Procore Announces Second Quarter 2024 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. Unlike stock-based compensation expense, employer payroll tax related to employee stock transactions is a cash expense that we will continue to incur in the future. 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 business combinations 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 June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
	(in thousands, except share and per share amounts)
Revenue	$	284,347		$	228,536		$	553,775		$	442,062
Cost of revenue^(1)(2)(3)		48,101			42,304			93,824			82,506
Gross profit		236,246			186,232			459,951			359,556
Operating expenses
Sales and marketing ^(1)(2)(3)(4)		127,922			125,362			248,916			242,725
Research and development ^(1)(2)(3)(4)		72,308			73,216			142,907			153,252
General and administrative ^(1)(3)(4)		50,792			46,383			101,810			91,571
Total operating expenses		251,022			244,961			493,633			487,548
Loss from operations		(14,776	)		(58,729	)		(33,682	)		(127,992	)
Interest income		5,814			4,943			11,752			9,891
Interest expense		(472	)		(491	)		(951	)		(987	)
Accretion income, net		3,761			2,031			6,849			3,663
Other expense, net		(148	)		(313	)		(492	)		(523	)
Loss before provision for income taxes		(5,821	)		(52,559	)		(16,524	)		(115,948	)
Provision for income taxes		490			322			753			380
Net loss	$	(6,311	)	$	(52,881	)	$	(17,277	)	$	(116,328	)
Net loss per share attributable to common stockholders, basic and diluted	$	(0.04	)	$	(0.37	)	$	(0.12	)	$	(0.83	)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted		146,938,942			141,238,489			146,207,469			140,446,873

(1)

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
	(in thousands)
Cost of revenue	$	3,683	$	2,880	$	6,868	$	5,376
Sales and marketing		15,671		14,470		28,691		27,574
Research and development		17,628		16,270		31,363		36,051
General and administrative		13,961		9,909		25,690		20,384
Total stock-based compensation expense*	$	50,943	$	43,529	$	92,612	$	89,385
Includes amortization of capitalized stock-based compensation of $1.7 million and $1.0 million, respectively, for the three months ended June 30, 2024 and 2023; and $3.3 million and $2.0 million , respectively, for the six months ended June 30, 2024 and 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 June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
	(in thousands)
Cost of revenue	$	6,156	$	5,493	$	12,041	$	10,986
Sales and marketing		3,145		3,106		6,251		6,213
Research and development		665		675		1,340		1,409
Total amortization of acquired intangible assets	$	9,966	$	9,274	$	19,632	$	18,608

(3)

Includes employer payroll tax on employee stock transactions as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
	(in thousands)
Cost of revenue	$	161	$	139	$	373	$	306
Sales and marketing		788		618		2,052		1,617
Research and development		900		891		2,568		2,247
General and administrative		494		503		1,539		1,135
Total employer payroll tax on employee stock transactions	$	2,343	$	2,151	$	6,532	$	5,305

(4)

Includes acquisition-related expenses as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
	(in thousands)
Sales and marketing	$	1,000	$	548	$	1,448	$	1,454
Research and development		—		204		—		6,188
General and administrative		563		—		563		—
Total acquisition-related expenses	$	1,563	$	752	$	2,011	$	7,642

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

	June 30, 2 024			December 31, 2 023
	(in thousands)
Assets
Current assets
Cash and cash equivalents	$	356,239		$	357,790
Marketable securities, current		379,120			320,161
Accounts receivable, net		158,700			206,644
Contract cost asset, current		30,946			28,718
Prepaid expenses and other current assets		41,471			42,421
Total current assets		966,476			955,734
Marketable securities, non-current		45,430			—
Capitalized software development costs, net		95,763			83,045
Property and equipment, net		34,895			36,258
Right of use assets - finance leases		33,051			34,375
Right of use assets - operating leases		35,255			44,141
Contract cost asset, non-current		44,193			44,564
Intangible assets, net		142,293			137,546
Goodwill		550,363			539,354
Other assets		19,316			18,551
Total assets	$	1,967,035		$	1,893,568
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	26,951		$	13,177
Accrued expenses		71,253			100,075
Deferred revenue, current		494,680			501,903
Other current liabilities		31,894			27,275
Total current liabilities		624,778			642,430
Deferred revenue, non-current		6,135			7,692
Finance lease liabilities, non-current		42,468			43,581
Operating lease liabilities, non-current		32,578			37,923
Other liabilities, non-current		5,278			6,332
Total liabilities		711,237			737,958
Stockholders’ equity
Common stock		15			15
Additional paid-in capital		2,414,224			2,295,807
Accumulated other comprehensive loss		(2,327	)		(1,375	)
Accumulated deficit		(1,156,114	)		(1,138,837	)
Total stockholders’ equity		1,255,798			1,155,610
Total liabilities and stockholders’ equity	$	1,967,035		$	1,893,568

Remaining performance obligation:

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

	June 30,				Change
	2024		2023		Dollar		Percent
	(dollars in thousands)
Remaining performance obligations
Current	$	724,832	$	622,639	$	102,193	16	%
Non-current		310,381		226,877		83,504	37	%
Total remaining performance obligations	$	1,035,213	$	849,516	$	185,697	22	%

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

	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
	(in thousands)
Operating activities
Net loss	$	(6,311	)	$	(52,881	)	$	(17,277	)	$	(116,328	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities
Stock-based compensation		49,225			42,487			89,357			87,425
Depreciation and amortization		20,843			17,336			40,894			34,210
Accretion of discounts on marketable debt securities, net		(3,661	)		(2,030	)		(6,749	)		(3,662	)
Abandonment of long-lived assets		312			94			580			535
Noncash operating lease expense		2,259			2,604			4,993			5,232
Unrealized foreign currency loss, net		(365	)		149			714			557
Deferred income taxes		1			3			2			5
Provision for credit losses		216			2,004			405			3,730
Increase (decrease) in fair value of strategic investments		118			42			(641	)		6
Changes in operating assets and liabilities, net of effect of asset acquisitions and business combinations
Accounts receivable		(19,019	)		(19,371	)		48,994			23,577
Deferred contract cost assets		(1,662	)		(3,170	)		(2,089	)		(3,630	)
Prepaid expenses and other assets		494			(2,848	)		(190	)		1,701
Accounts payable		10,124			(3,499	)		13,279			1,149
Accrued expenses and other liabilities		3,707			(2,929	)		(30,447	)		(31,110	)
Deferred revenue		3,231			13,093			(10,877	)		19,582
Operating lease liabilities		(817	)		(2,761	)		(3,108	)		(5,381	)
Net cash provided by (used in) operating activities		58,695			(11,677	)		127,840			17,598
Investing activities
Purchases of property and equipment		(1,874	)		(2,521	)		(3,963	)		(4,694	)
Capitalized software development costs		(10,218	)		(9,400	)		(19,732	)		(17,351	)
Purchases of strategic investments		(862	)		(293	)		(1,072	)		(442	)
Purchases of marketable securities		(222,940	)		(139,286	)		(324,374	)		(229,282	)
Maturities of marketable securities		118,798			118,817			226,099			222,726
Sales of marketable securities		—			5,452			—			5,452
Originations of materials financing		—			(7,930	)		—			(17,007	)
Customer repayments of materials financing		202			7,638			1,483			12,996
Acquisition of a business, net of cash acquired		(25,945	)		—			(25,945	)		—
Asset acquisitions, net of cash acquired		(3,787	)		—			(3,792	)		—
Net cash used in investing activities		(146,626	)		(27,523	)		(151,296	)		(27,602	)
Financing activities
Proceeds from stock option exercises		2,790			7,217			9,915			10,939
Proceeds from employee stock purchase plan		13,187			13,006			13,187			13,006
Principal payments under finance lease agreements, net of proceeds from lease incentives		(220	)		(520	)		(669	)		(930	)
Net cash provided by financing activities		15,757			19,703			22,433			23,015
Net increase in cash and cash equivalents		(72,174	)		(19,497	)		(1,023	)		13,011
Effect of exchange rate changes on cash		757			(53	)		(528	)		(309	)
Cash and cash equivalents, beginning of period		427,656			332,068			357,790			299,816
Cash and cash equivalents, end of period	$	356,239		$	312,518		$	356,239		$	312,518

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,
	2024			2023			2024			2023
	(dollars in thousands)
Revenue	$	284,347		$	228,536		$	553,775		$	442,062
Gross profit		236,246			186,232			459,951			359,556
Stock-based compensation expense		3,683			2,880			6,868			5,376
Amortization of acquired technology intangible assets		6,156			5,493			12,041			10,986
Employer payroll tax on employee stock transactions		161			139			373			306
Non-GAAP gross profit	$	246,246		$	194,744		$	479,233		$	376,224
Gross margin		83	%		81	%		83	%		81	%
Non-GAAP gross margin		87	%		85	%		87	%		85	%

Reconciliation of operating expenses to non-GAAP operating expenses:

	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
	(dollars in thousands)
Revenue	$	284,347		$	228,536		$	553,775		$	442,062
GAAP sales and marketing		127,922			125,362			248,916			242,725
Stock-based compensation expense		(15,671	)		(14,470	)		(28,691	)		(27,574	)
Amortization of acquired intangible assets		(3,145	)		(3,106	)		(6,251	)		(6,213	)
Employer payroll tax on employee stock transactions		(788	)		(618	)		(2,052	)		(1,617	)
Acquisition-related expenses		(1,000	)		(548	)		(1,448	)		(1,454	)
Non-GAAP sales and marketing	$	107,318		$	106,620		$	210,474		$	205,867
GAAP sales and marketing as a percentage of revenue		45	%		55	%		45	%		55	%
Non-GAAP sales and marketing as a percentage of revenue		38	%		47	%		38	%		47	%

GAAP research and development	$	72,308		$	73,216		$	142,907		$	153,252
Stock-based compensation expense		(17,628	)		(16,270	)		(31,363	)		(36,051	)
Amortization of acquired intangible assets		(665	)		(675	)		(1,340	)		(1,409	)
Employer payroll tax on employee stock transactions		(900	)		(891	)		(2,568	)		(2,247	)
Acquisition-related expenses		—			(204	)		—			(6,188	)
Non-GAAP research and development	$	53,115		$	55,176		$	107,636		$	107,357
GAAP research and development as a percentage of revenue		25	%		32	%		26	%		35	%
Non-GAAP research and development as a percentage of revenue		19	%		24	%		19	%		24	%

GAAP general and administrative	$	50,792		$	46,383		$	101,810		$	91,571
Stock-based compensation expense		(13,961	)		(9,909	)		(25,690	)		(20,384	)
Employer payroll tax on employee stock transactions		(494	)		(503	)		(1,539	)		(1,135	)
Acquisition-related expenses		(563	)		—			(563	)		—
Non-GAAP general and administrative	$	35,774		$	35,971		$	74,018		$	70,052
GAAP general and administrative as a percentage of revenue		18	%		20	%		18	%		21	%
Non-GAAP general and administrative as a percentage of revenue		13	%		16	%		13	%		16	%

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

	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
	(dollars in thousands)
Revenue	$	284,347		$	228,536		$	553,775		$	442,062
Loss from operations		(14,776	)		(58,729	)		(33,682	)		(127,992	)
Stock-based compensation expense		50,943			43,529			92,612			89,385
Amortization of acquired intangible assets		9,966			9,274			19,632			18,608
Employer payroll tax on employee stock transactions		2,343			2,151			6,532			5,305
Acquisition-related expenses		1,563			752			2,011			7,642
Non-GAAP income (loss) from operations	$	50,039		$	(3,023	)	$	87,105		$	(7,052	)
Operating margin		(5	%)		(26	%)		(6	%)		(29	%)
Non-GAAP operating margin		18	%		(1	%)		16	%		(2	%)

Reconciliation of net loss and net loss per share to non-GAAP net income and non-GAAP net income per share:

	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
	(in thousands, except share and per share amounts)
Revenue	$	284,347		$	228,536		$	553,775		$	442,062
Net loss		(6,311	)		(52,881	)		(17,277	)		(116,328	)
Stock-based compensation expense		50,943			43,529			92,612			89,385
Amortization of acquired intangible assets		9,966			9,274			19,632			18,608
Employer payroll tax on employee stock transactions		2,343			2,151			6,532			5,305
Acquisition-related expenses		1,563			752			2,011			7,642
Non-GAAP net income	$	58,504		$	2,825		$	103,510		$	4,612

Numerator:
Non-GAAP net income	$	58,504		$	2,825		$	103,510		$	4,612

Denominator:
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic		146,938,942			141,238,489			146,207,469			140,446,873
Effect of dilutive securities: Employee stock awards		4,653,396			6,117,368			5,349,382			6,537,556
Weighted-average shares used in computing net income per share attributable to common stockholders, diluted		151,592,338			147,355,857			151,556,851			146,984,429

GAAP net loss per share, basic	$	(0.04	)	$	(0.37	)	$	(0.12	)	$	(0.83	)
GAAP net loss per share, diluted	$	(0.04	)	$	(0.37	)	$	(0.12	)	$	(0.83	)
Non-GAAP net income per share, basic	$	0.40		$	0.02		$	0.71		$	0.03
Non-GAAP net income per share, diluted	$	0.39		$	0.02		$	0.68		$	0.03

Computation of free cash flow:

	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
	(in thousands)
Net cash provided by (used in) operating activities	$	58,695		$	(11,677	)	$	127,840		$	17,598
Purchases of property, plant, and equipment		(1,874	)		(2,521	)		(3,963	)		(4,694	)
Capitalized software development costs		(10,218	)		(9,400	)		(19,732	)		(17,351	)
Non-GAAP free cash flow	$	46,603		$	(23,598	)	$	104,145		$	(4,447	)

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