CARPINTERIA, Calif. — (BUSINESS WIRE) — 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:

• Added 363 net new organic customers in the third quarter, ending with a total of 16,067 organic customers.
• Achieved a gross revenue retention rate of 95% in the third quarter.
• Announced a number of innovations to the Procore platform related to digital transformation in construction, including the introduction of Procore Copilot, innovations in Procore Connectability, the launch of Procore Pay, and more.
• Ranked #4 on The Software Report’s list of Top 100 Software Companies of 2023.
• Awarded the TrustRadius 2023 Tech Cares Award.
• Recognized as a Silver Stevie Winner in The 20th Annual International Business Awards in 2023 for the Most Innovative Tech Company of the Year.
• Published the report “Risk Data Uncovered: How Technology is Transforming Risk Management in Construction,” in partnership with Frost & Sullivan, revealing insights into the transformative potential of technology adoption in construction risk management.
• Partnered with the Associated General Contractors of America to release the report “Top Civil & Infrastructure Trends: Today’s Industry Challenges and Opportunities,” exploring how civil and infrastructure organizations in the U.S. and Canada are building today, the challenges they face, and the opportunities that lie ahead.

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.