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Procore Announces Second Quarter 2022 Financial Results

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CARPINTERIA, Calif., August 03, 2022--(BUSINESS WIRE)--Procore Technologies, Inc. (NYSE: PCOR), a leading global provider of construction management software, today announced financial results for the second quarter ended June 30, 2022.

"Our second quarter results demonstrate the value we deliver to the construction industry, especially in a dynamic environment," said Tooey Courtemanche, Founder, President and CEO of Procore. "Our platform helps drive efficiency within construction and allows customers to have better visibility and control. We are continuing to see the return on investment in our solutions, which can help relieve some of the construction industry’s toughest burdens."

"We delivered another quarter of solid results, highlighted by continued strength in backlog metrics, expansion momentum and pipeline generation," said Paul Lyandres, CFO of Procore. "We are excited to host our inaugural Investor Day on November 8 in conjunction with our annual Groundbreak conference."

Second Quarter 2022 Financial Highlights:

  • Revenue was $172 million, an increase of 40% year-over-year.

    • Including a $7 million contribution from Levelset

  • GAAP gross margin was 79% and non-GAAP gross margin was 83%.

  • GAAP operating margin was (42%) and non-GAAP operating margin was (15%).

  • Operating cash outflow for the second quarter was $27 million.

  • Free cash outflow for the second quarter was $37 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:

Third Quarter and Full Year 2022 Outlook:

Procore is providing the following guidance for the third quarter and full year 2022:

  • Third Quarter 2022 Outlook:

    • Revenue is expected to be in the range of $174 million to $176 million, representing year-over-year growth of 32% to 33%.

    • Non-GAAP operating margin is expected to be in the range of (13%) to (14%).

  • Full Year 2022 Outlook:

    • Revenue is expected to be in the range of $690 million to $694 million, representing year-over-year growth of 34% to 35%.

      • Including $29 million from Levelset

    • Non-GAAP operating margin is expected to be in the range of (13%) to (14%).

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 second quarter results at 2:00 p.m., Pacific Time, on Wednesday, August 3, 2022. 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, 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, 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 (used in) 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.

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
June 30,

Six Months Ended
June 30,

(in thousands, except share and per share amounts)

2022

2021

2022

2021

Revenue

$

172,205

$

122,790

$

331,721

$

236,728

Cost of revenue (1)(2)(3)

36,735

25,493

70,067

45,852

Gross profit

135,470

97,297

261,654

190,876

Operating expenses:

Sales and marketing (1)(2)(3)(4)

103,283

99,905

197,198

153,870

Research and development (1)(2)(3)(4)

63,822

88,627

124,076

123,172

General and administrative (1)(3)(4)

40,667

57,827

83,819

75,754

Total operating expenses

207,772

246,359

405,093

352,796

Loss from operations

(72,302

)

(149,062

)

(143,439

)

(161,920

)

Interest income (expense), net

111

(576

)

(380

)

(1,138

)

Other expense, net

(890

)

(44

)

(347

)

(227

)

Loss before provision for income taxes

(73,081

)

(149,682

)

(144,166

)

(163,285

)

Provision for income taxes

42

37

376

166

Net loss

$

(73,123

)

$

(149,719

)

$

(144,542

)

$

(163,451

)

Net loss per share attributable to common stockholders, basic and diluted

$

(0.54

)

$

(2.04

)

$

(1.07

)

$

(3.11

)

Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted

135,927,677

73,539,568

135,232,404

52,564,840

(1) Includes stock-based compensation expense as follows:

Three Months Ended
June 30,

Six Months Ended
June 30,

2022

2021

2022

2021

(in thousands)

Cost of revenue

$

2,046

$

4,918

$

3,504

$

6,079

Sales and marketing

12,572

42,855

22,868

46,107

Research and development

13,144

51,317

26,152

54,563

General and administrative

6,133

38,353

18,580

40,997

Total stock-based compensation expense

$

33,895

$

137,443

$

71,104

$

147,746

(2) Includes amortization of acquired intangible assets as follows:

Three Months Ended
June 30,

Six Months Ended
June 30,

2022

2021

2022

2021

(in thousands)

Cost of revenue

$

5,654

$

1,086

$

11,308

$

2,172

Sales and marketing

3,106

466

6,212

945

Research and development

895

680

1,797

863

Total amortization of acquired intangible assets

$

9,655

$

2,232

$

19,317

$

3,980

(3) Includes employer payroll tax on employee stock transactions as follows:

Three Months Ended
June 30,

Six Months Ended
June 30,

2022

2021

2022

2021

(in thousands)

Cost of revenue

$

68

$

330

$

149

$

334

Sales and marketing

317

1,215

925

1,357

Research and development

523

1,748

1,550

1,822

General and administrative

182

635

727

715

Total employer payroll tax on employee stock transactions

$

1,090

$

3,928

$

3,351

$

4,228

(4) Includes acquisition-related expenses as follows:

Three Months Ended
June 30,

Six Months Ended
June 30,

2022

2021

2022

2021

(in thousands)

Sales and marketing

$

208

$

110

$

415

$

110

Research and development

1,090

191

2,191

191

General and administrative

1,081

442

2,119

442

Total acquisition-related expenses

$

2,379

$

743

$

4,725

$

743

Procore Technologies, Inc.

Condensed Consolidated Balance Sheets

(unaudited)

(in thousands)

June 30,
2022

December 31,
2021

Assets

Current assets

Cash and cash equivalents

$

563,224

$

586,108

Accounts receivable, net

89,274

113,977

Contract cost asset, current

19,251

17,030

Prepaid expenses and other current assets

44,082

35,173

Total current assets

715,831

752,288

Capitalized software development costs, net

42,335

27,062

Property and equipment, net

41,035

36,837

Right of use assets - finance leases

38,291

39,623

Right of use assets - operating leases

48,410

44,052

Contract cost asset, non-current

30,398

25,889

Intangible assets, net

182,501

201,977

Goodwill

539,584

540,922

Other assets

23,569

22,007

Total assets

$

1,661,954

$

1,690,657

Liabilities, Redeemable Convertible Preferred Stock and Stockholders’ Equity

Current liabilities

Accounts payable

$

21,251

$

15,490

Accrued expenses

52,087

65,907

Deferred revenue, current

316,559

301,557

Other current liabilities

29,461

20,750

Total current liabilities

419,358

403,704

Deferred revenue, non-current

3,943

4,024

Finance lease liabilities, non-current

46,451

47,344

Operating lease liabilities, non-current

42,762

41,573

Other liabilities, non-current

3,445

4,723

Total liabilities

515,959

501,368

Stockholders’ equity

Common stock

14

13

Additional paid-in capital

1,953,764

1,852,071

Accumulated other comprehensive loss

(1,029

)

(583

)

Accumulated deficit

(806,754

)

(662,212

)

Total stockholders’ equity

1,145,995

1,189,289

Total liabilities, redeemable convertible preferred stock and stockholders’ equity

$

1,661,954

$

1,690,657

Remaining performance obligation:

The remaining performance obligation was $653.9 million as of June 30, 2022, approximately 72% of which is expected to be recognized as revenue within 12 months. The remaining performance obligation was $478.4 million as of June 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
June 30,

Six Months Ended
June 30,

(in thousands)

2022

2021

2022

2021

Operating activities

Net loss

$

(73,123

)

$

(149,719

)

$

(144,542

)

$

(163,451

)

Adjustments to reconcile net loss to net cash (used in) provided by operating activities

Stock-based compensation

33,895

137,443

71,104

147,746

Depreciation and amortization

15,403

7,819

30,550

15,120

Abandonment of long-lived assets

887

-

887

554

Noncash lease expense

2,652

1,869

4,808

3,735

Unrealized foreign currency loss, net

832

86

355

691

Deferred income taxes

(286

)

(72

)

(638

)

(99

)

Changes in operating assets and liabilities, net of effect of business combinations

Accounts receivable

(9,788

)

(9,610

)

24,337

11,113

Deferred contract cost assets

(3,295

)

(3,500

)

(7,361

)

(5,062

)

Prepaid expenses and other assets

390

(1,122

)

(4,535

)

(5,723

)

Accounts payable

5,587

608

5,926

(2,908

)

Accrued expenses and other liabilities

(4,552

)

9,420

(8,909

)

14,535

Deferred revenue

6,932

4,206

15,706

10,845

Operating lease liabilities

(2,489

)

(557

)

(4,359

)

(1,929

)

Net cash flow (used in) provided by operating activities

(26,955

)

(3,129

)

(16,671

)

25,167

Investing activities

Purchases of property and equipment

(1,908

)

(1,801

)

(9,433

)

(4,194

)

Capitalized software development costs

(8,620

)

(3,523

)

(16,252

)

(5,716

)

Purchases of strategic investments

(689

)

(3,450

)

(3,018

)

(3,450

)

Originations of materials financing

(9,259

...