Procore Technologies, Inc. (NYSE: PCOR), the leading global
provider of construction management software, today announced
financial results for the first quarter ended March 31, 2024.
“The highly complex and collaborative nature of our industry
underscores the importance of our mission to connect everyone in
construction on a global platform,” said Tooey Courtemanche,
Founder and CEO of Procore. “Our trusted, innovative platform
mirrors what the industry needs and will continue to deliver value
to the industry in both the short and long term.”
"I am proud of the strong margin performance we delivered in
Q1,” said Howard Fu, CFO of Procore. “We remain focused on
continuing to improve our operating leverage while executing on the
long-term growth opportunity ahead of us.”
First Quarter 2024 Financial Highlights:
- Revenue was $269 million, an increase of 26%
year-over-year.
- GAAP gross margin was 83% and non-GAAP gross margin was
86%.
- GAAP operating margin was (7%) and non-GAAP operating margin
was 14%.
- Operating cash inflow for the first quarter was $69
million.
- Free cash inflow for the first quarter was $58 million.
A reconciliation of GAAP to non-GAAP financial measures has been
provided in the tables included in this press release. An
explanation of these measures is also included below under the
heading “Non-GAAP Financial Measures.”
Recent Business Highlights:
- Achieved a gross revenue retention rate of 95% in the first
quarter.
- Added 231 net new organic customers in the first quarter,
ending with a total of 16,598 organic customers.
- Ranked #8 among G2’s Top 100 Best Global Software Companies of
2024.
Second Quarter and Full Year 2024 Outlook:
Procore is providing the following guidance for the second
quarter and full year 2024:
- Second Quarter 2024 Outlook:
- Revenue is expected to be in the range of $274 million to $276
million, representing year-over-year growth of 20% to 21%.
- Non-GAAP operating margin is expected to be in the range of 11%
to 12%.
- Full Year 2024 Outlook:
- Revenue is expected to be in the range of $1,140 million to
$1,144 million, representing year-over-year growth of 20%.
- Non-GAAP operating margin is expected to be in the range of 9%
to 10%.
A reconciliation of non-GAAP guidance measures to corresponding
GAAP measures is not available on a forward-looking basis without
unreasonable effort due to the uncertainty of expenses that may be
incurred in the future and cannot be reasonably determined or
predicted at this time, although it is important to note that these
factors could be material to Procore’s future GAAP financial
results.
Quarterly Conference Call
Procore Technologies, Inc. will hold a conference call to
discuss its first quarter results at 2:00 p.m., Pacific Time, on
Wednesday, May 1, 2024. A live audio webcast will be accessible on
Procore's investor relations website at
http://investors.procore.com.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, about Procore and its industry that involve substantial
risks and uncertainties. All statements in this press release,
other than statements of historical fact, are forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements generally relate to
future events or future financial or operating performance, and may
be identified by the use of words such as “anticipate,” “believe,”
“contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,”
“may,” “plan,” “potential,” “predict,” “project,” “should,”
“target,” “will,” or “would,” or the negative of these words, or
other similar terms or expressions that concern Procore’s
expectations, strategy, plans, or intentions.
Procore has based the forward-looking statements contained in
this press release primarily on its current expectations and
projections about future events and trends that Procore believes
may affect its business, financial condition, and operating
results. The outcome of the events described in these
forward-looking statements is subject to risks, uncertainties, and
other factors that could cause results to differ materially from
Procore’s current expectations, including, but not limited to, our
expectations regarding our financial performance (including
revenues, expenses, and margins, and our ability to achieve or
maintain future profitability), our ability to effectively manage
our growth, anticipated performance, trends, growth rates, and
challenges in our business and in the market in which we operate or
anticipate entering into, economic and industry trends (in
particular, the rate of adoption of construction management
software and digitization of the construction industry, inflation,
and challenging geopolitical conditions), our ability to attract
new customers and retain and increase sales to existing customers,
our ability to expand internationally, the effects of increased
competition in our markets and our ability to compete effectively,
our estimated total addressable market, and as set forth in
Procore’s filings with the Securities and Exchange Commission. You
should not place undue reliance on Procore’s forward-looking
statements. Procore assumes no obligation to update any
forward-looking statements to reflect events or circumstances that
exist or change after the date on which they were made, except as
required by law.
Non-GAAP Financial Measures
Procore believes that the use of certain non-GAAP financial
measures as described below, when taken collectively, is helpful to
investors because it provides consistency and comparability with
past financial performance, and may assist in comparisons with
other companies, some of which use similar non-GAAP financial
information to supplement their GAAP results. These non-GAAP
financial measures are not prepared in accordance with U.S.
generally accepted accounting principles, or GAAP.
Non-GAAP Gross Profit, Non-GAAP Gross Margin, Non-GAAP
Operating Expenses, Non-GAAP Income (Loss) from Operations,
Non-GAAP Operating Margin, Non-GAAP Net Income, and Non-GAAP Net
Income per Share: Procore defines these non-GAAP financial
measures as the respective GAAP measures, excluding stock-based
compensation expense, amortization of acquired intangible assets,
employer payroll tax related to employee stock transactions, and
acquisition-related expenses. Non-GAAP gross margin is the ratio
calculated by dividing non-GAAP gross profit by total revenue.
Non-GAAP operating margin is the ratio calculated by dividing
non-GAAP income (loss) from operations by total revenue. Basic
earnings (loss) per share is computed by dividing net income (loss)
by the weighted average number of common shares outstanding for the
period. Non-GAAP diluted earnings per share is computed by giving
effect to all potential weighted average dilutive common stock
equivalents outstanding for the period, including options to
purchase common stock, restricted stock units, and shares to be
issued pursuant to the employee stock purchase plan. The dilutive
effect of outstanding awards is reflected in non-GAAP diluted
earnings per share by application of the treasury stock method.
Stock-based compensation expense includes the net effects of
capitalization and amortization of stock-based compensation expense
related to capitalized software and cloud-computing arrangement
implementation costs. Stock-based compensation expense has been,
and will continue to be for the foreseeable future, a significant
recurring expense in our business and an important part of the
compensation provided to our employees. Because of varying
available valuation methodologies, subjective assumptions, and the
variety of equity instruments that can impact a company’s non-cash
expenses, we believe that providing non-GAAP financial measures
that exclude stock-based compensation expense allows for meaningful
comparisons between its operating results from period to period.
The expense related to amortization of acquired intangible assets
is dependent upon estimates and assumptions, which can vary
significantly and are unique to each asset acquired; therefore,
Procore believes non-GAAP measures that adjust for the amortization
of acquired intangible assets provide investors a consistent basis
for comparison across accounting periods. The amount of employer
payroll tax-related items on employee stock transactions is
dependent on restricted stock unit settlements, option exercises,
related stock price, and other factors that are beyond Procore’s
control and that do not correlate to the operation of the business.
When evaluating the performance of its business and making
operating plans, Procore does not consider these items (for
example, when considering the impact of equity award grants, the
company places a greater emphasis on overall stockholder dilution
than the accounting charges associated with such grants).
Additionally, acquisition-related expenses, such as transaction
costs and retention payments, are expenses that are not necessarily
reflective of operational performance during a period. Procore
believes that the exclusion of acquisition-related expenses
provides for a useful comparison of our operating results to prior
periods and to its peer companies, which commonly exclude these
expenses. Overall, Procore believes it is useful to exclude these
expenses in order to better understand the long-term performance of
its core business and to facilitate comparison of its results
period-over-period and to those of peer companies. All of these
non-GAAP financial measures are important tools for financial and
operational decision-making and for evaluating Procore's own
operating results over different periods of time.
Non-GAAP financial measures may not provide information that is
directly comparable to information provided by other companies in
Procore's industry, as other companies in the industry may
calculate non-GAAP financial measures differently. In addition,
there are limitations in using non-GAAP financial measures because
non-GAAP financial measures are not prepared in accordance with
GAAP, may be different from non-GAAP financial measures used by
other companies, and exclude expenses that may have a material
impact on Procore's reported financial results. Further,
stock-based compensation expense has been, and will continue to be
for the foreseeable future, a significant recurring expense in
Procore's business and an important part of the compensation
provided to its employees. The presentation of non-GAAP financial
information is not meant to be considered in isolation or as a
substitute for the directly comparable financial measures prepared
in accordance with GAAP. Investors should review the reconciliation
of non-GAAP financial measures to the comparable GAAP financial
measures included below, and not rely on any single financial
measure to evaluate Procore's business.
Free Cash Flow: Procore defines free cash flow as net
cash provided by operating activities, less purchases of property
and equipment and capitalized software development costs. Procore
believes free cash flow is an important liquidity measure of the
cash (if any) that is available, after our operating activities and
capital expenditures. Procore uses free cash flow in conjunction
with traditional GAAP measures to assess its liquidity and evaluate
the effectiveness of its business strategies. Once Procore’s
business needs and obligations are met, cash can be used to
maintain a strong balance sheet and invest in future growth.
Other Metrics
Customer Count: The aforementioned customer count
excludes customers acquired from Levelset and Esticom that have not
yet been renewed onto standard Procore annual contracts. Remaining
Levelset and Esticom legacy customers will be included in our
customer metrics once they are renewed onto standard Procore annual
contracts or upon integration of the sales process.
About Procore
Procore Technologies, Inc. (NYSE: PCOR) creates software for
people who build the world. With a focus on providing timely and
accurate data for all, Procore transforms the construction industry
one project at a time - from hospitals and skyscrapers to airports
and stadiums. Beyond its connected, innovative technology, Procore
empowers the industry and its communities through Procore.org. For
more information, visit www.procore.com.
PROCORE-IR
Category: Earnings
Procore Technologies,
Inc.
Condensed Consolidated
Statements of Operations
(unaudited)
Three Months Ended March
31,
2024
2023
(in thousands, except share
and per share amounts)
Revenue
$
269,428
$
213,526
Cost of revenue(1)(2)(3)
45,723
40,202
Gross profit
223,705
173,324
Operating expenses
Sales and marketing(1)(2)(3)(4)
120,994
117,363
Research and development(1)(2)(3)(4)
70,599
80,036
General and administrative(1)(3)
51,018
45,188
Total operating expenses
242,611
242,587
Loss from operations
(18,906
)
(69,263
)
Interest income
5,938
4,948
Interest expense
(479
)
(496
)
Accretion income, net
3,088
1,632
Other expense, net
(344
)
(210
)
Loss before provision for income taxes
(10,703
)
(63,389
)
Provision for income taxes
263
58
Net loss
$
(10,966
)
$
(63,447
)
Net loss per share attributable to common
stockholders, basic and diluted
$
(0.08
)
$
(0.45
)
Weighted-average shares used in computing
net loss per share attributable to common stockholders, basic and
diluted
145,476,006
139,646,465
(1)
Includes stock-based compensation expense
and amortization of capitalized stock-based compensation as
follows:
Three Months Ended March
31,
2024
2023
(in thousands)
Cost of revenue
$
3,185
$
2,496
Sales and marketing
13,020
13,104
Research and development
13,735
19,781
General and administrative
11,729
10,475
Total stock-based compensation
expense*
$
41,669
$
45,856
*Includes amortization of capitalized
stock-based compensation of $1.5 million and $0.9 million,
respectively, for the three months ended March 31, 2024 and 2023
which was initially capitalized as capitalized software and
cloud-computing arrangement implementation costs.
(2)
Includes amortization of acquired
intangible assets as follows:
Three Months Ended March
31,
2024
2023
(in thousands)
Cost of revenue
$
5,885
$
5,493
Sales and marketing
3,106
3,107
Research and development
675
734
Total amortization of acquired intangible
assets
$
9,666
$
9,334
(3)
Includes employer payroll tax on employee
stock transactions as follows:
Three Months Ended March
31,
2024
2023
(in thousands)
Cost of revenue
$
212
$
167
Sales and marketing
1,264
999
Research and development
1,668
1,356
General and administrative
1,045
632
Total employer payroll tax on employee
stock transactions
$
4,189
$
3,154
(4)
Includes acquisition-related expenses as
follows:
Three Months Ended March
31,
2024
2023
(in thousands)
Sales and marketing
$
448
$
906
Research and development
—
5,984
Total acquisition-related expenses
$
448
$
6,890
Procore Technologies,
Inc.
Condensed Consolidated Balance
Sheets
(unaudited)
March 31, 2024
December 31,
2023
(in thousands)
Assets
Current assets
Cash and cash equivalents
$
427,656
$
357,790
Marketable securities
316,963
320,161
Accounts receivable, net
138,996
206,644
Contract cost asset, current
29,618
28,718
Prepaid expenses and other current
assets
41,707
42,421
Total current assets
954,940
955,734
Capitalized software development costs,
net
88,409
83,045
Property and equipment, net
35,417
36,258
Right of use assets - finance leases
33,712
34,375
Right of use assets - operating leases
36,727
44,141
Contract cost asset, non-current
43,757
44,564
Intangible assets, net
127,747
137,546
Goodwill
539,131
539,354
Other assets
18,870
18,551
Total assets
$
1,878,710
$
1,893,568
Liabilities and Stockholders’
Equity
Current liabilities
Accounts payable
$
16,446
$
13,177
Accrued expenses
67,008
100,075
Deferred revenue, current
487,944
501,903
Other current liabilities
23,585
27,275
Total current liabilities
594,983
642,430
Deferred revenue, non-current
7,403
7,692
Finance lease liabilities, non-current
43,076
43,581
Operating lease liabilities,
non-current
33,691
37,923
Other liabilities, non-current
5,876
6,332
Total liabilities
685,029
737,958
Stockholders’ equity
Common stock
15
15
Additional paid-in capital
2,345,537
2,295,807
Accumulated other comprehensive loss
(2,068
)
(1,375
)
Accumulated deficit
(1,149,803
)
(1,138,837
)
Total stockholders’ equity
1,193,681
1,155,610
Total liabilities and stockholders’
equity
$
1,878,710
$
1,893,568
Remaining performance obligation:
The following table presents our current and non-current RPO at
the end of each period:
March 31,
Change
2024
2023
Dollar
Percent
(dollars in thousands)
Remaining performance
obligations
Current
$
704,656
$
586,158
$
118,498
20
%
Non-current
302,159
219,316
82,843
38
%
Total remaining performance
obligations
$
1,006,815
$
805,474
$
201,341
25
%
Procore Technologies,
Inc.
Condensed Consolidated
Statements of Cash Flows
(unaudited)
Three Months Ended March
31,
2024
2023
(in thousands)
Operating activities
Net loss
$
(10,966
)
$
(63,447
)
Adjustments to reconcile net loss to net
cash provided by operating activities
Stock-based compensation
40,132
44,938
Depreciation and amortization
20,051
16,874
Accretion of discounts on marketable debt
securities, net
(3,088
)
(1,632
)
Abandonment of long-lived assets
268
441
Noncash operating lease expense
2,734
2,628
Unrealized foreign currency loss, net
1,079
408
Deferred income taxes
1
2
Provision for credit losses
189
1,726
Increase in fair value of strategic
investments
(759
)
(36
)
Changes in operating assets and
liabilities, net of effect of asset acquisition
Accounts receivable
68,013
42,948
Deferred contract cost assets
(427
)
(460
)
Prepaid expenses and other assets
(684
)
4,549
Accounts payable
3,155
4,648
Accrued expenses and other liabilities
(34,154
)
(28,181
)
Deferred revenue
(14,108
)
6,489
Operating lease liabilities
(2,291
)
(2,620
)
Net cash provided by operating
activities
69,145
29,275
Investing activities
Purchases of property and equipment
(2,089
)
(2,173
)
Capitalized software development costs
(9,514
)
(7,951
)
Purchases of strategic investments
(210
)
(149
)
Purchases of marketable securities
(101,434
)
(89,996
)
Maturities of marketable securities
107,301
103,909
Originations of materials financing
—
(9,077
)
Customer repayments of materials
financing
1,281
5,358
Asset acquisition, net of cash
acquired
(5
)
—
Net cash used in investing activities
(4,670
)
(79
)
Financing activities
Proceeds from stock option exercises
7,125
3,722
Principal payments under finance lease
agreements, net of proceeds from lease incentives
(449
)
(410
)
Net cash provided by financing
activities
6,676
3,312
Net increase in cash, cash equivalents,
and restricted cash
71,151
32,508
Effect of exchange rate changes on
cash
(1,285
)
(256
)
Cash, cash equivalents, and restricted
cash, beginning of period
357,790
299,816
Cash, cash equivalents, and restricted
cash, end of period
$
427,656
$
332,068
Procore Technologies,
Inc.
Reconciliation of GAAP to
Non-GAAP Financial Measures
(unaudited)
Reconciliation of gross profit and
gross margin to non-GAAP gross profit and non-GAAP gross
margin:
Three Months Ended March
31,
2024
2023
(dollars in thousands)
Revenue
$
269,428
$
213,526
Gross profit
223,705
173,324
Stock-based compensation expense
3,185
2,496
Amortization of acquired technology
intangible assets
5,885
5,493
Employer payroll tax on employee stock
transactions
212
167
Non-GAAP gross profit
$
232,987
$
181,480
Gross margin
83
%
81
%
Non-GAAP gross margin
86
%
85
%
Reconciliation of operating expenses to
non-GAAP operating expenses:
Three Months Ended March
31,
2024
2023
(dollars in thousands)
Revenue
$
269,428
$
213,526
GAAP sales and marketing
120,994
117,363
Stock-based compensation expense
(13,020
)
(13,104
)
Amortization of acquired intangible
assets
(3,106
)
(3,107
)
Employer payroll tax on employee stock
transactions
(1,264
)
(999
)
Acquisition-related expenses
(448
)
(906
)
Non-GAAP sales and marketing
$
103,156
$
99,247
GAAP sales and marketing as a percentage
of revenue
45
%
55
%
Non-GAAP sales and marketing as a
percentage of revenue
38
%
46
%
GAAP research and development
$
70,599
$
80,036
Stock-based compensation expense
(13,735
)
(19,781
)
Amortization of acquired intangible
assets
(675
)
(734
)
Employer payroll tax on employee stock
transactions
(1,668
)
(1,356
)
Acquisition-related expenses
—
(5,984
)
Non-GAAP research and development
$
54,521
$
52,181
GAAP research and development as a
percentage of revenue
26
%
37
%
Non-GAAP research and development as a
percentage of revenue
20
%
24
%
GAAP general and administrative
$
51,018
$
45,188
Stock-based compensation expense
(11,729
)
(10,475
)
Employer payroll tax on employee stock
transactions
(1,045
)
(632
)
Non-GAAP general and administrative
$
38,244
$
34,081
GAAP general and administrative as a
percentage of revenue
19
%
21
%
Non-GAAP general and administrative as a
percentage of revenue
14
%
16
%
Reconciliation of loss from operations
and operating margin to non-GAAP income (loss) from operations and
non-GAAP operating margin:
Three Months Ended March
31,
2024
2023
(dollars in thousands)
Revenue
$
269,428
$
213,526
Loss from operations
(18,906
)
(69,263
)
Stock-based compensation expense
41,669
45,856
Amortization of acquired intangible
assets
9,666
9,334
Employer payroll tax on employee stock
transactions
4,189
3,154
Acquisition-related expenses
448
6,890
Non-GAAP income (loss) from operations
$
37,066
$
(4,029
)
Operating margin
(7
%)
(32
%)
Non-GAAP operating margin
14
%
(2
%)
Reconciliation of net loss and net loss
per share to non-GAAP net income and non-GAAP net income per
share:
Three Months Ended March
31,
2024
2023
(in thousands, except share
and per share amounts)
Revenue
$
269,428
$
213,526
Net loss
(10,966
)
(63,447
)
Stock-based compensation expense
41,669
45,856
Amortization of acquired intangible
assets
9,666
9,334
Employer payroll tax on employee stock
transactions
4,189
3,154
Acquisition-related expenses
448
6,890
Non-GAAP net income
$
45,006
$
1,787
Numerator:
Non-GAAP net income
$
45,006
$
1,787
Denominator:
Weighted-average shares used in computing
net loss per share attributable to common stockholders, basic
145,476,006
139,646,465
Effect of dilutive securities: Employee
stock awards
5,708,299
6,707,822
Weighted-average shares used in computing
net income per share attributable to common stockholders,
diluted
151,184,305
146,354,287
GAAP net loss per share, basic
$
(0.08
)
$
(0.45
)
GAAP net loss per share, diluted
$
(0.08
)
$
(0.45
)
Non-GAAP net income per share, basic
$
0.31
$
0.01
Non-GAAP net income per share, diluted
$
0.30
$
0.01
Computation of free cash flow:
Three Months Ended March
31,
2024
2023
(in thousands)
Net cash provided by operating
activities
$
69,145
$
29,275
Purchases of property, plant, and
equipment
(2,089
)
(2,173
)
Capitalized software development costs
(9,514
)
(7,951
)
Non-GAAP free cash flow
$
57,542
$
19,151
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Media Contact press@procore.com
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Procore Technologies (NYSE:PCOR)
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