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  "documentTitle": "Porch Group Inc (PRCH)",
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  "authorName": "Ben Axler",
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  "presentationDate": "2021-04-08 00:00:00",
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      "kind": "callout",
      "text": "Revenue booked with no cost associated with it",
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      "text": "We conservatively estimate Porch booked $8.1m of revenue in 2019 with zero cost associated with it. As a result, we estimate Gross Margin % to be inflated by approximately 2.3% (230 basis points).",
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      "text": "Gross Margin: 230 bps",
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      "text": "We believe Porch's gross margins are not accurately stated. Porch explicitly states it encourages customers to pay it in the form of customer leads, which then generate transactional revenue. Yet, by closely examining Porch's cost of revenue disclosure, it explicitly excludes the cost of leads. We conservatively estimate Porch booked $8.1m of revenue in 2019 with zero cost associated with it. As a result, we estimate Gross Margin % to be inflated by approximately 2.3% (230 basis points). Note: This analysis just includes the inspection business, and not the moving, utility or warranty businesses, where Porch also provides software and has a similar pay model. However, inspection is its largest.",
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      "text": "Cost of revenue primarily consist of professional fees and materials under the Managed Services model and credit card processing fees, including merchant fees. — Prospectus, p. 70; Porch provides ERP and CRM software to a wide variety of home services companies. Those companies can pay us with typical software fees or we really encourage those companies to pay us by providing us access to their consumer, to their homebuyers, where we then generate B2B2C transactional revenues as we help those consumers with key services for their home. — Transcript",
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      "text": "1) Existing home sales per NAR as a proxy for inspections 2) Disclosed Investor Day Presentation (slide 11), Dec 1, 2020 3) Porch's inspector Kilma says 95% of customers opt-in,80% are communicated with, and 75% get at least 1 service 4) Disclosed Investor Day Presentation (slide 10), Dec 1, 2020 5) Disclosed Investor Day Conference Call per the CEO",
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      "text": "Estimated Inspection Revenue From Leads vs. SaaS Fees table",
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      "text": "Estimated Margin Overstatement table",
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      "text": "We Believe Porch's Gross Margins Are Inflated By At Least 230 Basis Points",
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