COMPANY OVERVIEW:

Porch Group, Inc. operates a software platform in the United

States and Canada. The company operates through two segments:
1) Vertical Software Services: The Vertical Software segment
provides software and services to home services companies
and gives early access to homebuyers and homeowners. It
offers services to home services companies, such as home
inspectors, mortgage companies and loan officers, and title
companies; consumers, such as homebuyers and homeowners,
service providers, such as moving, insurance, warranty, and
security companies, and TV/Internet providers.
2) Insurance: The Insurance segment offers property-related
insurance policies through its own risk-bearing carrier and
independent agency as well as risk-bearing home warranty
company. This segment operates though American Home
Protect, Elite Insurance Group, Porticus Reinsurance Ltd., and
Homeowners of America brands.

Key Executives:
 CEO: Matthew Ehrlichman
 CFO: Shawn Tabak
 COO: Matthew Neagle

FINANCIAL PEFORMANCE ANALYSIS:

Recent Quarter Summary (Q2: June 30, 2023): The company reported sales of $ 98.77 million for the second quarter,
up from $ 70.92 million in the same period last year. Compared to $ 27.33 million a year earlier, there is a net loss of $
86.96 million. From continuing activities, the average loss per share is $ 0.91 as opposed to $ 0.28 in the previous year.
PRCH Q2 numbers shows negative shareholder equity, which is a more serious situation than high level of debt
Ratios Analysis:

 Working Capital Management:

Declining Liquidity: The company's liquidity ratios, which include the current, quick, and cash ratio, have been
steadily declining over the course of the quarters. The June 23 current ratio dropped from 1.33 to 1.09 in a year,
the June 23 quick ratio dropped from 0.68 to 0.52, and the June 23 cash ratio dropped from 0.60 to 0.48.
Furthermore, Porch Group Inc.'s liquidity situation is comparatively lower than that of comparable peer corporations.
A falling current ratio indicates ineffective working capital management, which has forced the business to take on
additional debt.

 Capital Structure:
Debt/Equity Mix: Based on an analysis of the Debt/Equity ratio over the course of several quarters, the company's
capital structure, or the ratio of Debt-to-Equity mix, is in an extremely distressed condition. The D/E ratio for the
Porch Group increased dramatically from 2.09 on June 22 to 9.62 on March 23. The company's negative
operational cash flows make it clear that a high D/E ratio is deemed excessively risky and could potentially put a
pressure on cashflows. To top it all off, the previous quarter's figures indicate a negative D/E ratio (-11.77). This
 suggests that there are more liabilities than assets for the organization, which is concerning. (Note: Company has
issued 4,94,241 more shares in the year 2023).
 Profitability:
i) Margins: Since the company is making no profit, gross profit margins are used to evaluate how efficiently the
business is running. It displays decreasing margins over time. In June 22, the company's GP margin was
respectable at 58.75%, but in June 23, it continued to decline to 17.65%. A falling gross profit margin ratio is
cause for concern as it can point to problems with pricing, cost control, or operations within the organization.
ii) Returns: Over the course of the quarters, the company continually reported losses. From $27.3 million in June
22 to $86.96 million in June 23, the losses have soared. The company not only has negative Net Profits, but also
negative EBIT. As a result, both ROE and ROCE are negative. Furthermore, there is a significant discrepancy
between ROE and ROCE (ROE = -236%, ROCE = -34%). The primary source of this discrepancy is the
company's capital structure's high debt load.
 Valuations:
As Porch Group is unprofitable, Sales parameter is considered over earnings for doing valuation analysis.
i) Price to Sales Ratio: The P/S ratio for the company are consistently decreasing over the quarters. It was 3.54 in
June 22 and dropped to 1.38 in June 23, which indicates that company stock is undervalued relative to its sales.
However, the company continues to print off large quarterly losses despite good revenue growth. Hence, it is
important that the company strategizes on reducing the quarterly cash burn rate to improve the financial condition
of the company.
ii) EV/Sales ratio: Again, the declining EV/Sales ratio over the quarters indicates the company is undervalued. The
company’s stock trades below the fair price. But it becomes a good investment option only when the Capital
Structure becomes less risky and the bottom-line improvement with the top line.

COMPANY DEFAULT ANALYSIS:

The Altman Z-Score: The Altman Z-Score of Porch Group Inc. is -0.146. A negative Z-Score is a clear sign that the
company is in a precarious financial position, and there is a substantial risk that it may not be able to meet its debt
obligations and other financial responsibilities. Such a score of -0.146 is a strong indication of financial distress and a
high likelihood of bankruptcy for the company in question. A negative Altman Z-Score is a critical red flag and needs
attention from both the company and its stakeholders to assess and address the underlying financial issues and work
toward financial recovery or restructuring.

RECENT NEWS AND EVENTS:

 September 2023: Porch group announces $57 million cash investment in HOA (House of America Insurance
company) which is its insurance carrying subsidiary in exchange for a $49 million surplus note from HOA and
the acquisition of HOA’s rights to potential claims from the fraud connected to a company named Vesttoo Ltd
 September 2023: Porch group CEO buys $609k worth of company shares and the share rose over 4% that day.
 September 2023: Shareholder rights law firm Robbins LLP is Investigating the Officers and Directors of
PRCH on Behalf of Shareholders.
 April 2023: Porch Group announces $333 million convertible notes for financing. The New Notes will be
convertible into cash, shares of common stock of the company or a combination of cash and shares of common
stock at Porch’s election at an initial conversion rate of 39.9956 shares of common stock per $1,000 principal
amount of the New Notes.
 December 2022: Porch Group launched an app to enable users to manage their home using inspection
report.

OVERALL SECTOR COMPARISON:

Porch Group Arqit Quantum AudioEye Software sector
P/S ratio 1.38 42.3 1.6 22.17
Current Ratio 1.09 2.2 0.81 1.98
GP Margin 17.65% 61.09% 76.95% 58.05%
 ROE -236.69% -76.79% -22.77% 25.79%
Debt/Equity ratio -11.77 0.11 0.12 3.3
EV/Sales ratio 2.80 68.2 6.88 4.3
CHARTS AND GRAPHS:
Income Statement Overview:

Revenue vs Net Income

150

100

50

0
Q - Sept 22 Q- Dec 22 Q- March 23 Q- June 23
-50

-100

Revenue Net Income (in millions)

Balance Sheet overview:

Total Assets vs Total Liabilities

1200

1000

800

600

400

200

0
Q- June 22 Q- Sept 22 Q- Dec 22 Q- March Q- June 23
23

Total Assets Total Liabilities (in millions)

Cash Flows overview:

 Net Change in cash vs Net Cash
400
350
KEY FINANCIAL RATIOS: 300
250
200
150
LIQUIDITY RATIOS: 100 Jun-22 Sep-22 Dec-22 Mar-23 Jun-23
Current Ratio 50 1.33 1.28 1.18 1.11 1.09
0
Quick Ratio -50
Q- June Q-0.68
Sept Q- Dec 220.60 0.54
Q- March Q- June 0.46 0.52
22 22 23 23
Cash Ratio -100 0.60 0.53 0.49 0.41 0.48
LEVERAGE RATIOS Jun-22 Sep-22 Dec-22 Mar-23 Jun-23
Debt to Asset Ratio Net change
0.37in cash Total
0.40 Cash (in millions)
0.42 0.43 0.41
Debt to Equity Ratio 2.09 3.75 5.57 9.62 -11.77
Debt to total Capital 0.68 0.79 0.85 0.91 1.09
Asset to Equity Ratio 5.63 9.32 13.22 22.46 -28.50
Interest Coverage Ratio -16.46 -38.53 -15.23 -17.61 -18.17

PROFITABILITY RATIOS: Jun-22 Sep-22 Dec-22 Mar-23 Jun-23

Margin Ratios:
Gross Profit Margin 58.75% 57.42% 68.54% 41.31% 17.65%
Operating income Margin -44.67% -107.19% -52.71% -44.10% -161.40%
Net Income Margin -38.5% -109.2% -55.3% -44.3% -88.1%
Returun Ratios:
Return on Assets (ROA) -2.44% -7.88% -3.38% -3.81% -8.30%
Return on Equity (ROE) -13.73% -73.38% -44.70% -85.56% -236.69%
Return on Capital Employed (ROCE) -5.15% -15.17% -6.49% -8.01% -33.98%

VALUATION RATIOS Jun-22 Sep-22 Dec-22 Mar-23 Jun-23

Price/BV Ratio 1.26 1.91 1.46 3.00 -3.70
Price/Sales Ratio 3.54 2.85 1.80 1.56 1.38
EV/Sales Ratio 5.48 4.97 4.77 4.10 2.80

COMPANY OVERVIEW Jun-22 Sep-22 Dec-22 Mar-23 Jun-23

No. of Shares outstanding 9,79,61,597 9,79,61,597 9,79,61,597 9,84,55,838 9,84,55,838
Share price (as on quarter ended, $) 2.56 2.25 1.18 1.38 1.38
Market Capitalization (in thousands $) 2,50,782 2,20,414 1,15,595 1,35,869 1,35,869
Market Capitalization growth (QoQ) -12.11% -47.56% 17.54% 0.00%
Enterprice Value (EV) (in thousands $) 388 M 384 M 305M 357M 276M
Strengths and Weaknesses