | |
Fair value | 16,295 | 11,533 |
Other loan-backed and structured securities | ||
Amortized Cost | ||
Without single maturity date | 5,710 | |
Amortized Cost | 5,710 | 6,804 |
Fair Value | ||
Without single maturity date | 5,321 | |
Fair value | $ 5,321 | $ 6,334 |
Investments - Securities with G
Investments - Securities with Gross Unrealized Loss Position (Details) $ in Thousands | Jun. 30, 2023 USD ($) item security | Dec. 31, 2022 USD ($) security |
Net Investment Income [Line Items] | ||
Less Than Twelve Months, Gross Unrealized Loss | $ (1,192) | $ (3,725) |
Less Than Twelve Months, Fair Value | 49,510 | 44,735 |
Twelve Months or Greater, Gross Unrealized Loss | (4,947) | (2,502) |
Twelve Months or Greater, Fair Value | 39,418 | 29,702 |
Total, Gross Unrealized Loss | (6,139) | (6,227) |
Total, Fair Value | $ 88,928 | $ 74,437 |
Number of securities in an unrealized loss position | security | 470 | 483 |
Unrealized loss position for 12 months or longer | item | 380 | |
U.S. Treasuries | ||
Net Investment Income [Line Items] | ||
Less Than Twelve Months, Gross Unrealized Loss | $ (182) | $ (127) |
Less Than Twelve Months, Fair Value | 25,500 | 10,748 |
Twelve Months or Greater, Gross Unrealized Loss | (179) | (193) |
Twelve Months or Greater, Fair Value | 2,232 | 9,824 |
Total, Gross Unrealized Loss | (361) | (320) |
Total, Fair Value | 27,732 | 20,572 |
Obligations of states, municipalities and political subdivisions | ||
Net Investment Income [Line Items] | ||
Less Than Twelve Months, Gross Unrealized Loss | (79) | (929) |
Less Than Twelve Months, Fair Value | 2,060 | 6,258 |
Twelve Months or Greater, Gross Unrealized Loss | (1,099) | (397) |
Twelve Months or Greater, Fair Value | 8,145 | 3,504 |
Total, Gross Unrealized Loss | (1,178) | (1,326) |
Total, Fair Value | 10,205 | 9,762 |
Corporate Bonds | ||
Net Investment Income [Line Items] | ||
Less Than Twelve Months, Gross Unrealized Loss | (530) | (1,623) |
Less Than Twelve Months, Fair Value | 12,546 | 16,531 |
Twelve Months or Greater, Gross Unrealized Loss | (2,349) | (1,214) |
Twelve Months or Greater, Fair Value | 18,045 | 10,328 |
Total, Gross Unrealized Loss | (2,879) | (2,837) |
Total, Fair Value | 30,591 | 26,859 |
Residential and commercial mortgage-backed securities | ||
Net Investment Income [Line Items] | ||
Less Than Twelve Months, Gross Unrealized Loss | (292) | (687) |
Less Than Twelve Months, Fair Value | 8,365 | 6,565 |
Twelve Months or Greater, Gross Unrealized Loss | (1,036) | (581) |
Twelve Months or Greater, Fair Value | 7,319 | 4,952 |
Total, Gross Unrealized Loss | (1,328) | (1,268) |
Total, Fair Value | 15,684 | 11,517 |
Other loan-backed and structured securities | ||
Net Investment Income [Line Items] | ||
Less Than Twelve Months, Gross Unrealized Loss | (109) | (359) |
Less Than Twelve Months, Fair Value | 1,039 | 4,633 |
Twelve Months or Greater, Gross Unrealized Loss | (284) | (117) |
Twelve Months or Greater, Fair Value | 3,677 | 1,094 |
Total, Gross Unrealized Loss | (393) | (476) |
Total, Fair Value | $ 4,716 | $ 5,727 |
Fair Value - Schedule of Fair V
Fair Value - Schedule of Fair Value Measurements of Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities, fair value disclosure | $ 92,730 | $ 91,641 |
Monte Carlo simulation method | Contingent consideration - earnout | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities, fair value disclosure | 100 | |
Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 166,803 | 98,260 |
Liabilities, fair value disclosure | 48,539 | 25,297 |
Recurring | U.S. Treasuries | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities, fair value disclosure | 28,047 | 35,322 |
Recurring | Obligations of states, municipalities and political subdivisions | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities, fair value disclosure | 10,672 | 10,225 |
Recurring | Corporate Bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities, fair value disclosure | 32,395 | 28,227 |
Recurring | Residential and commercial mortgage-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities, fair value disclosure | 16,295 | 11,533 |
Recurring | Other loan-backed and structured securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities, fair value disclosure | 5,321 | 6,334 |
Recurring | Contingently issuable shares in connection with acquisitions | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities, fair value disclosure | 21,328 | 24,546 |
Recurring | Contingent consideration - earnout | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities, fair value disclosure | 44 | 44 |
Recurring | Private warrant liability | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities, fair value disclosure | 347 | 707 |
Recurring | Embedded derivatives | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities, fair value disclosure | 26,820 | |
Recurring | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 102,120 | 41,941 |
Recurring | Level 1 | U.S. Treasuries | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities, fair value disclosure | 28,047 | 35,322 |
Recurring | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 64,683 | 56,319 |
Recurring | Level 2 | Obligations of states, municipalities and political subdivisions | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities, fair value disclosure | 10,672 | 10,225 |
Recurring | Level 2 | Corporate Bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities, fair value disclosure | 32,395 | 28,227 |
Recurring | Level 2 | Residential and commercial mortgage-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities, fair value disclosure | 16,295 | 11,533 |
Recurring | Level 2 | Other loan-backed and structured securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities, fair value disclosure | 5,321 | 6,334 |
Recurring | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities, fair value disclosure | 48,539 | 25,297 |
Recurring | Level 3 | Contingently issuable shares in connection with acquisitions | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities, fair value disclosure | 21,328 | 24,546 |
Recurring | Level 3 | Contingent consideration - earnout | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities, fair value disclosure | 44 | 44 |
Recurring | Level 3 | Private warrant liability | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities, fair value disclosure | 347 | 707 |
Recurring | Level 3 | Embedded derivatives | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities, fair value disclosure | 26,820 | |
Recurring | Money market mutual funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 74,073 | 6,619 |
Recurring | Money market mutual funds | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | $ 74,073 | $ 6,619 |
Fair Value - Additional Informa
Fair Value - Additional Information (Details) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2023 USD ($) $ / shares | Mar. 17, 2023 USD ($) | Dec. 31, 2022 USD ($) $ / shares | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Assets, level 1 to 2 transfer | $ 0 | ||
Assets, level 2 to 1 transfer | 0 | ||
Decrease in stock price | 166,600 | ||
Repurchase option | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Minimum principal remains outstanding on June 14, 2026 for repurchase | $ 30,000 | ||
Percentage of repurchase price on principal amount of the notes to be repurchased, plus accrued interest | 106.50% | ||
Fundamental change option | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Percentage of repurchase price on principal amount of the notes to be repurchased, plus accrued interest | 105.25% | ||
Asset sale repurchase option | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Percentage of repurchase price on principal amount of the notes to be repurchased, plus accrued interest | 100% | ||
Percentage of aggregate net cash sales proceeds applied for repurchase | 50% | ||
Minimum amount of aggregate net cash sales proceeds required for repurchase | $ 20,000 | ||
Convertible senior notes, due 2026 | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Convertible senior notes, fair value | 72,000 | $ 238,600 | |
Convertible senior notes, due 2028 | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Convertible senior notes, fair value | $ 216,700 | ||
Current stock price | Private warrant liability | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Warrants, measurement input | $ / shares | 1.38 | 1.88 | |
Exercise Price | Private warrant liability | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Warrants, measurement input | $ / shares | 11.50 | 11.50 | |
Volatility | Private warrant liability | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Warrants, measurement input | 0.95 | 0.90 | |
Expected term | Private warrant liability | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Warrants term | 2 years 5 months 23 days | 2 years 11 months 23 days | |
Probabilities of a repurchase | Minimum | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Measurement input (in percent) | 0.01 | ||
Probabilities of a repurchase | Maximum | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Measurement input (in percent) | 0.35 | ||
Fundamental change | Minimum | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Measurement input (in percent) | 0.01 | ||
Fundamental change | Maximum | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Measurement input (in percent) | 0.35 | ||
Qualifying asset sales | Minimum | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Measurement input (in percent) | 0.01 | ||
Qualifying asset sales | Maximum | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Measurement input (in percent) | 0.35 | ||
Residential Warranty Services | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Business combination contingent consideration | $ 2,100 | ||
Discounted cashflows method | Residential Warranty Services | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Business combination contingent consideration | $ 9,000 | $ 9,000 | |
Discounted cashflows method | Residential Warranty Services | Discount rate | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Business combination contingent consideration, measurement input | 0.16 | 0.17 | |
Monte Carlo simulation method | Contingent consideration - earnout | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Liabilities, fair value disclosure | $ 100 | ||
Monte Carlo simulation method | Current stock price | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Contingent consideration earnout, measurement input | $ / shares | 1.38 | 1.88 | |
Monte Carlo simulation method | Exercise Price | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Contingent consideration earnout, measurement input | $ / shares | 22 | 22 | |
Monte Carlo simulation method | Volatility | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Contingent consideration earnout, measurement input | 1 | 1 | |
Monte Carlo simulation method | Forfeiture Rate | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Contingent consideration earnout, measurement input | 0.15 | 0.15 | |
Monte Carlo simulation method | Floify | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Business combination contingent consideration | $ 15,100 | $ 15,500 | |
Monte Carlo simulation method | Floify | Discount rate | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Business combination contingent consideration, measurement input | 0.144 | 0.103 | |
Monte Carlo simulation method | Floify | Current stock price | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Business combination contingent consideration, measurement input | $ / shares | 1.38 | 1.88 | |
Monte Carlo simulation method | Floify | Strike price | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Business combination contingent consideration, measurement input | $ / shares | 36 | 36 | |
Monte Carlo simulation method | Floify | Volatility | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Business combination contingent consideration, measurement input | 1 | 0.95 |
Fair Value - Level 3 (Details)
Fair Value - Level 3 (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Contingent consideration - earnout | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Beginning balance | $ 44 | $ 13,866 |
Change in fair value, loss (gain) included in net loss | (13,766) | |
Ending balance | 44 | 100 |
Contingently issuable shares in connection with acquisitions | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Beginning balance | 24,546 | 9,617 |
Additions | 15,555 | |
Settlements | (408) | |
Change in fair value, loss (gain) included in net loss | (2,810) | 4,686 |
Ending balance | 21,328 | 29,858 |
Embedded derivatives | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Additions | 23,870 | |
Change in fair value, loss (gain) included in net loss | 2,950 | |
Ending balance | 26,820 | |
Private warrant liability | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Beginning balance | 707 | 15,193 |
Change in fair value, loss (gain) included in net loss | (360) | (14,267) |
Ending balance | $ 347 | $ 926 |
Property, Equipment, and Soft_3
Property, Equipment, and Software (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Property, Plant and Equipment [Line Items] | |||||
Property, equipment, and software, Gross | $ 31,169 | $ 31,169 | $ 28,750 | ||
Less: Accumulated depreciation and amortization | (16,401) | (16,401) | (16,510) | ||
Property, equipment, and software, net | 14,768 | 14,768 | 12,240 | ||
Depreciation and amortization | 6,214 | $ 6,416 | 12,229 | $ 12,899 | |
Software and computer equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, equipment, and software, Gross | 8,266 | 8,266 | 8,326 | ||
Furniture, office equipment and other | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, equipment, and software, Gross | 1,708 | 1,708 | 2,118 | ||
Internally developed software | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, equipment, and software, Gross | 20,017 | 20,017 | 17,128 | ||
Leasehold improvements | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, equipment, and software, Gross | 1,178 | 1,178 | $ 1,178 | ||
Property equipment software | |||||
Property, Plant and Equipment [Line Items] | |||||
Depreciation and amortization | $ 1,200 | $ 1,000 | $ 2,400 | $ 2,000 |
Intangible Assets and Goodwil_2
Intangible Assets and Goodwill (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Intangible Assets and Goodwill | |||||
Accumulated Amortization And Impairment | $ (47,873) | $ (47,873) | |||
Accumulated Amortization | $ (40,191) | ||||
Intangible assets, Gross | 144,699 | 144,699 | 148,446 | ||
Intangible assets, net | 96,826 | 96,826 | 108,255 | ||
Aggregate amortization expense | 4,900 | $ 5,400 | 9,800 | $ 10,900 | |
Impairment of intangible assets | 2,000 | ||||
Insurance licenses | |||||
Intangible Assets and Goodwill | |||||
Indefinite-lived intangible assets | 4,960 | 4,960 | 4,960 | ||
Customer relationships | |||||
Intangible Assets and Goodwill | |||||
Finite lived Intangible Assets, gross | 69,505 | 69,505 | 69,730 | ||
Accumulated Amortization And Impairment | (19,494) | (19,494) | |||
Accumulated Amortization | (15,079) | ||||
Finite lived Intangible Assets, Net | $ 50,011 | $ 50,011 | $ 54,651 | ||
Weighted Average Useful Life (in years) | 9 years | 9 years | 9 years | ||
Acquired technology | |||||
Intangible Assets and Goodwill | |||||
Finite lived Intangible Assets, gross | $ 36,041 | $ 36,041 | $ 37,932 | ||
Accumulated Amortization And Impairment | (19,175) | (19,175) | |||
Accumulated Amortization | (16,468) | ||||
Finite lived Intangible Assets, Net | $ 16,866 | $ 16,866 | $ 21,464 | ||
Weighted Average Useful Life (in years) | 5 years | 5 years | 5 years | ||
Trademarks and tradenames | |||||
Intangible Assets and Goodwill | |||||
Finite lived Intangible Assets, gross | $ 23,443 | $ 23,443 | $ 25,071 | ||
Accumulated Amortization And Impairment | (5,609) | (5,609) | |||
Accumulated Amortization | (5,724) | ||||
Finite lived Intangible Assets, Net | $ 17,834 | $ 17,834 | $ 19,347 | ||
Weighted Average Useful Life (in years) | 10 years | 10 years | 10 years | ||
Non-compete agreements | |||||
Intangible Assets and Goodwill | |||||
Finite lived Intangible Assets, gross | $ 616 | $ 616 | $ 619 | ||
Accumulated Amortization And Impairment | (431) | (431) | |||
Accumulated Amortization | (407) | ||||
Finite lived Intangible Assets, Net | $ 185 | $ 185 | $ 212 | ||
Weighted Average Useful Life (in years) | 3 years | 3 years | 3 years | ||
Value of business acquired | |||||
Intangible Assets and Goodwill | |||||
Finite lived Intangible Assets, gross | $ 400 | $ 400 | $ 400 | ||
Accumulated Amortization And Impairment | $ (400) | $ (400) | |||
Accumulated Amortization | $ (400) | ||||
Weighted Average Useful Life (in years) | 1 year | 1 year | 1 year | ||
Renewal rights | |||||
Intangible Assets and Goodwill | |||||
Finite lived Intangible Assets, gross | $ 9,734 | $ 9,734 | $ 9,734 | ||
Accumulated Amortization And Impairment | (2,764) | (2,764) | |||
Accumulated Amortization | (2,113) | ||||
Finite lived Intangible Assets, Net | $ 6,970 | $ 6,970 | $ 7,621 | ||
Weighted Average Useful Life (in years) | 6 years | 6 years | 6 years |
Intangible Assets and Goodwil_3
Intangible Assets and Goodwill - Changes in Carrying Amount of Goodwill (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Dec. 31, 2022 | |
Goodwill [Roll Forward] | ||
Goodwill, Beginning Balance | $ 244,697 | |
Acquisitions | 2,421 | |
Impairment loss | (55,211) | |
Goodwill, Ending Balance | 191,907 | |
Accumulated impairment of goodwill | $ 99,000 | $ 43,800 |
Intangible Assets and Goodwil_4
Intangible Assets and Goodwill - Additional Information (Details) | Jun. 30, 2023 | Mar. 31, 2023 |
Insurance segment | Maximum | ||
Goodwill [Line Items] | ||
Threshold percentage fair value | 10% | |
Vertical Software | ||
Goodwill [Line Items] | ||
Threshold percentage fair value | 10% | |
Vertical Software | Maximum | ||
Goodwill [Line Items] | ||
Threshold percentage fair value | 5% |
Debt (Details)
Debt (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Debt | ||
Principal | $ 563,955 | $ 451,120 |
Unaccreted Discount | (122,935) | (847) |
Debt Issuance Costs | (8,616) | (8,508) |
Carrying Value | 432,404 | 441,765 |
Convertible senior notes, due 2026 | ||
Debt | ||
Principal | 225,000 | 425,000 |
Debt Issuance Costs | (3,909) | (8,508) |
Carrying Value | 221,091 | 416,492 |
Convertible senior notes, due 2028 | ||
Debt | ||
Principal | 333,334 | |
Unaccreted Discount | (122,877) | |
Debt Issuance Costs | (4,707) | |
Carrying Value | 205,750 | |
Advance funding arrangement | ||
Debt | ||
Principal | 5,321 | 15,670 |
Unaccreted Discount | (32) | (760) |
Carrying Value | 5,289 | 14,910 |
Term loan facility, due 2029 | ||
Debt | ||
Principal | 10,000 | |
Carrying Value | 10,000 | |
Other notes | ||
Debt | ||
Principal | 300 | 450 |
Unaccreted Discount | (26) | (87) |
Carrying Value | $ 274 | $ 363 |
Debt - Convertible Senior Notes
Debt - Convertible Senior Notes (Details) | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||
Apr. 30, 2023 USD ($) $ / shares | Jun. 30, 2023 USD ($) | Jun. 30, 2022 USD ($) | Jun. 30, 2023 USD ($) | Jun. 30, 2022 USD ($) | |
Debt | |||||
Gain on extinguishment of debt | $ 81,354,000 | $ 81,354,000 | |||
Convertible senior notes, due 2026 | |||||
Debt | |||||
Interest rate (stated) | 0.75% | 0.75% | |||
Interest expense | $ 900,000 | $ 1,400,000 | $ 2,200,000 | $ 2,700,000 | |
Debt Instrument, repurchased face amount | $ 200,000,000 | ||||
Effective interest rate | 1.30% | 1.30% | |||
Senior Secured Convertible Notes 6.75% due 2028 | |||||
Debt | |||||
Interest rate (stated) | 6.75% | ||||
Interest expense | $ 7,300,000 | $ 7,300,000 | |||
Amount borrowed | $ 333,000,000 | ||||
Gain on extinguishment of debt | $ 81,400,000 | ||||
Conversion ratio | 39.9956 | ||||
Principal amount denomination for conversion | $ 1,000 | ||||
Conversion price (per share) | $ / shares | $ 25 | ||||
Issue price ( as percentage) | 95% | ||||
Effective interest rate | 17.90% | 17.90% | |||
Contractual interest expense | $ 4,400,000 | $ 4,400,000 | |||
Amortization of debt issuance costs and discount | $ 2,900,000 | $ 2,900,000 | |||
Term Loan Facility, Due 2029 | |||||
Debt | |||||
Repayment amount | $ 9,700,000 |
Debt - Advance Funding Arrangem
Debt - Advance Funding Arrangement (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Debt Instrument [Line Items] | ||||
Interest expense | $ 8,775 | $ 1,925 | $ 10,963 | $ 4,352 |
Advance Funding Arrangement | ||||
Debt Instrument [Line Items] | ||||
Interest rate (stated) | 14% | 14% | ||
Interest expense | $ 400 | $ 500 | $ 900 | $ 1,600 |
Equity and Warrants - Common Sh
Equity and Warrants - Common Shares Outstanding and Common Stock Equivalents (Details) - $ / shares | Sep. 16, 2021 | Jun. 30, 2023 | Dec. 31, 2022 |
Class of Stock [Line Items] | |||
Issued and outstanding common shares | 96,118,956 | 96,405,838 | |
Earnout shares | 2,050,000 | 2,050,000 | |
Total common shares issued and outstanding | 98,168,956 | 98,455,838 | |
Common shares reserved for future issuance: | |||
Total shares of common stock outstanding and reserved for future issuance | 161,272,617 | 149,164,054 | |
Convertible senior notes, due 2026 | |||
Common shares reserved for future issuance: | |||
Total shares of common stock outstanding and reserved for future issuance | 8,999,010 | 16,998,130 | |
Capped call transactions, strike price (per unit) | $ 25 | ||
Capped call transactions, authorized shares | 16,998,130 | ||
Convertible senior notes, due 2028 | |||
Common shares reserved for future issuance: | |||
Total shares of common stock outstanding and reserved for future issuance | 13,331,893 | ||
Contingently issuable shares in connection with acquisitions | |||
Common shares reserved for future issuance: | |||
Shares reserved for future issuance | 13,969,860 | 10,631,558 | |
Restricted stock units | |||
Common shares reserved for future issuance: | |||
Total shares of common stock outstanding and reserved for future issuance | 13,244,675 | 6,230,165 | |
2020 Stock Incentive Plan | |||
Common shares reserved for future issuance: | |||
Total shares of common stock outstanding and reserved for future issuance | 8,045,331 | 11,189,745 | |
Private Warrants | |||
Common shares reserved for future issuance: | |||
Total shares of common stock outstanding and reserved for future issuance | 1,795,700 | 1,795,700 | |
Common stock warrants | |||
Common shares reserved for future issuance: | |||
Total shares of common stock outstanding and reserved for future issuance | 3,717,192 | 3,862,918 |
Equity and Warrants - Repurchas
Equity and Warrants - Repurchase of shares, Warrants (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2023 | Apr. 30, 2023 | Oct. 31, 2022 | |
Class of Stock [Line Items] | |||
Value of shares authorized to repurchase | $ 15,000 | ||
Repurchases of common stock | $ 3,101 | ||
Repurchase and retirement of common stock (in shares) | 1,396,158 | ||
Proceeds from issuance of common stock | $ 191 | ||
Accumulated Deficit | |||
Class of Stock [Line Items] | |||
Repurchases of common stock | $ 3,101 | ||
Convertible senior notes, due 2026 | |||
Class of Stock [Line Items] | |||
Debt Instrument, repurchased face amount | $ 200,000 |
Equity and Warrants - Public an
Equity and Warrants - Public and private warrant activity (Details) | 6 Months Ended |
Jun. 30, 2023 shares | |
Equity and Warrants | |
Beginning balance | 1,795,700 |
Exercised | |
Canceled | |
Ending balance | 1,795,700 |
Beginning balance | 11,521,412 |
Ending Balance | 11,521,412 |
Stock-Based Compensation - Plan
Stock-Based Compensation - Plan (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Stock-Based Compensation | ||||
Stock based compensation expense | $ 6,404 | $ 9,702 | $ 13,298 | $ 15,556 |
Selling and marketing | ||||
Stock-Based Compensation | ||||
Stock based compensation expense | 896 | 1,270 | 1,941 | 1,902 |
Product and technology | ||||
Stock-Based Compensation | ||||
Stock based compensation expense | 1,254 | 1,840 | 2,703 | 2,977 |
General and administrative | ||||
Stock-Based Compensation | ||||
Stock based compensation expense | $ 4,254 | $ 6,592 | $ 8,654 | $ 10,677 |
Stock-Based Compensation - RSU
Stock-Based Compensation - RSU and PRSU Activity (Details) | 6 Months Ended |
Jun. 30, 2023 shares | |
Employee Stock Option [Member] | |
Number of Options Outstanding | |
Beginning balance | 3,862,918 |
Exercised | (4,519) |
Forfeited, canceled or expired | (141,207) |
Ending balance | 3,717,192 |
Restricted stock units | |
Number of Restricted Stock Awards | |
Beginning Balance | 5,309,241 |
Granted | 5,591,534 |
Vested | (1,164,592) |
Forfeited, canceled or expired | (547,505) |
Ending Balance | 9,188,678 |
Performance restricted stock units | |
Number of Restricted Stock Awards | |
Beginning Balance | 920,924 |
Granted | 3,135,073 |
Ending Balance | 4,055,997 |
Reinsurance - Additional inform
Reinsurance - Additional information (Details) $ in Millions | 6 Months Ended | |
Apr. 01, 2023 USD ($) item | Jun. 30, 2023 item | |
Reinsurance Quota Share Program | ||
Reinsurance Retention Policy [Line Items] | ||
Number of placements for reinsurance programs | item | 3 | |
Reinsurance Quota Share Program | South Carolina | ||
Reinsurance Retention Policy [Line Items] | ||
Reinsured risk percentage | 7% | |
Reinsurance Quota Share Program | Texas | ||
Reinsurance Retention Policy [Line Items] | ||
Reinsured risk percentage | 42% | |
Reinsurance Quota Share Program | Combined Program | ||
Reinsurance Retention Policy [Line Items] | ||
Reinsured risk percentage | 5% | |
Reinsurance Quota Share Program | Core Program | ||
Reinsurance Retention Policy [Line Items] | ||
Reinsured risk percentage | 49.50% | |
Reinsurance Quota Share Program | Core Locations outside of Texas | ||
Reinsurance Retention Policy [Line Items] | ||
Reinsured risk percentage | 48% | |
Reinsurance Property Catastrophe Treaties | ||
Reinsurance Retention Policy [Line Items] | ||
Number of retention layers for reinsurance policy | item | 5 | 4 |
Amount retained | $ | $ 8 | |
Excess amount retained | $ | $ 440 |
Reinsurance - Effects of reinsu
Reinsurance - Effects of reinsurance on premiums written and earned (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Reinsurance | ||||
Direct premiums, written | $ 121,540 | $ 124,914 | $ 218,413 | $ 212,037 |
Ceded premiums, written | (67,387) | (117,926) | (65,121) | (178,562) |
Net premiums, written | 54,153 | 6,988 | 153,292 | 33,475 |
Direct premiums, earned | 116,397 | 93,082 | 231,221 | 177,400 |
Ceded premiums, earned | (72,166) | (83,095) | (146,840) | (154,822) |
Net premiums, earned | $ 44,231 | $ 9,987 | $ 84,381 | $ 22,578 |
Reinsurance - Effects of rein_2
Reinsurance - Effects of reinsurance on incurred losses and LAE (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Reinsurance | ||||
Direct losses and LAE | $ 137,591 | $ 74,617 | $ 227,606 | $ 142,838 |
Ceded losses and LAE | (66,442) | (60,133) | (113,598) | (119,106) |
Net losses and LAE | $ 71,149 | $ 14,484 | $ 114,008 | $ 23,732 |
Reinsurance - Detail of reinsur
Reinsurance - Detail of reinsurance balances due (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Reinsurance balances due: | ||
Ceded unearned premium | $ 147,297 | $ 203,157 |
Losses and LAE reserve | 89,296 | 76,999 |
Reinsurance recoverable | 29,260 | 18,765 |
Other | 6,614 | 139 |
Reinsurance balance due | $ 272,467 | $ 299,060 |
Unpaid Losses and Loss Adjust_3
Unpaid Losses and Loss Adjustment Reserve - Unpaid Losses and LAE Gross (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Dec. 31, 2022 | |
Unpaid Losses and Loss Adjustment Reserve | ||
Reserve for unpaid losses and LAE | $ 100,632 | |
Reinsurance recoverable on losses and LAE | (89,296) | $ (76,999) |
Reserve for unpaid losses and LAE reserve, net of reinsurance recoverables | 23,633 | |
Add provisions (reductions) for losses and LAE occurring in: | ||
Current year | 110,624 | |
Prior years | 3,384 | |
Net incurred losses and LAE during the current year | 114,008 | |
Deduct payments for losses and LAE occurring in: | ||
Current year | (44,510) | |
Prior years | (16,718) | |
Net claim and LAE payments during the current year | (61,228) | |
Reserve for unpaid losses and LAE, net of reinsurance recoverable, at end of period | 76,413 | |
Reinsurance recoverable on losses and LAE | 89,296 | |
Reserve for unpaid losses and LAE | $ 165,709 |
Business Combinations (Details)
Business Combinations (Details) - USD ($) $ in Millions | Jun. 30, 2023 | Mar. 17, 2023 | Dec. 31, 2022 |
General and administrative | |||
Business Acquisition [Line Items] | |||
Aggregate transaction costs | $ 0.1 | ||
Customer relationships | |||
Business Acquisition [Line Items] | |||
Estimated Useful Life (in years) | 9 years | 9 years | |
Residential Warranty Services | |||
Business Acquisition [Line Items] | |||
Contingent consideration | $ 2.1 | ||
Cash and current assets | 0.2 | ||
Residential Warranty Services | Customer relationships | |||
Business Acquisition [Line Items] | |||
Intangible assets | $ 0.2 | ||
Estimated Useful Life (in years) | 3 years |
Segment Information - Revenue (
Segment Information - Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Segment Reporting Information [Line Items] | ||||
Total revenue | $ 98,765 | $ 70,915 | $ 186,134 | $ 134,482 |
Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue | 98,765 | 70,915 | 186,134 | 134,482 |
Vertical Software | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue | 34,435 | 42,540 | 63,062 | 76,944 |
Vertical Software | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue | 34,435 | 42,540 | 63,062 | 76,944 |
Insurance | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue | 64,330 | 28,375 | 123,072 | 57,538 |
Insurance | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue | $ 64,330 | $ 28,375 | $ 123,072 | $ 57,538 |
Segment Information - Consolida
Segment Information - Consolidated Financial Information (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 USD ($) | Jun. 30, 2022 USD ($) | Jun. 30, 2023 USD ($) segment | Jun. 30, 2022 USD ($) | |
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Number of reportable segments | segment | 2 | |||
Total segment adjusted EBITDA (loss) | $ (29,365) | $ 43 | $ (36,946) | $ 3,142 |
Reconciling items: | ||||
Corporate and other | (13,769) | (15,048) | (28,070) | (28,503) |
Depreciation and amortization | (6,214) | (6,416) | (12,229) | (12,899) |
Non-cash stock-based compensation expense | (6,404) | (9,702) | (13,298) | (15,556) |
Restructuring costs | (1,093) | (2,077) | ||
Acquisition and other transaction costs | (258) | (357) | (386) | (1,322) |
Impairment loss on intangible assets and goodwill | (55,211) | (57,232) | ||
Loss on reinsurance contract | (48,244) | (48,244) | ||
Non-cash losses and impairment of property, equipment and software | (254) | (254) | (70) | |
Revaluation of contingent consideration | 2,656 | (1,481) | 2,810 | (4,686) |
Investment income and realized gains | (1,249) | (243) | (2,007) | (440) |
Non-cash bonus expense | 1,526 | |||
Operating loss | (159,405) | (31,678) | (197,933) | (60,334) |
Vertical Software | Operating Segments | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Total segment adjusted EBITDA (loss) | 1,816 | 5,652 | 1,420 | 8,536 |
Insurance | Operating Segments | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Total segment adjusted EBITDA (loss) | $ (31,181) | $ (5,609) | $ (38,366) | $ (5,394) |
Net Loss Per Share (Details)
Net Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Numerator: | ||||
Net loss used to compute net loss per share - basic | $ (86,963) | $ (27,325) | $ (125,703) | $ (36,610) |
Net loss used to compute net loss per share - diluted | $ (86,963) | $ (27,325) | $ (125,703) | $ (36,610) |
Denominator: | ||||
Weighted average shares outstanding used to compute loss per share - basic | 95,731,850 | 97,142,163 | 95,472,277 | 96,611,294 |
Weighted average shares outstanding used to compute loss per share - diluted | 95,731,850 | 97,142,163 | 95,472,277 | 96,611,294 |
Loss per share - basic | $ (0.91) | $ (0.28) | $ (1.32) | $ (0.38) |
Loss per share - diluted | $ (0.91) | $ (0.28) | $ (1.32) | $ (0.38) |
Net Loss Per Share - Computatio
Net Loss Per Share - Computation of diluted net loss per antidilutive (Details) - $ / shares | 3 Months Ended | 6 Months Ended | |||
Sep. 15, 2021 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Employee Stock Option [Member] | |||||
Net Loss Per Share | |||||
Antidilutive securities excluded from computation of earnings per share, amount | 3,717,192 | 4,429,426 | 3,717,192 | 4,429,426 | |
Restricted stock units and awards | |||||
Net Loss Per Share | |||||
Antidilutive securities excluded from computation of earnings per share, amount | 9,188,678 | 5,331,673 | 9,188,678 | 5,331,673 | |
Performance restricted stock units | |||||
Net Loss Per Share | |||||
Antidilutive securities excluded from computation of earnings per share, amount | 4,055,997 | 1,825,719 | 4,055,997 | 1,825,719 | |
Public and private warrants | |||||
Net Loss Per Share | |||||
Antidilutive securities excluded from computation of earnings per share, amount | 1,795,700 | 1,795,700 | 1,795,700 | 1,795,700 | |
Earnout shares | |||||
Net Loss Per Share | |||||
Antidilutive securities excluded from computation of earnings per share, amount | 2,050,000 | 2,050,000 | 2,050,000 | 2,050,000 | |
Convertible debt. | |||||
Net Loss Per Share | |||||
Antidilutive securities excluded from computation of earnings per share, amount | 22,330,903 | 16,998,130 | 22,330,903 | 16,998,130 | |
Conversion price (per unit) | $ 25 | ||||
Convertible debt. | Maximum | |||||
Net Loss Per Share | |||||
Antidilutive securities excluded from computation of earnings per share, amount | 16,998,130 | ||||
Contingently issuable shares in connection with acquisitions | |||||
Net Loss Per Share | |||||
Antidilutive securities excluded from computation of earnings per share, amount | 13,969,860 | 2,792,457 | 13,969,860 | 2,792,457 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2023 | Sep. 30, 2023 | Jun. 30, 2023 | Jun. 30, 2023 | |
Subsequent Events | ||||
Loss on reinsurance contract | $ 48,244 | $ 48,244 | ||
Homeowners of America Insurance Company | Vesttoo | ||||
Subsequent Events | ||||
Reinsurance, net asset due | $ 95,800 | $ 95,800 | ||
Subsequent Events | Homeowners of America Insurance Company | Vesttoo | ||||
Subsequent Events | ||||
Reinsurance, collateral received from trust | $ 47,600 | |||
Loss on reinsurance contract | 48,200 | |||
Reinsurance, collateral, line of credit facility | 300,000 | |||
Supplemental reinsurance coverage | $ 42,000 | |||
Subsequent Events | Homeowners of America Insurance Company | Vesttoo | Maximum | ||||
Subsequent Events | ||||
Reinsurance coverage limit | $ 175,000 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Pay vs Performance Disclosure | ||||
Net Income (Loss) | $ (86,963) | $ (27,325) | $ (125,703) | $ (36,610) |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Jun. 30, 2023 shares | |
Trading Arrangements, by Individual | |
Material Terms of Trading Arrangement | Matt Ehrlichman, our Chairman, Chief Executive Officer, and Founder, entered into a Rule 10b5-1 trading arrangement (as such term is defined in Item 408(a) of Regulation S-K) on June 2, 2023 (the “10b5-1 Plan”). The 10b5-1 Plan is scheduled to terminate on December 31, 2023, and covers the purchase of up to an aggregate of 2,327,777 shares of the Company’s common stock. The 10b5-1 Plan is intended to satisfy the affirmative defense Rule of 10b5-1(c). Trades under the 10b5-1 Plan will not commence until at least 90 days following the date on which such plan was entered. During the three months ended June 30, 2023, no other director or officer (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934) adopted, terminated or modified a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement, as each term is defined in Item 408(a) of Regulation S-K). |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Modified | false |
Rule 10b5-1 Arrangement Modified | false |
Matt Ehrlichman | |
Trading Arrangements, by Individual | |
Name | Matt Ehrlichman |
Title | Chairman, Chief Executive Officer, and Founder |
Rule 10b5-1 Arrangement Adopted | true |
Adoption Date | June 2, 2023 |
Aggregate Available | 2,327,777 |