PresentationSaket KaliaBarclays Bank PLC, Research Division All right. Well, good afternoon, everyone. Welcome to day 1 of the Barclays Tech Conference. My name is Saket Kalia. I cover software here. I am honored to have with us the team from Procore. We've got Howard Fu, Chief Financial Officer; also got Alexandra Geller, Head of Investor Relations in the audience. We've got about 30 minutes together. Let's take the first 20 or 25 minutes just to do some fireside chat here with Howard, which I know is goin ...

The traditional consumer journey from initial home project idea to completed build is notoriously inefficient, opaque and cash intensive. Retailers and construction managers are now turning to artificial intelligence (AI) to create a streamlined, digitally native decision path that dictates where and how money is spent.By completing this form, you agree to receive marketing communications from PYMNTS and to the sharing of your information with our sponsor, if applicable, in accordance with our Privacy Polic ...

We came across a bullish thesis on Procore Technologies, Inc. on Value investing subreddit by vek999. In this article, we will summarize the bulls’ thesis on PCOR. Procore Technologies, Inc.'s share was trading at $75.26 as of December 2nd. PCOR’s forward P/E was 40.49 according to Yahoo Finance. Kokliang/Shutterstock.com Procore Technologies, Inc., together with its subsidiaries, provides a cloud-based construction management platform and related products and services in the United States and internati ...

Core Viewpoint - Procore Technologies (PCOR) has received an upgrade to a Zacks Rank 2 (Buy), indicating a positive outlook based on rising earnings estimates, which significantly influence stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system emphasizes the importance of changing earnings estimates in determining stock price movements, making it a valuable tool for investors [2][4]. - An increase in earnings estimates typically leads to higher fair value calculations by institutional investors, which in turn drives stock price movements [4]. Business Improvement Indicators - The upgrade in Procore Technologies' rating suggests an improvement in the company's underlying business, which is expected to be reflected in higher stock prices [5]. - Over the past three months, the Zacks Consensus Estimate for Procore Technologies has increased by 17%, indicating a positive trend in earnings expectations [8]. Zacks Rank System Overview - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks, which have averaged a +25% annual return since 1988 [7]. - Procore Technologies' upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting a strong potential for market-beating returns in the near term [10].

Customer Growth and Retention - The number of customers contributing over $100,000 in annual recurring revenue (ARR) increased from 2,261 as of September 30, 2024, to 2,602 as of September 30, 2025, reflecting a year-over-year growth rate of 15%[148] - The total number of customers on the platform grew from 16,975 as of September 30, 2024, to 17,623 as of September 30, 2025, representing a year-over-year growth rate of 4%[148] - The gross retention rate (GRR) improved to 95% as of September 30, 2025, up from 94% as of September 30, 2024, indicating strong customer loyalty[149] Financial Performance - Revenue for the three months ended September 30, 2025, was $338,851,000, representing a 15% increase from $295,885,000 in the same period of 2024, with 77% of the increase attributed to existing customers and 23% to new customers[181] - Revenue for the nine months ended September 30, 2025, increased by $123.7 million, or 15%, compared to the same period in 2024, with approximately 56% from existing customers and 44% from new customers[188] - Gross profit for the three months ended September 30, 2025, was $270,089,000, a 12% increase from $240,931,000 in 2024, resulting in a gross margin of 80%[182] - Gross profit for the nine months ended September 30, 2025, was $772.0 million, reflecting a $71.1 million increase or 10% from $700.9 million in 2024, resulting in a gross margin of 79%[189] Operating Expenses - Total operating expenses for the three months ended September 30, 2025, were $285,119,000, compared to $277,428,000 in 2024, reflecting an increase in sales and marketing, research and development, and general and administrative expenses[176] - Research and development expenses for the three months ended September 30, 2025, were $88,049,000, up from $80,791,000 in 2024, indicating continued investment in product development[167] - Sales and marketing expenses for the three months ended September 30, 2025, were $144,290,000, slightly increasing from $141,370,000 in 2024, as the company continues to invest in customer growth[166] - General and administrative expenses for the three months ended September 30, 2025, were $52,780,000, compared to $55,267,000 in 2024, showing a decrease in this category[168] Net Loss and Income - The net loss for the three months ended September 30, 2025, was $9,101,000, compared to a net loss of $26,388,000 in the same period of 2024[176] - The company reported a loss from operations of $15.0 million for the three months ended September 30, 2025, an improvement from a loss of $36.5 million in 2024[203] - Non-GAAP income from operations was $58.6 million for the three months ended September 30, 2025, compared to $26.3 million in 2024, reflecting a non-GAAP operating margin of 17%[203] Cash Flow and Capital Management - Cash, cash equivalents, and marketable securities totaled $727.9 million as of September 30, 2025[205] - Net cash provided by operating activities was $185.3 million during the nine months ended September 30, 2025, despite a net loss of $63.2 million[214] - The company generated positive cash flows from operations in recent years but continues to report losses, with an accumulated deficit of $1.3 billion as of September 30, 2025[209] - The company authorized a stock repurchase program on October 29, 2024, to repurchase up to $300.0 million of outstanding common stock, with 1,903,527 shares repurchased at an average price of $67.67 during the nine months ended September 30, 2025[222] Strategic Initiatives - The company plans to continue investing in technology innovation and product development to enhance platform capabilities and attract a broader set of stakeholders[155] - The company has made strategic acquisitions, including Novorender AS and Intelliwave Technologies Inc., to enhance its product offerings and market position[156] - The company has a balanced capital allocation strategy focusing on organic revenue growth, accretive mergers and acquisitions, and returning capital to stockholders through stock repurchases[220] Market Conditions and Economic Factors - Macroeconomic factors have led to cautious customer spending, impacting the annual growth rate of cRPO, but the company continues to monitor these influences on its business[159] - The company does not anticipate material risks from interest rate changes due to the short-term nature of its investments[229]

Core Insights - Procore Technologies Inc reported better-than-expected third-quarter financial results, with earnings of 42 cents per share, surpassing the analyst consensus estimate of 32 cents per share [1] - The company achieved quarterly sales of $338.851 million, exceeding the analyst consensus estimate of $328.200 million [1] - Procore raised its FY2025 sales guidance from a range of $1.299 billion-$1.302 billion to $1.312 billion-$1.314 billion [2] Management Commentary - The founder and outgoing CEO, Tooey Courtemanche, expressed confidence in the company's market leadership and its platform's potential to leverage AI for customer benefits, highlighting the positive returns from their go-to-market model [3] - Ajei Gopal is set to take over as CEO, with expectations that his operational expertise will further drive growth and shareholder value [3] Analyst Reactions - Following the earnings announcement, analysts adjusted their price targets for Procore Technologies, with Piper Sandler maintaining an Overweight rating and raising the target from $82 to $91 [6] - BMO Capital also maintained an Outperform rating, increasing the price target from $82 to $87 [6]

Core Insights - Procore Technologies reported quarterly earnings of $0.42 per share, exceeding the Zacks Consensus Estimate of $0.31 per share, and showing an increase from $0.24 per share a year ago, resulting in an earnings surprise of +35.48% [1] - The company achieved revenues of $338.85 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 3.49% and increasing from $295.89 million year-over-year [2] - Procore Technologies has outperformed consensus EPS estimates three times over the last four quarters and has topped revenue estimates four times in the same period [2] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.37 on revenues of $338.72 million, while the estimate for the current fiscal year is $1.26 on revenues of $1.3 billion [7] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Context - The Internet - Software industry, to which Procore Technologies belongs, is currently ranked in the top 34% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Data and Key Metrics Changes - Revenue growth was 14.5% year over year, consistent with the previous quarter's growth, reflecting strong underlying business momentum [6][25] - Non-GAAP operating margins increased to 17%, showing a commitment to improving efficiency [6][25] - Current RPO grew 23% year over year, and current deferred revenue grew 14% year over year [25][26] - Q3 total revenue was $339 million, with international revenue growing 14% year over year, impacted by currency headwinds [25][26] Business Line Data and Key Metrics Changes - The number of six and seven-figure deals accelerated to 31% year over year growth, with over 2,600 customers generating $100,000+ ARR [6][25] - Strong performance was noted in owner and specialty contractor motions, with significant contributions from the mid-market team [26] Market Data and Key Metrics Changes - The U.S. non-residential and multifamily construction sectors experienced negative growth of 2% for the last two quarters, contrasting with Procore's growth which outpaced this by approximately 10-20 percentage points [11][26] - Procore surpassed $1 trillion in annual construction volume contracted to its platform, indicating strong market execution [11][25] Company Strategy and Development Direction - Procore is positioned as a clear category leader in a $15 trillion construction market, which remains largely under-digitized, presenting significant growth opportunities [10][21] - The company is focused on leveraging AI and proprietary construction data to enhance its platform and drive productivity in the industry [12][86] - A new CEO, Ajay Gopal, is set to lead the company into its next growth phase, with a strong operational track record [8][22] Management's Comments on Operating Environment and Future Outlook - Management noted ongoing macroeconomic headwinds but expressed confidence that these would eventually turn into tailwinds for the business [10][37] - The company anticipates continued growth and margin expansion, with a commitment to improving profitability [14][30] Other Important Information - Procore has implemented a new stock repurchase program for $300 million, maintaining flexibility in capital allocation [29] - The company is seeing improvements in pipeline conversion, expansion rates, and lower sales headcount attrition [15][62] Q&A Session Summary Question: What are the signals of a turning point in end market demand? - Management indicated that owner enthusiasm for projects is a key signal, but cautioned that project timelines can delay revenue recognition [36][37] Question: Can net new ARR growth lead to revenue growth acceleration? - Management confirmed that net new ARR growth is outpacing revenue growth, indicating strong future potential [39][40] Question: How significant is the data center opportunity for Procore? - Management acknowledged that while data centers are a growing segment, they represent a small portion of the overall construction economy [46][47] Question: What is the outlook for large-scale opportunities in Q4? - Management expressed optimism about a healthy pipeline for Q4, with a diverse range of stakeholders contributing to potential large deals [96][97] Question: How will Ajay's leadership impact the business? - Management believes Ajay's operational expertise will be crucial for scaling the business and enhancing partner ecosystems [105][106] Question: What is the status of the new pricing and packaging adjustments? - Management reported positive feedback from pilot testing of bundled solutions, aimed at simplifying customer choices [88][90]

Financial Data and Key Metrics Changes - Revenue growth was 14.5% year-over-year, consistent with the previous quarter's growth, reflecting strong underlying business momentum [6][25] - Non-GAAP operating margins increased to 17%, showing a commitment to improving efficiency [6][25] - Total revenue in Q3 was $339 million, with international revenue growing 14% year-over-year, impacted by currency headwinds [25] - Current RPO grew 23% year-over-year, and current deferred revenue grew 14% year-over-year [25][26] Business Line Data and Key Metrics Changes - The number of six and seven-figure deals accelerated to 31% year-over-year growth, with over 2,600 customers generating $100,000+ ARR [6] - Net new ARR growth was notably faster than revenue growth, indicating strong performance across various segments [26][39] Market Data and Key Metrics Changes - The U.S. non-residential and multifamily construction sectors experienced negative growth of 2% for the last two quarters, while Procore continued to grow faster than this end market by approximately 10-20 percentage points [11][26] - Procore surpassed $1 trillion in annual construction volume contracted to its platform, demonstrating its ability to capture market share even in challenging cycles [11][25] Company Strategy and Development Direction - Procore is positioned as the clear category leader in a market projected to reach $15 trillion in construction spend by 2030, with significant opportunities for long-term growth [10][21] - The company is focused on leveraging its unified construction platform to harness AI and improve customer success [12][14] - A new CEO, Ajay Gopal, will take over on November 10th, with a strong operational track record and relevant industry experience [8][9] Management's Comments on Operating Environment and Future Outlook - Management acknowledges ongoing macroeconomic headwinds but remains optimistic about future growth as the construction cycle is expected to turn upward [10][11] - The company is committed to improving its margin profile, having achieved significant non-GAAP operating margin improvement since the start of 2023 [14][30] - Management expressed confidence in the strength of the platform and the positive feedback from customers regarding new technical resources [15][62] Other Important Information - Procore has implemented a new stock repurchase program for an additional $300 million, maintaining flexibility in capital allocation [29] - The company is testing a new pricing model that offers bundled solutions, which has received positive feedback from customers [88][90] Q&A Session Summary Question: Insights on end market demand and owners - Management noted that macro headwinds remain consistent, but excitement from owners about building projects is crucial for Procore's growth [36][37] Question: Clarification on net new ARR growth - Management confirmed that net new ARR growth is outpacing revenue growth, indicating strong performance and confidence in future quarters [39][40] Question: Data center opportunity impact - Management acknowledged that while data centers are a small portion of the overall construction economy, Procore has performed well in this sector [46][47] Question: Trends in CRPO and renewals - Management reported healthy renewals and stable to positive underlying business health, contributing to CRPO performance [48][49] Question: Large-scale deal activity in Q4 - Management indicated that Q4 typically sees more large-scale activity, and the current pipeline looks healthy with a diverse set of stakeholders [96][97] Question: Future growth potential and margin expansion - Management expressed confidence in maintaining margin expansion while allowing the new CEO to explore growth opportunities [108][109]

Financial Data and Key Metrics Changes - Revenue growth was 14.5% year over year, consistent with the previous quarter's growth, reflecting strong underlying business momentum [5][23] - Non-GAAP operating margins increased to 17%, showing a commitment to improving efficiency [5][23] - Current RPO grew 23% year over year, and current deferred revenue grew 14% year over year [23][24] - Q3 non-GAAP operating income was $59 million, representing a non-GAAP operating margin of 17% [23] Business Line Data and Key Metrics Changes - The number of six and seven-figure deals accelerated to 31% year over year growth, with over 2,600 customers generating $100,000+ ARR [5] - Strong performance was noted in the owner and specialty contractor segments, with notable growth from the mid-market team [24] Market Data and Key Metrics Changes - U.S. non-residential and multifamily construction has seen a decline from 25% growth in Q1 2023 to negative 2% growth in recent quarters, representing a 27-point reduction in growth over two years [9][10] - Despite market headwinds, Procore has continued to grow faster than the end market by approximately 10-20 percentage points [10] Company Strategy and Development Direction - Procore is positioned as a clear category leader in a $15 trillion construction market, which remains largely undigitized, presenting significant growth opportunities [9] - The company is focused on leveraging AI and proprietary construction data to enhance its platform and drive productivity in the construction industry [11][51] - A new CEO, Ajay Gopal, is set to take over, bringing extensive experience in leading global technology companies [6][21] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth, anticipating that current headwinds will eventually turn into tailwinds [10][32] - The company is committed to improving its margin profile, having achieved 1,900 basis points of non-GAAP operating margin improvement since the start of 2023 [13] - Management expects Q4 revenue to be between $339 million and $341 million, representing year-over-year growth of 12%-13% [27] Other Important Information - Procore surpassed $1 trillion in annual construction volume contracted to its platform, demonstrating its ability to execute and gain market share [10][39] - A new stock repurchase program for $300 million has been implemented to optimize long-term shareholder value [26] Q&A Session Summary Question: Is the signal of a turning point in end market demand still reasonable to think about? - Management believes that as owners become more excited about building projects, it will positively impact Procore's business, although it may take time for projects to be greenlit [32] Question: Can you elaborate on net new ARR growth being faster than revenue growth? - Management reiterated that net new ARR growth is a strong indicator of future revenue growth acceleration, with confidence in continued performance [34] Question: How do you view the data center opportunity? - While data centers are a small portion of the overall construction economy, Procore has performed well in this sector and sees it as a strength [36] Question: What are the trends in CRPO and renewals? - Renewals have been healthy, and the underlying business is stable to positive, with longer contract durations reflecting customer commitment [38] Question: How is the competitive landscape perceived by customers? - Customers expressed excitement about Procore's achievements and innovations, with no significant mention of competitors during discussions [64]