Home Business Wire Procore Announces First Quarter 2023 Financial Results

Procore Announces First Quarter 2023 Financial Results

CARPINTERIA, Calif.–(BUSINESS WIRE)–$PCORProcore 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:

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

)

 

Contacts

Media Contact
Elizabeth Locke

press@procore.com

Investor Contact
Matthew Puljiz

ir@procore.com

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