Procore Announces Strong Second Quarter 2021 Financial Results

Revenue Accelerates to 27% Year-Over-Year Growth

CARPINTERIA, Calif.--()--Procore Technologies, Inc. (NYSE: PCOR), a leading provider of construction management software, today announced financial results for the second quarter ended June 30, 2021.

“Procore delivered record results in our first quarter as a public company,” said Tooey Courtemanche, Founder, President and CEO of Procore. “Our performance is a testament to our dedication to the construction industry, and the trust it has in us as a partner. Our commitment to this industry has always been, and will remain, core to who we are as we continue pursuing our vision of improving the lives of everyone in construction.”

“We are pleased with our performance in Q2 as we saw growth across all aspects of the business,” said Paul Lyandres, CFO of Procore. “We continued to expand our customer base, enter new international markets, and further invest in our products and platform, delivering incremental value to our customers.”

Second Quarter 2021 Financial Highlights:

  • Revenue was $122.8 million, an increase of 27% year-over-year.
  • GAAP gross margin was 79% and non-GAAP gross margin was 84%.
  • GAAP operating margin was (121%) and non-GAAP operating margin was (4%).
  • Operating cash outflow for the second quarter was $3.1 million.
  • Successfully completed our initial public offering on May 24, 2021, selling 10.41 million shares at $67 per share and raising total proceeds of $665.1 million net of underwriting discounts and commissions.

Non-GAAP gross margin and non-GAAP operating margin are non-GAAP financial measures. A reconciliation of GAAP to non-GAAP financial measures has been provided in the tables included in this press release.

Second Quarter 2021 Business Highlights:

Third Quarter and Full Year 2021 Outlook:

Procore is providing the following guidance for the third quarter and full year 2021:

  • Third Quarter 2021 Outlook:
    • Revenue is expected to be in the range of $125 million to $127 million.
    • Non-GAAP operating margin is expected to be in the range of (7%) to (8%).
  • Full Year 2021 Outlook:
    • Revenue is expected to be in the range of $496 million to $499 million.
    • Non-GAAP operating margin is expected to be in the range of (6%) to (7%).

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 3:00 p.m., Pacific Time, on Thursday, August 5, 2021. A live audio webcast will be accessible on Procore's investor relations website at http://investors.procore.com.

Forward-Looking Statements

Statements Procore makes in this press release may include statements which are not historical facts and are considered forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995, which are usually identified by the use of words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” "outlook", “seeks,” “should,” “will,” and variations of such words or similar expressions.

Procore intends these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are making this statement for purposes of complying with those safe harbor provisions.

This press release contains forward-looking statements about Procore and its industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this press release, including, but not limited to, statements regarding the expected performance of Procore’s business and objectives of management for future operations, are forward-looking statements. 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. 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 non-GAAP gross margin and non-GAAP operating margin is helpful to its investors. These measures, which are referred to as non-GAAP financial measures, are not prepared in accordance with U.S. generally accepted accounting principles, or GAAP. Non-GAAP gross profit and non-GAAP gross margin are defined as gross profit and gross margin, respectively, excluding stock-based compensation expense, amortization of acquired technology intangible assets, and employer payroll tax related to employee stock transactions. Non-GAAP gross margin is the ratio calculated by dividing non-GAAP gross profit by total revenue. Non-GAAP income (loss) from operations and non-GAAP operating margin are defined as GAAP loss from operations and GAAP operating margin, respectively, excluding stock-based compensation expense, amortization of acquired intangible assets, and employer payroll tax related to employee stock transactions. Non-GAAP operating margin is the ratio calculated by dividing non-GAAP income (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). 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.

About Procore

Procore is a leading 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

Procore Technologies, Inc.
Condensed Consolidated Statements of Operations
(unaudited)

(in thousands, except share and per share amounts)

 

Three Months Ended
June 30,

 

 

Six Months Ended
June 30,

 

 

 

2020

 

 

2021

 

 

2020

 

 

2021

 

Revenue

 

$

96,553

 

 

$

122,790

 

 

$

188,890

 

 

$

236,728

 

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

 

 

17,069

 

 

 

25,493

 

 

 

34,526

 

 

 

45,852

 

Gross profit

 

 

79,484

 

 

 

97,297

 

 

 

154,364

 

 

 

190,876

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

42,638

 

 

 

99,905

 

 

 

90,700

 

 

 

153,870

 

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

 

 

26,518

 

 

 

88,627

 

 

 

54,751

 

 

 

123,172

 

General and administrative (1)(3)

 

 

13,467

 

 

 

57,827

 

 

 

29,450

 

 

 

75,754

 

Total operating expenses

 

 

82,623

 

 

 

246,359

 

 

 

174,901

 

 

 

352,796

 

Loss from operations

 

 

(3,139

)

 

 

(149,062

)

 

 

(20,537

)

 

 

(161,920

)

Interest expense, net

 

 

(538

)

 

 

(576

)

 

 

(920

)

 

 

(1,138

)

Change in fair value of Series I redeemable convertible

preferred stock warrant liability

 

 

(10,605

)

 

 

 

 

 

(10,605

)

 

 

 

Other income (expense), net

 

 

741

 

 

 

(44

)

 

 

(477

)

 

 

(227

)

Loss before provision for income taxes

 

 

(13,541

)

 

 

(149,682

)

 

 

(32,539

)

 

 

(163,285

)

Provision for income taxes

 

 

208

 

 

 

37

 

 

 

244

 

 

 

166

 

Net loss

 

$

(13,749

)

 

$

(149,719

)

 

$

(32,783

)

 

$

(163,451

)

Net loss per share attributable to common stockholders,

basic and diluted

 

$

(0.50

)

 

$

(2.04

)

 

$

(1.22

)

 

$

(3.11

)

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

 

 

27,346,530

 

 

 

73,539,568

 

 

 

26,893,572

 

 

 

52,564,840

 

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

 

 

Three Months Ended
June 30,

 

 

Six Months Ended
June 30,

 

 

 

2020

 

 

2021

 

 

2020

 

 

2021

 

 

 

(in thousands)

 

Cost of revenue

 

$

268

 

 

$

4,918

 

 

$

535

 

 

$

6,079

 

Sales and marketing

 

 

3,115

 

 

 

42,855

 

 

 

5,234

 

 

 

46,107

 

Research and development

 

 

1,912

 

 

 

51,317

 

 

 

3,849

 

 

 

54,563

 

General and administrative

 

 

1,331

 

 

 

38,353

 

 

 

2,708

 

 

 

40,997

 

Total stock-based compensation expense

 

$

6,626

 

 

$

137,443

 

 

$

12,326

 

 

$

147,746

 

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

 

 

Three Months Ended
June 30,

 

 

Six Months Ended
June 30,

 

 

 

2020

 

 

2021

 

 

2020

 

 

2021

 

 

 

 

 

 

 

(in thousands)

 

 

 

 

 

Cost of revenue

 

$

761

 

 

$

1,086

 

 

$

1,522

 

 

$

2,172

 

Sales and marketing

 

 

404

 

 

 

466

 

 

 

808

 

 

 

945

 

Research and development

 

 

183

 

 

 

680

 

 

 

305

 

 

 

863

 

Total amortization of acquired intangible assets

 

$

1,348

 

 

$

2,232

 

 

$

2,635

 

 

$

3,980

 

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

 

 

Three Months Ended
June 30,

 

 

Six Months Ended
June 30,

 

 

 

2020

 

 

2021

 

 

2020

 

 

2021

 

 

 

(in thousands)

 

Cost of revenue

 

$

 

 

$

330

 

 

$

 

 

$

334

 

Sales and marketing

 

 

7

 

 

 

1,215

 

 

 

76

 

 

 

1,357

 

Research and development

 

 

20

 

 

 

1,748

 

 

 

35

 

 

 

1,822

 

General and administrative

 

 

25

 

 

 

635

 

 

 

27

 

 

 

715

 

Total employer payroll tax on employee stock transactions

 

$

52

 

 

$

3,928

 

 

$

138

 

 

$

4,228

 

Procore Technologies, Inc.
Condensed Consolidated Balance Sheets
(unaudited)

(in thousands)

 

December 31,
2020

 

 

June 30,
2021

 

Assets

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

379,907

 

 

$

1,060,512

 

Accounts receivable, net

 

 

77,692

 

 

 

66,782

 

Contract cost asset, current

 

 

13,598

 

 

 

15,324

 

Prepaid expenses and other current assets

 

 

16,772

 

 

 

23,243

 

Total current assets

 

 

487,969

 

 

 

1,165,861

 

Capitalized software development costs, net

 

 

18,538

 

 

 

18,946

 

Property and equipment, net

 

 

30,252

 

 

 

31,470

 

Right of use assets - finance leases

 

 

42,108

 

 

 

40,770

 

Right of use assets - operating leases

 

 

49,756

 

 

 

46,094

 

Contract cost asset, non-current

 

 

19,454

 

 

 

22,749

 

Intangibles, net

 

 

33,241

 

 

 

43,935

 

Goodwill

 

 

125,966

 

 

 

137,335

 

Restricted cash, non-current

 

 

3,104

 

 

 

3,104

 

Other assets

 

 

10,379

 

 

 

7,883

 

Total assets

 

$

820,767

 

 

$

1,518,147

 

Liabilities, Redeemable Convertible Preferred Stock and Stockholders’

(Deficit) Equity

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

9,012

 

 

$

6,513

 

Accrued expenses

 

 

28,492

 

 

 

42,964

 

Deferred revenue, current

 

 

213,438

 

 

 

226,151

 

Other current liabilities

 

 

10,768

 

 

 

11,953

 

Total current liabilities

 

 

261,710

 

 

 

287,581

 

Deferred revenue, non-current

 

 

6,373

 

 

 

4,612

 

Finance lease liabilities, non-current

 

 

48,835

 

 

 

48,003

 

Operating lease liabilities, non-current

 

 

46,558

 

 

 

43,601

 

Other liabilities, non-current

 

 

1,919

 

 

 

7,688

 

Total liabilities

 

 

365,395

 

 

 

391,485

 

Redeemable convertible preferred stock

 

 

727,474

 

 

 

 

Stockholders’ (deficit) equity

 

 

 

 

 

 

 

 

Common stock

 

3

 

 

13

 

Additional paid-in capital

 

 

124,755

 

 

 

1,687,184

 

Accumulated other comprehensive income (loss)

 

 

187

 

 

 

(37

)

Accumulated deficit

 

 

(397,047

)

 

 

(560,498

)

Total stockholders’ (deficit) equity

 

 

(272,102

)

 

 

1,126,662

 

Total liabilities, redeemable convertible preferred stock and stockholders’

(deficit) equity

 

$

820,767

 

 

$

1,518,147

 

Remaining performance obligation:

The remaining performance obligation was $478.4 million as of June 30, 2021, approximately 72% of which is expected to be recognized as revenue within 12 months. The remaining performance obligation was $379.3 million as of June 30, 2020, 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
June 30,

 

 

Six Months Ended
June 30,

 

(in thousands)

 

2020

 

 

2021

 

 

2020

 

 

2021

 

Operating activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(13,749

)

 

$

(149,719

)

 

$

(32,783

)

 

$

(163,451

)

Adjustments to reconcile net loss to net cash (used in)

provided by operating activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

6,626

 

 

 

137,443

 

 

 

12,326

 

 

 

147,746

 

Depreciation and amortization

 

 

6,405

 

 

 

7,819

 

 

 

12,397

 

 

 

15,120

 

Change in fair value of Series I redeemable convertible

preferred stock warrant liability

 

 

10,605

 

 

 

 

 

 

10,605

 

 

 

 

Abandonment of long-lived assets

 

 

658

 

 

 

 

 

 

966

 

 

 

554

 

Noncash lease expense

 

 

1,601

 

 

 

1,869

 

 

 

3,150

 

 

 

3,735

 

Unrealized foreign currency (gain) loss, net

 

 

(1,392

)

 

 

86

 

 

 

(370

)

 

 

691

 

Deferred income taxes

 

 

 

 

 

(72

)

 

 

 

 

 

(99

)

Changes in operating assets and liabilities, net of effect

of business combinations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(10,138

)

 

 

(9,610

)

 

 

6,484

 

 

 

11,113

 

Deferred contract cost assets

 

 

634

 

 

 

(3,500

)

 

 

796

 

 

 

(5,062

)

Prepaid expenses and other assets

 

 

1,449

 

 

 

(1,122

)

 

 

(123

)

 

 

(5,723

)

Accounts payable

 

 

(1,850

)

 

 

608

 

 

 

(88

)

 

 

(2,908

)

Accrued expenses and other liabilities

 

 

730

 

 

 

9,420

 

 

 

(11,498

)

 

 

14,535

 

Deferred revenue

 

 

(5,664

)

 

 

4,206

 

 

 

(776

)

 

 

10,845

 

Operating lease liabilities

 

 

(1,513

)

 

 

(557

)

 

 

(2,046

)

 

 

(1,929

)

Net cash flow (used in) provided by operating

activities

 

 

(5,598

)

 

 

(3,129

)

 

 

(960

)

 

 

25,167

 

Investing activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(2,051

)

 

 

(1,801

)

 

 

(5,311

)

 

 

(4,194

)

Capitalized software development costs

 

 

(2,961

)

 

 

(3,523

)

 

 

(6,930

)

 

 

(5,716

)

Strategic investments

 

 

 

 

 

(3,450

)

 

 

 

 

 

(3,450

)

Acquisition of businesses, net of cash acquired

 

 

 

 

 

(19,982

)

 

 

(3,325

)

 

 

(19,982

)

Net cash flow used in investing activities

 

 

(5,012

)

 

 

(28,756

)

 

 

(15,566

)

 

 

(33,342

)

Financing activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from issuance of redeemable convertible

preferred stock, net of issuance costs

 

 

4,942

 

 

 

 

 

 

157,942

 

 

 

 

Proceeds from issuance of Series I redeemable convertible

preferred stock warrant

 

 

 

 

 

 

 

 

11,923

 

 

 

 

Proceeds from initial public offering, net of underwriting

commissions and discounts

 

 

 

 

 

665,129

 

 

 

 

 

 

665,129

 

Proceeds from stock option exercises

 

 

4,332

 

 

 

17,499

 

 

 

10,059

 

 

 

29,126

 

Payment of debt issuance costs

 

 

(61

)

 

 

 

 

 

(80

)

 

 

 

Payments of deferred offering costs

 

 

(640

)

 

 

(2,987

)

 

 

(2,216

)

 

 

(3,527

)

Payment of deferred business acquisition consideration

 

 

 

 

 

(475

)

 

 

 

 

 

(475

)

Principal payments under finance lease agreements, net of

proceeds from lease incentives

 

 

(387

)

 

 

(428

)

 

 

(658

)

 

 

(742

)

Net cash flow provided by financing activities

 

 

8,186

 

 

 

678,738

 

 

 

176,970

 

 

 

689,511

 

Net (decrease) increase in cash, cash equivalents and

restricted cash

 

 

(2,424

)

 

 

646,853

 

 

 

160,444

 

 

 

681,336

 

Effect of exchange rate changes on cash

 

 

1,404

 

 

 

(102

)

 

 

336

 

 

 

(731

)

Cash, cash equivalents and restricted cash, beginning of

period

 

 

283,628

 

 

 

417,107

 

 

 

121,828

 

 

 

383,253

 

Cash, cash equivalents and restricted cash, end of period

 

$

282,608

 

 

$

1,063,858

 

 

$

282,608

 

 

$

1,063,858

 

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
June 30,

 

 

Six Months Ended
June 30,

 

 

 

2020

 

 

2021

 

 

2020

 

 

2021

 

 

 

(dollars in thousands)

 

Revenue

 

$

96,553

 

 

$

122,790

 

 

$

188,890

 

 

$

236,728

 

Gross profit

 

 

79,484

 

 

 

97,297

 

 

 

154,364

 

 

 

190,876

 

Stock-based compensation expense

 

 

268

 

 

 

4,918

 

 

 

535

 

 

 

6,079

 

Amortization of acquired technology

intangible assets

 

 

761

 

 

 

1,086

 

 

 

1,522

 

 

 

2,172

 

Employer payroll tax on employee stock

transactions

 

 

 

 

 

330

 

 

 

 

 

 

334

 

Non-GAAP gross profit

 

$

80,513

 

 

$

103,631

 

 

$

156,421

 

 

$

199,461

 

Gross margin

 

 

82

%

 

 

79

%

 

 

82

%

 

 

81

%

Non-GAAP gross margin

 

 

83

%

 

 

84

%

 

 

83

%

 

 

84

%

Reconciliation of loss from operations and operating margin to non-GAAP loss from operations and non-GAAP operating margin:

 

 

Three Months Ended
June 30,

 

 

Six Months Ended
June 30,

 

 

 

2020

 

 

2021

 

 

2020

 

 

2021

 

 

 

(dollars in thousands)

 

Revenue

 

$

96,553

 

 

$

122,790

 

 

$

188,890

 

 

$

236,728

 

Loss from operations

 

 

(3,139

)

 

 

(149,062

)

 

 

(20,537

)

 

 

(161,920

)

Stock-based compensation expense

 

 

6,626

 

 

 

137,443

 

 

 

12,326

 

 

 

147,746

 

Amortization of acquired intangible assets

 

 

1,348

 

 

 

2,232

 

 

 

2,635

 

 

 

3,980

 

Employer payroll tax on employee stock

transactions

 

 

52

 

 

 

3,928

 

 

 

138

 

 

 

4,228

 

Non-GAAP income (loss) from operations

 

$

4,887

 

 

$

(5,459

)

 

$

(5,438

)

 

$

(5,966

)

Operating margin

 

 

(3

%)

 

 

(121

%)

 

 

(11

%)

 

 

(68

%)

Non-GAAP operating margin

 

 

5

%

 

 

(4

%)

 

 

(3

%)

 

 

(3

%)

 

Contacts

Media Contact
Roohi Saeed
press@procore.com

Investor Contact
Matthew Puljiz
ir@procore.com

Release Summary

Procore Announces Strong Second Quarter 2021 Financial Results Revenue Accelerates to 27% Year-Over-Year Growth

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Contacts

Media Contact
Roohi Saeed
press@procore.com

Investor Contact
Matthew Puljiz
ir@procore.com