TechDogs-"Procore Announces Fourth Quarter And Full Year 2023 Financial Results"

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Procore Announces Fourth Quarter And Full Year 2023 Financial Results

By Business Wire

Business Wire
Overall Rating

CARPINTERIA, Calif.--(BUSINESS WIRE)--$PCOR--Procore Technologies, Inc. (NYSE: PCOR), the leading global provider of construction management software, today announced financial results for the fourth quarter and full year ended December 31, 2023.

“2023 was a year of milestones at Procore as we surpassed $1B in total annual recurring revenue, reaffirmed our status as one of the best places to work in technology, and delivered numerous innovations on the platform,” said Tooey Courtemanche, Founder and CEO of Procore. “Our continued evolution leaves me optimistic about our ability to achieve our vision of improving the lives of everyone in construction.”

“Procore remains committed to continuously improving how we operate across all aspects of the business," said Howard Fu, CFO of Procore. "This resulted in significant margin improvement in 2023, setting a strong foundation for our next phase of efficient growth.”

Fourth Quarter 2023 Financial Highlights:

  • Revenue was $260 million, an increase of 29% year-over-year.
  • GAAP gross margin was 82% and non-GAAP gross margin was 85%.
  • GAAP operating margin was (14%) and non-GAAP operating margin was 7%.
  • Operating cash inflow for the fourth quarter was $41 million.
  • Free cash inflow for the fourth quarter was $29 million.

Full Year 2023 Financial Highlights:

  • Revenue was $950 million, an increase of 32% year-over-year.
  • GAAP gross margin was 82% and non-GAAP gross margin was 85%.
  • GAAP operating margin was (23%) and non-GAAP operating margin was 2%.
  • Operating cash inflow for 2023 was $92 million.
  • Free cash inflow for 2023 was $47 million.

The financial results included in this press release are preliminary and will not be final until Procore files its Annual Report on Form 10-K for the period. 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:

  • Number of organic customers contributing more than $100,000 of annual recurring revenue totaled 2,008 as of December 31, 2023, an increase of 27% year-over-year.
  • Number of organic customers contributing more than $1,000,000 of annual recurring revenue totaled 62 as of December 31, 2023, an increase of 32% year-over-year.
  • Added 300 net new organic customers in the fourth quarter, ending with a total of 16,367 organic customers.
  • Achieved a gross revenue retention rate of 95% for 2023.
  • Achieved a net revenue retention rate of 114% for 2023.
  • As of December 31, 2023, 74% of total annual recurring revenue was generated from customers using four or more products.
  • As of December 31, 2023, 45% of total annual recurring revenue was generated from customers using six or more products.
  • Ended 2023 with 3,694 full-time employees, an increase of 4% year-over-year.
  • Ranked #5 on Glassdoor’s 100 Best Places to Work in 2024.

Leadership Updates:

Procore announces the appointment of Larry Stack as Chief Revenue Officer. In this role, Stack will lead Procore’s Global Sales and Customer Success organizations and will be responsible for Procore’s revenue growth strategy. He will report to Procore Founder, President and CEO Tooey Courtemanche.

First Quarter and Full Year 2024 Outlook:

Procore is providing the following guidance for the first quarter and full year 2024:

  • First Quarter 2024 Outlook:
    • Revenue is expected to be in the range of $262 million to $264 million, representing year-over-year growth of 23% to 24%.
    • Non-GAAP operating margin is expected to be in the range of 7% to 8%.
  • Full Year 2024 Outlook:
    • Revenue is expected to be in the range of $1,137 million to $1,142 million, representing year-over-year growth of 20%.
    • Non-GAAP operating margin is expected to be in the range of 7% to 8%.

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 fourth quarter and full year results at 2:00 p.m., Pacific Time, on Thursday, February 15, 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 (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, 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 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. Income tax expense relates to the change of valuation allowance as a result of acquisition-related deferred tax liabilities recorded related to available sources of income to realize our deferred tax assets. We exclude the income tax effect associated with 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.

Other Metrics

Customer Count: The aforementioned customer count excludes customers acquired from Levelset and Esticom that do not have standard Procore annual contracts.

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
December 31,

Year Ended
December 31,

2023

2022

2023

2022

(in thousands, except share and per share amounts)

Revenue

$

260,041

$

202,053

$

950,010

$

720,203

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

47,831

40,570

174,462

148,416

Gross profit

212,210

161,483

775,548

571,787

Operating expenses

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

122,511

118,170

494,908

424,976

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

74,611

75,413

300,571

270,982

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

52,422

43,102

195,746

166,283

Total operating expenses

249,544

236,685

991,225

862,241

Loss from operations

(37,334

)

(75,202

)

(215,677

)

(290,454

)

Interest income

5,167

3,152

19,779

5,826

Interest expense

(480

)

(499

)

(1,957

)

(2,135

)

Accretion income, net

3,179

1,369

9,794

2,035

Other income (expense), net

649

(247

)

(360

)

(1,737

)

Loss before provision for (benefit from) income taxes

(28,819

)

(71,427

)

(188,421

)

(286,465

)

Provision for (benefit from) income taxes

700

(243

)

1,273

466

Net loss

$

(29,519

)

$

(71,184

)

$

(189,694

)

$

(286,931

)

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

$

(0.20

)

$

(0.51

)

$

(1.34

)

$

(2.10

)

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

144,074,303

138,415,280

141,961,467

136,525,728

(1)

Includes stock-based compensation expense and amortization of capitalized stock-based compensation as follows:

Three Months Ended
December 31,

Year Ended
December 31,

2023

2022

2023

2022

(in thousands)

Cost of revenue

$

3,134

$

1,914

$

11,491

$

7,253

Sales and marketing

13,198

15,046

55,162

53,397

Research and development

15,874

19,352

68,275

63,262

General and administrative

11,769

10,693

44,406

38,974

Total stock-based compensation expense*

$

43,975

$

47,005

$

179,334

$

162,886

*Includes amortization of capitalized stock-based compensation of $1.4 million and $4.5 million, respectively, for the three and twelve months ended December 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
December 31,

Year Ended
December 31,

2023

2022

2023

2022

(in thousands)

Cost of revenue

$

5,904

$

5,493

$

22,396

$

22,428

Sales and marketing

3,106

3,107

12,425

12,425

Research and development

670

854

2,757

3,528

Total amortization of acquired intangible assets

$

9,680

$

9,454

$

37,578

$

38,381

(3)

Includes employer payroll tax on employee stock transactions as follows:

Three Months Ended
December 31,

Year Ended
December 31,

2023

2022

2023

2022

(in thousands)

Cost of revenue

$

101

$

60

$

540

$

308

Sales and marketing

383

348

2,766

1,955

Research and development

332

286

3,217

2,474

General and administrative

274

171

1,910

1,202

Total employer payroll tax on employee stock transactions

$

1,090

$

865

$

8,433

$

5,939

(4)

Includes acquisition-related expenses as follows:

Three Months Ended
December 31,

Year Ended
December 31,

2023

2022

2023

2022

(in thousands)

Sales and marketing

$

481

$

655

$

2,483

$

1,725

Research and development

46

1,679

6,370

5,549

General and administrative

16

6

35

2,128

Total acquisition-related expenses

$

543

$

2,340

$

8,888

$

9,402

Procore Technologies, Inc.

Condensed Consolidated Balance Sheets (unaudited)

December 31,

2023

2022

(in thousands)

Assets

Current assets

Cash and cash equivalents

$

357,790

$

296,712

Marketable securities

320,161

285,493

Accounts receivable, net

206,644

148,683

Contract cost asset, current

28,718

23,600

Prepaid expenses and other current assets

42,421

44,731

Total current assets

955,734

799,219

Capitalized software development costs, net

83,045

58,577

Property and equipment, net

36,258

39,193

Right of use assets - finance leases

34,375

37,026

Right of use assets - operating leases

44,141

41,934

Contract cost asset, non-current

44,564

40,477

Intangible assets, net

137,546

162,953

Goodwill

539,354

539,128

Other assets

18,551

21,903

Total assets

$

1,893,568

$

1,740,410

Liabilities and Stockholders’ Equity

Current liabilities

Accounts payable

$

13,177

$

14,282

Accrued expenses

100,075

99,182

Deferred revenue, current

501,903

396,535

Other current liabilities

27,275

21,639

Total current liabilities

642,430

531,638

Deferred revenue, non-current

7,692

5,278

Finance lease liabilities, non-current

43,581

45,578

Operating lease liabilities, non-current

37,923

38,087

Other liabilities, non-current

6,332

3,049

Total liabilities

737,958

623,630

Stockholders’ equity

Common stock

15

14

Additional paid-in capital

2,295,807

2,068,225

Accumulated other comprehensive loss

(1,375

)

(2,316

)

Accumulated deficit

(1,138,837

)

(949,143

)

Total stockholders’ equity

1,155,610

1,116,780

Total liabilities and stockholders’ equity

$

1,893,568

$

1,740,410

Remaining performance obligation:

The following table presents our current and non-current remaining performance obligations at the end of each period:

December 31,

Change

2023

2022

Dollar

Percent

(dollars in thousands)

Remaining performance obligations

Current

$

698,284

$

561,200

$

137,084

24

%

Non-current

302,215

236,300

65,915

28

%

Total remaining performance obligations

$

1,000,499

$

797,500

$

202,999

25

%

Procore Technologies, Inc.

Condensed Consolidated Statements of Cash Flows (unaudited)

Three Months Ended
December 31,

Year Ended
December 31,

2023

2022

2023

2022

(in thousands)

Operating activities

Net loss

$

(29,519

)

$

(71,184

)

$

(189,694

)

$

(286,931

)

Adjustments to reconcile net loss to net cash provided by operating activities

Stock-based compensation

42,601

47,005

174,835

162,886

Depreciation and amortization

19,690

16,586

71,633

63,039

Accretion of discounts on marketable debt securities, net

(3,175

)

(1,359

)

(9,790

)

(2,009

)

Abandonment of long-lived assets

676

280

1,488

1,344

Noncash operating lease expense

5,160

2,611

13,092

10,170

Unrealized foreign currency gain, net

(1,263

)

(1,232

)

(524

)

(351

)

Deferred income taxes

(776

)

67

(769

)

(283

)

Provision for credit losses

1,170

1,247

8,052

2,584

Decrease in fair value of strategic investments

132

519

287

483

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

Accounts receivable

(60,636

)

(42,196

)

(57,492

)

(35,817

)

Deferred contract cost assets

(4,207

)

(9,385

)

(9,306

)

(21,974

)

Prepaid expenses and other assets

(4,490

)

4,456

(6,368

)

(3,754

)

Accounts payable

(3,196

)

(1,682

)

(938

)

459

Accrued expenses and other liabilities

6,734

11,559

4,759

34,623

Deferred revenue

77,510

67,180

106,590

97,029

Operating lease liabilities

(5,668

)

(1,780

)

(13,840

)

(8,890

)

Net cash provided by operating activities

40,743

22,692

92,015

12,608

Investing activities

Purchases of property and equipment

(2,252

)

(2,112

)

(10,325

)

(15,782

)

Capitalized software development costs

(9,498

)

(8,865

)

(34,685

)

(33,648

)

Purchases of strategic investments

(238

)

(306

)

(764

)

(3,959

)

Purchases of marketable securities

(93,142

)

(76,128

)

(402,424

)

(369,206

)

Maturities of marketable securities

84,620

85,632

372,240

85,632

Sales of marketable securities

5,452

Originations of materials financing

(387

)

(6,739

)

(23,972

)

(23,489

)

Customer repayments of materials financing

5,189

6,688

26,242

18,685

Asset acquisitions, net of cash acquired

(1,814

)

(7,825

)

Settlement of post-close working capital adjustments from business combinations

1,291

Net cash used in investing activities

$

(17,522

)

$

(1,830

)

$

(76,061

)

$

(340,476

)

Procore Technologies, Inc.

Condensed Consolidated Statements of Cash Flows (unaudited)

Three Months Ended
December 31,

Year Ended
December 31,

2023

2022

2023

2022

(in thousands)

Financing activities

Proceeds from stock option exercises

$

2,524

$

3,019

$

17,618

$

22,364

Proceeds from employee stock purchase plan

12,394

10,620

25,400

22,133

Payments of deferred offering costs

(270

)

Payments of deferred business acquisition consideration

(3,870

)

(3,870

)

Principal payments under finance lease agreements, net of proceeds from lease incentives

(403

)

(375

)

(1,853

)

(1,705

)

Net cash provided by financing activities

14,515

9,394

41,165

38,652

Net increase (decrease) in cash, cash equivalents and restricted cash

37,736

30,256

57,119

(289,216

)

Effect of exchange rate changes on cash

1,736

1,834

855

(180

)

Cash, cash equivalents and restricted cash, beginning of period

318,318

267,726

299,816

589,212

Cash, cash equivalents and restricted cash, end of period

$

357,790

$

299,816

$

357,790

$

299,816


Contacts

Media Contact
press@procore.com

Investor Contact
ir@procore.com

Read full story here

First published on Fri, Feb 16, 2024

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