Procore Technologies, Inc. — FY2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. The filing provides annual results, not standalone fourth-quarter figures; Q4-specific performance is therefore not clear from the filing text provided. Filed February 26, 2024.
Business context and performance
Procore sells cloud-based construction management software, primarily through subscriptions priced according to products and contracted construction volume. It reported 16,367 customers at year-end, up 13% year over year. Gross retention was 95%; net retention was 114%, down from 117% in 2022. Customers generating over $100,000 of ARR increased 27% to 2,008.
| Metric | FY2023 | FY2022 | Change / context |
|---|---|---|---|
| Revenue | $950.0 million | $720.2 million | Up 32% |
| Gross profit / margin | $775.5 million / 82% | $571.8 million / 79% | Margin up 3 percentage points |
| Operating loss / margin | $215.7 million / (23%) | $290.5 million / (40%) | Loss narrowed |
| Net loss | $189.7 million | $286.9 million | Loss narrowed; FY2023 diluted and basic loss per share was $1.34 |
| Non-GAAP operating income (loss) | $18.6 million / 2% margin | $(73.8) million / (10%) margin | Improved; excludes specified expenses, including stock-based compensation |
| Cash from operating activities | $92.0 million | $12.6 million | Improved; deferred revenue growth contributed to cash generation |
| Cash, cash equivalents and marketable securities | $678.0 million | — | At December 31, 2023 |
Liquidity, obligations and material changes
- Year-end total liabilities were $738.0 million. The filing does not disclose conventional borrowings in the supplied text; reported finance lease liabilities were $45.6 million, alongside $48.3 million of operating lease liabilities.
- Management said existing cash, cash equivalents and marketable securities were expected to cover needs for at least 12 months. Near-term contractual commitments included $12.0 million of operating leases, $3.9 million of finance leases and $37.5 million of purchase commitments.
- Current remaining performance obligations (cRPO) grew 24% to $698.3 million; total RPO was $1.00 billion. cRPO growth slowed from 34% in 2022. Management attributed the slowdown in part to cautious customer spending amid macroeconomic conditions. About 66% of the 2023 cRPO increase came from new customers and 34% from existing customers.
- Revenue grew 32%, while operating expenses rose 15% overall. Gross margin improved, and operating loss narrowed; the company nevertheless remained GAAP loss-making.
- Materials financing credit losses were $8.1 million in 2023, versus $1.8 million in 2022. Procore stopped new originations under the program in October 2023 and recorded a $7.0 million increase in general and administrative bad-debt expense relating to receivables it did not expect to collect.
- International customers accounted for 14% of revenue, unchanged from 2022. Procore acquired Unearth in September 2023 and launched Procore Pay and Procore Risk Advisors during 2023; management said these offerings were not yet material to the business.
Outlook, risks and unusual items
The filing gives no specific numerical revenue, earnings or cash-flow guidance. Management plans to invest in product development, sales and marketing, and international expansion, and cautions that these investments may weigh on near-term results. It also said cautious customer spending contributed to slower cRPO growth.
- Key risks include construction-industry spending and macroeconomic conditions, competition, the ability to retain and expand customers, international and foreign-exchange exposure, service availability and reliance on AWS, cybersecurity and privacy compliance, and regulation of payment and lien-rights services.
- The filing reports no pending legal matter expected to have a material adverse effect. Management and the auditor concluded internal control over financial reporting was effective as of December 31, 2023; the auditor issued an unqualified opinion on the financial statements and controls.
- After year-end, Procore announced a reduction of approximately 4% of its global workforce on January 30, 2024. It estimated about $4.6 million in severance and benefit charges, mostly cash, substantially in Q1 2024.
- Stock-based compensation expense was $179.3 million in FY2023, a significant recurring expense excluded from the company’s non-GAAP operating measure.
Important facts for investors to verify
- Review the full audited statements and quarterly filings for Q4-specific results, which are not separately stated in the provided filing text.
- Assess the durability and quality of operating cash flow, including the contribution from deferred revenue, receivables and other working-capital movements.
- Track cRPO growth, customer expansion and retention, and whether macroeconomic caution continues to affect spending.
- Monitor materials-financing receivable collections and any further credit losses after originations ceased.
- Evaluate dilution and compensation costs: FY2023 stock-based compensation was $179.3 million, and year-end common shares outstanding were 144.8 million.
- Confirm the realized costs and operational effects of the January 2024 workforce reduction, and progress and compliance risks for Procore Pay and other newer offerings.