Procore Technologies, Inc. (NYSE: PCOR), a leading global
provider of construction management software, today announced
financial results for the first quarter ended March 31, 2023.
“I’m proud of the team’s hard work in delivering our first
quarter results,” said Tooey Courtemanche, founder, president and
CEO of Procore. “Looking ahead, our focus remains on solving the
biggest challenges for construction and delivering a platform that
helps our customers build better, safer and more efficiently.”
“Our first quarter results reflect durable growth and improved
operating leverage,” said Paul Lyandres, CFO of Procore. “I’m
excited to officially welcome Howard Fu as CFO effective next week,
and look forward to starting my new role at Procore as President of
Fintech to help unlock further value for our customers.”
First Quarter 2023 Financial Highlights:
- Revenue was $214 million, an increase of 34%
year-over-year.
- GAAP gross margin was 81% and non-GAAP gross margin was
85%.
- GAAP operating margin was (32%) and non-GAAP operating margin
was (2%).
- Operating cash inflow for the first quarter was $29
million.
- Free cash inflow for the first quarter was $19 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 601 net new organic customers in the first quarter,
ending with a total of 15,089 organic customers.
- Announced Procore Risk Advisors, a modern construction
brokerage offering enhanced insurance solutions.
- Recognized as a 2023 Best Place to Work by Glassdoor.
- Ranked #14 among G2’s Top 100 Best Global Software Companies of
2023.
Second Quarter and Full Year 2023 Outlook:
Procore is providing the following guidance for the second
quarter and full year 2023:
- Second Quarter 2023 Outlook:
- Revenue is expected to be in the range of $216 million to $218
million, representing year-over-year growth of 25% to 27%.
- Non-GAAP operating margin is expected to be in the range of
(7.5%) to (8.5%).
- Full Year 2023 Outlook:
- Revenue is expected to be in the range of $908 million to $912
million, representing year-over-year growth of 26% to 27%.
- Non-GAAP operating margin is expected to be in the range of
(5.5%) to (6.5%).
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 3, 2023. 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 Loss from Operations, Non-GAAP
Operating Margin, Non-GAAP Net Income (Loss), and Non-GAAP Net
Income (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, 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 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 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
March 31,
2023
2022
(dollars in thousands)
Revenue
$
213,526
$
159,516
Cost of revenue(1)(2)(3)
40,202
33,332
Gross profit
173,324
126,184
Operating expenses
Sales and marketing(1)(2)(3)(4)
117,363
93,915
Research and development(1)(2)(3)(4)
80,036
60,254
General and administrative(1)(3)(4)
45,188
43,152
Total operating expenses
242,587
197,321
Loss from operations
(69,263
)
(71,137
)
Interest income
4,948
74
Interest expense
(496
)
(565
)
Accretion income, net
1,632
—
Other (expense) income, net
(210
)
543
Loss before provision for income taxes
(63,389
)
(71,085
)
Provision for income taxes
58
334
Net loss
$
(63,447
)
$
(71,419
)
Net loss per share attributable to common
stockholders, basic and diluted
$
(0.45
)
$
(0.53
)
Weighted-average shares used in computing
net loss per share attributable to common stockholders, basic and
diluted
139,646,465
134,530,010
(1) Includes stock-based compensation
expense and amortization of capitalized stock-based compensation as
follows:
Three Months Ended
March 31,
2023
2022
(in thousands)
Cost of revenue
$
2,496
$
1,458
Sales and marketing
13,104
10,296
Research and development
19,781
13,008
General and administrative
10,475
12,447
Total stock-based compensation
expense*
$
45,856
$
37,209
*Includes amortization of capitalized
stock-based compensation of $0.9 million for the three months ended
March 31, 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,
2023
2022
(in thousands)
Cost of revenue
$
5,493
$
5,654
Sales and marketing
3,107
3,106
Research and development
734
902
Total amortization of acquired intangible
assets
$
9,334
$
9,662
(3) Includes employer payroll tax on
employee stock transactions as follows:
Three Months Ended
March 31,
2023
2022
(in thousands)
Cost of revenue
$
167
$
81
Sales and marketing
999
608
Research and development
1,356
1,027
General and administrative
632
545
Total employer payroll tax on employee
stock transactions
$
3,154
$
2,261
(4) Includes acquisition-related expenses
as follows:
Three Months Ended
March 31,
2023
2022
(in thousands)
Sales and marketing
$
906
$
207
Research and development
5,984
1,101
General and administrative
—
1,038
Total acquisition-related expenses
$
6,890
$
2,346
Procore Technologies,
Inc.
Condensed Consolidated Balance
Sheets
(unaudited)
March 31, 2023
December 31,
2022
(dollars in thousands)
Assets
Current assets
Cash and cash equivalents
$
328,964
$
296,712
Marketable securities
273,845
285,493
Accounts receivable, net
106,188
148,683
Contract cost asset, current
24,220
23,600
Prepaid expenses and other current
assets
41,777
44,731
Total current assets
774,994
799,219
Capitalized software development costs,
net
64,734
58,577
Property and equipment, net
38,282
39,193
Right of use assets - finance leases
36,353
37,026
Right of use assets - operating leases
41,910
41,934
Contract cost asset, non-current
40,299
40,477
Intangible assets, net
153,622
162,953
Goodwill
539,129
539,128
Other assets
21,856
21,903
Total assets
$
1,711,179
$
1,740,410
Liabilities and Stockholders’
Equity
Current liabilities
Accounts payable
$
19,451
$
14,282
Accrued expenses
69,625
99,182
Deferred revenue, current
403,012
396,535
Other current liabilities
22,598
21,639
Total current liabilities
514,686
531,638
Deferred revenue, non-current
5,536
5,278
Finance lease liabilities, non-current
45,130
45,578
Operating lease liabilities,
non-current
37,230
38,087
Other liabilities, non-current
4,245
3,049
Total liabilities
606,827
623,630
Stockholders’ equity
Common stock
14
14
Additional paid-in capital
2,118,936
2,068,225
Accumulated other comprehensive loss
(2,008
)
(2,316
)
Accumulated deficit
(1,012,590
)
(949,143
)
Total stockholders’ equity
1,104,352
1,116,780
Total liabilities and stockholders’
equity
$
1,711,179
$
1,740,410
Remaining performance obligation:
The remaining performance obligation was $805.5 million as of
March 31, 2023, approximately 73% of which is expected to be
recognized as revenue within 12 months. The remaining performance
obligation was $626.7 million as of March 31, 2022, approximately
71% 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 March
31,
2023
2022
(in thousands)
Operating activities
Net loss
$
(63,447
)
$
(71,419
)
Adjustments to reconcile net loss to net
cash provided by operating activities
Stock-based compensation
44,938
37,209
Depreciation and amortization
16,874
15,147
Accretion of discounts on marketable debt
securities, net
(1,632
)
—
Abandonment of long-lived assets
441
—
Noncash operating lease expense
2,628
2,156
Unrealized foreign currency loss (gain),
net
408
(477
)
Deferred income taxes
2
(352
)
Provision for (benefit from) credit
losses
1,726
(98
)
Increase in fair value of strategic
investments
(36
)
—
Changes in operating assets and
liabilities
Accounts receivable
42,948
34,473
Deferred contract cost assets
(460
)
(4,066
)
Prepaid expenses and other assets
4,549
(5,175
)
Accounts payable
4,648
339
Accrued expenses and other liabilities
(28,181
)
(4,357
)
Deferred revenue
6,489
8,774
Operating lease liabilities
(2,620
)
(1,870
)
Net cash provided by operating
activities
29,275
10,284
Investing activities
Purchases of property and equipment
(2,173
)
(7,525
)
Capitalized software development costs
(7,951
)
(7,632
)
Purchases of strategic investments
(149
)
(2,329
)
Purchases of marketable securities
(89,996
)
—
Maturities of marketable securities
103,909
—
Originations of materials financing
(9,077
)
—
Customer repayments of materials
financing
5,358
—
Settlement of post-close working capital
adjustments from business combinations
—
1,291
Net cash used in investing activities
(79
)
(16,195
)
Financing activities
Proceeds from stock option exercises
3,722
6,907
Principal payments under finance lease
agreements, net of proceeds from lease incentives
(410
)
(365
)
Net cash provided by financing
activities
3,312
6,542
Net increase in cash, cash equivalents and
restricted cash
32,508
631
Effect of exchange rate changes on
cash
(256
)
175
Cash, cash equivalents and restricted
cash, beginning of period
299,816
589,212
Cash, cash equivalents and restricted
cash, end of period
$
332,068
$
590,018
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,
2023
2022
(dollars in thousands)
Revenue
$
213,526
$
159,516
Gross profit
173,324
126,184
Stock-based compensation expense
2,496
1,458
Amortization of acquired technology
intangible assets
5,493
5,654
Employer payroll tax on employee stock
transactions
167
81
Non-GAAP gross profit
$
181,480
$
133,377
Gross margin
81
%
79
%
Non-GAAP gross margin
85
%
84
%
Reconciliation of operating expenses to
non-GAAP operating expenses:
Three Months Ended March
31,
2023
2022
(dollars in thousands)
Revenue
$
213,526
$
159,516
GAAP sales and marketing
117,363
93,915
Stock-based compensation expense
(13,104
)
(10,296
)
Amortization of acquired intangible
assets
(3,107
)
(3,106
)
Employer payroll tax on employee stock
transactions
(999
)
(608
)
Acquisition-related expenses
(906
)
(207
)
Non-GAAP sales and marketing
$
99,247
$
79,698
GAAP sales and marketing as a percentage
of revenue
55
%
59
%
Non-GAAP sales and marketing as a
percentage of revenue
46
%
50
%
GAAP research and development
$
80,036
$
60,254
Stock-based compensation expense
(19,781
)
(13,008
)
Amortization of acquired intangible
assets
(734
)
(902
)
Employer payroll tax on employee stock
transactions
(1,356
)
(1,027
)
Acquisition-related expenses
(5,984
)
(1,101
)
Non-GAAP research and development
$
52,181
$
44,216
GAAP research and development as a
percentage of revenue
37
%
38
%
Non-GAAP research and development as a
percentage of revenue
24
%
28
%
GAAP general and administrative
$
45,188
$
43,152
Stock-based compensation expense
(10,475
)
(12,447
)
Employer payroll tax on employee stock
transactions
(632
)
(545
)
Acquisition-related expenses
—
(1,038
)
Non-GAAP general and administrative
$
34,081
$
29,122
GAAP general and administrative as a
percentage of revenue
21
%
27
%
Non-GAAP general and administrative as a
percentage of revenue
16
%
18
%
Reconciliation of loss from operations
and operating margin to non-GAAP loss from operations and non-GAAP
operating margin:
Three Months Ended March
31,
2023
2022
(dollars in thousands)
Revenue
$
213,526
$
159,516
Loss from operations
(69,263
)
(71,137
)
Stock-based compensation expense
45,856
37,209
Amortization of acquired intangible
assets
9,334
9,662
Employer payroll tax on employee stock
transactions
3,154
2,261
Acquisition-related expenses
6,890
2,346
Non-GAAP loss from operations
$
(4,029
)
$
(19,659
)
Operating margin
(32
%)
(45
%)
Non-GAAP operating margin
(2
%)
(12
%)
Reconciliation of net loss and net loss
per share to non-GAAP net income (loss) and non-GAAP net income
(loss) per share:
Three Months Ended March
31,
2023
2022
(dollars in thousands)
Revenue
$
213,526
$
159,516
Net loss
(63,447
)
(71,419
)
Stock-based compensation expense
45,856
37,209
Amortization of acquired intangible
assets
9,334
9,662
Employer payroll tax on employee stock
transactions
3,154
2,261
Acquisition-related expenses
6,890
2,346
Non-GAAP net income (loss)
$
1,787
$
(19,941
)
Numerator:
Non-GAAP net income (loss)
$
1,787
$
(19,941
)
Denominator:
Weighted-average shares used in computing
net loss per share attributable to common stockholders, basic
139,646,465
134,530,010
Effect of dilutive securities: Employee
stock awards
6,707,822
—
Weighted-average shares used in computing
net income per share attributable to common stockholders,
diluted
146,354,287
134,530,010
GAAP net loss per share, basic
$
(0.45
)
$
(0.53
)
GAAP net loss per share, diluted
$
(0.45
)
$
(0.53
)
Non-GAAP net income (loss) per share,
basic
$
0.01
$
(0.15
)
Non-GAAP net income (loss) per share,
diluted
$
0.01
$
(0.15
)
Computation of free cash flow:
Three Months Ended March
31,
2023
2022
(in thousands)
Net cash provided by operating
activities
$
29,275
$
10,284
Purchases of property, plant, and
equipment
(2,173
)
(7,525
)
Capitalized software development costs
(7,951
)
(7,632
)
Non-GAAP free cash flow
$
19,151
$
(4,873
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230503005836/en/
Media Contact Elizabeth Locke press@procore.com
Investor Contact Matthew Puljiz ir@procore.com
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