Summary
Procore reported fiscal 2022 third quarter revenue of $186.4 million, up 41.2% from the $132.0 million booked a year earlier. Levelset, acquired in November 2021, contributed $8.5 million of that total. Revenue for the first nine months of the fiscal year reached $518.2 million, up 40.5%. Customer additions held up. The company signed 683 net new organic customers in the quarter, 189 of them from LaborChart, and ended with 14,086 organic customers, up from 11,605 as of September 30, 2021, a 21% increase. Levelset's more than 3,000 customers stay outside that count until they renew onto standard Procore annual contracts.
Costs are scaling faster than revenue. Gross profit rose 36.0% to $148.7 million, but gross margin fell to 79.7% from 82.8% as amortization of acquired developed technology and third-party cloud hosting costs increased. The GAAP operating loss widened to $71.8 million from $49.6 million, and the GAAP operating margin slipped to negative 38.5% from negative 37.5%. The net loss widened to $71.2 million from $50.7 million, and diluted loss per share was $0.52 against $0.39. For the first nine months, diluted loss per share was $1.59 versus $2.71. On a non-GAAP basis, the loss from operations was $13.4 million and the operating margin was negative 7%, compared with negative 4% a year earlier. Hiring explains much of the gap: headcount in cost of revenue rose 49% since September 30, 2021, sales and marketing 51%, research and development 35% and general and administrative 40%.
Cash generation thinned. Operating cash flow was $6.59 million for the quarter, down 56.5% from $15.1 million a year earlier, and the first nine months produced operating cash flow of negative $10.08 million versus $40.3 million of inflow in the same stretch of 2021. Capital expenditures of $4.24 million were up 0.6% from the prior-year quarter, and the nine-month total of $13.67 million rose 62.6%. Non-GAAP free cash flow, which also subtracts capitalized software development costs, was an outflow of $6 million for the quarter. Deferred revenue, current portion, rose 37.1% to $329.1 million, and remaining performance obligations reached $714.9 million, up 43.8% year over year, with roughly 70% expected to be recognized as revenue within 12 months. Cash, cash equivalents and marketable securities totaled $558.1 million at September 30, 2022.
Guidance covers the fourth quarter and the full fiscal year. For the fourth quarter of fiscal 2022, revenue is guided to $189 million to $191 million, growth of 29% to 31%, with a non-GAAP operating margin between negative 10% and negative 11%. For the full fiscal year 2022, revenue is expected to be $707 million to $709 million, growth of 37% to 38%, including $30 million from Levelset, with a non-GAAP operating margin of negative 11% to negative 12%. Procore does not offer a forward-looking reconciliation of non-GAAP guidance to GAAP, citing uncertainty over expenses it cannot reasonably predict.
Several risks sit behind those numbers. Procore lists inflation, challenging geopolitical conditions and the uncertain path of the pandemic among the factors that could shift results. The materials financing program assumed with Levelset carries $13.6 million of customer receivables, and the company says it may use up to roughly 10% of its current cash to support the program. Management also notes it may not reach profitability in the foreseeable future and may need to raise additional capital, and international expansion adds execution risk. Two personnel moves are worth flagging. Steve Davis became President of Product Technology on August 15, 2022, and Dennis Lyandres stepped down as Chief Revenue Officer effective October 31, 2022 to serve as Special Advisor to the CEO, focusing on international expansion.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2022 | Q2 FY2022 | QoQ | Q3 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $186.4M | $172.2M | +8.3% | $132.0M | +41.2% |
| Gross profit | $148.7M | $135.5M | +9.7% | $109.3M | +36.0% |
| Gross margin | 79.7% | 78.7% | +1.1 pp | 82.8% | -3.1 pp |
| Research & development | $71.5M | $63.8M | +12.0% | $53.4M | +33.8% |
| Sales & marketing | $109.6M | $103.3M | +6.1% | $70.4M | +55.8% |
| General & administrative | $39.4M | $40.7M | -3.2% | $35.1M | +12.3% |
| Total operating expenses | $220.5M | $207.8M | +6.1% | $158.9M | +38.8% |
| Operating income (loss) | -$71.8M | -$72.3M | +0.7% | -$49.6M | -44.9% |
| Operating margin | -38.5% | -42.0% | +3.5 pp | -37.5% | -1.0 pp |
| Net income (loss) | -$71.2M | -$73.1M | +2.6% | -$50.7M | -40.3% |
| Net margin | -38.2% | -42.5% | +4.3 pp | -38.4% | +0.3 pp |
| Diluted EPS | -$0.52 | -$0.54 | +$0.02 | — | — |
| Customers | 3,000 | 3,000 | ±0.0% | — | — |
Risks
Construction industry demand is exposed to economic slowdowns, rising inflation, supply chain disruptions, labor shortages, and reduced government infrastructure spending. Because Procore generally prices on a customer's annual construction volume, a decrease in construction volume could reduce what customers pay and pressure revenue.
Procore reported a net loss of $215.7 million for the nine months ended September 30, 2022 and an accumulated deficit of $878.0 million as of September 30, 2022. The operating loss widened in the third quarter to $71.8 million from $49.6 million in the prior-year quarter, and the company expects expenses to increase as it invests in growth.
The construction management software market is highly competitive, and competitors may offer lower-priced or free products or bundle broader offerings. Procore sells at a premium compared with some competitors, and competitive pressure could force price cuts or increased marketing spend, including in newer areas such as materials financing.
Risk factors state that revenue growth rate is expected to decline as the business matures even if revenue continues to increase. Revenue was up 41.2% in the third quarter of 2022 and up 40.5% year to date, so a slowdown could cause the company to miss analyst expectations.
The company depends on expanding sales and marketing capabilities, and risk factors note high customer acquisition costs and lengthy sales processes. Sales and marketing headcount increased 51% since September 30, 2021, so failure to generate corresponding revenue growth would harm results.
Procore had customers running projects in over 150 countries as of December 31, 2021, and 15% of 2021 revenue was generated outside the U.S. It opened additional international offices in 2022, increasing compliance, tax, employment, data protection, and geopolitical risks, including from the Russia and Ukraine conflict.
Following the Levelset acquisition, Procore operates a materials financing program and had $13.6 million of customer receivables at September 30, 2022. It may use up to approximately 10% of its current cash position to support the program and faces customer non-payment, mechanic's lien enforcement, and regulatory compliance risks.
The Levelset and LaborChart acquisitions closed in the fourth quarter of 2021 and have increased expenses, including amortization and headcount. Levelset contributed $8.5 million in revenue in the third quarter of 2022 and $22.7 million in the first nine months of 2022, but integration, retention, internal control, and impairment risks could harm results.
Procore is subject to expanding data privacy and security laws, including the CCPA, CPRA, GDPR, and PCI DSS. Risk factors cite potential GDPR fines of up to 20 million euros or 4% of annual global revenue, and proposed EU artificial intelligence rules could impose additional obligations.
Risk factors emphasize increasing ransomware, supply chain, phishing, and state-sponsored attacks, with remote work expanding exposure. A security incident could disrupt products, cause data loss, trigger notification and remediation costs, and reduce customer renewals.
Procore depends on founder and CEO Mr. Courtemanche and other key personnel, and competition for skilled sales, engineering, and product staff has intensified. The company increased headcount sharply, including sales and marketing headcount up 51% and research and development headcount up 35% since September 30, 2021.
Procore will cease to be an emerging growth company as of December 31, 2022, which triggers auditor attestation over internal control over financial reporting and increased compliance costs. Any material weakness could impair timely and accurate financial reporting.
Operating cash flow was negative $10.1 million for the nine months ended September 30, 2022, down 125.0% from positive $40.3 million in the prior-year period. Although cash, cash equivalents, and marketable securities totaled $558.1 million at September 30, 2022, continued losses or growth in materials financing may require additional capital.
As of December 31, 2021, Procore had $794.5 million of U.S. federal and $509.0 million of state net operating loss carryforwards. These carryforwards are subject to Section 382 limitations and changing tax laws, and the company may not generate sufficient taxable income to use them.
COVID-19 continues to create uncertainty, with potential sales cycle lengthening, reduced construction spending, and return-to-office disruption. Remote and hybrid work also increase cybersecurity, culture, and employee retention risks.
SaaS KPIs
All quarters →Non-GAAP Gross Margin
Non-GAAP Operating Margin
Total Organic Customers
Free Cash Flow
Net New Organic Customers Added
Summary, forecast, risks and KPIs are extracted from PROCORE TECHNOLOGIES, INC.'s SEC filings for Q3 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.