Summary
Procore Technologies reported first quarter fiscal 2023 revenue of $213.5 million, up 33.9% from the prior-year quarter. Gross profit reached $173.3 million, up 37.4%, and gross margin improved to 81.2%, a 2.1 percentage point gain from the prior-year quarter. The company still posted a GAAP operating loss of $69.3 million, but that loss narrowed from the prior-year quarter. GAAP operating margin was -32.4%, an improvement of 12.2 percentage points. Net loss was $63.4 million, also a narrower loss year over year, and diluted loss per share was $0.45, an improvement from the prior-year quarter.
On a non-GAAP basis, gross margin was 85% and operating margin was negative 2%, which excludes stock-based compensation, amortization of acquired intangibles, employer payroll taxes on stock transactions, and acquisition-related expenses. Operating cash flow was $29.3 million, up 184.7% from the prior-year quarter. Free cash flow was $19 million. Capital expenditures were $2.2 million, down 71.1% from the prior-year quarter. Deferred revenue, current, was $403.0 million, up 30.0% year over year. Remaining performance obligations were $805.5 million, up 28.5%, and about 73% of that amount is expected to be recognized as revenue within 12 months. Customer count ended at 15,089 organic customers, with 601 net new organic customers added in the quarter. The prior-year count was 12,809, and the filing cited 18% year-over-year growth. The total included 189 LaborChart customers after that acquisition was integrated into the sales process in the third quarter of 2022.
Guidance for the second quarter of 2023 calls for year-over-year revenue growth of 25% to 27% and a non-GAAP operating margin of negative 7.5% to negative 8.5%. For the full fiscal year 2023, Procore guided to year-over-year revenue growth of 26% to 27% and a non-GAAP operating margin of negative 5.5% to negative 6.5%. The company noted that a reconciliation of non-GAAP guidance measures to GAAP measures is not available on a forward-looking basis without unreasonable effort. Procore also launched Procore Risk Advisors, a construction brokerage offering insurance and surety solutions. International growth remains a priority, though non-U.S. revenue was 14% of total revenue, compared with 15% a year earlier.
Risks include macroeconomic pressure such as rising inflation, rising interest rates, volatility in capital markets, bank failures, and foreign exchange fluctuations. The company said it does not currently believe those factors have had a material impact on its business, but it continues to monitor them. Procore disclosed that the March 2023 failure of Silicon Valley Bank did not materially affect day-to-day operations or liquidity requirements, and that less than 1% of total cash, cash equivalents, and marketable securities balances were held in deposit accounts at First Citizens Bank as of March 31, 2023. The materials financing program remains a balance sheet use of capital, and management may use up to approximately 10% of current cash, cash equivalents, and marketable securities to support it. Leadership changes are underway: Paul Lyandres, the CFO, will move to President of Fintech, and Howard Fu will become CFO effective next week. The company continues to generate losses from operations and may not achieve profitability in the foreseeable future.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2023 | Q4 FY2022 | QoQ | Q1 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $213.5M | $202.1M | +5.7% | $159.5M | +33.9% |
| Gross profit | $173.3M | $161.5M | +7.3% | $126.2M | +37.4% |
| Gross margin | 81.2% | 79.9% | +1.3 pp | 79.1% | +2.1 pp |
| Research & development | $80.0M | $75.4M | +6.1% | $60.3M | +32.8% |
| Sales & marketing | $117.4M | $118.2M | -0.7% | $93.9M | +25.0% |
| General & administrative | $45.2M | $43.1M | +4.8% | $43.2M | +4.7% |
| Total operating expenses | $242.6M | $236.7M | +2.5% | $197.3M | +22.9% |
| Operating income (loss) | -$69.3M | -$75.2M | +7.9% | -$71.1M | +2.6% |
| Operating margin | -32.4% | -37.2% | +4.8 pp | -44.6% | +12.2 pp |
| Net income (loss) | -$63.4M | -$71.2M | +10.9% | -$71.4M | +11.2% |
| Net margin | -29.7% | -35.2% | +5.5 pp | -44.8% | +15.1 pp |
| Diluted EPS | -$0.45 | -$0.52 | +$0.07 | — | — |
| Customers | 189 | 189 | ±0.0% | 3,000 | -93.7% |
Risks
The Levelset materials financing program exposes Procore to new credit, performance, and liquidity risks. Receivables for amounts financed, net of allowance, were $13.5 million as of March 31, 2023, and Procore may use up to approximately 10% of its current cash, cash equivalents, and marketable securities to support originations. Customer defaults or weak mechanic's lien enforcement could harm cash flows and liquidity.
Demand depends on construction spending and customer budgets, and pricing is generally based on a customer's annual construction volume. Economic slowdowns, rising inflation, higher interest rates, supply chain disruptions, labor shortages, or reduced government infrastructure spending could reduce revenue or increase costs.
Bank failures, including SVB on March 10, 2023, increase liquidity risk because cash and marketable securities balances typically exceed FDIC insurance limits. As of March 31, 2023, less than 1% of total cash, cash equivalents, and marketable securities were held at First Citizens Bank, with letters of credit totaling about $5.8 million.
Revenue was $213.5 million in FY2023 Q1, up 33.9% from $159.5 million in FY2022 Q1, but management warns that prior growth may not indicate future performance and that the revenue growth rate will decline. Supporting growth requires continued investment in sales, marketing, research and development, and international operations.
Subscriptions are recognized ratably over annual or multi-year terms, so downturns in new or renewed subscriptions may not be immediately reflected in revenue. Larger enterprise and owner deals lengthen sales cycles and raise upfront sales costs. In FY2023 Q1, approximately 89% of the revenue increase came from existing customers and 11% from new customers.
The construction management software market is highly competitive, and Procore sells at a premium to some competitors. Competitors may offer lower-priced or free products, bundle broader offerings, or acquire customers at lower cost. New offerings such as materials financing may face new competitors with competitive advantages.
Success depends on key personnel, especially founder, President, and CEO Craig F. Courtemanche, Jr., and employees work on an at-will basis. Competition for skilled personnel is significant. In FY2023 Q1, research and development personnel-related expenses rose, including a $6.8 million increase in stock-based compensation, reflecting retention pressures.
Data privacy and security obligations are stringent and can conflict across jurisdictions. The CCPA provides civil penalties of up to $7,500 per violation, and the EU GDPR allows fines of up to 20 million euros or 4% of annual global revenue. Cross-border data transfer restrictions could disrupt operations.
International expansion adds compliance, tax, language, and currency risks. Non-U.S. revenue was 14% of total revenue as of March 31, 2023, compared with 15% as of March 31, 2022, and Procore does not currently hedge non-U.S. dollar currency exposures.
Procore had an accumulated deficit of $1.0 billion as of March 31, 2023. While cash, cash equivalents, and marketable securities totaled $602.8 million and are expected to meet needs for at least 12 months, Procore may need additional capital, and equity or debt financing could be dilutive or unavailable on acceptable terms.
As of December 31, 2022, Procore had $842.6 million of U.S. federal and $567.2 million of state NOL carryforwards. Section 382 ownership changes could limit their use, and OECD Pillar Two tax proposals could increase future tax obligations.
SaaS KPIs
All quarters →Non-GAAP Gross Margin
Non-GAAP Operating Margin
Total Organic Customers
Net New Organic Customers
Non-GAAP Free Cash Flow
Summary, forecast, risks and KPIs are extracted from PROCORE TECHNOLOGIES, INC.'s SEC filings for Q1 FY2023 (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.