{
  "docId": "019dd923-622c-750b-8b99-069a37f5f517",
  "docSlug": "9c995cfa26e4",
  "documentTitle": "Porch Group Inc (PRCH)",
  "authorId": "54_Spruce_Point_Capital",
  "authorName": "Ben Axler",
  "documentKindSlug": "activist-deck",
  "documentKindLabel": "Activist deck",
  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2021-04-08 00:00:00",
  "orientation": "landscape",
  "aspectRatio": 1.3333334,
  "pageNumber": 8,
  "pageCount": 63,
  "prevPage": 7,
  "nextPage": 9,
  "slideType": "expose_contradiction",
  "function": "expose_contradiction",
  "density": "overcrowded",
  "nDataPoints": 24,
  "notes": "Uses a combination of CEO quotes and financial modeling to expose accounting discrepancies.",
  "elementsJson": [
    "headline_text",
    "paragraph",
    "callout_box",
    "quote_block",
    "data_table",
    "footnote"
  ],
  "metadataConfidence": 1,
  "imagePath": null,
  "slideHref": "/slides/019dd923-622c-750b-8b99-069a37f5f517/8",
  "deckHref": "/decks/019dd923-622c-750b-8b99-069a37f5f517",
  "deckJsonHref": "/decks/019dd923-622c-750b-8b99-069a37f5f517.json",
  "deckAnchorHref": "/decks/019dd923-622c-750b-8b99-069a37f5f517#slide-8",
  "components": [
    {
      "bbox": {
        "h": 0.06,
        "w": 0.27,
        "x": 0.63,
        "y": 0.87
      },
      "kind": "callout",
      "text": "Revenue booked with no cost associated with it",
      "attrs": null,
      "subkind": "primary",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "2c4de197-18d1-4fb3-b1e1-277b6f1d3f87",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.13,
        "w": 0.88,
        "x": 0.09,
        "y": 0.16
      },
      "kind": "callout",
      "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.",
      "attrs": null,
      "subkind": "primary",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "87ca3cb0-495b-4284-b614-2d09cb628130",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": null,
      "kind": "callout",
      "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).",
      "attrs": null,
      "subkind": null,
      "toolName": "Visual emphasis",
      "toolSlug": "visual-emphasis",
      "confidence": null,
      "componentId": "019dd953-203e-77ad-a6b1-47eb37e13299",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": null,
      "kind": "metric",
      "text": "Gross Margin: 230 bps",
      "attrs": null,
      "subkind": "primary",
      "toolName": "Quantification",
      "toolSlug": "quantification",
      "confidence": null,
      "componentId": "019dd953-203e-77ad-a6b1-4e6fc488c599",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": null,
      "kind": "quote",
      "text": "“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.” — Porch's CEO At Gateway Conference",
      "attrs": null,
      "subkind": null,
      "toolName": "Authority citation",
      "toolSlug": "authority-citation",
      "confidence": null,
      "componentId": "019dd953-203e-77ad-a6b1-48a2f81b039c",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.07,
        "w": 0.55,
        "x": 0.09,
        "y": 0.91
      },
      "kind": "source-note",
      "text": "1) Existing home sales per NAR as a proxy for inspections\n2) Disclosed Investor Day Presentation (slide 11), Dec 1, 2020\n3) Porch's inspector Kilma says 95% of customers opt-in,80% are communicated with, and 75% get at least 1 service\n4) Disclosed Investor Day Presentation (slide 10), Dec 1, 2020\n5) Disclosed Investor Day Conference Call per the CEO",
      "attrs": null,
      "subkind": null,
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "738d2da0-e768-4159-a3d6-37407080fbe7",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.38,
        "w": 0.45,
        "x": 0.09,
        "y": 0.47
      },
      "kind": "table",
      "text": "Estimated Inspection Revenue From Leads vs. SaaS Fees",
      "attrs": null,
      "subkind": "data",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "7b33ef34-7515-4a73-92a4-24a786f73f9a",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.28,
        "w": 0.38,
        "x": 0.57,
        "y": 0.47
      },
      "kind": "table",
      "text": "Estimated Margin Overstatement",
      "attrs": null,
      "subkind": "valuation",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "7d68b724-a2a5-4dea-8cd4-30613f4e6f73",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.07,
        "w": 0.65,
        "x": 0.31,
        "y": 0.03
      },
      "kind": "title",
      "text": "We Believe Porch Uses Barter Deals: Gross Margins Are Inflated By At Least 230 Basis Points",
      "attrs": null,
      "subkind": "headline",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "2b3822db-fe1b-48e5-a5ee-2c325e98ae62",
      "frameworkName": null,
      "frameworkSlug": null
    }
  ],
  "metrics": [],
  "tools": [],
  "frameworks": [
    {
      "name": "fraud-exposure",
      "slug": null,
      "matchId": "16c8069f-36c5-4792-908a-35327bd727d2",
      "evidence": "The slide explicitly identifies a discrepancy between reported margins and actual costs to expose potential accounting manipulation.",
      "confidence": 0.95
    }
  ],
  "arcBeats": [
    {
      "to": 10,
      "from": 7,
      "beatId": "51843484-cb1b-4d15-bdc3-56f423c2d267",
      "arcName": "Overcoming the Monster",
      "arcSlug": "overcoming-monster",
      "beatName": "Expose Contradiction",
      "beatSlug": null,
      "evidence": "The deck highlights multiple contradictions in Porch's statements to the SEC and industry experts",
      "position": 0,
      "confidence": 0.8,
      "parentBeatName": null,
      "parentBeatSlug": null
    }
  ],
  "loops": [
    {
      "to": 10,
      "from": 7,
      "name": "Aha Moment",
      "slug": "03-aha-moment",
      "bestFor": "Data-heavy sections, research findings, analytical arguments",
      "matchId": "3c5bb627-d1ad-4155-9fba-e440c643af8d",
      "evidence": "The deck presents a clear and detailed critique of Porch's business model and financials",
      "position": 0,
      "objective": "to reveal contradictions in Porch's statements",
      "structure": "The Problem/Question -> What the Data Shows -> The Insight",
      "confidence": 0.8,
      "description": "Establish a tension, present data, then deliver the insight that changes everything"
    }
  ],
  "imagePathAlt": null,
  "thumbSrc": null,
  "thumbSrcAlt": null,
  "locked": true
}