Procore Announces First Quarter 2023 Financial Results

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

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