PROCORE TECHNOLOGIES, INC. [PCOR] Filings

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

10-Q 1 pcor-10q_20220930.htm Q3'22 10-Q pcor-10q_20220930.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to _______

Commission File Number: 001-40396

Procore Technologies, Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware	73-1636261
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
6309 Carpinteria Avenue Carpinteria, CA	93013
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (866) 477-6267

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common stock, $0.0001 par value

PCOR

The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 28, 2022, the registrant had 138,009,119 shares of common stock, $0.0001 par value per share, outstanding.

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION	4
Item 1.	Financial Statements (Unaudited)	4
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Operations and Comprehensive Loss	5
	Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)	6
	Condensed Consolidated Statements of Cash Flows	8
	Notes to Condensed Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37
Item 4.	Controls and Procedures	38
PART II.	OTHER INFORMATION	39
Item 1.	Legal Proceedings	39
Item 1A.	Risk Factors	39
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	69
Item 6.	Exhibits	70
Signatures		71

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), about us and our industry that involve substantial risks and uncertainties. All statements, other than statements of historical fact contained in this Quarterly Report on Form 10-Q, are forward-looking statements of our future operating results and financial position, our business strategy and plans, market growth and trends, and objectives for future operations, and the impact of the ongoing coronavirus pandemic (the “COVID-19 pandemic”), on our financial condition and results of operations. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain 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 our expectations, strategy, plans or intentions. These forward-looking statements include, but are not limited to, statements concerning the following:

•

our expectations regarding our financial performance, including revenues, expenses, and margins, and our ability to achieve or maintain future profitability;

•

our expectations regarding our ability to successfully integrate Express Lien, Inc. (d/b/a Levelset), a Delaware corporation (“Levelset”), and LaborChart, Inc., a Delaware corporation (“LaborChart”), into our business and receive the anticipated benefits from all such transactions;

•

our ability to effectively manage our growth;

•

anticipated performance, trends, growth rates, and challenges in our business and in the markets 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;

•

the performance of our corporate investments;

•

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;

•

our ability to develop new products and features, and whether our customers and prospective customers will adopt these new products and features;

•

our ability to maintain, protect, and enhance our brand;

•

the sufficiency of our cash to meet our cash needs for at least the next 12 months;

•

future acquisitions, joint ventures, or investments;

•

our ability to comply or remain in compliance with laws and regulations that currently apply or become applicable to our business in the United States (“U.S.”) and internationally;

•

the effects of the COVID-19 pandemic or other public health crises;

•

our reliance on key personnel and our ability to attract, maintain, and retain management and skilled personnel;

•

the future trading price of our common stock; and

•

our anticipated use of the net proceeds from our initial public offering (“IPO”).

You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our 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 described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. The results, events, and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.

In addition, statements that “we believe,” and similar statements, reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Quarterly Report on Form 10-Q. While we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.

The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments.

RISK FACTORS SUMMARY

Investing in our common stock involves a high degree of risk. Below is a summary of factors material to our business that make an investment in our securities speculative or risky. Importantly, this summary does not address all of the risks that we face. Additional discussion of the risks summarized in this risk factor summary, as well as other risks we face can be found under the heading “Risk Factors” in Part II of this Quarterly Report on Form 10-Q.

Our business is subject to a number of risks of which you should be aware before making a decision to invest in our common stock. These risks include, among others, the following:

•

we have experienced rapid growth in recent periods, and such growth may not be indicative of our future growth. If we fail to properly manage future growth, our business, financial condition, results of operations, and prospects could be materially adversely affected;

•

we have a history of losses and may not be able to achieve or sustain profitability in the future;

•

our business may be significantly impacted by changes in the economy and related reductions in spend across the construction industry;

•

the construction management software industry is evolving and may not develop in ways we expect;

•

our current and future products and features may not be widely accepted by our customers, and we may not be able to respond to technological changes or changes in customer demands and preferences, or develop new products and functionality;

•

we are continuing to expand our operations outside the U.S., where we may be subject to increased business, regulatory, and economic risks that could materially adversely affect our business, financial condition, results of operations, and prospects;

•

our business depends on a strong brand, and if we are not able to maintain and enhance our brand, our ability to maintain and expand our customer base may be impaired, and our business may be harmed;

•

our ability to increase our customer base and achieve broader market acceptance of our products will significantly depend on our ability to develop and expand our sales and marketing capabilities, the failure of which could materially adversely impact our business, financial condition, results of operations, and prospects;

•

we operate in a competitive market, and we must continue to compete effectively;

•

our results of operations may fluctuate significantly, which could make our future results difficult to predict and could cause our results of operations to fall below expectations;

•

if we lose key management personnel or if we are unable to retain or hire additional qualified personnel, we may not be able to achieve our strategic objectives and our business, financial condition, results of operations, and prospects could be materially adversely affected;

•

we are subject to stringent, changing, and sometimes potentially inconsistent obligations related to data privacy and security, both domestically and internationally, and our actual or perceived failure to comply with such obligations could lead to regulatory investigations or actions, litigation, fines and penalties, disruptions of our business operations, reputational harm, loss of revenue or profits, loss of customers or sales, and other adverse consequences, any of which could materially adversely affect our business, financial condition, results of operations, and prospects;

•

if our information technology systems or data, or those of third parties upon which we rely, are or were compromised, we could experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions, litigation, fines and penalties, disruptions of our business operations, reputational harm, loss of revenue or profits, loss of customers or sales, and other adverse consequences, any of which could materially adversely affect our business, financial condition, results of operations, and prospects;

•

any failure to offer high quality support for our customers and collaborators may harm our relationships with our customers and, consequently, our business;

•

if we fail to maintain an effective system of disclosure controls and internal control over our financial reporting, including our acquired companies, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired and our business, financial condition, results of operations, and prospects could be materially adversely affected; and

•

the COVID-19 pandemic has had and could continue to have an adverse impact on our business, operations, and the markets and communities in which we, our partners, and our customers operate.

Part I – FINANCIAL INFORMATION

Item 1. Financial Statements

Procore Technologies, Inc.

Condensed Consolidated Balance Sheets

(unaudited)

(in thousands, except number of shares and par value)	September 30, 2022			December 31, 2021
Assets
Current assets
Cash and cash equivalents	$	264,622		$	586,108
Marketable securities		293,430			-
Accounts receivable, net		106,749			113,977
Contract cost asset, current		20,658			17,030
Prepaid expenses and other current assets		49,913			35,173
Total current assets		735,372			752,288
Capitalized software development costs, net		51,376			27,062
Property and equipment, net		40,666			36,837
Right of use assets - finance leases		37,459			39,623
Right of use assets - operating leases		45,494			44,052
Contract cost asset, non-current		33,528			25,889
Intangible assets, net		172,303			201,977
Goodwill		539,016			540,922
Other assets		22,090			22,007
Total assets	$	1,677,304		$	1,690,657
Liabilities, Redeemable Convertible Preferred Stock and Stockholders’ Equity
Current liabilities
Accounts payable	$	16,277		$	15,490
Accrued expenses		83,079			65,907
Deferred revenue, current		329,072			301,557
Other current liabilities		30,475			20,750
Total current liabilities		458,903			403,704
Deferred revenue, non-current		5,023			4,024
Finance lease liabilities, non-current		45,790			47,344
Operating lease liabilities, non-current		39,935			41,573
Other liabilities, non-current		3,352			4,723
Total liabilities		553,003			501,368
Contingencies (Note 8)
Stockholders’ equity
Preferred stock, $0.0001 par value, 100,000,000 shares authorized at September 30, 2022 and December 31, 2021; 0 shares issued and outstanding at September 30, 2022 and December 31, 2021.		-			-
Common stock, $0.0001 par value, 1,000,000,000 shares authorized at September 30, 2022 and December 31, 2021; 137,968,304 and 134,046,926 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively.		14			13
Additional paid-in capital		2,004,995			1,852,071
Accumulated other comprehensive loss		(2,749	)		(583	)
Accumulated deficit		(877,959	)		(662,212	)
Total stockholders’ equity		1,124,301			1,189,289
Total liabilities, redeemable convertible preferred stock and stockholders’ equity	$	1,677,304		$	1,690,657

The accompanying notes are an integral part of these condensed consolidated financial statements.

Procore Technologies, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands, except share and per share amounts)	2022			2021			2022			2021
Revenue	$	186,429		$	131,990		$	518,150		$	368,718
Cost of revenue		37,779			22,693			107,846			68,545
Gross profit		148,650			109,297			410,304			300,173
Operating expenses
Sales and marketing		109,608			70,356			306,806			224,226
Research and development		71,493			53,447			195,569			176,619
General and administrative		39,362			35,051			123,181			110,805
Total operating expenses		220,463			158,854			625,556			511,650
Loss from operations		(71,813	)		(49,557	)		(215,252	)		(211,477	)
Interest income		2,143			51			2,895			100
Interest expense		(504	)		(572	)		(1,636	)		(1,759	)
Other expense, net		(698	)		(653	)		(1,045	)		(880	)
Loss before provision for income taxes		(70,872	)		(50,731	)		(215,038	)		(214,016	)
Provision for income taxes		333			11			709			177
Net loss	$	(71,205	)	$	(50,742	)	$	(215,747	)	$	(214,193	)
Net loss per share attributable to common stockholders, basic and diluted	$	(0.52	)	$	(0.39	)	$	(1.59	)	$	(2.71	)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted		137,180,639			131,438,987			135,888,952			79,145,139
Other comprehensive loss
Foreign currency translation adjustment		(1,277	)		(562	)		(1,723	)		(786	)
Unrealized loss on available-for-sale debt and marketable securities, net of tax		(443	)		-			(443	)		-
Total other comprehensive loss		(1,720	)		(562	)		(2,166	)		(786	)
Comprehensive loss	$	(72,925	)	$	(51,304	)	$	(217,913	)	$	(214,979	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

Procore Technologies, Inc.

Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(unaudited)

	Redeemable													Accumulated						Total
	Convertible										Additional			Other						Stockholders'
	Preferred Stock						Common Stock				Paid-in			Comprehensive			Accumulated			Equity
(in thousands, except share amounts)	Shares			Amount			Shares		Amount		Capital			Income (Loss)			Deficit			(Deficit)
Balances as of December 31, 2020		85,331,278		$	727,474			30,707,113	$	3	$	124,755		$	187		$	(397,047	)	$	(272,102	)
Exercise of stock options		-			-			1,264,484		-		11,038			-			-			11,038
Stock-based compensation		-			676			-		-		9,710			-			-			9,710
Foreign currency translation adjustment		-			-			-		-		-			(24	)		-			(24	)
Net loss		-			-			-		-		-			-			(13,732	)		(13,732	)
Balances as of March 31, 2021		85,331,278		$	728,150			31,971,597	$	3	$	145,503		$	163		$	(410,779	)	$	(265,110	)
Exercise of stock options		-			-			1,644,603		-		17,658			-			-			17,658
Stock-based compensation		-			225			-		-		138,055			-			-			138,055
Conversion of redeemable convertible preferred stock to common stock upon initial public offering		(85,331,278	)		(728,375	)		85,331,278		9		728,366			-			-			728,375
Issuance of common stock upon initial public offering, net of underwriting discounts and offering costs		-			-			10,410,000		1		657,617			-			-			657,618
Issuance of common stock, net of common stock withheld for tax liability upon settlement of restricted stock units		-			-			1,709,527		-		(15	)		-			-			(15	)
Foreign currency translation adjustment		-			-			-		-		-			(200	)		-			(200	)
Net loss		-			-			-		-		-			-			(149,719	)		(149,719	)
Balances as of June 30, 2021		-		$	-			131,067,005	$	13	$	1,687,184		$	(37	)	$	(560,498	)	$	1,126,662
Exercise of stock options		-			-			529,934		-		5,782			-			-			5,782
Stock-based compensation		-			-			-		-		40,434			-			-			40,434
Issuance of common stock upon settlement of restricted stock units		-			-			359,523		-		-			-			-			-
Offering costs		-			-			-		-		11			-			-			11
Foreign currency translation adjustment		-			-			-		-		-			(562	)		-			(562	)
Net loss		-			-			-		-		-			-			(50,742	)		(50,742	)
Balances as of September 30, 2021		-		$	-			131,956,462	$	13	$	1,733,411		$	(599	)	$	(611,240	)	$	1,121,585

The accompanying notes are an integral part of these condensed consolidated financial statements

Procore Technologies, Inc.

Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(unaudited)

	Redeemable										Accumulated
	Convertible								Additional		Other						Total
	Preferred Stock				Common Stock				Paid-in		Comprehensive			Accumulated			Stockholders'
(in thousands, except share amounts)	Shares		Amount		Shares		Amount		Capital		Income (Loss)			Deficit			Equity
Balances as of December 31, 2021		-	$	-		134,046,926	$	13	$	1,852,071	$	(583	)	$	(662,212	)	$	1,189,289
Exercise of stock options		-		-		697,998		-		6,795		-			-			6,795
Stock-based compensation		-		-		-		-		39,375		-			-			39,375
Issuance of common stock upon settlement of restricted stock units		-		-		706,663		-		-		-			-			-
Foreign currency translation adjustment		-		-		-		-		-		345			-			345
Net loss		-		-		-		-		-		-			(71,419	)		(71,419	)
Balances as of March 31, 2022		-	$	-		135,451,587	$	13	$	1,898,241	$	(238	)	$	(733,631	)	$	1,164,385
Exercise of stock options		-		-

PROCORE TECHNOLOGIES, INC. [PCOR] Filings
10-Q	[2022-11-04]
10-Q	[2022-08-05]
10-Q	[2022-05-06]
10-K	[2022-03-04]
10-Q	[2021-11-05]
10-Q	[2021-08-06]
S-1	[2020-02-28]