Porch Group, Inc., a leading vertical software company reinventing the home services industry, has announced four strategic acquisitions that strengthen the Company’s rapidly expanding platform for home service companies and homeowners.
Homeowners of America (HOA) Acquisition
Porch and Homeowners of America (HOA) have executed a definitive merger agreement for Porch to acquire HOA and all related subsidiaries. The transaction, which is pending only regulatory approval, is expected to close in the second quarter of 2021.
HOA is a Managing General Agent (MGA) and insurance carrier hybrid with high margins and a capital efficient reinsurance strategy which limits retained risk. HOA operates in six states, including Texas, Arizona, North Carolina, South Carolina, Virginia, and Georgia. The company was founded in 2006 in Texas, a $10 billion homeowners insurance market, and was the 12th largest home insurer in Texas in 2019. HOA is licensed to operate in 31 states, positioning it for nationwide expansion as part of Porch.
HOA has a business-to-business-to-consumer (B2B2C) revenue model with all revenues recurring in nature. It generates new policy sales through an independent network of more than 800 independent agency partners.
HOA Strategic Rationale
- Fits squarely with Porch’s strategy of going deeper into the insurance value chain. Home insurance is the highest value service in the home and a key growth opportunity for Porch. Porch will be able to feature and prioritize HOA to its large, recurring base of homebuyers. Combining an MGA and insurance carrier hybrid with Porch’s insurance agency business will allow Porch to attract the highest lifetime value (LTV) potential customers through a comprehensive insurance offering.
- Porch will now be one of the largest “InsurTech” companies. When looking at Porch and HOA combined for the full year 2021, Porch expects over $270 million of pro forma Gross Written Premium1. Combining Porch’s vast access to homebuyers and unique property data with HOA’s strong pricing and claims experience, Porch will become one of the largest InsurTech companies with significant advantages to driving rapid, long-term growth.
- Profitable InsurTech platform with long-term competitive and economic advantages.
V12 is a fully scaled Software-as-a-Service (SaaS) marketing and data platform with tools to help brands connect with and engage consumers at key purchasing decision points, such as moving. The platform leverages billions of buyer intent signals and has 330 million U.S. consumer records that small-to-medium-sized businesses (SMB) and enterprise brand customers like Jordan’s Furniture, a Berkshire Hathaway company, use in data-driven marketing. V12’s rapidly expanding customer base generates approximately 90% recurring or reoccurring revenue.
Porch is acquiring HOA and V12 for a combined $122 million. This includes $97 million in cash and $25 million in cash or equity (at Porch’s election) based on Porch’s share price at the time of the HOA acquisition close. This equates to a purchase price multiple of 2.0 times combined estimated 2021 HOA and V12 revenue. With these acquisitions, Porch is increasing its 2021 revenue guidance from $120 million to $170 million.
Porch CFO Marty Heimbigner said: “Porch’s business model produces a highly recurring or reoccurring stream of homebuyers that are candidates for HOA and V12 services. Over time, we believe we will be able to accelerate the revenue growth of the newly acquired companies to our long-term target of 30% and believe these acquisitions are synergistic and accretive for our shareholders.”