Procore Technologies, Inc. — FY2022 Form 10-K Summary
Reporting period: Fiscal year ended December 31, 2022. This is an annual filing; it does not provide standalone fourth-quarter results.
Business context and reporting period
Procore provides cloud-based construction management software, earning substantially all revenue from subscriptions. Pricing is generally based on subscribed products and contracted annual construction volume. The company reported 14,488 customers at year-end, up 19% year over year; its 95% gross retention rate was unchanged from 2021. Customer metrics exclude certain legacy Levelset and Esticom customers not yet renewed to standard Procore contracts.
Key financial metrics
| Metric | FY2022 | FY2021 | Change |
|---|---|---|---|
| Revenue | $720.2 million | $514.8 million | +40% |
| Gross profit / gross margin | $571.8 million / 79% | $416.5 million / 81% | Margin down 2 percentage points |
| Operating loss | $290.5 million | $285.9 million | Loss widened $4.5 million |
| Net loss | $286.9 million | $265.2 million | Loss widened $21.8 million |
| Operating cash flow | $12.6 million | $36.7 million | Down $24.1 million |
| Cash, cash equivalents and marketable securities | $582.2 million | $586.1 million in cash and cash equivalents | 2022 includes $285.5 million in marketable securities |
Non-GAAP operating loss was $73.8 million, or a 10% negative margin, versus $29.2 million, or a 6% negative margin, in 2021. These non-GAAP measures exclude, among other items, stock-based compensation and acquired-intangible amortization. Stock-based compensation expense was $162.9 million in 2022.
Procore reported no funded borrowings at year-end and terminated its $75 million credit facility in April 2022. Finance lease liabilities were $47.4 million and operating lease liabilities were $46.9 million. Year-end current assets were $799.2 million and current liabilities were $531.6 million. The company reported $11.5 million of net materials-financing receivables.
Material changes versus the prior comparable period
- Revenue grew $205.4 million, driven primarily by existing-customer expansion and new customers; Levelset contributed $31.6 million of 2022 revenue.
- Cost of revenue rose 51%, faster than revenue, contributing to gross-margin compression. The company cited higher personnel, acquired-technology amortization, and cloud-hosting costs.
- Operating expenses increased 23% to $862.2 million, with sales and marketing up 38%, research and development up 14%, and general and administrative up 6%.
- Operating cash flow fell to $12.6 million from $36.7 million. The filing attributes the 2022 amount partly to deferred-revenue growth and other working-capital movements.
- Investing cash outflow was $340.5 million, including $369.2 million of marketable-security purchases, partly offset by maturities. In 2021, investing outflow was $541.8 million, largely reflecting acquisitions.
Outlook, risks, contingencies and unusual items
- Management provided no specific revenue, earnings, or margin guidance in the supplied filing text. It expects existing liquidity to meet needs for at least 12 months, while noting continuing losses and possible future capital needs.
- Remaining performance obligations were $797.5 million at year-end; approximately 70% was expected to be recognized as revenue in the next 12 months, with substantially all of the remainder in the following 12–36 months.
- Management said macroeconomic factors had not materially affected the business to date, but identified inflation, interest rates, foreign exchange, construction spending, labor shortages, and supply-chain disruption as risks.
- Materials financing is an early-stage activity funded from the balance sheet. Management said it may use up to approximately 10% of cash, cash equivalents, and marketable securities to support the program before a potential third-party funding arrangement. Credit losses, liquidity, lien-enforcement, and regulatory risks are disclosed.
- Other prominent risks include competition, customer adoption and retention, service availability and cybersecurity, international compliance, and integration of acquisitions. The company also discloses potential legal and regulatory exposure concerning Levelset lien services and unauthorized practice of law; it reported no pending legal matters expected to have a material adverse effect.
- Auditor and management assessments concluded internal control over financial reporting was effective as of December 31, 2022. The independent auditor identified revenue recognition as a critical audit matter, not a separate qualification of its opinion.
Important facts for investors to verify
- Whether customer growth, retention, and expansion sustain revenue growth as construction spending and customer budgets change.
- Whether gross-margin pressure and operating losses improve, including the impact of stock-based compensation and acquisition-related amortization.
- Cash-flow quality and the expected cash needs of materials financing, including default experience, receivable collections, and any third-party funding plans.
- Integration and performance of Levelset and LaborChart, and the treatment of legacy customers excluded from reported customer metrics.
- Remaining performance obligations, renewal activity, and the timing of conversion into recognized revenue.
- Lease and purchase commitments, including the $45 million renewal agreement executed in January 2023, and the company’s liquidity position.