Procore Technologies, Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024. Procore provides cloud-based construction management software, primarily through subscriptions. Amounts below are in U.S. dollars.
Financial performance and liquidity
| Metric | Q1 2024 | Q1 2023 / comparison |
|---|---|---|
| Revenue | $269.4 million | $213.5 million; up 26% |
| Gross profit / margin | $223.7 million / 83% | $173.3 million / 81% |
| Operating loss / margin | $18.9 million / 7% loss | $69.3 million / 32% loss |
| Net loss | $11.0 million; $0.08 per share | $63.4 million; $0.45 per share |
| Non-GAAP operating income (loss) / margin | $37.1 million / 14% | $(4.0) million / (2%) |
| Cash from operations | $69.1 million | $29.3 million |
At March 31, cash and cash equivalents were $427.7 million and marketable securities were $317.0 million, totaling $744.6 million in cash, cash equivalents, and marketable securities. Current assets were $954.9 million versus current liabilities of $595.0 million. Total liabilities were $685.0 million. The filing does not report conventional borrowings; it reports non-current finance lease liabilities of $43.1 million and operating lease liabilities of $33.7 million.
Operating cash flow benefited from a $68.0 million decrease in accounts receivable, partly offset by lower accrued expenses and deferred revenue. Investing activities used $4.7 million and financing activities provided $6.7 million. Management said existing cash, cash equivalents, and marketable securities should meet needs for at least 12 months, while cautioning that profitability may not be achieved in the foreseeable future.
Material changes and operating trends
- Revenue growth was driven mainly by existing customers: approximately 90% of the year-over-year increase came from existing customers and 10% from new customers.
- Customer count rose 10% year over year to 16,598; gross retention rate improved to 95% from 94%.
- Remaining performance obligations were $1.01 billion, up 25% year over year. Current RPO was $704.7 million, up 20%; approximately 70% of total RPO was expected to be recognized in the next 12 months. Management attributed 77% of the cRPO increase to new customers and 23% to existing customers.
- Operating expenses were nearly flat at $242.6 million. Lower R&D expense reflected lower acquisition-related costs and stock-based compensation compared with Q1 2023; G&A expense increased 13%.
- GAAP operating results improved substantially, while stock-based compensation remained significant: $40.1 million of expense, plus $2.5 million capitalized for software and cloud-computing costs.
- The company reduced its global workforce by 4%, completing the action by March 31; restructuring costs were $4.2 million, with $0.4 million remaining accrued.
Outlook, risks, and unusual items
- The filing provides no specific quarterly or full-year revenue, earnings, or margin guidance.
- Management cited cautious customer spending amid macroeconomic and geopolitical conditions, including construction-industry trends, inflation, interest rates, foreign exchange movements, and conflicts. It said these factors contributed to a decline in the cRPO annual growth rate.
- Management plans continued investment in product development and international expansion; non-U.S. revenue was 14% of total revenue. It noted these investments could weigh on near-term results. Procore Pay and Procore Risk Advisors were not yet material to the business.
- Materials financing originations ceased in Q4 2023. At March 31, 2024, the remaining $3.5 million gross receivable balance was fully reserved; Q1 2024 credit losses were $0.6 million.
- Austin office lease modifications increased future rent commitments by $10.7 million through 2036. The company also disclosed up to $5.4 million of optional additional funding commitments to limited partnership investments.
- The company reported no pending legal matters expected to have a material adverse effect and no material changes to the risk factors in its 2023 Form 10-K. It maintains a full valuation allowance on U.S. federal and state deferred tax assets.
Important facts for investors to verify
- Whether revenue growth, customer expansion, retention, and RPO conversion continue, particularly given management’s caution about customer spending.
- How much of operating cash flow reflects durable operating performance versus billing, collections, and seasonal timing; Q1 included material working-capital movements.
- Progress toward sustained GAAP profitability, including the effect of recurring stock-based compensation and the difference between GAAP and non-GAAP results.
- Remaining exposure and recoveries, if any, on the fully reserved materials financing receivables.
- Potential effects of international expansion, macroeconomic conditions, lease commitments, and strategic investment obligations on future cash needs.