Procore Announces Third Quarter 2023 Financial Results

November 1, 2023

Procore Technologies, Inc. (NYSE: PCOR), the leading global provider of construction management software, today announced financial results for the third quarter ended September 30, 2023.

“We remain excited about the long-term opportunity ahead of us, as we continue to deliver technology that drives the efficiency and productivity gains that are critical for our customers in today’s uncertain climate. Amidst a more challenging demand environment, we continued to advance our mission of connecting everyone in construction on a global platform, with a number of groundbreaking innovations to the Procore platform,” said Tooey Courtemanche, founder, president and CEO of Procore.

“In Q3, we made significant improvements to our efficiency profile, returning to non-GAAP operating profitability this quarter,” said Howard Fu, CFO of Procore. “In light of the incremental demand headwinds, we remain more focused than ever on maintaining our disciplined operating approach to optimize our efficient growth trajectory in the near and long term.”

Third Quarter 2023 Financial Highlights:

  • Revenue was $248 million, an increase of 33% year-over-year.
  • GAAP gross margin was 82% and non-GAAP gross margin was 86%.
  • GAAP operating margin was (20%) and non-GAAP operating margin was 3%.
  • Operating cash inflow for the third quarter was $34 million.
  • Free cash inflow for the third quarter was $22 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:

Fourth Quarter and Full Year 2023 Outlook:

Procore is providing the following guidance for the fourth quarter and full year 2023:

  • Fourth Quarter 2023 Outlook:
    • Revenue is expected to be in the range of $247 million to $249 million, representing year-over-year growth of 22% to 23%.
    • Non-GAAP operating margin is expected to be in the range of 2% to 3%.
  • Full Year 2023 Outlook:
    • Revenue is expected to be in the range of $937 million to $939 million, representing year-over-year growth of 30%.
    • Non-GAAP operating margin is expected to be in the range of 0.5% to 1%.

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 third quarter results at 2:00 p.m., Pacific Time, on Wednesday, November 1, 2023. 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 benefits relate to the release of a portion of our valuation allowance as a result of 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 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 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 Technologies, Inc.

Condensed Consolidated Statements of Operations

(unaudited)

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

(in thousands, except share and per share amounts)

Revenue

$

247,907

 

 

$

186,429

 

 

$

689,969

 

 

$

518,150

 

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

 

44,125

 

 

 

37,779

 

 

 

126,631

 

 

 

107,846

 

Gross profit

 

203,782

 

 

 

148,650

 

 

 

563,338

 

 

 

410,304

 

Operating expenses

 

 

 

 

 

 

 

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

 

129,672

 

 

 

109,608

 

 

 

372,397

 

 

 

306,806

 

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

 

72,708

 

 

 

71,493

 

 

 

225,960

 

 

 

195,569

 

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

 

51,753

 

 

 

39,362

 

 

 

143,324

 

 

 

123,181

 

Total operating expenses

 

254,133

 

 

 

220,463

 

 

 

741,681

 

 

 

625,556

 

Loss from operations

 

(50,351

)

 

 

(71,813

)

 

 

(178,343

)

 

 

(215,252

)

Interest income

 

4,721

 

 

 

1,922

 

 

 

14,612

 

 

 

2,674

 

Interest expense

 

(490

)

 

 

(504

)

 

 

(1,477

)

 

 

(1,636

)

Accretion income, net

 

2,952

 

 

 

666

 

 

 

6,615

 

 

 

666

 

Other expense, net

 

(486

)

 

 

(1,143

)

 

 

(1,009

)

 

 

(1,490

)

Loss before provision for income taxes

 

(43,654

)

 

 

(70,872

)

 

 

(159,602

)

 

 

(215,038

)

Provision for income taxes

 

193

 

 

 

333

 

 

 

573

 

 

 

709

 

Net loss

$

(43,847

)

 

$

(71,205

)

 

$

(160,175

)

 

$

(215,747

)

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

$

(0.31

)

 

$

(0.52

)

 

$

(1.13

)

 

$

(1.59

)

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

 

142,828,406

 

 

 

137,180,639

 

 

 

141,249,446

 

 

 

135,888,952

(1)

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

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

(in thousands)

Cost of revenue

$

2,981

 

$

1,835

 

$

8,357

 

$

5,339

Sales and marketing

 

14,390

 

 

 

15,483

 

 

 

41,964

 

 

 

38,351

 

Research and development

 

16,350

 

 

 

17,758

 

 

 

52,401

 

 

 

43,910

 

General and administrative

 

12,253

 

 

 

9,701

 

 

 

32,637

 

 

 

28,281

 

Total stock-based compensation expense*

$

45,974

 

 

$

44,777

 

 

$

135,359

 

 

$

115,881

 

 

*Includes amortization of capitalized stock-based compensation of $1.2 million and $3.1 million, respectively, for the three and nine months ended September 30, 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
September 30,

 

Nine Months Ended
September 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

(in thousands)

Cost of revenue

$

5,506

 

$

5,627

 

$

16,492

 

$

16,935

Sales and marketing

 

3,106

 

 

 

3,106

 

 

 

9,319

 

 

 

9,318

 

Research and development

 

678

 

 

 

877

 

 

 

2,087

 

 

 

2,674

 

Total amortization of acquired intangible assets

$

9,290

 

 

$

9,610

 

 

$

27,898

 

 

$

28,927

 

(3)

Includes employer payroll tax on employee stock transactions as follows:

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

(in thousands)

Cost of revenue

$

133

 

$

99

 

$

439

 

$

248

Sales and marketing

 

766

 

 

 

682

 

 

 

2,383

 

 

 

1,607

 

Research and development

 

638

 

 

 

638

 

 

 

2,885

 

 

 

2,188

 

General and administrative

 

501

 

 

 

304

 

 

 

1,636

 

 

 

1,031

 

Total employer payroll tax on employee stock transactions

$

2,038

 

 

$

1,723

 

 

$

7,343

 

 

$

5,074

 

(4)

Includes acquisition-related expenses as follows:

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

(in thousands)

Sales and marketing

$

548

 

$

655

 

$

2,002

 

$

1,070

Research and development

 

136

 

 

 

1,679

 

 

 

6,324

 

 

 

3,870

 

General and administrative

 

19

 

 

 

3

 

 

 

19

 

 

 

2,122

 

Total acquisition-related expenses

$

703

 

 

$

2,337

 

 

$

8,345

 

 

$

7,062

 

Procore Technologies, Inc.

Condensed Consolidated Balance Sheets

(unaudited)

 

 

September 30,
2023

 

December 31,
2022

 

(in thousands)

Assets

 

 

 

Current assets

 

 

 

Cash and cash equivalents

$

318,318

 

 

$

296,712

 

Marketable securities

 

308,162

 

 

 

285,493

 

Accounts receivable, net

 

145,714

 

 

 

148,683

 

Contract cost asset, current

 

26,656

 

 

 

23,600

 

Prepaid expenses and other current assets

 

43,096

 

 

 

44,731

 

Total current assets

 

841,946

 

 

 

799,219

 

Capitalized software development costs, net

 

76,931

 

 

 

58,577

 

Property and equipment, net

 

37,381

 

 

 

39,193

 

Right of use assets - finance leases

 

35,013

 

 

 

37,026

 

Right of use assets - operating leases

 

47,481

 

 

 

41,934

 

Contract cost asset, non-current

 

42,232

 

 

 

40,477

 

Intangible assets, net

 

144,227

 

 

 

162,953

 

Goodwill

 

539,108

 

 

 

539,128

 

Other assets

 

18,682

 

 

 

21,903

 

Total assets

$

1,783,001

 

 

$

1,740,410

 

Liabilities and Stockholders’ Equity

 

 

 

Current liabilities

 

 

 

Accounts payable

$

16,911

 

 

$

14,282

 

Accrued expenses

 

95,130

 

 

 

99,182

 

Deferred revenue, current

 

425,591

 

 

 

396,535

 

Other current liabilities

 

23,923

 

 

 

21,639

 

Total current liabilities

 

561,555

 

 

 

531,638

 

Deferred revenue, non-current

 

5,836

 

 

 

5,278

 

Finance lease liabilities, non-current

 

44,013

 

 

 

45,578

 

Operating lease liabilities, non-current

 

41,275

 

 

 

38,087

 

Other liabilities, non-current

 

6,571

 

 

 

3,049

 

Total liabilities

 

659,250

 

 

 

623,630

 

Stockholders’ equity

 

 

 

Common stock

 

14

 

 

 

14

 

Additional paid-in capital

 

2,235,480

 

 

 

2,068,225

 

Accumulated other comprehensive loss

 

(2,425

)

 

 

(2,316

)

Accumulated deficit

 

(1,109,318

)

 

 

(949,143

)

Total stockholders’ equity

 

1,123,751

 

 

 

1,116,780

 

Total liabilities and stockholders’ equity

$

1,783,001

 

 

$

1,740,410

 

Remaining performance obligation:

 

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

 

 

September 30,

 

Change

 

 

2023

 

 

 

2022

 

 

Dollar

 

Percent

 

(dollars in thousands)

Remaining performance obligations

 

 

 

 

 

 

 

Current

$

635,000

 

$

501,400

 

$

133,600

 

27

%

Non-current

 

255,381

 

 

 

213,600

 

 

 

41,781

 

 

20

%

Total remaining performance obligations

$

890,381

 

 

$

715,000

 

 

$

175,381

 

 

25

%

Procore Technologies, Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

(in thousands)

Operating activities

 

 

 

 

 

 

 

Net loss

$

(43,847

)

 

$

(71,205

)

 

$

(160,175

)

 

$

(215,747

)

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

 

 

 

 

 

 

 

Stock-based compensation

 

44,809

 

 

 

44,777

 

 

 

132,234

 

 

 

115,881

 

Depreciation and amortization

 

17,733

 

 

 

15,903

 

 

 

51,943

 

 

 

46,453

 

Accretion of discounts on marketable debt securities, net

 

(2,953

)

 

 

(650

)

 

 

(6,615

)

 

 

(650

)

Abandonment of long-lived assets

 

277

 

 

 

177

 

 

 

812

 

 

 

1,064

 

Noncash operating lease expense

 

2,700

 

 

 

2,751

 

 

 

7,932

 

 

 

7,559

 

Unrealized foreign currency loss, net

 

182

 

 

 

526

 

 

 

739

 

 

 

881

 

Deferred income taxes

 

2

 

 

 

288

 

 

 

7

 

 

 

(350

)

Provision for credit losses

 

3,152

 

 

 

695

 

 

 

6,882

 

 

 

1,337

 

Decrease (increase) in fair value of strategic investments

 

149

 

 

 

45

 

 

 

155

 

 

 

(36

)

Changes in operating assets and liabilities

 

 

 

 

 

 

 

Accounts receivable

 

(20,433

)

 

 

(17,978

)

 

 

3,144

 

 

 

6,379

 

Deferred contract cost assets

 

(1,469

)

 

 

(5,228

)

 

 

(5,099

)

 

 

(12,589

)

Prepaid expenses and other assets

 

(3,579

)

 

 

(3,094

)

 

 

(1,878

)

 

 

(8,210

)

Accounts payable

 

1,109

 

 

 

(3,785

)

 

 

2,258

 

 

 

2,141

 

Accrued expenses and other liabilities

 

29,135

 

 

 

31,973

 

 

 

(1,975

)

 

 

23,064

 

Deferred revenue

 

9,498

 

 

 

14,143

 

 

 

29,080

 

 

 

29,849

 

Operating lease liabilities

 

(2,791

)

 

 

(2,751

)

 

 

(8,172

)

 

 

(7,110

)

Net cash provided by (used in) operating activities

 

33,674

 

 

 

6,587

 

 

 

51,272

 

 

 

(10,084

)

Investing activities

 

 

 

 

 

 

 

Purchases of property and equipment

 

(3,379

)

 

 

(4,237

)

 

 

(8,073

)

 

 

(13,670

)

Capitalized software development costs

 

(7,836

)

 

 

(8,531

)

 

 

(25,187

)

 

 

(24,783

)

Purchases of strategic investments

 

(84

)

 

 

(635

)

 

 

(526

)

 

 

(3,653

)

Purchases of marketable securities

 

(80,000

)

 

 

(293,078

)

 

 

(309,282

)

 

 

(293,078

)

Maturities of marketable securities

 

64,894

 

 

 

 

 

 

287,620

 

 

 

 

Sales of marketable securities

 

 

 

 

 

 

 

5,452

 

 

 

 

Originations of materials financing

 

(6,578

)

 

 

(7,491

)

 

 

(23,585

)

 

 

(16,750

)

Customer repayments of materials financing

 

8,057

 

 

 

5,736

 

 

 

21,053

 

 

 

11,997

 

Asset acquisition, net of cash acquired

 

(6,011

)

 

 

 

 

 

(6,011

)

 

 

 

Settlement of post-close working capital adjustments from business combinations

 

 

 

 

 

 

 

 

 

 

1,291

 

Net cash used in investing activities

 

(30,937

)

 

 

(308,236

)

 

 

(58,539

)

 

 

(338,646

)

Financing activities

 

 

 

 

 

 

 

Proceeds from stock option exercises

 

4,155

 

 

 

4,741

 

 

 

15,094

 

 

 

19,345

 

Proceeds from employee stock purchase plan

 

 

 

 

 

 

 

13,006

 

 

 

11,513

 

Payments of deferred offering costs

 

 

 

 

 

 

 

 

 

 

(270

)

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

 

(520

)

 

 

(486

)

 

 

(1,450

)

 

 

(1,330

)

Net cash provided by financing activities

 

3,635

 

 

 

4,255

 

 

 

26,650

 

 

 

29,258

 

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

 

6,372

 

 

 

(297,394

)

 

 

19,383

 

 

 

(319,472

)

Effect of exchange rate changes on cash

 

(572

)

 

 

(1,208

)

 

 

(881

)

 

 

(2,014

)

Cash, cash equivalents and restricted cash, beginning of period

 

312,518

 

 

 

566,328

 

 

 

299,816

 

 

 

589,212

 

Cash, cash equivalents and restricted cash, end of period

$

318,318

 

 

$

267,726

 

 

$

318,318

 

 

$

267,726

 

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
September 30,

 

Nine Months Ended
September 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

(dollars in thousands)

Revenue

$

247,907

 

 

$

186,429

 

 

$

689,969

 

 

$

518,150

 

Gross profit

 

203,782

 

 

 

148,650

 

 

 

563,338

 

 

 

410,304

 

Stock-based compensation expense

 

2,981

 

 

 

1,835

 

 

 

8,357

 

 

 

5,339

 

Amortization of acquired technology intangible assets

 

5,506

 

 

 

5,627

 

 

 

16,492

 

 

 

16,935

 

Employer payroll tax on employee stock transactions

 

133

 

 

 

99

 

 

 

439

 

 

 

248

 

Non-GAAP gross profit

$

212,402

 

 

$

156,211

 

 

$

588,626

 

 

$

432,826

 

Gross margin

 

82

%

 

 

80

%

 

 

82

%

 

 

79

%

Non-GAAP gross margin

 

86

%

 

 

84

%

 

 

85

%

 

 

84

%

Reconciliation of operating expenses to non-GAAP operating expenses:

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

(dollars in thousands)

Revenue

$

247,907

 

 

$

186,429

 

 

$

689,969

 

 

$

518,150

 

GAAP sales and marketing

 

129,672

 

 

 

109,608

 

 

 

372,397

 

 

 

306,806

 

Stock-based compensation expense

 

(14,390

)

 

 

(15,483

)

 

 

(41,964

)

 

 

(38,351

)

Amortization of acquired intangible assets

 

(3,106

)

 

 

(3,106

)

 

 

(9,319

)

 

 

(9,318

)

Employer payroll tax on employee stock transactions

 

(766

)

 

 

(682

)

 

 

(2,383

)

 

 

(1,607

)

Acquisition-related expenses

 

(548

)

 

 

(655

)

 

 

(2,002

)

 

 

(1,070

)

Non-GAAP sales and marketing

$

110,862

 

 

$

89,682

 

 

$

316,729

 

 

$

256,460

 

GAAP sales and marketing as a percentage of revenue

 

52

%

 

 

59

%

 

 

54

%

 

 

59

%

Non-GAAP sales and marketing as a percentage of revenue

 

45

%

 

 

48

%

 

 

46

%

 

 

49

%

 

 

 

 

 

 

 

 

GAAP research and development

$

72,708

 

 

$

71,493

 

 

$

225,960

 

 

$

195,569

 

Stock-based compensation expense

 

(16,350

)

 

 

(17,758

)

 

 

(52,401

)

 

 

(43,910

)

Amortization of acquired intangible assets

 

(678

)

 

 

(877

)

 

 

(2,087

)

 

 

(2,674

)

Employer payroll tax on employee stock transactions

 

(638

)

 

 

(638

)

 

 

(2,885

)

 

 

(2,188

)

Acquisition-related expenses

 

(136

)

 

 

(1,679

)

 

 

(6,324

)

 

 

(3,870

)

Non-GAAP research and development

$

54,906

 

 

$

50,541

 

 

$

162,263

 

 

$

142,927

 

GAAP research and development as a percentage of revenue

 

29

%

 

 

38

%

 

 

33

%

 

 

38

%

Non-GAAP research and development as a percentage of revenue

 

22

%

 

 

27

%

 

 

24

%

 

 

28

%

 

 

 

 

 

 

 

 

GAAP general and administrative

$

51,753

 

 

$

39,362

 

 

$

143,324

 

 

$

123,181

 

Stock-based compensation expense

 

(12,253

)

 

 

(9,701

)

 

 

(32,637

)

 

 

(28,281

)

Employer payroll tax on employee stock transactions

 

(501

)

 

 

(304

)

 

 

(1,636

)

 

 

(1,031

)

Acquisition-related expenses

 

(19

)

 

 

(3

)

 

 

(19

)

 

 

(2,122

)

Non-GAAP general and administrative

$

38,980

 

 

$

29,354

 

 

$

109,032

 

 

$

91,747

 

GAAP general and administrative as a percentage of revenue

 

21

%

 

 

21

%

 

 

21

%

 

 

24

%

Non-GAAP general and administrative as a percentage of revenue

 

16

%

 

 

16

%

 

 

16

%

 

 

18

%

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

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

(dollars in thousands)

Revenue

$

247,907

 

 

$

186,429

 

 

$

689,969

 

 

$

518,150

 

Loss from operations

 

(50,351

)

 

 

(71,813

)

 

 

(178,343

)

 

 

(215,252

)

Stock-based compensation expense

 

45,974

 

 

 

44,777

 

 

 

135,359

 

 

 

115,881

 

Amortization of acquired intangible assets

 

9,290

 

 

 

9,610

 

 

 

27,898

 

 

 

28,927

 

Employer payroll tax on employee stock transactions

 

2,038

 

 

 

1,723

 

 

 

7,343

 

 

 

5,074

 

Acquisition-related expenses

 

703

 

 

 

2,337

 

 

 

8,345

 

 

 

7,062

 

Non-GAAP income (loss) from operations

$

7,654

 

 

$

(13,366

)

 

$

602

 

 

$

(58,308

)

Operating margin

 

(20

%)

 

 

(39

%)

 

 

(26

%)

 

 

(42

%)

Non-GAAP operating margin

 

3

%

 

 

(7

%)

 

 

0

%

 

 

(11

%)

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

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

(in thousands, except share and per share amounts)

Revenue

$

247,907

 

 

$

186,429

 

 

$

689,969

 

 

$

518,150

 

Net loss

 

(43,847

)

 

 

(71,205

)

 

 

(160,175

)

 

 

(215,747

)

Stock-based compensation expense

 

45,974

 

 

 

44,777

 

 

 

135,359

 

 

 

115,881

 

Amortization of acquired intangible assets

 

9,290

 

 

 

9,610

 

 

 

27,898

 

 

 

28,927

 

Employer payroll tax on employee stock transactions

 

2,038

 

 

 

1,723

 

 

 

7,343

 

 

 

5,074

 

Acquisition-related expenses

 

703

 

 

 

2,337

 

 

 

8,345

 

 

 

7,062

 

Income tax effect of non-GAAP items

 

 

 

 

(48

)

 

 

 

 

 

62

 

Non-GAAP net income (loss)

$

14,158

 

 

$

(12,806

)

 

$

18,770

 

 

$

(58,741

)

 

 

 

 

 

 

 

 

Numerator:

 

 

 

 

 

 

 

Non-GAAP net income (loss)

$

14,158

 

 

$

(12,806

)

 

$

18,770

 

 

$

(58,741

)

 

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

 

 

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

 

142,828,406

 

 

 

137,180,639

 

 

 

141,249,446

 

 

 

135,888,952

 

Effect of dilutive securities: Employee stock awards

 

6,285,767

 

 

 

 

 

 

6,672,063

 

 

 

 

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

 

149,114,173

 

 

 

137,180,639

 

 

 

147,921,509

 

 

 

135,888,952

 

 

 

 

 

 

 

 

 

GAAP net loss per share, basic

$

(0.31

)

 

$

(0.52

)

 

$

(1.13

)

 

$

(1.59

)

GAAP net loss per share, diluted

$

(0.31

)

 

$

(0.52

)

 

$

(1.13

)

 

$

(1.59

)

Non-GAAP net income (loss) per share, basic

$

0.10

 

 

$

(0.09

)

 

$

0.13

 

 

$

(0.43

)

Non-GAAP net income (loss) per share, diluted

$

0.09

 

 

$

(0.09

)

 

$

0.13

 

 

$

(0.43

)

Computation of free cash flow:

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

(in thousands)

Net cash provided by (used in) operating activities

$

33,674

 

 

$

6,587

 

 

$

51,272

 

 

$

(10,084

)

Purchases of property, plant, and equipment

 

(3,379

)

 

 

(4,237

)

 

 

(8,073

)

 

 

(13,670

)

Capitalized software development costs

 

(7,836

)

 

 

(8,531

)

 

 

(25,187

)

 

 

(24,783

)

Non-GAAP free cash flow

$

22,459

 

 

$

(6,181

)

 

$

18,012

 

 

$

(48,537

)

PROCORE-IR

Category: Earnings

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press@procore.com

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Source: Procore Technologies Inc.