Summary
Procore closed the first quarter of fiscal 2022, ended March 31, 2022, with revenue up 40% to $159.5 million and gross profit up 34.8% to $126.2 million. Growth came from expansion inside existing accounts, from customers signed over the past year, and from price increases. The Levelset acquisition, closed in November 2021, contributed $6.9 million of revenue in the quarter. Organic customer count reached 12,809, up 20% from 10,668 a year earlier, after 616 net new organic additions. Those counts exclude Levelset, LaborChart and Esticom, which still sit on non-standard legacy contracts; Levelset alone has more than 3,000 customers. The company formally launched in France, adding to 2022 office openings in Singapore, Paris, Dublin and Dubai.
Profitability moved the other way. GAAP gross margin fell to 79.1%, down 3.0 percentage points, and operating margin dropped to -44.6%, 33.3 percentage points below the prior-year quarter. The operating loss was $71.1 million and the net loss was $71.4 million, both wider than a year earlier. Diluted loss per share was $0.53. Two forces drove that swing. Stock-based compensation climbed sharply after IPO-related RSU performance conditions were satisfied, and hiring ran hot: cost of revenue headcount rose 51% since March 31, 2021, sales and marketing 48%, research and development 54% and general and administrative 61%. Amortization of intangibles from the Levelset and LaborChart deals added more expense. On a non-GAAP basis, which strips out those items, gross margin was 84% and operating margin was -12%.
Cash generation thinned out. Operating cash flow was $10.3 million, down 63.7% from the prior-year quarter. Free cash flow, defined by Procore as operating cash flow less purchases of property and equipment and capitalized software development costs, was an outflow of $5 million. Capital expenditures rose 214.5% to $7.5 million, mainly for leased office improvements and computer equipment. Deferred revenue, current portion only, stood at $310.0 million at March 31, 2022. Remaining performance obligations totaled $626.7 million, and about 71% of that is expected to be recognized as revenue within 12 months, which fits a model where subscriptions run one to three years and are billed in advance.
Guidance puts second quarter 2022 revenue growth at 31% to 33%, with a non-GAAP operating margin of -14% to -15%. For the full fiscal year 2022, Procore guides to revenue growth of 31% to 32% and a non-GAAP operating margin of -13.5% to -14.5%. The company does not reconcile that non-GAAP margin guidance to GAAP, saying the excluded items cannot be estimated without unreasonable effort. The full-year figure absorbs the Levelset contribution noted in the outlook.
The risk list is long and mostly structural. Procore expects to keep a full valuation allowance against its U.S. and U.K. deferred tax assets, a signal that management does not count on near-term taxable profits. It warns that it may not achieve profitability in the foreseeable future. International expansion brings spending on offices, languages, currencies and local compliance. The COVID-19 pandemic still clouds construction activity and the company's hybrid work plans. On April 29, 2022, Procore terminated its credit facility ahead of its May 7, 2022 maturity, leaving $6.5 million of letters of credit outstanding on an unsecured basis. Cash and cash equivalents of $586.9 million give room to fund the plan, but the widening operating loss is the figure that will draw scrutiny as spending grows.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2022 | Q4 FY2021 | QoQ | Q1 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $159.5M | $146.1M | +9.2% | — | — |
| Gross profit | $126.2M | $116.3M | +8.5% | — | — |
| Gross margin | 79.1% | 79.6% | -0.5 pp | — | — |
| Research & development | $60.3M | $60.7M | -0.7% | — | — |
| Sales & marketing | $93.9M | $84.3M | +11.4% | — | — |
| General & administrative | $43.2M | $45.8M | -5.8% | — | — |
| Total operating expenses | $197.3M | $190.8M | +3.4% | — | — |
| Operating income (loss) | -$71.1M | -$74.5M | +4.4% | — | — |
| Operating margin | -44.6% | -51.0% | +6.4 pp | — | — |
| Net income (loss) | -$71.4M | -$51.0M | -40.1% | — | — |
| Net margin | -44.8% | -34.9% | -9.9 pp | — | — |
| Customers | 3,000 | 3,000 | ±0.0% | — | — |
Risks
The company has a history of losses and may not achieve or sustain profitability. For FY2022 Q1, net loss widened to $71.4 million from $13.7 million in FY2021 Q1, operating loss widened to $71.1 million from $12.9 million, and accumulated deficit was $733.6 million as of March 31, 2022; operating cash flow decreased 63.7% to $10.3 million.
Revenue was $159.5 million for FY2022 Q1, up 40.0% from $113.9 million in FY2021 Q1, but the company expects its revenue growth rate to decline. Failure to manage rapid growth, forecast accurately, or maintain growth could cause the stock price to decline.
Gross margin decreased 3.0 percentage points to 79.1% in FY2022 Q1 from 82.1% in FY2021 Q1, and operating margin decreased 33.3 percentage points to -44.6% from -11.3%. Cost of revenue rose 64% due to acquisition amortization, headcount, and cloud hosting costs.
Construction industry exposure to economic slowdowns, inflation, supply chain disruptions, labor shortages, tariffs, and reduced government spending could lower demand. Because pricing is based on customers' annual construction volume, decreased construction volume could reduce what customers pay.
The Levelset and LaborChart acquisitions closed in Q4 2021 and present integration, synergy realization, key personnel retention, internal control, and cybersecurity alignment risks. MD&A states Levelset contributed $6.9 million of revenue in Q1 2022 and has more than 3,000 customers as of March 31, 2022.
Stringent and changing data privacy laws apply, including CCPA fines up to $7,500 per violation, CPRA effective January 1, 2023, GDPR fines up to 20 million euros or 4% of annual global revenue, and PCI DSS penalties of $5,000 to $100,000 per month. A proposed EU regulation on artificial intelligence could impose additional onerous obligations.
Cyberattacks including ransomware, nation-state and nation-state-supported actors, supply chain attacks, and remote workforce exposure could compromise sensitive information or disrupt the platform. Consequences include regulatory investigations, litigation, fines, lost customers, and reputational harm.
The company depends on CEO Courtemanche and other key personnel, and faces significant competition for skilled engineers, product managers, designers, and sales representatives. Headcount increased since March 31, 2021 by 51% in cost of revenue, 48% in sales and marketing, 54% in research and development, and 61% in general and administrative, increasing execution and retention risk.
The market is highly competitive and rapidly changing, with competitors having better name recognition, longer operating histories, larger marketing budgets, greater resources, and broader product bundles. Some competitors offer lower-priced or free products, which could pressure Procore's premium pricing and force discounts.
The Levelset lien rights management services may subject the company to unauthorized practice of law claims; past Levelset offerings have faced UPL claims, and compliance across jurisdictions may require different business structures and significant expense.
Sales involve educating prospective customers about construction management software, and the cost to acquire customers is high. Identifying, recruiting, and training qualified sales representatives is time-consuming, and failure to secure sales after lengthy sales efforts could harm revenue growth.
15% of 2021 revenue was generated outside the United States, and the company is expanding internationally with new offices. Risks include compliance with international laws, foreign exchange controls, political and economic instability from the Russia and Ukraine conflict and sanctions, longer payment cycles, and higher costs.
As a public company, the company must maintain effective disclosure controls and internal control over financial reporting, and acquisitions may strain these controls. Failure or material weaknesses could impair timely and accurate financial reporting, cause restatements, and lead to loss of investor confidence or NYSE listing issues.
Sales and use, value added, and similar tax collection positions are uncertain after South Dakota v. Wayfair, and tax authorities may audit and impose substantial liabilities. As of December 31, 2021, federal NOL carryforwards were $794.5 million and state NOL carryforwards were $509.0 million, subject to Section 382 limitations and California NOL restrictions.
SaaS KPIs
All quarters →Non-GAAP Gross Margin
Non-GAAP Operating Margin
Total Organic Customers
Net New Organic Customers
Non-GAAP Free Cash Flow
Levelset Customers
Summary, forecast, risks and KPIs are extracted from PROCORE TECHNOLOGIES, INC.'s SEC filings for Q1 FY2022 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.