Hosting Inaugural Investor Day on Wednesday, November 9
CARPINTERIA, Calif.–(BUSINESS WIRE)–$PCOR—Procore Technologies, Inc. (NYSE: PCOR), a leading global provider of construction management software, today announced financial results for the third quarter ended September 30, 2022.
“Our excellent third quarter performance reflects the value that our investments in our platform continue to deliver to our customers,” said Tooey Courtemanche, Founder, President, and CEO of Procore. “Procore is designed to solve real problems while driving better business outcomes for our customers.”
“We delivered another quarter of impressive results on the top and bottom line, highlighted by growth across stakeholders and customer sizes, as well as operating margin improvement,” said Paul Lyandres, CFO of Procore. “These results are a testament to our deepening partnership with the industry, our focus on scaling efficiently, and the significant opportunity ahead of us. We look forward to sharing more at our upcoming Investor Day.”
Third Quarter 2022 Financial Highlights:
Revenue was $186 million, an increase of 41% year-over-year.
Including an $8.5 million contribution from Levelset.
GAAP gross margin was 80% and non-GAAP gross margin was 84%.
GAAP operating margin was (39%) and non-GAAP operating margin was (7%).
Operating cash inflow for the third quarter was $7 million.
Free cash outflow for the third quarter was $6 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:
Added 683 net new organic customers in the third quarter, including 189 customers from LaborChart, which was integrated into our sales process in the third quarter, ending with a total of 14,086 organic customers.
Excluding over 3,000 customers from Levelset.
Launched Procore Workforce Management, a new end-to-end solution for the construction industry.
Partnered with FMI Corp. to release The State of Global Preconstruction Report, discussing the current environment for preconstruction and the characteristics of organizations that do it well.
Opened a new Middle East and North Africa office in Dubai, UAE following our successful launch in the region last year.
Leadership Updates:
On August 15, 2022, Procore announced the appointment of Steve Davis as Procore’s President of Product & Technology. In this role, Mr. Davis will lead Procore’s product, design, and engineering organizations.
Effective as of October 31, 2022, Dennis Lyandres resigned from his position as Procore’s Chief Revenue Officer and transitioned to a new position as Special Advisor to the CEO. In this new role, Mr. Lyandres will focus on certain areas of strategic importance to Procore’s future success, including international expansion and scale.
Fourth Quarter and Full Year 2022 Outlook:
Procore is providing the following guidance for the fourth quarter and full year 2022:
Fourth Quarter 2022 Outlook:
Revenue is expected to be in the range of $189 million to $191 million, representing year-over-year growth of 29% to 31%.
Non-GAAP operating margin is expected to be in the range of (10%) to (11%).
Full Year 2022 Outlook:
Revenue is expected to be in the range of $707 million to $709 million, representing year-over-year growth of 37% to 38%.
Including $30 million from Levelset.
Non-GAAP operating margin is expected to be in the range of (11%) to (12%).
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 third quarter results at 2:00 p.m., Pacific Time, on Wednesday, November 2, 2022. A live audio webcast will be accessible on Procore’s investor relations website at http://investors.procore.com.
November 9, 2022 Investor Day
Procore Technologies, Inc. will host its inaugural Investor Day on Wednesday, November 9, 2022 from 9:00 a.m. to 1:00 p.m., Central Time. The event will be held in-person in conjunction with Groundbreak 2022, Procore’s leading construction technology conference, taking place at the Ernest N. Morial Convention Center in New Orleans, Louisiana.
A live webcast of the event will begin at 9:00 a.m., Central Time, on November 9, 2022. Interested parties can access the webcast by registering here. A replay of the webcast will also be made available 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, 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, the performance of our corporate investments, our ability to expand internationally, 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 Loss from Operations, Non-GAAP Operating Margin, Non-GAAP Net Loss, and Non-GAAP Net Loss 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, acquisition-related expenses, and the income tax effect of non-GAAP items. 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 loss from operations by total revenue.
Because of varying available valuation methodologies, subjective assumptions, and the variety of equity instruments that can impact a company’s non-cash expenses, Procore believes that providing non-GAAP financial measures that exclude stock-based compensation expense allow 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. Income tax benefits relate to the release of a portion of our valuation allowance as a result of deferred tax liabilities recorded related to acquisitions that are available sources of income to realize our deferred tax assets. We exclude the income tax effect associated with our acquisitions from certain of our non-GAAP financial measures because we believe that excluding this provides meaningful supplemental information regarding our operational performance. 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 (used in) 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.
About Procore
Procore is a leading global provider of construction management software. Over 1 million projects and more than $1 trillion USD in construction volume have run on Procore’s platform. Procore’s platform connects key project stakeholders to solutions Procore has built specifically for the construction industry—for the owner, the general contractor, and the specialty contractor. Procore’s App Marketplace has a multitude of partner solutions that integrate seamlessly with Procore’s platform, giving construction professionals the freedom to connect with what works best for them. Headquartered in Carpinteria, California, Procore has offices around the globe. Learn more at Procore.com.
PROCORE-IR
Category: Earnings
Procore Technologies, Inc.
Condensed Consolidated Statements of Operations
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in thousands, except share and per share amounts)
2022
2021
2022
2021
Revenue
$
186,429
$
131,990
$
518,150
$
368,718
Cost of revenue (1)(2)(3)
37,779
22,693
107,846
68,545
Gross profit
148,650
109,297
410,304
300,173
Operating expenses:
Sales and marketing (1)(2)(3)(4)
109,608
70,356
306,806
224,226
Research and development (1)(2)(3)(4)
71,493
53,447
195,569
176,619
General and administrative (1)(3)(4)
39,362
35,051
123,181
110,805
Total operating expenses
220,463
158,854
625,556
511,650
Loss from operations
(71,813
)
(49,557
)
(215,252
)
(211,477
)
Interest income
2,143
51
2,895
100
Interest expense
(504
)
(572
)
(1,636
)
(1,759
)
Other expense, net
(698
)
(653
)
(1,045
)
(880
)
Loss before provision for income taxes
(70,872
)
(50,731
)
(215,038
)
(214,016
)
Provision for income taxes
333
11
709
177
Net loss
$
(71,205
)
$
(50,742
)
$
(215,747
)
$
(214,193
)
Net loss per share attributable to common stockholders,
basic and diluted
$
(0.52
)
$
(0.39
)
$
(1.59
)
$
(2.71
)
Weighted-average shares used in computing net loss per
share attributable to common stockholders, basic and
diluted
137,180,639
131,438,987
135,888,952
79,145,139
(1) Includes stock-based compensation expense as follows:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022
2021
2022
2021
(in thousands)
Cost of revenue
$
1,835
$
679
$
5,339
$
6,758
Sales and marketing
15,483
11,178
38,351
57,285
Research and development
17,758
15,064
43,910
69,627
General and administrative
9,701
11,262
28,281
52,259
Total stock-based compensation expense
$
44,777
$
38,183
$
115,881
$
185,929
(2) Includes amortization of acquired intangible assets as follows:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022
2021
2022
2021
(in thousands)
Cost of revenue
$
5,627
$
1,086
$
16,935
$
3,258
Sales and marketing
3,106
404
9,318
1,349
Research and development
877
907
2,674
1,770
Total amortization of acquired intangible assets
$
9,610
$
2,397
$
28,927
$
6,377
(3) Includes employer payroll tax on employee stock transactions as follows:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022
2021
2022
2021
(in thousands)
Cost of revenue
$
99
$
66
$
248
$
400
Sales and marketing
682
473
1,607
1,830
Research and development
638
386
2,188
2,208
General and administrative
304
170
1,031
885
Total employer payroll tax on employee stock
transactions
$
1,723
$
1,095
$
5,074
$
5,323
(4) Includes acquisition-related expenses as follows:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022
2021
2022
2021
(in thousands)
Sales and marketing
$
655
$
–
$
1,070
$
110
Research and development
1,679
251
3,870
442
General and administrative
3
2,472
2,122
2,914
Total acquisition-related expenses
$
2,337
$
2,723
$
7,062
$
3,466
Procore Technologies, Inc.
Condensed Consolidated Balance Sheets
(unaudited)
(in thousands)
September 30,
2022
December 31,
2021
Assets
Current assets
Cash and cash equivalents
$
264,622
$
586,108
Marketable securities
293,430
–
Accounts receivable, net
106,749
113,977
Contract cost asset, current
20,658
17,030
Prepaid expenses and other current assets
49,913
35,173
Total current assets
735,372
752,288
Capitalized software development costs, net
51,376
27,062
Property and equipment, net
40,666
36,837
Right of use assets – finance leases
37,459
39,623
Right of use assets – operating leases
45,494
44,052
Contract cost asset, non-current
33,528
25,889
Intangible assets, net
172,303
201,977
Goodwill
539,016
540,922
Other assets
22,090
22,007
Total assets
$
1,677,304
$
1,690,657
Liabilities, Redeemable Convertible Preferred Stock and Stockholders’
Equity
Current liabilities
Accounts payable
$
16,277
$
15,490
Accrued expenses
83,079
65,907
Deferred revenue, current
329,072
301,557
Other current liabilities
30,475
20,750
Total current liabilities
458,903
403,704
Deferred revenue, non-current
5,023
4,024
Finance lease liabilities, non-current
45,790
47,344
Operating lease liabilities, non-current
39,935
41,573
Other liabilities, non-current
3,352
4,723
Total liabilities
553,003
501,368
Stockholders’ equity
Common stock
14
13
Additional paid-in capital
2,004,995
1,852,071
Accumulated other comprehensive loss
(2,749
)
(583
)
Accumulated deficit
(877,959
)
(662,212
)
Total stockholders’ equity
1,124,301
1,189,289
Total liabilities, redeemable convertible preferred stock and stockholders’
equity
$
1,677,304
$
1,690,657
Remaining performance obligation:
The remaining performance obligation was $714.9 million as of September 30, 2022, approximately 70% of which is expected to be recognized as revenue within 12 months. The remaining performance obligation was $497.3 million as of September 30, 2021, approximately 72% of which was expected to be recognized as revenue within 12 months.
Procore Technologies, Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in thousands)
2022
2021
2022
2021
Operating activities
Net loss
$
(71,205
)
$
(50,742
)
$
(215,747
)
$
(214,193
)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities
Stock-based compensation
44,777
38,183
115,881
185,929
Depreciation and amortization
15,903
8,149
46,453
23,269
Accretion of discounts on marketable debt securities, net
(650
)
–
(650
)
–
Abandonment of long-lived assets
177
–
1,064
554
Noncash lease expense
2,751
1,865
7,559
5,600
Unrealized foreign currency loss, net
526
184
881
875
Deferred income taxes
288
192
(350
)
93
Changes in operating assets and liabilities, net of effect of
business combinations
Accounts receivable
(17,611
)
(7,730
)
6,726
3,383
Deferred contract cost assets
(5,228
)
(2,011
)
(12,589
)
(7,073
)
Prepaid expenses and other assets
(2,721
)
(2,032
)
(7,256
)
(7,755
)
Accounts payable
(3,785
)
2,780
2,141
(128
)
Accrued expenses and other liabilities
31,973
14,149
23,064
28,684
Deferred revenue
14,143
13,876
29,849
24,721
Operating lease liabilities
(2,751
)
(1,725
)
(7,110
)
(3,654
)
Net cash flow provided by (used in) operating activities
6,587
15,138
(10,084
)
40,305
Investing activities
Purchases of property and equipment
(4,237
)
(4,211
)
(13,670
)
(8,405
)
Capitalized software development costs
(8,531
)
(4,459
)
(24,783
)
(10,175
)
Purchases of strategic investments
(635
)
–
(3,653
)
(3,450
)
Purchases of marketable securities
(293,078
)
–
(293,078
)
–
Originations of materials financing
(7,491
)
–
(16,750
)
–
Customer repayments of materials financing
5,736
–
11,997
–
Acquisition of a business, net of cash acquired
–
(8
)
–
(19,990
)
Settlement of post-close working capital adjustments from
business combinations
–
–
1,291
–
Net cash flow used in investing activities
(308,236
)
(8,678
)
(338,646
)
(42,020
)
Financing activities
Proceeds from initial public offering, net of underwriting
commissions and discounts
–
–
–
665,129
Proceeds from stock option exercises
4,741
6,187
19,345
35,313
Payments of deferred offering costs
–
(319
)
(270
)
(3,846
)
Proceeds from employee stock purchase plan
–
–
11,513
–
Payment of deferred business acquisition consideration
–
–
–
(475
)
Principal payments under finance lease agreements, net of
proceeds from lease incentives
(486
)
(433
)
(1,330
)
(1,175
)
Net cash flow provided by financing activities
4,255
5,435
29,258
694,946
Net (decrease) increase in cash, cash equivalents and
restricted cash
(297,394
)
11,895
(319,472
)
693,231
Effect of exchange rate changes on cash
(1,208
)
(309
)
(2,014
)
(1,040
)
Cash, cash equivalents and restricted cash, beginning of period
566,328
1,063,858
589,212
383,253
Cash, cash equivalents and restricted cash, end of period
$
267,726
$
1,075,444
$
267,726
$
1,075,444
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
September 30,
Nine Months Ended
September 30,
2022
2021
2022
2021
(dollars in thousands)
Revenue
$
186,429
$
131,990
$
518,150
$
368,718
Gross profit
148,650
109,297
410,304
300,173
Stock-based compensation expense
1,835
679
5,339
6,758
Amortization of acquired technology intangible assets
5,627
1,086
16,935
3,258
Employer payroll tax on employee stock transactions
99
66
248
400
Non-GAAP gross profit
$
156,211
$
111,128
$
432,826
$
310,589
Gross margin
80
%
83
%
79
%
81
%
Non-GAAP gross margin
84
%
84
%
84
%
84
%
Contacts
Media Contact
Elizabeth Locke
press@procore.com
Investor Contact
Matthew Puljiz
ir@procore.com
