UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to _______

Commission File Number: 001-40396

Procore Technologies, Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware	73-1636261
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
6309 Carpinteria Avenue Carpinteria, CA	93013
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (866) 477-6267

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.0001 par value	PCOR	The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes  ☐    No  ☒

As of October 29, 2021, the registrant had 132,018,026 shares of common stock, $0.0001 par value per share, outstanding.

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION	3
Item 1.	Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations and Comprehensive Loss	4
	Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ (Deficit) Equity	5
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36
Item 4.	Controls and Procedures	36
PART II.	OTHER INFORMATION	38
Item 1.	Legal Proceedings	38
Item 1A.	Risk Factors	38
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	64
Item 6.	Exhibits	65
Signatures		66

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, are forward-looking statements of our future operating results and financial position, our business strategy and plans, market growth and trends, and objectives for future operations, and the impact of the ongoing coronavirus pandemic, or the COVID-19 pandemic, on our financial conditions and results of operations. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. These forward-looking statements include, but are not limited to, statements concerning the following:

• our expectations regarding our financial performance, including revenues, expenses, and margins, and our ability to achieve or maintain future profitability;

• our expectations regarding our ability to successfully integrate Express Lien, Inc. (d/b/a Levelset), a Delaware corporation (“Levelset”), and LaborChart, Inc., a Delaware corporation (“LaborChart”), into our business and receive the anticipated benefits from all such transactions;

• our ability to effectively manage our growth;

• anticipated trends, growth rates, and challenges in our business and in the markets in which we operate;

• economic and industry trends, in particular the rate of adoption of construction management software and digitization of the construction industry;

• our ability to attract new customers and retain and increase sales to existing customers;

• our ability to expand internationally;

• the effects of increased competition in our markets and our ability to compete effectively;

• our estimated total addressable market;

• our ability to develop new products and features, and whether our customers and prospective customers will adopt these new products and features;

• our ability to maintain, protect, and enhance our brand;

• the sufficiency of our cash to meet our cash needs for at least the next 12 months;

• future acquisitions, joint ventures, or investments;

• our ability to comply or remain in compliance with laws and regulations that currently apply or become applicable to our business in the United States and internationally;

• the effects of COVID-19 pandemic or other public health crises;

• our reliance on key personnel and our ability to attract, maintain, and retain management and skilled personnel;

• the future trading prices of our common stock; and

• our anticipated use of the net proceeds from our initial public offering (“IPO”).

You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, and operating results. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. The results, events, and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.

In addition, statements that “we believe,” and similar statements, reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Quarterly Report on Form 10-Q. While we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.

The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments.

RISK FACTORS SUMMARY

Investing in our common stock involves a high degree of risk. Below is a summary of material factors that make an investment in our securities speculative or risky. Importantly, this summary does not address all of the risks that we face. Additional discussion of the risks summarized in this risk factor summary, as well as other risks we face can be found under the heading “Risk Factors” in Part II of this Quarterly Report on Form 10-Q.

Our business is subject to a number of risks of which you should be aware before making a decision to invest in our common stock. These risks include, among others, the following:

• we have experienced rapid growth in recent periods, and such growth may not be indicative of our future growth. If we fail to properly manage future growth, our business, financial condition, results of operations, and prospects could be materially adversely affected;

• we have a history of losses and may not be able to achieve or sustain profitability in the future;

• our business may be significantly impacted by changes in the economy and related reductions in spend across the construction industry;

• the construction management software industry is evolving and may not develop in ways we expect;

• our current and future products and features may not be widely accepted by our customers, and we may not be able to respond to technological changes, changes in customer demands and preferences, or develop new products and functionality;

• we are continuing to expand our operations outside the United States, where we may be subject to increased business, regulatory, and economic risks that could materially adversely affect our business, financial condition, results of operations, and prospects;

• our business depends on a strong brand, and if we are not able to maintain and enhance our brand, our ability to maintain and expand our customer base will be impaired, and our business will be harmed;

• our ability to increase our customer base and achieve broader market acceptance of our products will significantly depend on our ability to develop and expand our sales and marketing capabilities, the failure of which could materially adversely impact our business financial condition, results of operations, and prospects;

• we operate in a competitive market, and we must continue to compete effectively;

• our results of operations may fluctuate significantly, which could make our future results difficult to predict and could cause our results of operations to fall below expectations;

• if we lose key management personnel or if we are unable to retain or hire additional qualified personnel, we may not be able to achieve our strategic objectives and our business, financial condition, results of operations, and prospects could be materially adversely affected;

• our business is subject to data security risks, and our data security measures may be inadequate to address these risks, making our systems susceptible to compromise, which could materially adversely affect our business, financial condition, results of operations, and prospects;

• any failure to offer high quality support for our customers and collaborators may harm our relationships with our customers and, consequently, our business;

• if we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired and our business, financial condition, results of operations, and prospects could be adversely materially affected; and

• the COVID-19 pandemic has had and could continue to have an adverse impact on our business, operations, and the markets and communities in which we, our partners, and our customers operate.

Part I – FINANCIAL INFORMATION

Item 1. Financial Statements

Procore Technologies, Inc.

Condensed Consolidated Balance Sheets

(unaudited)

(in thousands, except number of shares and par value)	December 31, 2020			September 30, 2021
Assets
Current assets
Cash and cash equivalents	$	379,907		$	1,072,098
Accounts receivable, net		77,692			74,472
Contract cost asset, current		13,598			15,992
Prepaid expenses and other current assets		16,772			23,882
Total current assets		487,969			1,186,444
Capitalized software development costs, net		18,538			22,543
Property and equipment, net		30,252			32,989
Right of use assets - finance leases		42,108			40,298
Right of use assets - operating leases		49,756			44,307
Contract cost asset, non-current		19,454			23,787
Intangibles, net		33,241			41,189
Goodwill		125,966			137,375
Restricted cash, non-current		3,104			3,104
Other assets		10,379			9,027
Total assets	$	820,767		$	1,541,063
Liabilities, Redeemable Convertible Preferred Stock and Stockholders’    (Deficit) Equity
Current liabilities
Accounts payable	$	9,012		$	8,913
Accrued expenses		28,492			56,063
Deferred revenue, current		213,438			240,085
Other current liabilities		10,768			12,438
Total current liabilities		261,710			317,499
Deferred revenue, non-current		6,373			4,418
Finance lease liabilities, non-current		48,835			47,704
Operating lease liabilities, non-current		46,558			41,898
Other liabilities, non-current		1,919			7,959
Total liabilities		365,395			419,478
Contingencies (Note 6)
Redeemable convertible preferred stock, $0.0001 par value, 85,734,623 and 0    shares authorized at December 31, 2020 and September 30, 2021, respectively;    85,331,278 and 0 shares issued and outstanding at December 31, 2020    and September 30, 2021, respectively.		727,474			—
Stockholders’ (deficit) equity
Preferred stock, $0.0001 par value, 0 and 100,000,000 shares    authorized at December 31, 2020 and September 30, 2021, respectively;    0 shares issued and outstanding at December    31, 2020 and September 30, 2021.		—			—
Common stock, $0.0001 par value, 138,490,810 and 1,000,000,000 shares    authorized at December 31, 2020 and September 30, 2021, respectively;    30,707,113 and 131,956,462 shares issued and outstanding at December    31, 2020 and September 30, 2021, respectively.	3			13
Additional paid-in capital		124,755			1,733,411
Accumulated other comprehensive income (loss)		187			(599	)
Accumulated deficit		(397,047	)		(611,240	)
Total stockholders’ (deficit) equity		(272,102	)		1,121,585
Total liabilities, redeemable convertible preferred stock and stockholders’    (deficit) equity	$	820,767		$	1,541,063

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

Procore Technologies, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands, except share and per share amounts)	2020			2021			2020			2021
Revenue	$	101,891		$	131,990		$	290,781		$	368,718
Cost of revenue		18,063			22,693			52,589			68,545
Gross profit		83,828			109,297			238,192			300,173
Operating expenses
Sales and marketing		47,410			70,356			138,110			224,226
Research and development		34,504			53,447			89,255			176,619
General and administrative		18,320			35,051			47,770			110,805
Total operating expenses		100,234			158,854			275,135			511,650
Loss from operations		(16,406	)		(49,557	)		(36,943	)		(211,477	)
Interest expense, net		(573	)		(521	)		(1,493	)		(1,659	)
Change in fair value of Series I redeemable convertible    preferred stock warrant liability		1,002			—			(9,603	)		—
Other income (expense), net		248			(653	)		(229	)		(880	)
Loss before provision for income taxes		(15,729	)		(50,731	)		(48,268	)		(214,016	)
Provision for income taxes		224			11			468			177
Net loss	$	(15,953	)	$	(50,742	)	$	(48,736	)	$	(214,193	)
Less: Recognition of beneficial conversion feature    on preferred stock as a deemed dividend		(547	)		—			(547	)		—
Net loss attributable to common stockholders	$	(16,500	)	$	(50,742	)	$	(49,283	)	$	(214,193	)
Net loss per share attributable to common stockholders,    basic and diluted	$	(0.58	)	$	(0.39	)	$	(1.80	)	$	(2.71	)
Weighted-average shares used in computing net loss per    share attributable to common stockholders, basic and    diluted		28,231,857			131,438,987			27,342,923			79,145,139
Total comprehensive loss
Net loss	$	(15,953	)	$	(50,742	)	$	(48,736	)	$	(214,193	)
Foreign currency translation adjustment		67			(562	)		35			(786	)
Comprehensive loss	$	(15,886	)	$	(51,304	)	$	(48,701	)	$	(214,979	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

Procore Technologies, Inc.

Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ (Deficit) Equity

(unaudited)

	Redeemable Convertible Preferred Stock					Common Stock				Additional Paid-in			Accumulated Other Comprehensive			Accumulated			Total Stockholders’ (Deficit)
(in thousands, except share amounts)	Shares		Amount			Shares		Amount		Capital			Income (Loss)			Deficit			Equity
Balances as of December 31, 2019		78,863,035	$	442,897			25,394,082	$	3	$	47,043		$	20		$	(300,824	)	$	(253,758	)
Cumulative- effect of accounting change due    to adoption of ASU 2016-13		—		—			—		—		—			—			(56	)		(56	)
Exercise of stock options		—		—			1,726,099		—		5,727			—			—			5,727
Issuance of Series I redeemable convertible    preferred stock, net of issuance costs of $60		4,355,502		152,941			—		—		—			—			—			—
Stock-based compensation		—		683			—		—		5,300			—			—			5,300
Foreign currency translation adjustment		—		—			—		—		—			(104	)		—			(104	)
Net loss		—		—			—		—		—			—			(19,034	)		(19,034	)
Balances as of March 31, 2020		83,218,537	$	596,521			27,120,181	$	3	$	58,070		$	(84	)	$	(319,914	)	$	(261,925	)
Exercise of stock options		—		—			703,096		—		4,497			—			—			4,497
Issuance of Series I redeemable convertible    preferred stock for cash, net of issuance    costs of $9		132,046		4,991			—		—		—			—			—			—
Stock-based compensation		—		683			—		—		6,124			—			—			6,124
Foreign currency translation adjustment		—		—			—		—		—			72			—			72
Net loss		—		—			—		—		—			—			(13,749	)		(13,749	)
Balances as of June 30, 2020		83,350,583	$	602,195			27,823,277	$	3	$	68,691		$	(12	)	$	(333,663	)	$	(264,981	)
Exercise of stock options		—		—			1,092,892		—		6,325			—			—			6,325
Issuance of Series I redeemable convertible    preferred stock for cash, net of issuance    costs of $9		264,093		9,990			—		—		—			—			—			—
Beneficial conversion feature on Series I    redeemable convertible preferred stock		—		(547	)		—		—		547			—			—			547
Recognition of beneficial conversion feature    as a deemed dividend		—		547			—		—		(547	)		—			—			(547	)
Vesting of RSUs		—		—			2,000		—		—			—			—			—
Stock-based compensation		—		691			—		—		9,343			—			—			9,343
Foreign currency translation adjustment		—		—			—		—		—			67			—			67
Net loss		—		—			—		—		—			—			(15,953	)		(15,953	)
Balances as of September 30, 2020		83,614,676	$	612,876			28,918,169	$	3	$	84,359		$	55		$	(349,616	)	$	(265,199	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

Procore Technologies, Inc.

Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ (Deficit) Equity

(unaudited)

	Redeemable Convertible Preferred Stock				Common Stock				Additional Paid-in		Accumulated Other Comprehensive			Accumulated			Total Stockholders’ (Deficit)
(in thousands, except share amounts)	Shares		Amount		Shares		Amount		Capital		Income (Loss)			Deficit			Equity
Balances as of December 31, 2020		85,331,278	$	727,474		30,707,113	$	3	$	124,755	$	187		$	(397,047	)	$	(272,102	)
Exercise of stock options		—		—		1,264,484		—		11,038		—			—			11,038
Stock-based compensation		—		676		—		—		9,710		—			—			9,710
Foreign currency translation adjustment		—		—		—		—		—		(24	)		—			(24	)
Net loss		—		—		—		—		—		—			(13,732	)		(13,732	)
Balances as of March 31, 2021		85,331,278	$	728,150