Porch.com Combining With SPAC Company PropTech Acquisition Corp (PTAC) To Go Public

By Amit Chowdhry ● August 1, 2020
  • Special purpose acquisition company PropTech Acquisition Corp (NASDAQ: PTAC) and Porch.com entered into a definitive agreement which would result in Porch becoming a publicly listed company

PropTech Acquisition Corp (NASDAQ: PTAC), a special purpose acquisition company targeting businesses in the real estate technology industry, and Porch.com (a leading software and services platform for the home inspection and home service industries) have entered into a definitive agreement which would result in Porch becoming a publicly listed company.

Upon closing of the deal, PropTech will be renamed Porch.com, Inc. and it is expected to remain listed on the Nasdaq Capital Market under the new ticker symbol “PRCH.”

Porch works as a home services platform that provides industry-leading ERP and CRM software to 11,000 inspection, moving and adjacent home services companies thus gaining access to a proprietary and recurring sales funnel — which includes a majority of homebuyers in the U.S. annually.

And the company’s business-to-business-to-consumer (B2B2C) pricing model provides a cost-free alternative for software users and consumers while creating an expansive revenue opportunity for Porch through the utilization of established monetization channels such as insurance, moving, TV/internet, security, home repair and improvement, etc.

Porch delivers software and services through several wholly-owned brands, including Inspection Support Network (ISN), Elite Insurance Group, HireAHelper, and Porch.com. Last year, Porch processed about $2.2 billion of gross services volumes through its platform.

About 65% of all U.S. homebuyers are processed through Porch’s platform via its integrated software users. And about 27% of all U.S. homebuyers are introduced to Porch’s “Moving Concierge” six weeks prior to their move when most major purchasing decisions are made thus providing Porch a distinct advantage in engaging with these high-value consumers.

The early access provided by Porch’s software platform enables it to deliver services efficiently across the lifetime of the home, from pre-move and move-in, to maintenance and improvement.

Porch competes in a total U.S. addressable market estimated at over $220 billion. And as the company pursues other opportunities in the home services market, including expanding into other home services verticals, Porch’s potential addressable market will continue to grow.

The company’s pro forma 2018 revenue (excluding certain divested businesses) was $36 million and it is projected to be $120 million in 2021, a 49% compounded annual growth rate.

And the projected 2020 gross margin is expected to be 78%. Porch management anticipates being profitable on an adjusted EBITDA basis in 2021.

The combined company will have an estimated post-transaction enterprise value of $523 million, which consists of estimated equity value of $728 million and $205 million in cash and no debt, assuming no redemptions of PropTech public stockholders. The cash proceeds raised will consist of PropTech’s approximately $174 million of cash in trust (before redemptions) and an additional $150 million private investment at $10.00 per share.

The net proceeds raised from the transaction will be used for supporting Porch’s working capital, pay down debt, and fund expansion through acquisitions. And Porch’s growth strategy is expected to generate estimated revenue and adjusted EBITDA of $120 million and $7 million, respectively, in 2021 (exclusive of any accretive benefits from M&A activity made possible by this transaction).

KEY QUOTES:

“Porch aligns well with the objectives laid out in our property technology investment thesis. It brings significant innovation to the residential real estate industry by delivering critical home services in a scalable, software-based platform. Porch’s early access to millions of homebuyers through its 11,000 contracted companies brings to the public market an established company with a track record of significant revenue growth. Porch’s massive addressable market and software platform are well-positioned to deliver high gross margin, attractive unit economics and a well-defined path to achieve profitability in 2021. We are partnering with a world-class leadership team that shares our vision.”

— Tom Hennessy, chairman, co-CEO and president of PropTech

“Porch’s mission is to partner with home service companies and, together, delight the homeowner from move to improve and everything in between. Merging with PropTech and becoming a public company is the right next step in our growth phase and a key milestone for our company. A public listing will enhance our ability to scale more quickly and continue to innovate. We look forward to partnering with PropTech in a transaction that provides an efficient, accelerated and proven path for a successful public listing on NASDAQ.”

— Matt Ehrlichman, CEO and founder of Porch