PROCORE(US:PCOR)2024-05-02 20:05PART I. FINANCIAL INFORMATION Financial Statements (Unaudited) For Q1 2024, Procore Technologies, Inc. reported a 26% revenue increase to $269.4 million, significantly narrowing its net loss to $11.0 million, with total assets at $1.88 billion and operating cash flow improving to $69.1 million Condensed Consolidated Balance Sheets As of March 31, 2024, total assets slightly decreased to $1.88 billion, total liabilities decreased to $685.0 million, and total stockholders' equity increased to $1.19 billion Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Assets | $1,878,710 | $1,893,568 | | Total Current Assets | $954,940 | $955,734 | | Goodwill | $539,131 | $539,354 | | Total Liabilities | $685,029 | $737,958 | | Total Current Liabilities | $594,983 | $642,430 | | Deferred Revenue (Current) | $487,944 | $501,903 | | Total Stockholders' Equity | $1,193,681 | $1,155,610 | Condensed Consolidated Statements of Operations and Comprehensive Loss In Q1 2024, revenue grew 26% year-over-year to $269.4 million, gross profit increased to $223.7 million with an 83% margin, and net loss significantly decreased to $11.0 million from $63.4 million Q1 2024 vs. Q1 2023 Statement of Operations (in thousands, except per share data) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Revenue | $269,428 | $213,526 | | Gross Profit | $223,705 | $173,324 | | Loss from Operations | $(18,906) | $(69,263) | | Net Loss | $(10,966) | $(63,447) | | Net Loss Per Share | $(0.08) | $(0.45) | Condensed Consolidated Statements of Cash Flows For the three months ended March 31, 2024, net cash provided by operating activities significantly increased to $69.1 million, with net cash used in investing activities at $4.7 million, and net cash provided by financing activities at $6.7 million, leading to a cash and cash equivalents balance of $427.7 million Cash Flow Summary (in thousands) | Activity | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $69,145 | $29,275 | | Net cash used in investing activities | $(4,670) | $(79) | | Net cash provided by financing activities | $6,676 | $3,312 | | Net increase in cash | $71,151 | $32,508 | Notes to Condensed Consolidated Financial Statements Key notes detail accounting policies, investments, and remaining performance obligations (RPO) at $1.0 billion, along with $40.1 million in stock-based compensation and $4.2 million in restructuring costs from a 4% workforce reduction, with U.S. revenue at 86% - Total Remaining Performance Obligations (RPO) as of March 31, 2024, was $1.0 billion, with $704.7 million (70%) expected to be recognized as revenue in the next 12 months47 - In January 2024, the company executed a 4% global workforce reduction, incurring $4.2 million in restructuring-related costs during the quarter9192 Revenue by Geographic Region (in thousands) | Region | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | U.S. | $230,433 (86%) | $183,925 (86%) | | Rest of the world | $38,995 (14%) | $29,601 (14%) | | Total Revenue | $269,428 | $213,526 | Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the 26% revenue growth in Q1 2024 primarily to existing customer expansion, highlighting a 10% customer count increase to 16,598, a 95% gross retention rate, and a non-GAAP operating income of $37.1 million, reflecting improved efficiency - The number of customers increased by 10% year-over-year, from 15,089 as of March 31, 2023, to 16,598 as of March 31, 2024102 - The Gross Retention Rate (GRR) was 95% as of March 31, 2024, an improvement from 94% as of March 31, 2023104 Remaining Performance Obligations (in thousands) | RPO Type | March 31, 2024 | March 31, 2023 | % Change | | :--- | :--- | :--- | :--- | | Current (cRPO) | $704,656 | $586,158 | 20% | | Non-current | $302,159 | $219,316 | 38% | | Total RPO | $1,006,815 | $805,474 | 25% | Reconciliation to Non-GAAP Income (Loss) from Operations (in thousands) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | GAAP Loss from operations | $(18,906) | $(69,263) | | Stock-based compensation | $41,669 | $45,856 | | Amortization of intangibles | $9,666 | $9,334 | | Other adjustments | $4,637 | $10,044 | | Non-GAAP Income (Loss) from operations | $37,066 | $(4,029) | Results of Operations Revenue for Q1 2024 increased by $55.9 million (26%) YoY, primarily from existing customers, with gross margin improving to 83% and total operating expenses remaining flat due to decreased R&D, leading to a reduced operating loss - Revenue increased 26% YoY, with approximately 90% of the increase attributable to existing customers and 10% from new customers133 - Research and development expenses decreased by 12% YoY, primarily due to a $6.0 million decrease in acquisition-related expenses and a $6.1 million decrease in stock-based compensation expense136 - Sales and marketing expenses increased by only 3% YoY, despite the 26% revenue growth, indicating improved efficiency135 Liquidity and Capital Resources As of March 31, 2024, Procore's liquidity totaled $744.6 million in cash and marketable securities, with $69.1 million generated from operations, deemed sufficient for the next 12 months despite an accumulated deficit of $1.1 billion - Principal sources of liquidity totaled $744.6 million as of March 31, 2024, consisting of cash, cash equivalents, and marketable securities147 - The company has an accumulated deficit of $1.1 billion as of March 31, 2024, but believes its existing cash will be sufficient for at least the next 12 months150 Quantitative and Qualitative Disclosures About Market Risk The company identifies foreign currency exchange, interest rate, and inflation as primary market risks, with minimal material impact due to U.S. Dollar revenue, short-term investments, and no significant inflation effects to date - The company's primary market risks are foreign currency exchange, interest rate, and inflation risk166167168 - Due to the short-term nature of its $744.6 million investment portfolio, a hypothetical 100 basis point change in interest rates would not have a material impact167 Controls and Procedures Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of March 31, 2024, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report171 - No material changes to internal control over financial reporting occurred during the quarter ended March 31, 2024171 PART II. OTHER INFORMATION Legal Proceedings The company is not currently a party to any legal proceedings expected to have a material adverse effect on its business, financial condition, or results of operations - Procore is not presently a party to any legal proceedings that would be reasonably expected to have a material adverse effect on the business175 Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2023 - No material changes have been made to the risk factors disclosed in the company's 2023 Form 10-K176 Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities and no issuer purchases of equity securities during the quarter - There were no unregistered sales of equity securities or issuer purchases of equity securities in the period177178 Other Information During the quarter, Steven S. Davis, President of Product & Technology, adopted a Rule 10b5-1 trading plan on March 15, 2024, for the potential sale of up to 64,802 shares of common stock - On March 15, 2024, Steven S. Davis, President, Product & Technology, adopted a Rule 10b5-1 trading arrangement for the sale of up to 64,802 shares181 Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications by the CEO and CFO, and various incentive plan documents