Company Overview

‍Procore Technologies, the leading cloud-based construction management software provider, filed for a $100M IPO. Per usual, the $100M figure is a placeholder and is likely to rise significantly by the time the company prices their IPO. Goldman Sachs is leading the IPO and Procore plans to trade on the New York Stock Exchange (NYSE) under the ticker “PCOR".

Procore's mission is to "connect everyone in construction on a global platform" and it operates in one of the oldest and least digitized industries in the world -- construction -- which represented ~13% of GDP, and employed 7% of the global workforce in 2017. Most of the industry still relies on pen and paper, email, fax and other on-premise software tools. Craig “Tooey” Courtemanche, Jr., founder and CEO of Procore, started the company in 2002 while facing frustration with his own home construction project. The first product was only accessible online through their website and they saw little market traction until 2012 when they saw advances in WiFi, connectibity and proliferation of smartphones and tablets. The company has also significantly expanded their suite of products both organically and through acquisitions (more below) and today offers an integrated SaaS platform that spans 4 product categories 1) Preconstruction 2) Project Management 3) Resource Management and 4) Financial Management enabling their customers to manage the entire construction lifecycle through their software. While Procore has been around almost two decades, the traction of the business over the past few years has been outstanding. The company did $289.2M in revenue in 2019, up 55% YoY with 8,506 customers running projects in 125+ countries. They ended last quarter at $339.6M of implied ending ARR (quarterly subscription revenue * 4), up 54% YoY. Procore is based in Carpinteria, California (near Santa Barbara) and has 1,911 full-time employees. The company was incorporated as Butterfly Lane, Inc. in January 2002, and changed their name to Procore Technologies, Inc. in May 2002.‍

Company timeline graphic:

Source: Company S-1

Product

Source: Company S-1

‍Procore's products span the construction lifecycle for their customers and includes bidding, scheduling, labor tracking, financial management, building information modeling and also offers open APIs and the Procore App Marketplace, which enables customers to integrate the Procore product with their internal systems and 180+ 3rd party applications for accounting, document management, scheduling and more. The App Marketplace has been widely adopted by customers and ~72% of customers have at least 1 integration and 40%+ have two or more. The company's platform streamlines communication and facilitates compliance with safety & regulatory standards, increases efficiency & reduces rework and delays, improves safety, and enhances collaboration and accountability among key stakeholders. Procore has been successful in building (or buying) new products and as of 31-Dec-2019, 59% of their customers subscribed to 3 or more of their products (41% have 4+ products), of which they have 13 in total. This enables the company to have strong upsell characteristics (more on retention later). Across their 8,500+ customers, the company had 1.3 million users in 2019, which they define as their customers' employees. 60% of which are "collaborators", which are users involved in a project but don't have control over what data they can access and more limited functionality. Moreover, customers can invite all project participants to engage with the platform as part of a project team. In 2019, on average each customer invited 170+ project participants. The company designed their products for owners, general contractors, and specialty contractors. Procore's product is run on AWS. More on their main product categories and descriptions below:

• Preconstruction: Procore's Preconstruction products facilitate collaboration between internal and external stakeholders during the planning, budgeting, and partner selection phase of a construction project.
• Project Management: The Procore Project Management products connect entire construction project teams by ensuring project information is aggregated in a cloud-based platform, available to all project participants, and accurate so that work on the jobsite is completed correctly. They also enable enable real-time collaboration, information storage, design, and regulation compliance.
• Resource Management: Their Resource Management product helps customers track labor productivity and manage profitability on construction projects.
• Financial Management: Procore's Financial Management products provide customers with visibility into the financial health of their individual construction projects and portfolios and facilitate access to financial data, linking the field and the office in real-time.

Procore also offers Procore Analytics, which is a business intelligence product to improve their customers' decision-making processes. It has ~100 pre-built reports and was launched in the fall of 2019. Procore ends up becoming the system of record for customers' construction projects and as of the end of 2019, Procore's user activity generated 3,000+ terabytes of data and in 2019 on average added 110+ terabytes of data per month.

Procore mentions some ROI statistics for their customers and according to the 2018 Procore Survey, 93% of individual respondents say their company is more protected against claims or litigation due to the data tracked in Procore. A few more stats from the 2018 Procore survey below:

• 87% of individual respondents reported that after using Procore's products, submittals were processed faster.
• 84% of individual respondents reported they were able to process requests for information, or RFIs, faster.
• 85% of individual respondents reported closing punch list items faster after using Procore's products.
• 90% of individual respondents said their client satisfaction has increased since using Procore.