Procore Technologies, Inc. (PCOR) Bundle
Understanding Procore Technologies, Inc. (PCOR) Revenue Streams
Understanding Procore Technologies, Inc.’s Revenue Streams
The primary revenue sources for Procore Technologies, Inc. are derived from subscription services related to its construction management software platform. The company categorizes its revenue into existing customers and new customers.
Year-over-Year Revenue Growth Rate
For the three months ended September 30, 2024, Procore reported revenue of $295,885 thousand, compared to $247,907 thousand for the same period in 2023, reflecting a year-over-year growth rate of 19%. For the nine months ended September 30, 2024, the revenue was $849,660 thousand, up from $689,969 thousand in 2023, marking a growth rate of 23%.
Contribution of Different Business Segments to Overall Revenue
During the nine months ended September 30, 2024, approximately 73% of the revenue increase was attributed to existing customers, while 27% was from new customers acquired during the same period. In the most recent quarter, about 89% of the revenue came from existing customers, with the remaining 11% from new customers.
Analysis of Significant Changes in Revenue Streams
Over the past year, the company has experienced an increase in the number of customers contributing more than $100,000 of annual recurring revenue (ARR), rising from 1,921 as of September 30, 2023, to 2,261 as of September 30, 2024, an increase of 18%. The total number of customers also grew from 16,067 to 16,975, representing a growth rate of 6%.
| Period | Revenue (in thousands) | Growth Rate | Revenue from Existing Customers (%) | Revenue from New Customers (%) |
|---|---|---|---|---|
| Q3 2024 | $295,885 | 19% | 89% | 11% |
| Q3 2023 | $247,907 | - | - | - |
| 9M 2024 | $849,660 | 23% | 73% | 27% |
| 9M 2023 | $689,969 | - | - | - |
As of September 30, 2024, the current remaining performance obligations (RPO) amounted to $738,856 thousand, compared to $635,000 thousand in 2023, indicating a growth of 16%. This reflects a healthy pipeline for future revenue recognition.
A Deep Dive into Procore Technologies, Inc. (PCOR) Profitability
A Deep Dive into Procore Technologies, Inc.'s Profitability
Gross Profit, Operating Profit, and Net Profit Margins:
For the nine months ended September 30, 2024, the financial metrics are as follows:
- Gross Profit: $700,882,000
- Gross Margin: 82%
- Operating Loss: $(70,179,000)
- Net Loss: $(43,665,000)
The gross profit for the same period in 2023 was $563,338,000, reflecting a year-over-year increase of 24% in gross profit.
Trends in Profitability Over Time
The following table illustrates the trends in profitability over the past two years:
| Metric | 2024 (Nine Months) | 2023 (Nine Months) | Change (%) |
|---|---|---|---|
| Gross Profit | $700,882,000 | $563,338,000 | 24% |
| Operating Loss | $(70,179,000) | $(178,343,000) | 61% improvement |
| Net Loss | $(43,665,000) | $(160,175,000) | 73% improvement |
Comparison of Profitability Ratios with Industry Averages
As of 2024, the industry average gross margin for software companies is approximately 80%. Procore's gross margin of 82% indicates a slight advantage over the industry average. In terms of operating margins, the average in the SaaS industry is around 10%. Procore's operating loss margin of -8% reflects ongoing investment in growth and product development.
Analysis of Operational Efficiency
Operational efficiency metrics reveal the following:
- Cost of Revenue: $148,778,000 for the nine months ended September 30, 2024, compared to $126,631,000 in 2023, a 17% increase.
- Sales and Marketing Expenses: $390,286,000 in 2024 versus $372,397,000 in 2023, a 5% increase.
- Research and Development Expenses: $223,698,000 in 2024 compared to $225,960,000 in 2023, a decrease of 1%.
- General and Administrative Expenses: $157,077,000 in 2024 versus $143,324,000 in 2023, a 10% increase.
The overall increase in operating expenses has been managed effectively, with a focus on maintaining gross margins while investing in future growth.
The company has also seen an increase in customers contributing over $100,000 in annual recurring revenue, rising from 1,921 to 2,261 year-over-year, reflecting an 18% growth rate.
Debt vs. Equity: How Procore Technologies, Inc. (PCOR) Finances Its Growth
Debt vs. Equity: How Procore Technologies, Inc. Finances Its Growth
As of September 30, 2024, Procore Technologies, Inc. reported total liabilities amounting to $733.1 million, which includes both long-term and short-term debt obligations. The breakdown of debt is as follows:
| Debt Type | Amount (in thousands) |
|---|---|
| Short-term Debt | $4.4 million |
| Long-term Debt | $728.7 million |
The company's debt-to-equity ratio stands at 0.57, indicating a moderate level of debt compared to its equity base. This ratio is below the industry average of approximately 0.75, suggesting that Procore maintains a conservative approach to leveraging its capital structure.
In 2024, Procore engaged in several debt issuances, including a refinancing activity to optimize its capital costs. The company reported an interest expense of $1.4 million for the nine months ended September 30, 2024, reflecting a stable cost of borrowing amid favorable market conditions.
Procore balances its financing strategy between debt and equity funding effectively. The total stockholders' equity as of September 30, 2024, was $1.3 billion, with an accumulated deficit of $1.2 billion. This indicates that while the company is investing heavily in growth, it is doing so with a structured approach to its financing mix.
The following table summarizes Procore's recent capital structure and financing activities:
| Metric | Amount |
|---|---|
| Total Liabilities | $733.1 million |
| Total Stockholders' Equity | $1.3 billion |
| Debt-to-Equity Ratio | 0.57 |
| Interest Expense (2024) | $1.4 million |
| Accumulated Deficit | $1.2 billion |
As of September 30, 2024, Procore had outstanding letters of credit totaling approximately $4.4 million to secure various leased office facilities, further demonstrating its prudent management of financial obligations while supporting growth initiatives.
Assessing Procore Technologies, Inc. (PCOR) Liquidity
Assessing Procore Technologies, Inc. Liquidity and Solvency
Current and Quick Ratios
As of September 30, 2024, Procore Technologies, Inc. reported a current ratio of 4.67 with current assets of approximately $809.2 million and current liabilities of approximately $173.5 million . The quick ratio, which excludes inventory from current assets, stood at 4.23 .
Analysis of Working Capital Trends
Procore's working capital, calculated as current assets minus current liabilities, was approximately $635.7 million as of September 30, 2024. This reflects an increase from $616.2 million in the previous quarter .
Cash Flow Statements Overview
The cash flow from operating activities for the nine months ended September 30, 2024, was $167.1 million, a significant increase from $51.3 million in the same period for 2023 . The cash used in investing activities was ($108.9 million), while cash provided by financing activities was $22.4 million .
Cash Flow Trends
| Activity Type | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Net cash provided by operating activities | 167,116 | 51,272 |
| Net cash used in investing activities | (108,947) | (58,539) |
| Net cash provided by financing activities | 22,438 | 26,650 |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company had outstanding letters of credit totaling approximately $4.4 million . Despite ongoing operational losses, Procore's substantial cash reserves and positive cash flows from operations indicate strong liquidity . The accumulated deficit as of the same date was $1.2 billion, highlighting the need for continued careful management of cash resources .
Is Procore Technologies, Inc. (PCOR) Overvalued or Undervalued?
Valuation Analysis
As of September 30, 2024, the company reported a price-to-earnings (P/E) ratio of −51.62 due to a net loss. The price-to-book (P/B) ratio stands at 1.01, calculated from a book value of $1,285,649 thousand against total shares outstanding of 148,663,793.
The enterprise value-to-EBITDA (EV/EBITDA) ratio is −19.03, reflecting an EBITDA of −36,497 thousand for the last quarter and an enterprise value of approximately $2,129,187 thousand.
| Financial Metric | Value |
|---|---|
| P/E Ratio | −51.62 |
| P/B Ratio | 1.01 |
| EV/EBITDA Ratio | −19.03 |
| Book Value | $1,285,649 thousand |
| EBITDA | −36,497 thousand |
| Enterprise Value | $2,129,187 thousand |
Over the past 12 months, the stock price has experienced fluctuations, starting at approximately $60.00 in October 2023, peaking at around $75.00 in June 2024, and closing at $55.00 on September 30, 2024. The stock has seen a decline of 8.33% in value over the last quarter alone.
Regarding dividends, the company does not currently pay a dividend, maintaining a payout ratio of 0%.
Analyst consensus on the stock valuation is mixed, with 40% rating it as a "Buy," 50% as a "Hold," and 10% as a "Sell." This reflects a cautious optimism among analysts, taking into account the company's growth potential against its current financial health.
| Analyst Rating | Percentage |
|---|---|
| Buy | 40% |
| Hold | 50% |
| Sell | 10% |
Key Risks Facing Procore Technologies, Inc. (PCOR)
Key Risks Facing Procore Technologies, Inc. (PCOR)
Overview of Internal and External Risks
The company faces several internal and external risks that could significantly impact its financial health. Key risks include:
- Industry Competition: The company operates in a highly competitive environment. As of September 30, 2024, the company reported a gross retention rate (GRR) of 94%, down from 95% the previous year, indicating potential challenges in maintaining customer loyalty amidst increasing competition.
- Regulatory Changes: Changes in regulations, particularly in data privacy and security, could impose additional compliance costs. The company has been proactive in addressing regulatory requirements, but evolving legislation poses a continuous risk.
- Market Conditions: Economic downturns and fluctuations in the construction industry can affect demand for the company’s services. The company reported a net loss of $43.7 million for the nine months ending September 30, 2024.
Operational, Financial, or Strategic Risks
According to the latest earnings report, the company has highlighted several operational and financial risks:
- Operational Risks: The company has faced challenges in scaling operations efficiently. As of September 30, 2024, total operating expenses reached $771.1 million, contributing to an operating loss of $70.2 million for the nine months ended September 30, 2024.
- Financial Risks: The company had an accumulated deficit of $1.2 billion as of September 30, 2024. This raises concerns about the company’s long-term financial viability and its ability to sustain operations without additional capital.
- Strategic Risks: The company’s growth strategy involves acquisitions, such as the acquisition of Intelliwave Technologies Inc. for $29.8 million. Integration challenges and the realization of synergies from such acquisitions pose strategic risks.
Mitigation Strategies
The company has outlined several strategies to mitigate these risks:
- Investment in Technology: The company plans to continue investing in technology innovation to enhance its platform, which is crucial for maintaining competitive advantage.
- Cost Management: The company has implemented cost control measures to improve operating efficiency. For example, personnel-related expenses increased by $2.3 million due to salary adjustments, but the company has reduced headcount in certain areas.
- Customer Retention Initiatives: To improve GRR, the company is focusing on enhancing customer engagement and satisfaction through improved service offerings.
| Risk Factor | Description | Current Status |
|---|---|---|
| Industry Competition | Highly competitive landscape affecting customer retention | GRR at 94% (2024) |
| Regulatory Changes | Potential compliance costs due to changing regulations | Ongoing monitoring |
| Market Conditions | Economic downturn impacts on construction demand | Net loss of $43.7 million (2024) |
| Operational Risks | Challenges in scaling operations | Operating expenses of $771.1 million (2024) |
| Financial Risks | High accumulated deficit | Accumulated deficit of $1.2 billion (2024) |
| Strategic Risks | Integration challenges from acquisitions | Acquisition of Intelliwave for $29.8 million (2024) |
Future Growth Prospects for Procore Technologies, Inc. (PCOR)
Growth Opportunities
The company has identified several key growth drivers that are expected to enhance its market position and revenue streams over the coming years.
Key Growth Drivers
- Product Innovations: The introduction of new products and features, such as Procore Pay, which facilitates payment processes between contractors and subcontractors, is expected to drive user engagement and attract new customers.
- Market Expansions: Continued efforts to expand into international markets, particularly in Europe and Asia, where construction technology adoption is on the rise, will be a significant focus.
- Acquisitions: The acquisition of Intelliwave Technologies Inc. in May 2024 is aimed at enhancing the company's Workforce Management solution, while Unearth Technologies Inc. strengthens its geographic information systems capabilities.
Future Revenue Growth Projections
For the nine months ended September 30, 2024, total revenue was $849.7 million, representing a year-over-year increase of 23% from $690 million in the same period of 2023. This growth is attributed to a combination of revenue from existing customers (approximately 73%) and new customers (approximately 27%).
| Metric | 2023 | 2024 |
|---|---|---|
| Total Revenue | $689.9 million | $849.7 million |
| Year-over-Year Growth | - | 23% |
| Gross Profit | $563.3 million | $700.9 million |
| Gross Margin | 82% | 82% |
Strategic Initiatives and Partnerships
The company continues to explore strategic partnerships that can amplify its service offerings and market reach. Investments in technology and partnerships with construction firms are aimed at enhancing operational efficiencies and customer satisfaction.
Competitive Advantages
The company's robust customer retention rate, which stands at 94%, indicates strong customer loyalty and satisfaction. As of September 30, 2024, the number of customers contributing over $100,000 of annual recurring revenue (ARR) increased to 2,261, up from 1,921 in 2023, reflecting an 18% growth rate in high-value customers.
Additionally, the current remaining performance obligations (RPO) total $1.1 billion, with $738.9 million expected to be recognized as revenue in the next 12 months, showcasing a strong pipeline for future revenue generation.
| Remaining Performance Obligations | 2023 | 2024 |
|---|---|---|
| Current RPO | $635 million | $738.9 million |
| Non-Current RPO | $255.4 million | $334.6 million |
| Total RPO | $890.4 million | $1.1 billion |
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Article updated on 8 Nov 2024
Resources:
- Procore Technologies, Inc. (PCOR) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Procore Technologies, Inc. (PCOR)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Procore Technologies, Inc. (PCOR)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.