Summary
Procore Technologies closed FY2022 Q2 with revenue of $172.2 million, up 40.2% from the prior-year quarter. The top line included a contribution from Levelset, the materials financing and lien rights business acquired in November 2021. Year-to-date revenue reached $331.7 million, up 40.1%. Gross profit for the quarter was $135.5 million, up 39.2%. Gross margin slipped to 78.7%, down 0.6 percentage points from the prior-year quarter. The company still carries a GAAP operating loss, but that loss narrowed sharply. Operating loss was $72.3 million, and operating margin was negative 42.0%, an improvement of 79.4 percentage points. Net loss narrowed to $73.1 million, and diluted EPS was negative $0.54, a narrower loss per share than the prior-year quarter. On a year-to-date basis, net loss was $144.5 million and diluted EPS was negative $1.07.
Cash generation remains the weak spot. Operating cash flow was negative $27.0 million for the quarter, down from a smaller outflow in the prior-year quarter and down 761.5% according to the reported figures. Year-to-date operating cash flow was negative $16.7 million, down from positive cash flow in the prior-year period. Free cash outflow, a non-GAAP measure that subtracts capital expenditures and capitalized software development costs, was $37.5 million for the quarter and $42.4 million year to date. Capital expenditures were $1.9 million in the quarter, up 5.9%, and $9.4 million year to date, up 124.9%. Deferred revenue, current portion only, was $316.6 million, up 40.0%. Remaining performance obligations were $653.9 million, up 36.7%, with about 72% expected to be recognized as revenue within 12 months.
Customer additions and product activity give some balance to the loss profile. Procore added 594 net new organic customers in the quarter and ended with 13,403 organic customers. That compares with 11,149 customers on the platform at June 30, 2021, a year-over-year growth rate of 20%. The organic count excludes more than 3,000 Levelset customers. The company released over 60 product enhancements in the quarter, opened an Asia-Pacific headquarters in Sydney, Australia, and appointed Joy Durling as Chief Data Officer. Management pointed to expansion within existing customers and new customer additions as the main drivers of revenue growth. Non-GAAP figures show a smaller loss than GAAP, with non-GAAP operating margin at negative 15% for the quarter, compared with negative 4% in the prior-year quarter.
Management guided third-quarter revenue and full-year 2022 revenue to ranges that call for continued year-over-year growth, with the full-year figure including a contribution from Levelset. Non-GAAP operating margin guidance is negative for both the third quarter and the full year. The outlook depends on a dynamic construction environment. Procore lists risks including inflation, challenging geopolitical conditions, the pace of construction management software adoption, its ability to attract new customers and retain and expand existing ones, international expansion, and its estimated total addressable market. COVID-19 remains an uncertain factor. The company has a full valuation allowance against net U.S. and U.K. deferred tax assets and says it may not achieve profitability in the foreseeable future. It may need additional capital resources to fund strategic initiatives. The materials financing program uses balance sheet capital and could affect liquidity as it grows.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2022 | Q1 FY2022 | QoQ | Q2 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $172.2M | $159.5M | +8.0% | $122.8M | +40.2% |
| Gross profit | $135.5M | $126.2M | +7.4% | $97.3M | +39.2% |
| Gross margin | 78.7% | 79.1% | -0.4 pp | 79.2% | -0.6 pp |
| Research & development | $63.8M | $60.3M | +5.9% | $88.6M | -28.0% |
| Sales & marketing | $103.3M | $93.9M | +10.0% | $99.9M | +3.4% |
| General & administrative | $40.7M | $43.2M | -5.8% | $57.8M | -29.7% |
| Total operating expenses | $207.8M | $197.3M | +5.3% | $246.4M | -15.7% |
| Operating income (loss) | -$72.3M | -$71.1M | -1.6% | -$149.1M | +51.5% |
| Operating margin | -42.0% | -44.6% | +2.6 pp | -121.4% | +79.4 pp |
| Net income (loss) | -$73.1M | -$71.4M | -2.4% | -$149.7M | +51.2% |
| Net margin | -42.5% | -44.8% | +2.3 pp | -121.9% | +79.5 pp |
| Diluted EPS | -$0.54 | — | — | — | — |
| Customers | 3,000 | 3,000 | ±0.0% | — | — |
Risks
Revenue increased 40.2% in the quarter and 40.1% year to date, but the filing states rapid growth may not be indicative of future growth and management expects the revenue growth rate to decline as the business matures. Failure to manage growth or accurately forecast could cause the stock price to decline.
The construction industry is exposed to economic slowdowns, inflation, supply chain disruptions, labor shortages, commodity prices, and reduced government spending. Because pricing is generally based on a customer's annual construction volume, reduced construction volumes could reduce what customers pay.
The company depends on key personnel, including founder, President, and CEO Mr. Courtemanche, and competition for skilled sales, engineering, and product personnel has intensified. It may need to offer higher compensation to attract and retain talent.
Data privacy and security obligations are expanding under CCPA, CPRA, GDPR, and UK GDPR, with GDPR fines up to 20 million euros or 4% of annual global revenue. New state laws and proposed AI regulation could require significant compliance resources.
Operating cash flow was negative $27.0 million in the quarter, down 761.5% versus the prior-year quarter, and negative $16.7 million year to date, down 166.2%. The company may require additional capital to fund strategic initiatives and growth.
The market is highly competitive, with aggregated construction management products, accounting software vendors, point solution providers, and in-house tools. Competitors may offer lower-priced or free products or bundle broader suites, which could force price cuts or increased marketing spend.
Sales cycles can be long and results fluctuate because of budgeting cycles, government funding, and difficulty predicting customer demand. The company must invest heavily to educate prospective customers, and customer acquisition costs are high.
International expansion brings compliance, employment, tax, and foreign exchange risks, and 15% of 2021 revenue was generated outside the United States. The Russia and Ukraine conflict and related sanctions could also adversely affect operations.
Acquisitions of Levelset and LaborChart create integration, retention, and potential impairment risks. The materials financing program uses balance sheet capital, had $12.0 million of receivables as of June 30, 2022, and depends on collections and mechanic's lien rights.
The company will cease to be an emerging growth company as of December 31, 2022 based on non-affiliate market value as of June 30, 2022. It will then be subject to auditor attestation of internal control over financial reporting and increased public company compliance costs.
COVID-19 has caused business disruption, and the filing states it may continue to reduce construction spending, lengthen sales cycles, reduce subscription renewals, and impair collections. A hybrid workforce and return-to-office changes could also disrupt operations.
SaaS KPIs
All quarters →Non-GAAP Gross Margin
Non-GAAP Operating Margin
Total Organic Customers
Free Cash Flow
Net New Organic Customers
Levelset Customers
Summary, forecast, risks and KPIs are extracted from PROCORE TECHNOLOGIES, INC.'s SEC filings for Q2 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.