Porch Group, Inc. (PRCH) Earnings Call Transcript & Summary

Hello, everyone. Welcome back to the afternoon session, Needham Growth Conference. My name is Brad Erickson. I cover Internet services here at Needham. Very pleased in the afternoon session here to be joined by the CEO and Founder of Porch, Matt Ehrlichman. Matt, nice to see you. How are things?

Doing great. Happy new year to you.

As well, as well. Matt's coming to us off the road. For me, in Portland. He's in Seattle. So we're tightening out here on the West Coast. So I thought just because you guys just recently went public through a SPAC, it probably made sense to maybe spend a few minutes and go through your initial deck. And I think you've got it up on the screen store, so we're set to go. I certainly have some questions. For the audience listening, feel free to lob me any questions, and we'll look to sprinkle those in as we're able. But with that, I will let you take it away.

That's great. I do appreciate it. It's great to be here. And I'll try to keep this pretty quick just so we have plenty of time for Q&A. But yes, Porch did just go public here recently. On December 24, we had our IPO, as we kind of move into this, what we feel like is the second chapter of the journey. So briefly, I founded Porch. I'm the Founder and CEO, started at about -- we launched about 7.5 years ago. And prior to Porch, had been a technology entrepreneur, so bootstrapped as SaaS company out of Stanford, we sold for a little more than $60 million and then took the company public. And so wanted to start Porch really with the idea of it being my last company, which it will be. I wanted to go build a truly great company that makes a dent in the world and solves a real problem. And Porch was born as I was in the process of building a home. And in the classic entrepreneur story, have been tremendously painful, and wanted to go make the home simple. And that's what our mission is, is to go after one of the largest markets there is. And certainly, all of our largest assets in our lives are homes and be able to go and make it easy from the move all the way through the ongoing maintenance. Now we've taken a very unique approach and strategy for how we are attacking that problem and the opportunity. Porch is a vertical software platform for the home. So we provide ERP and CRM software to companies, home inspection companies, moving companies and a number of other verticals where we embed ourselves in these companies to help them grow. That is our primary go-to-market. That's what we do is go sell software to these companies. But what we've done is we have really priced the software and figure out ways to generate revenue from that software in these very fragmented markets like the home inspection industry by monetizing not only with SaaS fees but also with transactions. And so we do that by these companies, these approximately 11,000 companies that we provide software to, having them give us access to their consumers, to their homebuyers, where we then help those consumers with really key, high-value services for their home, such as insurance for their home or TV and Internet or moving or security, these services where there's a huge amount of concentrated LTV in this pre-move phase. So when the consumer has kind of found that next home, it has to do all these things to be able to get set up before they move in. Because Porch meets these homebuyers so early from these companies, we've been able to build this really unique engine and this really unique B2B2C transaction revenues on top of our software platform. Very similar to an open table-type model, as you think about corollaries where they provide software to restaurants, get access to the consumer, monetize with transactions and drive demand back to restaurants, our flywheel works exactly the same. We just have an advantage in that our TAM is massively larger. And where they would make $1 per transaction, we've specifically focused our strategy to go after the highest-value transactions where we make $1,000 per transaction at times. I'll go through the flywheel briefly just to give context. But we have a number of different brands. So some of these people go to porch.com, and they aren't even aware that we are the largest provider of software to home inspectors, as an example. Or if you go to porchgroup.com, you'll get a better sense for our company and our strategy. But we have a number of brands. ISN is our brand in the inspection software space. We have -- 26% of all of the inspections that happen in the U.S. are managed through our software platform. HireAHelper is our brand in the moving space. We provide CRM and moving software to these companies as well as demand back to those moving companies. Again, we have around 11,000 companies we provide software and services to across these different verticals, and this is in order. So inspection is our largest, then moving companies and utilities, et cetera. Now again, these companies give us access and introductions to their consumers as part of the way they pay for the software. And so through these relationships, Porch is, right now, the moving concierge and has access to around 1/4 of all of the U.S. home buyers every single month. And through these companies, Porch has access to data about the home that nobody else has. Because, again, 26% of all the home inspections happen through our software platform, where we know if the roof is old or if a hot water system is going to break. And that's really unique data that we can be able to create value with over time. But the timing of the access that we get to consumers is really important to note. So right now, today, when a consumer moves into the new home, you might remember that you get flooded with direct mail. Well, that's mover marketing today. So brands spend a huge amount of money trying to market to those consumers. But the only touch point and access point they have is post-move, after you change your address of the USPS. Well, Porch gets access to these homebuyers 6 weeks prior. Not only do we -- are we the moving concierge or the, call them, marketing rights to a quarter, but over half of all of the homebuyers are coming through our system every single month. So we have huge visibility to these consumers very early. So we cannot only work directly with them but be able to over time let brands connect with these consumers through us. Now again, when we are working directly with that consumer, both through our self-service tools and technology and our concierge, we help them with a variety of services. So in particular, we've gone very deep into insurance. If you kind of think about Porch's vertical software platform, that's layering InsurTech on top of it. So Elite Insurance Group is our in-house insurance brokerage. But instead of just offering one service like insurance, we really want to wrap that experience for the consumer in a variety of services, so we can help them with their entire move and to make sure that when consumers interact with us that they are excited that their inspection company introduced -- introduce them to Porch. We really want to make sure these companies get a boost in their NPS scores by bringing Porch into the equation to help make that move easy for their consumers. And so we've gone and we've done integrations. We've spent a huge amount of time doing integrations with all of these types of companies and more. So it's not like the consumer ever gets called as a lead by a moving company or TV and Internet company. We've done the integrations to show them here's all of your pricing and options and your promotions for all the TV and Internet options you have at your new home. So you can actually activate through us, and you don't have to go wait on the phone with Comcast. Or insurance, where license brokers -- so we'll show you quotes for all of these major insurance carriers. We partner with 17 of them right now, so you can be able to compare and contrast, and we'll actually go ahead and take care of activating that and getting it affected back to your mortgage. Or moving, where we can coordinate any kind of a move, small move or a large move, which is really, really unique. With the consumers in their home, sometimes people think about Porch as a home service marketplace because of where we started 7.5 years ago. But in reality, we are not. We're a vertical software platform. And in fact, we partner with the home service marketplaces. So we partner with HomeAdvisor and YP and Dex and many, many others, so that once the consumer moves into their home, we can pull in all of those different professionals to give the consumer all kinds of options and make that ongoing maintenance improvements work of their home really simple. Now a few last quick slides, and I'll turn it over to Q&A. But one I would want to highlight is just where we're going in our strategy. So again, Porch's builds have a very large ambition in terms of building something that's going to be meaningful in that scale. So this is what we put out in our public decks where in that medium term, we expect to be able to go build meaningful scale. $1.5 billion in revenue is what we target. And we do that through these 4 core areas. One is our core business growth. So our business has been growing at a 50% CAGR over these last 3 years, and we expect to be able to have continued strong growth by selling software to more companies, having more and more of those companies pay us with transactions where they're worth at 6x more to us when they do so. And then layering in more and more services for consumers, things like electricity, warranty, solar, all these things they have to purchase during that move that we don't yet offer. In addition to that, though, there are these 3 big growth areas for us. Mover marketing, I'd mentioned, getting brands to shift their spend from post-move to pre-move. Insurance is the most valuable service in the home and one that we're going to continue to go deep into. And so right now, again, we're an insurance brokerage. But as we look forward, we will become a managed general agency or an MGA/carrier, where we don't take on any meaningful underwriting risk. We push all the reinsurers. We're able to capture meaningfully more of the economics than we do today and be able to start using our data about the home to be able to be more intelligent on where the good risk exists and where bad risk exists. It's a big opportunity for us to go deeper into our InsurTech opportunity. And then lastly, we'll be taking our platform and expanding it into additional verticals. So with that, I'll turn it over to you, Brad. Happy to take any questions you have or from the audience.

Yes. Thanks for that rundown. That was great. I think just to start, obviously, for some newer to the brand or investors introduced to the story for the first time, and we'll get into the kind of the B2B components and how that all started. But from a consumer perspective, talk about how are consumers really discovering you these days. Talk about that now and how you see that sort of evolving over time.

Yes. We meet our consumers through the companies that we provide software and services to. So let's take an example of a home inspection company. So virtually, every time in the U.S., when a consumer makes an offer, it's contingent on a home inspection, north of 90% of the time. So an offer is made. Offer is accepted, and the home inspector is hired 1, 2, 3 days later to be able to go to the home. And they'll typically spend 3 or 4 hours in the home documenting everything, up on the roof, see any issues, all the appliances, hot water system, et cetera. Historically, that inspector would then drop a 60-page, of course, on the consumer's laps saying, "Good luck." Now what they're able to say is, "Great, here's your report. And as part of my service, you get Porch moving concierge, which is complementary and provided as part of my service." And so right then, we send an e-mail to the consumer saying, "Great. I'm your Porch moving concierge. It's very nice to meet you. I'm working with ABC inspector. Here's a link to your dashboard, moving dashboard that you can be able to use to help with everything for your move. So you can see all the pricing of all the different movers in your area and all the different insurance options and all the different TV and Internet options, et cetera." And we also, because the consumers are all going through our software, get all the TCPA rights and all the terms we need from the consumer to be able to also give them calls. We say, "Hey, I'll give you a call tomorrow for an appointment. Click here if you don't want me to." In a very small set, 1% to 2% of those consumers will opt out. And so we help the consumer, both through our self-service tools and through our concierge teams, to be able to just map out everything coming up for the move. And the first thing they have to do is get set up insurance. We bring in one of our licensed insurance agents to be able to help them compare all those options and be able to get set up with insurance for their new home.

Got it. Got it. And what have you found -- just talk about kind of conversion trends you found on like -- talk about -- let's talk inspection as a good example as any. You mentioned you have about 1/4 of the market in terms of penetration for the software there. How has the conversion been trending lately, we'll say?

Yes. Let me pull up 3 quick slides that will answer that question and will, I think, highlight what we do in the inspection industry. So first, you're right, when we go to the inspection industry, we provide them the full back-end software system, all the calendaring and scheduling, online booking, payment processing, et cetera, all of those tools. And then we give them the ability for the core software, "Great, you can pay with SaaS fees, or you can pay with customer access." Now through that value prop, yes, we've been able to produce really strong unit economics, 30x LTV to CAC unit economics. And we've been able to produce really strong kind of underlying metrics where because this value prop is hard for others to compete with, we give them the best software for free. We give them the concierge tools that boost their NPS and drive demand and jobs to their calendar. We have a 73 NPS, 134% annual net revenue retention. But to your question, here's what it looks like from a conversion rate standpoint. So there's 2 types of conversion for us. First, on the company side, when a company comes on board, they can pay us SaaS fees, and it's a monthly software fee that scales with volume. So as we help them grow, they pay us more. It comes to around $4 per customer, $4 per inspection that they're paying us. If they choose to pay us with transactions, they can flip a switch, and overnight, all of their customers, all of their inspections are worth $25 to us on average. And so this is where, again, we created a 6x increase in value from these companies when they choose to pay us that way. Today, 59% of companies pay us with SaaS fees and 41% pay us with access to their customers. And that is up from 0% paying us with access to their customers 3.5 years ago when we started layering in that transaction pricing on our software.

Got it. Got it. Okay.

Now the other element of conversion is on the right side of the screen, where, okay, great, we make $25 for every one of their consumers. But right now, we're capturing around 1% of the total value opportunity. So if we provide anywhere close to the experience that we're setting out to where it feels like a white glove corporate relocation experience does to a CEO where everything is just handled for you, we believe that's the experience that every homebuyer should get for free. And when we provide that to them, if we simply help them with all the services they're going to need to purchase anyway, it's a $2,300 revenue opportunity. And so we've just seen very steady improvement as we continue to make more and more per consumer as we layer in more and more services and turn on self-service for more and more of these services and as we continue to go deeper in the value chain. So again, as we go deeper in insurance value chain, we make meaningfully more of the economics than [indiscernible].

Got it. And then, I guess just around the 26% penetration level, talk about how difficult or expensive, rather, has been to achieve that level. And I mean, we kind of joke about it, but I don't think investors on the line are -- we certainly weren't that familiar with the burgeoning market for home inspection software. Is that a competitive market? Do you guys think you can grow your share to, say, 50% over time? Just talk about how well you can do in that vertical.

Yes. It's certainly not a competitive market. It's -- I think there's a lot of these markets that are out there where they're very fragmented. And if you go and just take software into those markets and only price with the SaaS fee, it's really hard to extract enough value to be able to create compelling unit economics and a compelling TAM. It's the reality. And so what Porch has done is deploy software and then go after where there is the large TAM and where there are the deep pockets to be able to extract the full value and the full opportunity, so we can create, again, the 30x LTV to CAC that I'd mentioned and just unit economics that allow us to scale. But Porch is very unique. So there's nobody like us not only in these verticals that we're in today but even in any of the other verticals in the rest of the home services space. And so for us, it creates this huge advantage that, yes, we would expect to absolutely go from 26% to be able to get at least half the market. But right now, of all the home inspectors -- about half of all the home inspectors don't use software at all today to help them run the back-end office of their business. And so for us, we expect to continue to grow very quickly in these verticals.

What are -- and I know we don't need to get into specifics today. But just as we think about the amount of data that you're building, the live database around all the, whatever, 125 million single-family homes in the U.S., what are some potential adjacencies you could foresee down the road of what you could do with that data? Just -- let's just whiteboard it for a second.

Yes. No, I -- it's a cool question because there is -- so right now, today, we don't monetize the property data that sits in our system at all. And we would never be selling out that data to third parties, but we can use it to be able to make really good decision. So one, you can improve the consumer experience, does it very simply, where you can -- as we launch our app this year and such, we can be able to personalize that experience to help them with all their to-dos and all the things they need downstream once they're in their home. But even more important for us this year is as we go deeper and deeper into insurance and some of these other really high-value services, knowing if the home has a big issue with the roof or knowing if the hot water system is very likely to break or is at the end of its useful life, that is incredibly valuable to be able to have those kinds of insights to be able to understand risk. So out of the gate, those are the 2 things that we are excited about. But as you look forward, without selling the data, if we can help brands be able to really effectively target market to the right consumer, clearly, we'll be able to create value. So helping an appliance company market to people that have old appliances, as simple as that, right? And so because all of this data is flowing through our system, there's going to be a lot of application over time.

Got it. Got it. And then -- so obviously, you're capturing a ton of super intriguing data on the inspection side. Let's talk about insurance, and you mentioned that, that kind of longer term is one of your bigger opportunities, maybe your biggest as you stack on the revenue build. Talk about -- I mean, how is the value created there? And then secondarily, just the importance of the -- of having kind of your own insurance agency, why that matters so much?

Yes. So today, we create value as an insurance brokerage, where because we have access to so many of the homebuyers that have to buy insurance or required to buy insurance and because we're meeting these homebuyers before they started that shopping process right at the beginning of their move, we can get in front of them before they go to Google or any of the other ways that they can go buy insurance and just lay out all of the options on a silver platter for them to make it really easy. Today, we get paid with standard brokerage fees. So large carriers will pay us a commission year 1 and ongoing each year as that consumer continues with their insurance. Now as we do, again, vertically integrate, we'll continue to maintain our brokerage. But we do think -- for us, it makes a lot of sense to be able to own more of that experience, not only because we can capture more than twice the take rates than we do today, but also because we can create an experience for consumers that we can't just as a brokerage. Case in point, we believe the future should be so frictionless for the consumer as they're moving and purchasing insurance that we should be able to use all this data that we have and the CAC free access we have to consumers and be able to put a quote, a bindable quote in their e-mail and in their SMS and through our concierge in our dashboard, so they can be able to click and be done with insurance just like that. And then downstream, we can use all of our moving concierge, all of our home maintenance, all of our repair capabilities to be able to now just deepen the experience. And so really, when I say layering InsurTech off -- on top of our vertical software platform is a core part of our strategy. We believe we can be able to take insurance to where it really should be, which is not something for you to sell insurance and you just kind of hope the consumer forgets about you, but actually be able to make it one where we are also your partner for your home. And again, that's a big part of what we think we can build.

Yes. And to date, when you're seeing conversion on the consumer side, are -- I mean, which of the services are consumers most often adopting? And talk about the incidence of adopting multiple services as they discover you through whatever service provider they're coming to you from.

Yes. When we have been engaging with consumers, we'll often see them use us for multiple things. But if I were to stack rank of our B2B2C move-related services, the most common would be insurance and moving are the largest 2 that we help people with the most, then security and then TV and Internet. TV and Internet is actually the newest service that we launched. We tended to want to launch one new service to the consumer kind of on an annual basis and bring it into all of our dash -- moving dashboard and self-service tools. And so that was one we launched more recently. But insurance is large. And I will say, having gone through this public process recently and meeting with lots of investors, one request is investors really would like to see us break out insurance over time. Because I think what people are excited about is great, you've got this recurring base of companies. They're very sticky, and we have very low churn. We get this very consistent revenue from them with SaaS transaction. But they also want to know, okay, you kind of get this double-compounding effect when you can take those recurring set of companies and turn them into this recurring set of revenue from those consumers instead of just making revenue from the consumer just during their move. If we can turn it into this annuity, you get this really interesting curve in the path you can grow the business. And so over the course of 2021, that is our plan. We'll start to break out insurance to be able to provide that visibility into our total gross written premium and certain things like that to be able to help with that.

Yes. No, that's great. Yes, people love 0 marginal CAC is what that's called.

Yes, I know, right? Yes, especially in services like insurance, right, and that's one of the more valuable services and you have CAC-free and huge data advantages. We do believe that if you could just layer insurance on top of our vertical software platform and create a million -- many billion-dollar revenue-type company. But we really do want to wrap all these services around it so that it's this really warm, high satisfaction experience for the consumer. And therefore, companies want to provide that experience to their consumer. And that's a key part of it.

I guess, that's another question, just -- this is a little higher level. But as investors get sort of introduced to you and learn the story, obviously, there's B2B and B2C components of the business. How do you want to be thought of in that respect?

Well, I mean, we are a vertical software company. So I mean, just what we are, our go-to-market is going and selling software to companies. And I would say, we are indispensable for those companies as seen through our NPS scores and things like that, where we help them, help them grow. So that is our primary customer. But we generate most of the revenue by having those companies paying with transactions and giving us access to their consumer, where we then help with these high-value services. And so in our view, it's kind of this multilayered strategy where what we've been really focused on is embedding ourselves in these companies, creating very significant competitive moats that other people can't compete with us because we get access to consumers from these companies before they can. Over time, there is more and more and more we want to do with the consumer, with our consumer apps, with our products like owning the insurance solution, such that we build this deeper and deeper relationship with the consumer, so we're equally as indispensable to them. And that's just part of our evolution.

Got it. And then maybe if we could just kind of hit it vertical by vertical as we go through insurance and moving and security and cable and so forth. Just rough economics or -- and we don't necessarily have to get into numbers, but just the mechanics of how you draw your revenue off of those various verticals. So let's start with that, and then I have a follow-up.

Sure. So for insurance, we get paid a commission from the carriers today. So I mean, I'll talk about where we're going as well. But we get paid on average around 14% -- 13% to 14% tight commission, which is again year 1 and ongoing each year. And obviously, insurance retains really well, and so that creates a nice LTV. Where, again, we're going is as we go deeper in the value chain as an MGA and carrier hybrid, we don't expect to carry any meaningful amount of risks. So we'll use reinsurance, but we can be able to capture more than twice the take rates in terms of what our economic opportunity is there. Moving, we offer all different types of moving services to the consumer. So if they just need help with 2 people carrying the heavy stuff up the stairs, we've integrated all of those calendars, thousands across the country, to be able to get people out there. We will show all the different price points, and we can help them. If they want a truck or an odd storage unit, we have all the integrations with all the major truck companies and storage companies so we can be able to coordinate rate. We'll have it here on this day. We'll have people loaded the truck for you end-to-end. For smaller-moving jobs where there's no big trucks or assets involved, we get around 30% to 35% type take-rates. For larger moving jobs where there's trucks and storage units, it's more like 10% to 20% type take-rates but very large ticket sizes. Security and TV and Internet, without going through the numbers, they pay us really well, but they pay us upfront. So they get large LTVs from their customers because there's a recurring relationship, recurring [indiscernible]. They pay us an upfront bounty that is worth a large number of months of service fees that we then -- for helping them get a new customer.

Got it. Okay. Yes, that's perfect. And then let's talk M&A a little bit because I know that's kind of central. I mean, you guys have a huge pipeline of companies. I think you've given the numbers $180 million of revenue, $32 million of EBITDA just in the current pipeline. And then there's, sounds like, dozens of others. What -- I guess, just as you think about the toolkit that you look to assemble, what's most interesting for you at this point? What should we kind of be thinking about there?

Yes. It's one of the reasons for us to go public through a SPAC versus the traditional IPO, which I'd say was previously the plan. And then we can get public a full year earlier than we would have been able to otherwise. And the reason that creates value for us is, to your question, tied to the M&A pipeline and opportunities, both having the cash, public currency to be able to go and execute against that. There's 4 main categories that we're looking at for M&A. So one is going deeper into the vertical software in the existing industries that we already service today. So I think that would be pretty obvious, pretty straightforward. Two is, like I mentioned before, expanding in the vertical software into other home services verticals. Three is the opportunity I'd mentioned, insurance, where we can go after that organically but also through M&A. And then lastly is the opportunity I'd mentioned, mover marketing, where we've started that organically, but they're poised to be able to accelerate against that opportunity with M&A. Those are the primary buckets that we're looking at. But you're right, the opportunities that we have in front of us are, we believe, immediately accretive at around 2x revenue multiples. But in addition to that, the reason that they are immediately accretive and it makes sense for those companies to sell and join Porch is that, like I'd mentioned before, typically, small companies, software companies that are just pricing with normal software in these fragmented markets have a hard time of creating enough value to be able to create unit economics that can grow. And so we've done these 2 acquisitions that I put up on the screen in the past. ISN is a company we acquired 3.5 -- yes, 3.5 years ago, give or take. We -- it's a very small company, $3 million in revenue, growing very, very slowly. 3 years later, we've more than 5x it. 4 years later, almost 10x. So for us, that's a great example of having a company layering on transactional revenue, unlocking the unit economics of each company through that and being able to deploy more dollars into the go-to-market. Same thing for HireAHelper. It wasn't growing between 2017 and 2018. We acquired it end of 2018. And 18 months later, it's more than double. 2.5 years later, it will be more than 3x. And so again, great examples for us in terms of how we can bring these companies in, organize our business in a decentralized model such they can continue to run but be able to provide these unique advantages to them that really helps them unlock the business and scale.

Got it. And just on the brands, as you bring all those together, longer term, I mean, are you effectively sunsetting a lot of these brands and bringing them under the Porch umbrella over time? Or are you retaining a lot of these separate brands? Talk about that.

Typically, we'll retain the brands, particularly on the B2B side, so any time it's companies that are providing software, we'll typically maintain the brands. Obviously, often they have a great following. They have really good products, and we'll just support them with growing faster. On the consumer side, we think it makes sense to be able to transition brands into Porch over time and make sure that we're able to execute on that cross-sell opportunity for the consumer really effectively to create more LTV and value from that consumer. But generally, that's our strategy.

Got it. And just to give a sense, I guess, it may have been on that last slide, but how many of these opportunities exist out there would you say roughly?

Well, I mean, there's 1,000 documented in our pipeline and 150 that are active in our pipeline. And there's a lot more work to do for us, certainly, so we continue to build up our machinery. But we talked about -- we expect to be able to go do 4 this year at least in 2021. And so yes, we're very excited about how we're just teed up for this year.

Yes, yes. Got it. We do have a few investor questions trickling in here, so we'll kind of sprinkle a couple of these in here. One of them is looking at your -- the 30x LTV to CAC. And the question, of course, and again, this is this growth-oriented question. Why not spend more on CAC in that case given such an attractive ratio there?

So we -- I'd say, stay tuned. We think there's -- I would say that feedback is very consistent with the feedback we've gotten from the SPAC investors and then the pipe roadshow that we've kind of gone through here in the middle of 2020 is, "Hey, there's such a large TAM, such a large opportunity, why not invest faster?" And we think that there is a lot of merit to it. It certainly helps with now a very strong balance sheet. So when we went through the SPAC process, we had virtually 0 redemptions. It was like 0.001% redemptions, $4,000. And it's like, you can say 0 officially, but virtually 0. And so we're just -- we're set up, yes, and we're going to raise a $50 million pipe. But we had $300 million in orders, and so we upsized it to $150 million pipe. So we're just set up well at this point in terms of capital, which allows us to make decisions. That said, I do want to make sure each year we are showing really good material progress with EBITDA as a percentage of revenue toward our long-term targets. I don't think it's the right thing to go and take big steps back and invest so much money, but we will show progress each year. And within those constraints, we'll want to invest as aggressively as we can.

Got it. Got it. That's great. And then one thing I want to circle back to, you mentioned maybe looking to work more with even like the home service provider like contractor channels and those sorts of things. I think you threw out a few well-known channels in the space that you work with today. Talk about how you're working with those today and how that kind of fits in with the story.

Yes. So there's a couple of different ways that we work with contractors in general. Yes, so obviously, we have a base of homebuyers that cumulatively becomes this very large base of homeowners. And we want to obviously help them with their homes. Now today, for Porch, as I bring out this kind of consumer journey, we meet the consumer in this pre-move phase, and so we have focused our energy really on that move-in stage of the journey. This is where we're deploying most of our engineering and our resources because there's such this concentration of LTV and because our access and our competitive moats are so well-established here. And so it just makes sense for us to go very deep. And so what we've done is ongoing, after the move, instead having to go build a 2,000-person large sales team and go sell every professional, yes, we have some pros that can create a profile on Porch, certainly. And yes, we work with nationwide professionals. We partner with these marketplaces to make sure that we can be able to service those homeowners when these homebuyers have moved into their homes with whatever the projects are that they need. And so for us, that allows us to deliver the solution, to be that partner for these consumers through the journey of their home but be able to focus our energy on what we view are the priorities.

Got it. And I guess, just to structurally understand that a little bit better, like think of traditional, say, lead gen sites, are you guys effectively providing the supply on those sites? Or maybe I'm not quite...

No, it will be more like we have the demand. We have the homeowners that are flowing through. And we'll partner with marketplaces to be able to bring in supply, to bring in professionals into our system such that we can be able to still help these consumers with the projects that they need without having to power all of the supply.

Got it. And then there's a cost per action or cost per success associated with that, and you guys can get paid on a [ year ]?

Exactly. Yes, so as we help them with their projects, we get paid [indiscernible], yes.

Great. And then maybe just give you the chance to sort of set expectations here. Not -- we're not talking about the future. But just in general, philosophically, and you kind of spoke to this earlier but just to be really crystal, how do you guys think about the business from a growth versus profitability standpoint? You mentioned wanting to show at least sort of iterative levels of EBITDA. But really, I want to let you sort of put your stamp on that.

Yes. No, I appreciate it. I mean, the business has been growing quickly, a 50% CAGR over the last few years. We expect the business will continue to grow very, very rapidly. It's such a large TAM. And we are, without a doubt, just positioned very differently than any other company in terms of how we've embedded ourselves and companies to get access to homebuyers. And that just creates this massive growth opportunity ahead. And so again, kind of like I'd laid out, we are targeting that medium term. We haven't said the number of years. But to be able to get to that $1.5 billion type scale, and we believe that. We believe that we can go and execute against the plan and be able to create real scale as a business. And as we look ahead, we will be investing aggressively both in R&D and in sales and marketing to go after that opportunity. But we are going to show very consistent and meaningful improvement as in our EBITDA as a percentage of revenue. We do believe long term, we kind of have a targeted long-term economics of 25% EBITDA margins. And with our contribution margin already really strong, our [indiscernible] is already very positive, we could certainly have even set that long-term target higher. But we really want to guide and guide investors and to let them know that we are going to invest aggressively in the business even long term. And we'll produce, we believe, good margins at that time. But the whole purpose for me in starting this business, again, was to go build something really great, build a household brand, build a legacy company. And so that's what we're intending to do.

Awesome. Well, I think we are out of time, but it sounds like you're off to a great start. So Matt, thank you very much for joining us and really appreciate it. Look forward to catching up with you soon.

That's great, and it's nice to see you today. Thanks for having me.

Thanks, guys. All right. Have a good day.

Take care, everybody.

Yes.