Key Points
- Procore's Q2 revenue was $284 million, surpassing management’s guidance.
- Non-GAAP operating margin reached 17.6%, outperforming expectations by 5.6 percentage points.
- Lack of profitability remains a concern, with the company posting a $6.3 million loss.
Procore Technologies (PCOR 2.49%), a cloud-based construction management software company, released its second-quarter earnings on Aug. 1. It reported $284 million in revenue, surpassing its guidance range of $274 million to $276 million, and achieved a non-GAAP operating margin of 17.6%, well above the 11% to 12% expected by management. Despite these achievements, Procore posted a net loss of $6.3 million, reflecting its ongoing challenges with profitability.
| Metric | Q2 2024 | Q2 2024 Management's Expectations | Q2 2023 | Year-over-year Change |
|---|---|---|---|---|
| Revenue | $284 million | $274 million to $276 million | $229 million | 24% |
| GAAP operating margin | (5%) | N/A | (12%) | 7 percentage points |
| Non-GAAP operating margin | 17.6% | 11% to 2% | 14% | 3.6 percentage points |
| Net profit | ($6.3 million) | N/A | ($10.9 million) | N/A |
| Customer base | 16,750 | N/A | 16,367 | 2.3% |
| Source: Expectations based on management's guidance, as provided in 2024-05-01 earnings report. |
Procore Technologies: A Brief Overview
Procore Technologies aims to modernize and digitize the construction industry. The company focuses on connecting stakeholders on projects through a centralized platform, aiding communication and project management. Recent efforts have emphasized customer base expansion and integrating advanced technologies.
Q2 2024 Highlights and Achievements
During Q2 2024, Procore made significant strides in several areas. Its revenue reached $284 million, marking 24% year-over-year growth. Procore's non-GAAP gross margin also improved to 87% from 85% in Q2 2023. These figures underscore the success of the company’s subscription-based revenue model, which has continued to drive growth without implementing per-user fees.
Procore's customer base expanded marginally, with total organic customers increasing to 16,750 as of June 30. The company's focus on high-value clients bore fruit as the number of customers contributing more than $100,000 annually increased by 20% year over year. Its gross revenue retention rate stood at 94%, demonstrating strong customer loyalty and ongoing engagement.
On the product front, Procore launched several innovations, including enhancements to Maps and Locations, and integration with Microsoft (MSFT 1.14%) Teams via Procore Copilot. The start of the FedRAMP authorization process was also a critical milestone. CEO Tooey Courtemanche expressed optimism about Procore's trajectory, emphasizing the importance of connecting global construction stakeholders.
Procore's research and development expenditures reached $72.3 million. Although this marked a slight decrease year-over-year, it indicates Procore's continued commitment to technological advancement. Despite high operating expenses of $251 million, Procore achieved an impressive non-GAAP operating margin of 17.6%, surpassing the top of management's guidance range by 5.6 percentage points.
Looking Ahead
In Q3, Procore expects revenue of between $286 million and $288 million, representing 15% to 16% growth. The company’s guidance for non-GAAP operating margin is slightly conservative at 9% to 10%, compared to the 17.6% margin in Q2. For the full year, management projects revenue between $1.141 billion and $1.144 billion, with a non-GAAP operating margin of 10% to 11%.
