Investment Focus & Market Trends - Venture Capital firms are analyzing the potential overhype in AI verticals [1] - The discussion includes the "Covid mistake" in AI investing, suggesting lessons learned from previous market behaviors [1] - The report highlights the increasing costs associated with competing in the AI sector [1] - The analysis covers whether AI markets will experience a boom or deflation, indicating uncertainty in the sector's future [1] Company & Valuation - Revolut's $75 billion valuation is discussed, providing insight into high-value startups [1] - OpenAI's billion-dollar cloud play is examined, showcasing the company's expansion into cloud services [1] SaaS & AI - The report addresses the truth about vertical SaaS, offering insights into this specific business model [1] - AI's impact on the legal industry is explored, demonstrating AI's transformative effects across sectors [1]

Procore (NYSE:PCOR) Update Summary Company Overview - Procore is a construction management software company that focuses on providing a connected platform for various stakeholders in the construction industry. [1][2] Key Industry Insights - The construction industry is projected to exceed $15 trillion and is one of the least digitized sectors, presenting significant growth opportunities for Procore. [15][79] - There is a notable shift in customer focus from traditional construction projects to more complex hyperscaler projects, which now account for 30% of some customers' business. [8][9] Core Product Announcements - Procore is enhancing its platform with AI-driven innovations, including the introduction of Helix, which serves as an intelligence layer across the platform. [32][35] - The company is focusing on improving tools for the planning phase of projects, which has historically been a weak area for Procore. [88] - New features include advanced scheduling capabilities and resource management tools aimed at better serving owners. [82][84] Customer Segmentation and Growth Strategy - Procore has over 3,000 owner customers, contributing a quarter of its annual recurring revenue (ARR). [84][86] - The company aims to increase its focus on owners, who have different needs compared to general contractors, particularly in the planning and operational phases of projects. [87][90] - Procore is targeting public sector entities, leveraging its FedRAMP certification to enhance its appeal to federal and state projects. [91] Technological Advancements - Procore is investing in AI and machine learning to enhance its platform's capabilities, including the use of computer vision and dynamic visualizations for project management. [11][12][16] - The introduction of an agent marketplace allows users to create and share custom agents, enhancing collaboration and knowledge sharing within organizations. [68][70] Security and Compliance - Procore has made significant investments in governance, security, and transparency, which are critical for its enterprise customers. [20][22] - The company has implemented a new AI transparency site to provide customers with insights into data usage and compliance standards. [22] Customer Engagement and Feedback - Procore has established innovation labs and hackathons to engage with customers and gather feedback, resulting in a significant increase in feature requests and product enhancements. [24][30] - Customers have requested a more controlled release management system, allowing them to choose the pace of new feature adoption. [28][29] Future Outlook - Procore is focused on increasing adoption of its Helix platform across all customer tiers, with plans to monetize through usage-based models in the future. [77][78] - The company is positioned as a leader in the construction software space, with a singular focus on construction providing a competitive advantage. [79] Conclusion - Procore is strategically enhancing its platform to meet the evolving needs of the construction industry, particularly focusing on AI integration, customer engagement, and expanding its offerings for owners and public sector entities. The company's commitment to security and transparency further strengthens its position as a trusted partner in the construction management space. [79][80]

Company Background - John Ederer has transitioned from a Wall Street analyst to the CFO of Teradata, bringing over 10 years of experience in the finance and enterprise software sectors [3][4] - Ederer has a diverse background, having worked with both public companies and private equity-backed businesses, which provides a comprehensive understanding of different business models [4] Previous Experience - Prior to joining Teradata, Ederer was at Model N, a vertical SaaS business, where he successfully implemented a profitable growth strategy over four years [4]

Core Viewpoint - The digital banking space is identified as an attractive investment arena, with a focus on companies like Alkami Technology and Q2 Holdings, which are modernizing customer-facing software for credit unions and regional banks [1][3]. Company Summaries - **Alkami Technology**: - Rated as Overweight by the analyst, with organic revenue growth exceeding 20% and trading at six times EV/Sales for 2026E [4]. - Holds less than 5% market share in a ~$10 billion market, with up to 60% of the market being an addressable opportunity [3]. - Benefits from high customer retention and long contract lengths, supporting revenue visibility [1]. - **Q2 Holdings**: - Also rated as Overweight, with similar characteristics to Alkami Technology in terms of customer retention and contract lengths [1]. - Holds less than 10% market share in the same ~$10 billion market, with significant growth potential [3]. - **nCino**: - Rated as Neutral, focusing on cloud-based banking software solutions for financial institutions [2]. - The analyst has noted idiosyncratic factors that have kept her on the sidelines regarding nCino compared to broader vertical SaaS [2]. Market Dynamics - The digital banking industry is characterized by a defensive monetization model based on the number of bank accounts and products subscribed to by banks [2]. - The opportunity for improving bank efficiency is described as seemingly limitless, indicating a strong growth potential for the sector [2]. Price Actions - As of publication, stock prices are as follows: - Alkami Technology (ALKT) is up 5.26% at $28.24 - Q2 Holdings (QTWO) is up 3.56% at $89.07 - nCino (NCNO) is down 0.44% at $26.96 [5].

Group 1 - Intapp (NASDAQ: INTA) operates in the vertical SaaS space, which has a more limited total addressable market compared to broader horizontal SaaS platforms [1] - The customer base of Intapp is niche but may be more sensitive to macroeconomic slowdowns, particularly in discretionary spending [1]