Procore IPO: Is Procore going public?
Procore will be going public in May 2021 on the New York Stock Exchange under the stock symbol PCOR. Here’s everything we know so far:
Procore IPO date
Procore has set an IPO date of May 20 2021. Procore had initially filed to go public in February 2020 but was delayed (as so many were) by the onset of the global pandemic in March of the same year.
Procore IPO price
Procore’s IPO price range has been set at between $60 to $65 per share. According to the Procore IPO prospectus, the firm is offering 9,470,000 shares, which will leave more than 128 million shares outstanding.
At the midpoint of the price range, Procore could generate net proceeds of $552.9 million. The company plans to use this money for general corporate purposes – including operating expenses, acquisitions and investment in technologies.
The underwriters for the Procore IPO are Goldman Sachs, JP Morgan, Barclays and Jefferies. Should they opt to exercise their right to purchase additional shares, Procore could raise a total of $608.5 million.
Learn about other upcoming US IPOs.
At the midpoint of Procore’s IPO price range, the company could be valued at $8.9 billion. This is a reasonable step up from previous Procore valuations. Reportedly a primary funding round in April 2020 enabled Procore to raise $150 million, giving it a valuation of $5 billion. The previous funding round in September 2019 raised $94.9 million, valuing Procore at $4.77 billion.
In total, Procore has raised more than $450 million in venture capital funding from investors including D1 Capital Partners, Tiger Global Management, Dragoneer Investment Group, ICONIQ Capital, Bessemer Venture Partners, Lead Edge Capital, Lumia Capital and Scop Venture Capital.
What is Procore Technologies?
Procore Technologies is a construction project management software developer founded in 2002 in California, initially under the name Butterfly Lane.
The company aims to provide a collaboration tool to owners, contractors and other industry stakeholders, to enable more efficient cross-location working. It does so by using real-time data to boost and streamline projects.
How does Procore make money?
The company makes money through the annual subscription fee it charges to use its cloud-based construction management software. The initial fee will depend on each customer’s construction volume and will then increase as the user adds more products. Procore booked $422 million in sales for the year ended March 31, 2021.
Naturally, Procore claims that customers will earn value back through improved efficiency and productivity gains, which will boost their construction volume. But once a company’s construction volume increases, Procore can charge it a higher subscription fee.
Is Procore profitable?
No, currently Procore is operating at a net loss of $96 million according to its S1 filing. Its losses are down year on year, from $83.1 million in 2019 and $56.7 million in 2018. However, Procore has said that it may never be able to achieve or sustain profitability due to increasing costs, and the significant risks that the construction industry faces.
As the construction industry is so tied into the health of the global economy – representing 13% of global GDP – Procore’s health will be impacted by any changes to spending.
Learn more about cyclical stocks.
All this being said, despite the impact of Covid-19, Procore has managed to continue increasing its user base and revenues. Procore reported revenue growth of 38% in 2020, from $289.2 million in 2019 to $400.3 million in 2020. Since 2014, Procore's customers have used its platform to create an aggregate of more than 1 million projects representing over $1 trillion of construction volume. However, the past periods of growth are no indication of what’s to come.
Discover how to read an earnings report.
What is Procore’s strategy?
Procore’s business model is ‘designed to encourage rapid, widespread adoption of its products and becoming the sole construction platform in the world. Founder Tooey Courtemanche believes that this will make the lives of people in the construction industry easier, safer and more productive.
Procore aims to do this by supporting the adoption of technology – conveniently via its platform. According to a report by Deloitte, on average, other industries spend over 3% of revenue annually on IT, meanwhile, the construction industry spends just 1.7%. It states that most of the industry still relies on paper management tools and on-site technology, which has led to a lower productivity rate compared to the global rate.
The company believes that its policy of allowing for unlimited users – rather than charging a per-user fee – will achieve this goal, as it sets it apart from other pricing models. In 2020, on average, each customer invited some 160 project participants. Procore has more than 800 customers and a total of 1.6 million users across 125 countries.
Procore still believes that it has huge expansion potential as the proportion of construction company revenue spent on IT software increases. The company estimates that the annual potential market opportunity for its current products is approximately $9.4 billion – up from $1 billion.
The company has six core goals that will help it achieve its expansion goals:
- Maintain and advance technology
- Acquire new customers
- Increase spend within its current consumer base
- Expand internationally
- Increase its brand positioning
- Pursue targeted acquisitions
Who are the directors of Procore?
- Tooey Courtemanch - Founder and Chief Executive Officer
- Steve Zahm - President & Chief Culture Officer
- Pat Wadors - Chief People Officer
- Paul Lyandres - Chief Financial Officer
- Rusty Reed - Chief Strategy Officer
- Sam Crigman - Chief Technology Officer
- Michael Hanson - Chief Information Officer
- Dennis Lyandres - Chief Revenue Officer
- Benjamin Singer - Chief Legal Officer & Corporate Secretary
- Brian Feinstein – Board Member, Bessemer Venture Partners
- Kevin O'Connor – Board Member, Scop Venture Capital
Who are Procore’s competitors?
Competitors to Procore include Autodesk Construction Cloud, Corecon, CMiC Platform, and Bluebeam Revu.
Procore has established itself as the market leader in the rather niche field of cloud support for construction companies. That being said, the field is constantly evolving and there’s no way to be sure Procore can sustain its current advantages.
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