Core Viewpoint - Procore Technologies, Inc. (NYSE: PCOR) is viewed positively due to its continuous revenue growth and potential for further expansion [1] Group 1 - The company has been classified as a "Buy" based on its revenue growth trajectory [1]

Core Insights - Procore Technologies reported quarterly earnings of $0.23 per share, exceeding the Zacks Consensus Estimate of $0.17 per share, but down from $0.30 per share a year ago, resulting in an earnings surprise of 35.29% [1] - The company achieved revenues of $310.63 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 2.75% and up from $269.43 million year-over-year [2] - Procore Technologies has surpassed consensus EPS estimates three times over the last four quarters and topped consensus revenue estimates four times in the same period [2] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.26 on revenues of $314.29 million, and for the current fiscal year, it is $1.15 on revenues of $1.28 billion [7] - The estimate revisions trend for Procore Technologies is mixed, leading to a Zacks Rank 3 (Hold), indicating expected performance in line with the market [6] Industry Context - The Internet - Software industry, to which Procore Technologies belongs, is currently ranked in the bottom 43% of over 250 Zacks industries, suggesting potential challenges for stock performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact investor sentiment [5]

Financial Data and Key Metrics Changes - Total revenue in Q1 was $311 million, up 15% year over year, with international revenue growing 18% year over year [30] - Non-GAAP operating income was $32 million, representing a non-GAAP operating margin of 10% [30] - Current RPO grew 20% year over year, and current deferred revenue grew 15% year over year [31] Business Line Data and Key Metrics Changes - Procore has over 2,400 customers contributing more than $100,000 in ARR, indicating strong customer retention and growth [12] - The company added new customers across various sectors, including a major semiconductor company and a global commercial real estate firm [21][22] Market Data and Key Metrics Changes - International revenue growth was impacted by currency headwinds, with a constant currency growth of 20% year over year [30] - The company noted a steady pipeline and no significant changes in customer plans despite tariff uncertainties [10][36] Company Strategy and Development Direction - Procore is focused on driving digital transformation in the construction industry and enhancing its platform capabilities, including AI integration [11][15] - The company aims to expand its customer base, particularly in underpenetrated segments like owners and specialty contractors, and to increase product cross-sell opportunities [19][20] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about long-term growth despite short-term uncertainties due to tariffs, emphasizing the importance of productivity gains and risk management [10][12] - The company is maintaining its revenue guidance for the full year, expecting revenue between $1.286 billion and $1.290 billion, representing a year-over-year growth of 12% [39] Other Important Information - Procore has initiated a CEO succession plan, with a focus on finding a candidate who shares the company's vision and operational expertise [28][29] - The company returned approximately $100 million to shareholders through share repurchases in Q1 [34] Q&A Session Summary Question: Can you discuss the drivers behind the CRPO acceleration? - Management noted a strong new logo quarter and an increase in contract duration, contributing to the performance [46] Question: What are the early signs of success in international markets? - Management highlighted positive feedback from customers regarding new technical resources and bespoke go-to-market efforts [48][50] Question: How does Procore's value proposition resonate with customers amid uncertainty? - Management emphasized that customers appreciate Procore as a partner, providing more than just software solutions [56] Question: What metrics should be prioritized for measuring progress? - Management indicated that dollar volume is more critical than customer count, focusing on expanding existing customer relationships [78] Question: How is the company managing operational changes during the go-to-market transition? - Management acknowledged some disruption but expressed confidence in the transition's alignment with long-term goals [96]

Financial Data and Key Metrics Changes - Total revenue in Q1 was $311 million, up 15% year over year, with international revenue growing 18% year over year [29][30] - Non-GAAP operating income was $32 million, representing a non-GAAP operating margin of 10% [30] - Current RPO grew 20% year over year, and current deferred revenue grew 15% year over year [30] Business Line Data and Key Metrics Changes - The company has over 2,400 customers contributing more than $100,000 in ARR, indicating strong customer retention and growth [11] - The average contract duration increased from approximately 20 months to about 21.5 months, with the proportion of ARR on multi-year deals rising from 38% to 43% [44] Market Data and Key Metrics Changes - International revenue growth was impacted by currency headwinds, contributing approximately two points of headwind to international revenue growth; on a constant currency basis, international revenue grew 20% year over year [29][30] - The company noted a steady pipeline and that customers have not substantially altered their plans despite tariff uncertainties [9][34] Company Strategy and Development Direction - The company is focused on driving digital transformation in the construction industry and enhancing its platform capabilities, including AI integration [10][14] - The strategy includes acquiring new customers, expanding volume with existing customers, cross-selling products, and international expansion [19][20] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about long-term growth despite short-term headwinds from tariffs, emphasizing the importance of productivity gains and risk management [12][18] - The company is maintaining its revenue guidance for the full year, expecting revenue between $1.286 billion and $1.290 billion, representing total year-over-year growth of 12% [38] Other Important Information - The company is undergoing a go-to-market transition to build deeper partnerships with customers, which has been well received despite some initial disruption [25][26] - A CEO succession plan is in place, with a search for a successor being conducted thoughtfully and without urgency [27][28] Q&A Session Questions and Answers Question: Can you discuss the drivers behind the CRPO acceleration and the strength of new logos versus net revenue retention? - The company had a strong new logo quarter, contributing to performance, with longer contract durations providing flexibility for customers [42][44] Question: What are the early signs of success in international markets following the management changes? - New technical resources have improved customer engagement and adoption, indicating positive growth prospects [46][48] Question: How does the company view its role as a partner versus a vendor in the current market? - The company is seen as a partner providing significant value beyond software, helping customers navigate challenges and improve transparency [54] Question: How does the company plan to leverage its AI capabilities in the construction ecosystem? - The company has a unique vantage point with extensive data across various project types, enabling it to develop valuable AI tools that enhance productivity [58][60] Question: What metrics should investors focus on to measure progress in customer growth? - The focus is on dollar volume rather than customer count, with significant untapped opportunities remaining in the market [79][80] Question: Can you provide insights into the impact of longer contract durations on revenue recognition? - Longer durations allow for earlier reloading of CRPO, but do not impact revenue recognition directly [81][83]

Revenue Performance - Revenue for Q1 2025 was $311 million, representing a 15% year-over-year increase[7] - Revenue for the three months ended March 31, 2025, was $310,632 thousand, an increase of 15.3% compared to $269,428 thousand in 2024[31] - For Q2 2025, revenue is expected to be between $310 million and $312 million, indicating a year-over-year growth of 9% to 10%[7] - Full year 2025 revenue guidance is projected to be between $1,286 million and $1,290 million, reflecting a 12% year-over-year growth[7] Customer Metrics - The gross revenue retention rate achieved was 95% in Q1 2025[7] - The number of organic customers contributing over $100,000 in annual recurring revenue increased by 14% year-over-year to 2,418[7] - Procore added 218 net new organic customers in Q1 2025, totaling 17,306 organic customers[7] Financial Metrics - GAAP gross margin was 79%, while non-GAAP gross margin was 83%[7] - Operating cash inflow for Q1 2025 was $66 million, with free cash inflow of $47 million[7] - Non-GAAP income from operations for the three months ended March 31, 2025, was $32,399 thousand, compared to $37,066 thousand in 2024[33] - Non-GAAP net income for Q1 2025 was $35,655,000, down 20.8% from $45,006,000 in Q1 2024[34] - Non-GAAP net income per share, basic, was $0.24 in Q1 2025, compared to $0.31 in Q1 2024[34] - Non-GAAP free cash flow for Q1 2025 was $46,664,000, a decrease of 18.9% from $57,542,000 in Q1 2024[35] Loss and Expenses - Net loss for the three months ended March 31, 2025, was $(32,989) thousand, compared to $(10,966) thousand in 2024[30] - Cash and cash equivalents decreased to $313,734 thousand as of March 31, 2025, from $437,722 thousand at the end of 2024[27] - Total current assets decreased to $816,487 thousand in 2025 from $1,099,879 thousand in 2024[27] - Acquisition-related expenses totaled $2,080 thousand in 2025, significantly higher than $448 thousand in 2024[25] - Stock-based compensation expense increased to $48,279 thousand in 2025 from $40,132 thousand in 2024[30] Shareholder Actions - Procore repurchased approximately 1.5 million shares for about $100 million, with $200 million remaining for future repurchases[7] Industry Insights - The inaugural Future State of Construction Report was released, highlighting trends driven by AI, automation, and workforce shifts in the construction industry[7] Other Financial Changes - Total remaining performance obligations (RPO) increased by 28% to $1,290,265 thousand in 2025 from $1,006,815 thousand in 2024[28] - Total liabilities decreased to $767,067 thousand in 2025 from $813,018 thousand in 2024[27] - Weighted-average shares used in computing diluted net income per share increased to 154,220,017 in Q1 2025 from 151,184,305 in Q1 2024[34] - Capitalized software development costs increased to $(15,331,000) in Q1 2025 from $(9,514,000) in Q1 2024[35] - Employer payroll tax on employee stock transactions was $4,001,000 in Q1 2025, slightly down from $4,189,000 in Q1 2024[34]

Core Viewpoint - Procore Technologies (PCOR) is anticipated to report a year-over-year decline in earnings despite an increase in revenues, which could significantly influence its stock price depending on the actual results compared to estimates [1][2]. Earnings Expectations - The upcoming earnings report is scheduled for May 1, 2025, with expectations of quarterly earnings at $0.17 per share, reflecting a year-over-year decrease of 43.3%. Revenues are projected to be $302.32 million, representing a 12.2% increase from the previous year [3][2]. Estimate Revisions - The consensus EPS estimate has been revised down by 38.71% over the last 30 days, indicating a collective reassessment by analysts regarding the company's earnings prospects [4][10]. Earnings Surprise Prediction - The Zacks Earnings ESP (Expected Surprise Prediction) model indicates that the Most Accurate Estimate for Procore is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -3.45%. This suggests a bearish outlook from analysts [6][11]. Historical Performance - In the last reported quarter, Procore was expected to post earnings of $0.11 per share but only achieved $0.01, leading to a surprise of -90.91%. Over the last four quarters, the company has beaten consensus EPS estimates three times [12][13]. Industry Comparison - In the Zacks Internet - Software industry, Udemy, Inc. (UDMY) is expected to report earnings of $0.10 per share for the same quarter, indicating a year-over-year increase of 233.3%. However, Udemy also has a negative Earnings ESP of -8.16%, making it difficult to predict an earnings beat [17][18].

Core Insights - True value in investments comes from growth rather than short-term gains, emphasizing a long-term perspective on evaluation [1] - Great businesses provide significant societal value and exhibit durability, deserving of substantial growth [1] - Key characteristics sought in businesses include selection, convenience, value, and durability, with a preference for non-cyclical businesses [1] Business Characteristics - Businesses that consistently outperform competitors through superior products and services are favored [1] - The ability to create multiple revenue streams and maintain complex operations is seen as advantageous [1] - A business's resilience in the face of adversity is a critical test of its durability [1] Value Drivers - Uniqueness is identified as the primary driver of value [1] - Low costs associated with maintaining existing operations allow for high leverage in reinvestment and growth [1] - Trust and network effects are important indicators of a business's durability [1] Management Importance - Effective management is crucial, with a preference for executives who have aligned interests and a strong focus on the business [1] - Companies led by seasoned CEOs, founders, or family businesses are viewed favorably [1] - Good management fosters a culture that empowers employees and attracts talent [1] Investment Strategy - The success of companies like Amazon illustrates the benefits of a customer-centric approach [1] - Buyback strategies are recommended for businesses with durable models [1] - The optimal investment timing is when negative news is already priced in, revealing true value [1] Market Dynamics - Price movements are influenced by expectations and surprises, with a focus on undervalued factors amidst negative sentiment [1]

Core Insights - The article does not provide specific insights or analysis regarding any companies or industries, focusing instead on disclaimers and disclosures related to the author's position and affiliations [1][2]. Summary by Categories - **Company Analysis**: No specific company analysis or performance data is provided in the article [1][2]. - **Industry Insights**: The article lacks any insights or trends related to specific industries [1][2]. - **Market Trends**: There are no discussions on market trends or investment opportunities mentioned [1][2].

Financial Performance - Revenue for 2024 reached $1,151.7 million, representing a year-over-year growth of 21% compared to $950.0 million in 2023[38] - Net losses for 2024 were reported at $106.0 million, an improvement from $189.7 million in 2023[38] - Revenue for 2024 was $1,151.7 million, up from $950.0 million in 2023 and $720.2 million in 2022, indicating significant growth but a declining growth rate[90] - The company incurred net losses of $106.0 million in 2024, $189.7 million in 2023, and $286.9 million in 2022, with an accumulated deficit of $1.2 billion as of December 31, 2024[93] Customer Growth and Engagement - As of December 31, 2024, the number of customers contributing more than $100,000 of annual recurring revenue (ARR) increased to 2,333, reflecting a year-over-year growth of 16%[38] - The number of customers on the platform grew to 17,088 as of December 31, 2024, showing a year-over-year increase of 4%[38] - Customers contributing more than $1,000,000 of ARR increased to 86, marking a year-over-year growth of 39%[38] - Customers that contributed more than $100,000 of ARR represented 63% of total ARR in 2024, up from 60% in 2023[38] Product and Technology Development - The platform's capabilities include AI features such as Copilot and Insights, aimed at increasing productivity and reducing risks[52] - The platform supports over 500 integrations through its App Marketplace, enhancing functionality for users[57] - The company aims to increase its business value through network expansion, product innovation, and data utilization, allowing unlimited users without per-seat fees[62] - The company has made acquisitions, including Intelliwave Technologies in 2024 and Unearth Technologies in 2023, to enhance its platform capabilities and integrate innovative features[66] Market Strategy and Expansion - The company plans to expand its sales and marketing efforts to drive awareness and grow its customer base, focusing on owners, general contractors, and specialty contractors[66] - The global market for construction management software is currently underpenetrated, representing a significant opportunity for expansion[66] - The company is investing in expanding its sales and marketing teams, technology infrastructure, and product development to drive future growth[93] - The company plans to hire sales and customer experience teams to expand its international presence and improve customer relationships[67] Operational Challenges and Risks - The overall sentiment in the construction industry remains uncertain, which poses challenges to future growth, particularly due to macroeconomic factors[91] - The company faces high customer acquisition costs due to intensive sales efforts, and any failure to convert these efforts into sales could adversely affect financial performance[108] - Disruptions and adverse impacts to financial and operating results are expected as the company implements its evolved GTM operating model[109] - Future growth is dependent on the ability to attract new customers and retain existing ones, as well as the successful introduction of new products and services[92] Compliance and Regulatory Risks - The company is subject to stringent data privacy and security regulations, which could lead to regulatory investigations, fines, and reputational harm if not complied with[141] - The California Consumer Privacy Act (CCPA) imposes specific obligations on the company regarding personal data, with potential fines for noncompliance[147] - The EU's General Data Protection Regulation (GDPR) allows for fines of up to €20 million or 4% of annual global revenue for certain violations, impacting the company's operations in Europe[148] - The company may face significant consequences if unable to lawfully transfer personal data from the EEA or the U.K. to the U.S., including operational disruptions and increased regulatory scrutiny[154] Cybersecurity and Data Protection - Cyberattacks and malicious activities pose a growing threat to the confidentiality and integrity of sensitive information processed by the company and its third-party partners[162] - The company is vulnerable to increased cyberattack risks during geopolitical conflicts, which could disrupt operations and supply chains[163] - The company faces a variety of evolving cybersecurity threats, including ransomware attacks, which can lead to significant operational interruptions and reputational harm[165] - A significant number of high and critical unremediated vulnerabilities exist in the company's IT systems, and delays in developing remedial measures could lead to exploitation[174] Intellectual Property - The company holds 80 issued patents and 93 pending patent applications in the U.S., with additional patents in foreign countries, indicating a strong focus on intellectual property[78] - As of December 31, 2024, the company held 80 issued patents and had 93 pending patent applications in the U.S.[218] Legal and Litigation Risks - The company may face litigation and disputes that could adversely affect its business and financial condition, with potential increases in operating expenses due to legal proceedings[191] - Increased government scrutiny of the technology industry could lead to investigations and legal actions that may require changes to the company's products and services, impacting business operations[194] - The company may experience reputational harm and financial consequences from potential lawsuits or investigations related to compliance failures[190]

Group 1 - Procore Technologies (NYSE: PCOR) has experienced a 30% increase in share price since the previous buy rating was issued on July 5, 2024, indicating strong structural tailwinds for the company [1] - The investment strategy focuses on long-term investments while also identifying short-term opportunities to generate alpha, emphasizing a bottom-up analysis of individual companies [1] - The investment duration is medium to long-term, with an aim to identify companies that possess solid fundamentals, sustainable competitive advantages, and growth potential [1]