Earnings call transcript Q2 2023

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Operator

Good afternoon. Thank you for attending the Procore Technologies 2023 Q2 Earnings Call. My name is Matt, and I’ll be your moderator for today’s call. [Operator Instructions] I would now like to pass the conference over to our host, Matthew Puljiz, VP of Finance.

Matthew Puljiz

Alright. Thanks. everyone. afternoon, Good XXXX Procore’s Earnings Call. Welcome Second to Quarter Finance. am Puljiz, of Matthew VP I Tooey With Fu, Howard me Courtemanche, President today are Founder, and CEO; and CFO.

press the the section replay following of our found website. and and is of a can reports our call. call on release filed the is periodic our recorded, with available Relations disclosure available which Today’s issued conclusion will Investor Further the be our of today, SEC. results in be being

may include products, call statements regarding and Comments and results, this made forward-looking our financial customer macroeconomic on operations demand, geopolitical conditions.

not forward-looking are today, XXXX. risks, rely uncertainties You and on predictions should to forward-looking August X, and assumptions expectations on of based of All future as events. and subject management’s as are statements current statements views

reconciliation statements today, obligation new not call presented by law. may no to reflect Therefore, unanticipated except is forward-looking call the or contain after this current any update replayed as to events, undertakes reviewed information And required accurate or information. measures information be should the Procore during our if provide We’ll date. non-GAAP release. views our of as certain statements as investors. representing GAAP in relied subsequent these refer to A information financial to measures any to additional is non-GAAP to provided also upon of press not

And Tooey. here with is that,

Tooey Courtemanche

in results see and Matt to delivered we that this the demand I thank we quarter of continue Thanks, you, the proud everyone, today. for environment. us am despite challenges joining the

customers of a total revenue Let new reaching XXX year-over-year over over me quarter. XX,XXX and net from the In QX, start sharing XX% by we the grew highlights by a end few customers, quarter. the of added

while operating the across report. XX our And progress efficient summer journey make once growth construction again business by to one leverage improving revenue of in categories XXXX number was Procore continue GX’s growth. ranked on in sustaining We

is top of the a Procore, way a I opportunity travelers. my to of the construction. that At to its precious spend to vision in quarter, The and mind on most we this lot lives the to industry’s want people. improve this share everyone road time is only past from protect something had asset, further of have I’ve the to vision

channel made the and to the general workers increasingly to clear quarter, last of health. tremendous in men with health the In the population. the about construction. Construction came physical officially that a progress alongside prioritize global Talking, to rate initiative this video Get health have we What’s suicide safety higher construction and mental improve physical is why we BXM, and century, is together Xx of than we launch U.S., must construction the construction. Over leading for That’s mental a improve health becoming

users we combining over network million awareness raise construction amplify to resources leaders organizations industry I’m the the efforts work destigmatize countries, X.X money and the to subscribers BXM’s bring By of to with in mental Procore’s X million more the in and XXX mental working of in to need. can construction industry honored space. than of YouTube provide reach and health alongside workers to over charities across and health

During my opportunity Thermonuclear travels, as known to I ITER. had Experimental Reactor, tour the also an international amazing

is projects themselves It’s for the important illustrate that ways for the complexities reminder efficiency between is construction construction sheer me. and energy this a XX optimize on technology. and an more scale to seek career environment. one only of project for ITER important the prime it’s enthusiast, overstated. demand building continues contractors their and Procore’s of Peruvial contracts. over given are collaborative And the to incredibly the and cannot was customer proud is current XXX and a project highlight this be the on and becoming Examples this effort industry of alternative an I’m like why real The position contributing game-changing of one construction this planet, As the to this continued complexity countries growth. that largest

we’ve construction volume and about takes and the past, and what aggregate matters many construction the in In puts how is really talked overall the most. demand

demand the to two a evolve, tale emerged. As of continues stories environment has

some While customer broader the we’re remain sectors construction experiencing within our we’re not muted, in other The base. unlike are sub-sectors growth. seeing behavior the is seeing in dichotomy unprecedented industry

surfaced to dynamic On portion our this QX, volume their portion time In showed last construction industry new cautiousness same we at customers grew of a Relative began portion the greater while a in QX, construction volumes earnings greater which has a dynamic conservatism, greater volumes. very a portion in and Procore. became commitments, call, shared that demonstrating pronounced. at time a the more their QX, with expanded incremental of the same while

customer both Howard quarter cautiousness second in it’s span no trend Similar concentrated sizes attention this And of elaborate seeing is point, but this just business, it’s to, geographies. a was to a facet going not this close any the on to expansion last the activity quarter, stakeholders, but rather paying the is incremental and and longer data and given of becoming multiple we’re that dynamic, further. particular

with portfolio the to industry strong Speaking with and particular Hegarty on XX number quarter. the examples, notable large-scale share a office, in contractor and a upon like a customer I’d we healthcare starting UK years industrial with of SUNS, few and partnership continue momentum, They projects. diverse general P.J. with a to education, complex Ireland. leading experience, undertaking projects expansion wins focus our civil build a across of the manage with commercial, over across

desktop solutions allowed teams. of Hegarty happening data accessibility, enable projects. and using to all field for adoption Procore their onto been expanded easier to consolidate their projects, their across order solutions They using have better for into be our one their connected platform competitive on site. now bought but had this and was They what Procore our visibility center valued project displacing and them mobile platform in P.J. particularly initially which previously quarter we’ll

part their of to BIM this models they’re adding expansion, collaboration Procore to capabilities. enable and BI their analytical and on product analytics As suite enhance

P.J. had is of pleasure continue customers Hegarty in great I offices the world. with in meeting their the Doublet. travels, around to person we the relationships a foster my During the example our This of in team

and provide. we real-time square County and $X major ownership bonds two to example. feet expansion for of collaborative They to analytics Carolina, Guilford School across share XX.X school totaling billion XX,XXX the insights, like North data our the students public for I’d intuitive purchased million construction platform, District facilities. is nearly another passed serving recently schools. Procore in improvements County third across largest XXX school particularly district much-needed support approximately Guilford originally

Procore of with Guilford Xx. expanding build several Procore a new County As result bonds, these ultimately commitment is with schools, their by partnering to

Our teachers surrounding and expanded the educational partnership benefit students, long-term for goals community Carolina. North the all Greensboro, will of

the the that proud them need life. we contributing why builds great I example industry that just and schools, infrastructure is us. brings hospitals build to and around to the to support of the am them desperately that and homes Procore powers This is one world

need XXXX; a University of on the Bridge. nearly for Quebec, becoming other Since on of Canada, active Another in Toronto customer sites. Canada’s great example including the reducing building been is the projects solutions. Student is project in have multiple Procore Pomerleau, Procore standardizing Pomerleau theater focused and the the They across leading software XXX De construction companies grand incredible involved Burgoyne residences one platform, with

Procore, increased quarter, the volume This Pomerleau our expanding construction investment platform. with on

As journey, collaboration. and this Pomerleau this onto of models expansion, started for part has Procore BIM bringing easier viewing

fascinating data leverage of Procore be leveraging evolved that talking application the will enable get their value talking much see to our and data from digest part can It’s quickly to extracts as to Pomerleau been customers strategy possible. about reporting. out as they AI data of data how how is more easily also to about have flexible

this In our about more up most And of to we’re fact, on perspective to thinking AI for share I a going but share AI opportunity upcoming comes want Procore. now I’m our on the my conversations. conference, moment customer groundbreak in how take at to

This as we we potential our technology in a It’s how business becoming to we powerful how cusp abundantly operate a think, work, how the serve the has transform clear we customers. that transformational shift generative we on of and how AI. are

expanding our Intelligence and From to functionality, to in automated submittals, acquisitions INDUS.AI, reporting Procore takeoff Avata like capture. enhancements years. capabilities area for of machine analytics, been voice-enabled our and and have We learning search new AI product features

for a the Now our our of with everyone to well is a even Procore to vision of our technology this generating of value the customers. improving massive data, of large to have single efficiencies our in nature construction. leverage another value and advent platform, the lives deliver customers in and tool further the amount greater language yet By of positioned unlock toolbox on models, greater drive data built being project we of to

assist customer what makes for about to mean as thinking intimacy, for you all users. conversational referred to them When or which of tech of vision, copilots ourselves help them begin there and just of will users. be heard The to guide their partners this this achieve future business To is our to them, increase for as I’ve not we trusted productivity. our but our think them sense. must AI end as providers

Connecting key the our users to across been has platform workflows on our success.

of Generative turn our but not to them intelligence is users work will reactive do. one even in this, solutions of help want tools Procore single our jobs. us day. do just allowing solutions to are done evolving We the provide the every Procore that We’re to do users’ is proactive, that needs AI to create to us instinctively they before enable that their ultimately all to to to understand

adapt, improve Solutions that learn time. can over and

are just not products. building We

partnerships. We building are

just not We’re problems. solving

And to we’re not reacting industry. We’re anticipating the just that.

shaping are it. We

you there. Chicago. to to alongside be up, an hall We be the ground from couldn’t Ali of XXXX former get together thousands advancements including September expo annual with is see technology wrap to to showcasing an and keynote you athletes our to expected user Stamford’s planned Day, Michael Program, want on renowned thrilled to of latest I to construction construction more hope days, including conference, with our and XX XX all all I Michael and up This sessions of invite and our of XX dozens breakout and us. break Steep. will customers, like of held Laila break jampacked Executive leaders shaping So and ground shareholders, in which I over our lineup Director be Investor our of countries speakers, the and Technology join partners couple exciting ever Disruptive a largest our Phelps in Founder

it hand over me to Howard. let that, With

Howard Fu

Thanks, thank Tooey, joining us today. and for to you everyone

a color on some financial share and the outlook. Today, quickly I’ll we with results pleased are our demand the challenging environment. our against We with delivered quarter results recap conclude

up million, quarters, $XXX Let’s year-over-year, revenue international into was Similar by XX% jump QX in results. results to Total revenue year-over-year. our prior XX% and currency our headwinds. QX impacted international QX grew were

revenue of On basis, approximately X a international international a basis, year-over-year currency points headwind FX on constant Therefore, growth. revenue grew contributed XX% year-over-year. to

operating and our QX current an RPO representing and back non-GAAP performance. operating like backlog share metrics, $X I’d deferred year-over-year, revenue take and our negative and key loss some XX% current a additional respectively. Our X% was XX% to margin step on specifically million, of grew color

customer mentioned, Tooey and dichotomy more QX behavior we became As QX. saw pronounced in in the

is the of This across the and the well new saw well expansion of demonstrate customers the activity was This positive rounded cohorts products. believe within additional as share as business, of a construction multiple industry. the optimism of of both volume continued we facets we reflection form strong of quarter, construction greater momentum expansion a in addition

within Conversely, initial reflects we sizes. sales the believe, to industry. to has coolants heightened and volume translated customers other longer deal which in This sense a increase demonstrating of commitments, construction in we saw also conservatism smaller continue an of cycles cautiousness

persist illustrate isn’t partially it offsetting represents as While the geographies. multiple occurrence expansion through results. and saw, and cautiousness and cautiousness current span we impact customer environment future particular Nonetheless, not that historical an in to why share business, to these further And therefore, quarters. this sentiment and sizes should had rather obvious help part impacts similar wanted and that be demand headwinds, financial the challenging. managed when this the to The expansion remains to unusual us concentrated resilient but of in reviewing has was our we may cautious we persisted QX dynamic to compared stakeholders, activity any and norms in elevated

Moving further down P&L. the

non-GAAP margin operating At basis stronger current approximately we share performance is this of framework XXX average quarter view how of Given with our margin of to second some margin growth on year points on Day, want last as Investor we our our trajectory a I rate. expansion year’s a provided revenue context whole. per

set meaningful improving the to to our and react set need needs. for line the to improvement framework. incremental right and is that We business plan recognize allowing we to scale our of profile landscape. believe for our balance to growth profile, of margin margin to our our revenue without expansion, accelerate compromising We top up included that This a relative this path sustaining continue flexibility year, catch XXXX this a the margin business to plan

heard an Additionally, identify areas of multiple resulted refer previously. and leaned expense of ways operational scale us business efficiency into have the to savings to two opportunities. in you’ve in efficient concept, while and This improve combination has year, evaluating Internally, expansion to that in these of allowed years. the teams the flexibility to expansion across and over this expectations and continue growth leaders smaller faster margin business. investment the every accumulation has us giving expect translated Ultimately, the not margin same our investing to this outperform meaningfully to dynamics magnitude growth investors future should margin the past of future us quarters, has opportunity

the provided last investors we Day at expect. framework year’s we is continue to forward, what Going Investor should believe

we Investor trajectories. our our to to revenue let outlook. Day, more about At profile various managing our philosophical at on that, to move our me share plan upcoming With approach financial

We environment. demand continue in to a operate challenging

factors As the our incremental uncertainty this a for into philosophy the account in reminder, potential guidance takes and market. weakness in

quarters high over we at level any the can We on several to conviction taken a very deliver a environment. have similar almost have guidance we in set approach last

note Additionally, should when a the as second that reviewing XXXX serves compare period. future results, half investors our of challenging

benefited and XXXX. closed activity that of large QX anticipated we QX metrics As call instead from noted earnings XXXX our but year, of backlog on was deal close in last to our in QX

an year-over-year X XXXX in As on a XXXX. result, of to than RPO QX basis, organic growth accelerated higher in current quarters approximately other points XX% any

QX for here XXXX. is that, our With year guidance and full

XX% the expect million, quarter of negative we is between to revenue $XXX XX%. non-GAAP be representing between negative X% QX and X%. For between million and XXXX, third and growth margin $XXX operating expected year-over-year

year $XXX of our $XXX million, is For guide. growth revenue and expect total of we fiscal the of between million which previous from million representing an XXXX, XX%, year $XX full increase year-over-year full

between cash and framework points which Investor XXX And may a finally, although quarter negative we for recall provided do improvement negative last is expected should the expansion year-over-year slightly of not guide non-GAAP year cash we last year’s issued operating or an margin you to Non-GAAP operating line be than and previously implies guidance in basis free Day our basis X%, faster margin X.X% from flow, represents margin expand margin. at free that XXX of that flow points.

I flow to am With that this cash quarter, our on updated pleased track free guidance are sustainable share positive in to we and XXXX. reach

we efficient growth. cash continue of as flow We this first pursuit be free our of expect years many to the generating of

a remain manner, us Looking invest drive share. cash to leadership at market in allows delivering growth in improving as extending flow which ultimately leverage, free we focused as scale disciplined on well our per operating both ahead,

Investor Before Relations I break comments like Please you all reach team I’d invite to build to September wrap ground up, on to taking with and would us conjunction on out place Day at in XX like Tooey’s our our to in XXXX attend. join Chicago. Investor if you

turn thanking the that, close to the well it we the to operator With giving by for for like employees, this I’d Q&A. opportunity. shareholders serve partners, us over communities our as as industry and customers, let’s

Operator

of with question Canaccord. first from the The Hynes Instructions] line DJ is [Operator

open. is line now Your

DJ Hynes

question. Hey, the guys. for Thanks taking

second remind been talked It over commitments, dynamics to just investors pockets maybe Or pockets are the from that or faster some for you were how conservatism, you business customers couple of some some then opting us So And to it’s a of do charges? how Like clear positive how to guys about is the that are if smaller terms hard those – that with in that? with to net totally want in mean you follow-up growth expansion. of I’ve I numbers. wasn’t the if how that a the I negative of on me that’s commitments, your discern Procore? is part model asked question that? do And they handle common there exceed times of for works? a net

Howard Fu

DJ. Thanks, This Yes. is Howard.

net positive, versus has amounts the results. positive. and greater in So our more in of terms financial so is net first we’re thing pronounced, dichotomy impact is why The actually expansion continued the The but not it’s net the downgrades impact that’s to seeing of get impact. is apparent

terms In the typically to And is they customers exceed a have to that an things exceed lower those they we typically basis upfront. to volume volume higher point that One of they volume the do have. customers commits incentive of when volume commits, the higher actually commits commit pay it’s for

And they higher we to – of so we basis see points. they typically that. so a pay then don’t do And as that, have ton

we typically so commits volume And upfront. get more

DJ Hynes

And sense. you want Howard, on makes to ask margins. Yes, then I

good are notable margins of the half back first planned that been kind seen the mean, first consistent obviously materially strong a laying Guidance promise, this the what with your any mantra. we’ve kind drive there year. out investments I in seems year of job deliver under a year lower over they’ve did You that half? was catch-up But in than the half. in really of would

Howard Fu

and to year. could margin great the that, our margin If opportunity to make those there evaluate room profile. do potential believe those don’t of towards it’s as environment upside that available the have that part as There investments guide, flexibility a risen that something continue to we what’s really investments be opportunities our we isn’t. to see mind enough Keep to us we in back that us in and leaves

DJ Hynes

Yes. Makes sense.

thank the Okay, guys you, for color.

Howard Fu

Thanks, DJ.

Operator

Thank your question. you for

the is Kalia line question Next Saket from Barclays. with

open. Your line is now

Saket Kalia

Hey, Howard, my lot the we and to just a maybe for was for you, year’s future, that of international from do wondering an Day. in leverage way? contributing for think little now. if How Great. Okay. operating bit bit last of the little Analyst about business you at questions, here. you a talk growing out business taking about this could investment a just Thanks sort Clearly, eventually reviewed the that quarter. guys. think I zooming bigger even I there right

Howard Fu

Yes. Thanks, Saket.

to international side, that investment we So focused basis actually and that something the growth any provided on remain and is that investments contemplate points see expansion not leverage does ongoing investments. average from Remember it would as we on an we framework the we that have on there. that upside XXX basis the of view international continue additional that our that

And on the thinking to in I’m this an so forward towards how of international. the back components investment the the of business focused that’s this year. We to that particularly year, update on still We profile margin come part provide later international about the relative in remain expect about still back part of in we’ll our going improvements year.

Saket Kalia

level, Got about it. of you any I your want early very payments? maybe payments Anything here early, mean, for from high customer comments Very or still pricing? I to it’s say follow-up but testing? clear. my product on in preferences terms beta in Tooey, just you. just for anything observations realize

Tooey Courtemanche

I talking about product. payments, a know I about won’t love you talk Saket,

lot market faster. to have this what problem with in very this getting of customers very, we talking you And enthusiasm I’m by So have the solving I partnered us I’m that is and people that know the gratified the we close to the learned deliver a paid about industry see solution. I would constantly say

to And moment. learn Investor little you so a you may bit that to at Day more groundbreaking come would I a all encourage because

Saket Kalia

Got it.

forward Looking it. to guys. Thanks,

Howard Fu

you. Thank

Operator

line for Borg the Thank next question. Stifel. you question your of with The is from Adam

Your line is now open.

Adam Borg

question. product end Great. of kind of bit of product-led serve you’ve you, And terms about curious this little we Tooey. refining more of the market. to with for growth strategy. In and Maybe just a a the packaging where better thanks I taking was adopting for much talked so lower are the past, in just

Tooey Courtemanche

so a to event. some for product definitely been bit more support our something so quite in we’ve time. strategy working still And in if about days. the we’re growth But the base like are right? in I line Well, an and characterize expanding not was our becomes PCN to has I prevalent say Yes. PCN, on the past. adopted. where talked is would It’s early journey, help is we process, this We as Things collaborators going a across connected our little customer been that

a yet, journey. innings early So but

Howard Fu

around to not end on lower PCN, we’re Tooey very Remember, a that so bit It market to as broader it things add of about And go the Just market. think specifically to PLG a strategy early is there. when keep as just of little about in across the we for board, the PLG. innings. including mentioned, in talking terms like is mind how

Tooey Courtemanche

much And Adam. of we they best are size so or run that learning them expanding of from we the to with this that with we how areas upon action customers, take offering top better in businesses. customer, those best data much drill can to not their opportunity relationship dependent to about it’s use present the Procore. have our benefits going their know next – everybody to them Procore next the about have that I’m so and on of And for

Adam Borg

hear just initial early, break, you’re ground front, super any there interesting any we’ll feedback a fast willing share? more earnings maybe I’m on but just That’s the it’s And helpful. proper Thanks or again, super know Again, to so risk insurance I sure super on as but advisers. much. customer follow-up, just

Tooey Courtemanche

Yes, sure.

to definitely to Day. you very And would again, come days. still, I So early Investor encourage

lot will will to stay going tuned, a I area there, an to it’s I of Our there’s talk come. friend, I yes, But opportunity. he lot say that will have about. where more be to there’s a and say be think Paul would

goes We’re and the a industry, trust trusted that long to way. a partner

Adam Borg

again. Thanks Great.

Tooey Courtemanche

Adam. Thanks,

Operator

line with question. next the question Sterling Auty The Nathanson. is your Moffett Thank from of for you

is open. line Your now

Sterling Auty

But coverage anything this you in to Thanks. you bit And pipeline the little commentary macro. light on in guys. sales pipeline specifically, talk it specific Procore I current manage a getting can Hi, Yes. to your the your weaker? appreciate gotten you you view us home dynamics? other and to bringing about it the those of of In are that that mentioned? ratios coverage trends light is stronger? words, Is doing pipeline how

Howard Fu

is Hey, Howard thanks the Sterling. for question. This here,

first the longer business, has we The part with our strong. this cautiousness taking still about cycle in that do really little is generation talk pipeline of bit we’re that smaller of seeing that remains When pipeline the the certain a in pockets it and of lands. terms to the deal

where managing seeing in terms of making terms and we’re of the what our that think we something we do focus, terms In evaluating business in and investments down options [XX:XX]cautious I of internally, continuously is and those that doing the we’re adjustments, up that’s terms quarter. showing and pipeline But in is every we’re what what each pool. certainly of to say single things I are from would how

Sterling Auty

Gotc you, guys. it, thank

Tooey Courtemanche

Thanks, Sterling. Yes.

Operator

Thank you for from your Brent with of line the question. The question is Jefferies. Thill next

now line Your is open.

Luv Sodha

incentivize to them And additional of what but Thank Sodha adopted? that the on additional also Could you is the products? into This of sell expansion products are taking wanted team expansion, volume-based this to for made comments not the quarter, have been give adoption to Brent with you just it’s Howard. Hi, – you additional us it’s insight Tooey. some Thill. Hi, question. go-to-market the just ask one saw again for on then was I activity you working products. Luv one you

Tooey Courtemanche

financial products question, they’re need on board for Great folks their the they’re disjointed reasons apart The financials. We Luv. manage coming to with platform. buying that’s aren’t successful, that one is them Procore our news what and that the management, been and that a that management really between been I us the is is seeing management, on think separate pieces demand in we’ve project is customers. are acknowledge our project sets good software. help and that project fact why Great from quickly integration of are required of example management the financials And

So purchase choose a workforce customers, are of for need going then management, different to products the type tools it’s the field. GCs depends it more on natural than And progression, contractors the are of BIM and kind beginning. in going to the specialty that really they owners

So progress purchasing our we’re it that as talking how to through really different depends on to the products. person they

Howard Fu

have Yes. product an expansion anything cross-sell overly of perspective. as lot incentives specific continue a There of or our to direct incentive terms we from this of standpoint, From is that’s to don’t at opportunity a still in most volume point. is

Luv Sodha

it. one, quick or the may, retention just one Howard, that That’s led you there I helpful. to share could And you to elaborate, Got color was any on then there? if anything Thank gross Could side. just moderation additional the XX% you.

Howard Fu

mind still way of so and XX%, number. Sure. historical we gross retention. XX% XX% retention good was to The is XX% But within gross range XX%, feel into its in made that that keep that that, likely about there some of the that still cautiousness our

Operator

of next question. Mizuho. question your Thank you line The for Matt the is Broome with from

Your is open. now line

Matt Broome

consistent I increased quarter. and really indeed quarter a the little guess of of those trends causing polarization the Tooey, sort Thanks I and progressed to strong on And behavior, much. of July? on customer Hi, in become of pronounced terms more just Congrats that very interested as another bit sort Howard. into understand about more and behavior? what’s be did carry

Tooey Courtemanche

Yes.

quarters, that to this one Matt, news, into few Matt, read were if particular mentioned is I construction, data the wish environment. when more have you, have ask gotten tell the say to which area, points could going we what personal scary I’m again, we earlier, overall forget going I more things that But you segment, So last it one one I deeper but over geo, things a seem macro bit is to get is it’s look if entire bit was looking the I portfolio, rosy, where to you this. than think more the and little to really gives interest happening more is haven’t about happening anybody, my interesting, opinion, in continued which stakeholder about little us one generalized this a others. It was across but little bit a

sentiment in way a I So think goes that. long

also, a infrastructure hear the because optimism But of you about there’s lot bills.

all about hear these You big coming mega projects online.

about hear manufacturing. about centers, the all You data hear you

we’re where can things kind interesting. things this customer concern optimistic be there’s and said very economy. So he the bullet, quarter then optimism. to be are a in about increasingly He really there’s me, that that right of optimistic a dodge we talking but was may and increasingly you. I this we goes, And he to may it’s world to goes that not we about worried right, that

how So shows is other that me, two articulate illustrates it countered thoughts which actually hold that, your head to are each like well. you I in can it, to think it and

Matt Broome

No, ultimately and then of there, Alright. of incremental any just What from in signs into that your the if terms sort usage the any? customers sort of translating helpful. there I value some commitments, those cautiousness guess, that’s usage? on effect And of this is volume are is lower

Tooey Courtemanche

No. Yes.

We It’s no any not and closely, on believe the the fact, there in – usage not decrease. there’s on been correlation at we track very usage So increase. all. do has is

Matt Broome

much. so Thanks Prefect. Alright.

Tooey Courtemanche

Matt. Thanks,

Howard Fu

Thank you.

Operator

Thank for your you question.

with the Wolfe Next line Tilton question of Research. is from Josh

Your line is now open.

Josh Tilton

less. to pointing that that them to to and trend I go more? kind hearing how my they’re choosing who to taking more having. what what why these actually customers confidence like go customer for being it those less to I we’re But who customers of like those or spending guess to get compare you’re when more you’re in to Is less. of that’s versus spending spending pointing points does back is one maybe maybe this are what the go is kind are from are giving are it of I questions. expand conversations. exactly that data back the in customers that last who who spending talk and macro? that obvious to some it is that? out thanks And to of they are customers go want like spending Hey, conversations and there’s Is But back no you some than

Tooey Courtemanche

Yes.

that the conversations mentioned, the been my anecdotal tell road can I’ve the on and I’ve you And been I lot. having. a by way, So just as stories I

been and were I they may business of running center business in conversations cases a running awarded person were were but not increase that these newer businesses us, hadn’t them of rest phone or quick these led project anticipated not but and lot only some to their Procore. more were deep with and/or their to because What have calls. two the Procore, not in volume data just a want their they volume to to been had large So conversations they they found

earlier, the that around The things off on though financials, other management, project customers betting for an opportunity like future things that people – quality expand the us as will safety, I there’s accounts. management. around and start like the piece are mentioned to those things with around is like for invoice

to Josh, though, And biased our a on so I to you, of there’s kind I we I sample be customers. best that’s I with And say, the biggest have – how side, it. see side, think and would that honest by way, talk optimism the

And And pessimistic, so want you’re you plus do here. to all have optimism. But but to? the get want numbers, the really into Howard, customers clearly, – so that. are there of don’t to going customers, who some. I with overgeneralize spectrum many in to is XX,XXX I can’t spoken speak to obviously, But terms in not I

Howard Fu

in the of customers about feeling what Yes, sentiment they’re things, seeing Josh, side I themselves. to they’re the terms really, come and think on it’s to in it’s have those downgrade of back what for

basis anything it if do the they’re sentiment so be feeling mind, the in in and overachieve stable. pay they about when they may because still like our necessarily aren’t not gross at volume, relation It’s a But remains the point to they decide do downgrade or is higher Keep purely and they overuse news have or on it that at when that to that. downgrade. retention, you look there point. backlogs relatively good And that their to

Josh Tilton

positive the it follow-up, in my topic just was quarter, Totally you prepared us future. negative a think it that this it appropriately sounds in warned offset makes I in with remarks, could the also but a discontinues, an is, but be it like sticking And guess net very I sense. the

from kind that your answer, of from you in need this So I expanding perspective, customers, customers to net more what, go into which positive being is have being like still flip obvious cautious of to to the outside guess a than would change for negative?

Howard Fu

change? in answer a have of What couple me it Let to different ways.

a First, see or in I customers little downgrading, renewing of itself that are that are terms when to either customers are renewing that be business we of bit smaller less of look are expansion at the that a and proportion of are that in or profile that of cautiousness my accurate. causes actually that the you calling out. From when and downgrading, the expanding, going proportion seat, predictability

have standpoint, sure And that I from that out where make I cautiousness. call said we prudently that to so

And to get But to downside we the accurate increase. see to would the to causes outpaces volatility are sentiment start to place less for that just we the see on to the We a so seeing profile predictability a that materialize. expansion be what have cautiousness and little side. really the what potential bit will to that have really of

Josh Tilton

guys. much. Helpful so Thank you

Tooey Courtemanche

Thanks Josh.

Operator

for you of The Brent from Sandler. question next with Thank Bracelin is line the your question. Piper

now Your is open. line

Brent Bracelin

of year-over-year of two seen customers you. net afternoon. back couple maybe makes a you, challenges Thank which with XXX for have a the there. the in little sense starting million Tooey, little had years. seasoning guess volume basis new on to there, net we that out surprised stronger strong quarters, year-over-year adds the Good I in than the I was were quarter, given in last new really growth declined

Just a either that? or environment. cohort little Thanks. the to wanted there thought profile color adds? driving some looks net get have a would on I customers driving what’s a new a owner that Is specialty net more the little given the that’s unique of So, than or healthier

Tooey Courtemanche

so in variability not customer numbers. that those count. of is Brent, a much lot we would business, because such thing SMB creates So over-index The really – on a large have I

don’t volume bring we So, track the construction really remains about see platform, much our it more we really strong. as the customers on It’s and that being closely. that something

Howard Fu

customer QX. just and been to adds. the To have range those terms count we million the Look, XXX that of Historically, will we that I the are versus still dollars in in actual we with in. really are to Tooey’s that managing happy million customer. quarter-on-quarter Yes, XXX of remains in in increase, consistent point, jump the customers bring

And feel so customer the good we count. about

Brent Bracelin

discussions softness. then, contractions? heard out versus dollar you we And had earlier are volumes seeing Howard, the think Avata on sub-segment from them renewal they call Great. a being I exchange expansion a follow-up today, on commercial for they seeing around quick one are and a where building

to that Is As downgrading, about to hard for you tied we are contracts are are the that contracts Is think it erosion? more those a little Just clearly get trying tied to where commercial is to renewal, weakness? seeing building it it shrinking. that building are up color office predict? commercial on

Tooey Courtemanche

up that Brent, come over going that’s not – But am in conversations. this I in the simply one. on jump no, Howard So Howard to doesn’t in is then jump and can answer the

driven is is something for sentiment. long primarily that time, by I I trying success think say what Howard to have which been is a our said

these do about the it’s more that’s than on the so is downturn. opportunity ahead segment about And particular it executives feel any about how

ones commercial data X warehousing As have in our areas heavy again office diversified from portfolio shifted years – dramatically some they and and that and in it we I say run the don’t were mix can buildings mentioned success. their manufacturing centers these that actually before, they portfolios see to where customers into away that will they ago, – the

there no, industry. XX sub-segments construction in So is and remember it really not, are the

single-digit overall – just industry. it’s one that’s the So and and in of the percentage

Howard. Sorry,

else? anything You got

Howard Fu

No.

You everything covered too.

Brent Bracelin

appreciate. color that helpful some Thanks. XX sub-segments certainly helps there. explain maybe Really don’t the diversification

Tooey Courtemanche

you. Sure. Thank

Howard Fu

Thank you.

Operator

line your with next the Deutsche Thank you Altmann Nick from question The of question. is Bank. for

Your line open. is now

Nick Altmann

Awesome. Thanks guys.

Is really that the – how weakness some of some sort weakness guys expansion combating the product of a you of SKUs? other think around commitments, the are or earlier sort is you of financials had it in some go-to-market in sort guys on gaining through new in you from to of with. volume volume think you helpful. categories color of traction it But with sort in shift give are equipment? SKU commitments, an you plan I Just volume weakness any a how continue that or am perspective? the or is on guess areas? combating guys be what to Is of sort can mentioned that area Just place incentives a you wondering how pockets drive I focus of of I remedy, would that I combating

Howard Fu

Thanks. Yes. Sure, Nick.

around what into mentioned of where put what resources we evaluating the of and to could although I determining So, that things not specifically and on basis a equation. account regular a similar quarter-on-quarter takes part in necessarily before, we do our be products, these part

We And decisions part things we of make the in we want we continuously where we those will on adjustments or quarter like or and make do at specific any that geos those normal driving like specific a look down and the the are quarter. year. execute teams that particular throughout as things throughout pipeline to are double things

as definitely move So, those we year. are throughout happening the adjustments

Nick Altmann

that outlook the And on It’s just comments margins then Great. on around the the of great some a to quick cash margins. the flow. free follow-up and see

areas maybe up expense of little cleaning adding equation, to expense sort line? are the you sort of on where guys of are Just bit, side double are line the a the up dollar the where flip maybe more. given down maybe can And areas on the you bit you you just want incremental a talk are maybe where the you the cleaning about and

be think Thanks. that international, you could talk If product would about interesting. I categories, etcetera,

Howard Fu

from from and planned G&A. diverse wide above have been basis was go-to-market really to improvement terms R&D given areas has And points framework we about XXX really that margin being on come The of that a of in it the range Yes. average.

So, that’s thing. first the

are second The in the to largely there. and in thing the of front office is that business, we that because to reacting continue the invest see we demand we

And go-to-market. so we invest still the in

less before said headcount have to margin see We investments, year. we are fiscal will into investing mind, have in this contributed that are and investments we continue side. come fiscal are the fiscal And in ‘XX. add capacity that than in still expansion we we also saw has we ‘XX, seeing and to the we in this and ‘XX Keep that resources of in products have and the year, certainly terms to going the

Nick Altmann

guys. Thanks

Tooey Courtemanche

Nick. Thanks

Operator

The Blair. for your the Becker question William is Dylan of next you question. from with Thank line

is line Your now open.

Unidentified Analyst

evolution Hey guys. questions. Dylan pure macro of It’s of the thanks our dynamics. on the I wanted Faith taking for on and business outside touch to for the

to approach Wondering a growth the of equation how when resiliency maybe So, a a it’s balanced on think a product itself. the volume efficiency there solely versus historically, your framework, space is you business I more both mix that and now done we of about lot relying that still more to believe has white shifts should I volume durable support platform started. versus tool now which in of guys point growth solution in as understand,

Tooey Courtemanche

Yes. Well, thank you.

multiproduct since been a has Procore platform So, XXXX.

we we matured What shifted flagship to that product. of is more being kind a have So, of characterize company I us the just wouldn’t project done that having products platform as management a our play. had have have we

more now additional their sense of by your We the because of on of customers think providing to And helping it on. that we fact can we not entire a are of our giving that ton obviously, grab provide all more your platform projects a virtue by value are their business. so products. that’s us to run volume And the business make run opportunity doesn’t

Unidentified Analyst

that’s up ask thinking network guys sales more new or work how stakeholders? touch And How helpful. different that I you No, this? to quickly, self-serve Procore about if to construction open Right. the follow-up, and of to optionality by efficiency wanted efforts this the are conversion to can then drive enabling process a can scopes just I collaborator on

Tooey Courtemanche

Yes.

is our will get and one entitled about that tool is platform, to on single an we and in that think our PCN is every we that them connect the to experience just them day collaborators global So, are to PCN platform acknowledge construction platform. a keep the engaged everybody are on that the way use our on mission

people ways virtually of So, count many it’s just enabler, by one on but that are different our actually customer it’s and that our we that fact engaged the products. an increasing have our using just platform more we are

just so have and helps interested of it But examples and though. of one the that’s people we lots different example provide get sales value how we And process.

Howard Fu

I Faith. And add will Yes. just top that, of on

the when Specifically, also intent to our PCN with have opportunity at the increase point increased meet and for that $X participation we on we PCN, of have engagement. that customer is chain how that efficiencies an and that the in that the pipeline pipeline further of example how close participation volume the to play in to opportunity, and that of it and then terms generate up starts need. and And comes we customers’ ability we And a of into into ultimately the pipeline ARR. engagement

Unidentified Analyst

Thank the you, for color. Thanks guys.

Tooey Courtemanche

Thanks Faith.

Howard Fu

you. Thank

Operator

Rangan of for your line Goldman the question. The Kash next is question you from Sachs. with Thank

Your line open. is now

Kash Rangan

Thank you getting for mean we want. different are are accelerated waiting we have has and that in this from same years been and recovery, what we I in numbers take, putting Howard. have But slightly not always very I up. a macro and you much growth rate Tooey you fact went public, you the your the when have up time, X the been at

went I think the was quarter, XX%. first you XX%, public

is flow margins cash better, of customers are better, number free Your growing. added keeps just

is the base, XX% it’s about growing. your revenue think customer XX%, I growth customer in per

getting Your yield better. is

So, right? growth the nothing to you mean have to whatever get same “recovery” to because set would if you need your still outperforming. we this do? a and recovery what strength don’t a aside performing keeping company? Maybe How commercial normal. the for? the But but or company? it doing is markets with seems a what optimism you business are leave the in I your had end we TAM, does respect Are if the new of we don’t of opportunity a model and waiting notion What just enough be

something should why be about? about So, we more we are not about worried worried all us tell

Tooey Courtemanche

hired our anybody officially. probably thing hear you the Kash, onto said. from nice And now to are has Well, That’s you. good ever Investor team Relations

another, personally a the to really is that that demand from the macro if that’s So they just be for and shift convinced all beauty And to sectors. yes, shift serve segment I It don’t be need have anything, shift am customers challenge, portfolio, when just they Procore, there. or overall so so portfolio. products one their continues our the construction may going to shift we helps of to their environment

demand the to the going saw COVID I overall you And those we to firm that dramatically our we – didn’t to believer remember, for got this also seen we construction we So, I timeframes. have remain. wane demand downturn, am Look, downturn, saw friend, during a Paul. am say for XXXX is going

does to that doesn’t use works, doesn’t the always slow the these fast, oil like And it way industry an slow, it down doesn’t this analogy, agile. even we it use speed which it’s if and Paul, So, turn and oil up fast tanker certainly tanker. things, this and it very

that time, the overall riding nature So, more the steady downs we Eddie be it ups believe that and a of because will macro just when to over of we of construction. of comes economy

Howard Fu

Yes.

maintain we still in our growth Kash. outsized an low-XXs on perspective Just to Doubling uptick will period have range, about have that you a that consistent, on or there, high-XXs and we to tanker the bit see still we of talked that downtick always where more because dynamic. And that going analogy, forward. down growth what in won’t steady-state any oil and rate is particular the little add

Kash Rangan

much. Got analyst of that pursue appreciate line to the you so case work. to in make it. decide a nice would words, Thanks you Tooey, great

Tooey Courtemanche

Got it. Thanks all.

Kash Rangan

guys. Thank you,

Operator

for your KeyBanc. the with The you from line question is next question. Celino Thank of Jason

Your now open. line is

Jason Celino

we one the were ones there at go quarters on sequential were To extent exceed you CRP or downsizing what minimally. two like It I renewals Howard. are am saw where only a I those trying sounds your of like trying customers This but gain really more and did expanding here. XXXX, that gain is If Tooey the decreasing. kind to back extreme perspective than that they to grow upsizing? just are Thanks. the time Hi to am comparison, just perspective.

Howard Fu

Yes, Jason.

is there think make going is situation right in When job literally how that XXXX. to we empty, severe are situation so still different and there backlogs still and want on, out are XXXX, folks that I about done. was construction being sites there, now a because you than sure So, understand were is still business in very the

that’s And sites would job necessarily scenario wouldn’t empty. where happen. fair only a so were because severe as literally, I that the that look you at something compare see And

Jason Celino

just that’s you No, Thanks. seen then Yes. fair. competitively, Okay. competitive changes given And market these dynamics, changing competitive wondering landscape, any to have the tactics. if

Tooey Courtemanche

far as we of the Office, day people analog are we platform opposed are as that talking to type Jason, as coming the every me, vast things join to more solutions, to but it’s no always changes are majority shocking Procore the those Microsoft of to Again, whatsoever really concerned. from competitors.

just so it bow And it, don’t And on really if a to of kind that at put changes way. we report. look no but – to anything,

Jason Celino

you. Thank Perfect.

Howard Fu

Jason. you, Thank

Operator

Schappel line of Capital with Mark the from is question next The question. Markets. Loop your for you Thank

line open. Your is now

Tim Grieves

Hi. This attrition is I Tim for Mark. that Grieves did noted employee for anticipated. want you me last lower trend know, in guys One that on came over QX? quarter, is continue to than

Howard Fu

from happy hiring low a we levels, and at are Attrition Yes. where remains really with we perspective. are

Tim Grieves

hired? and if If reps, quarters sales you new And in sales new they the the new if I international expand ago productive can of us yet, with few recall are do an provide to correctly, update on onboarding reps another that changes business particularly add around the could not, that where these a fully you I these the or side, and stand? one mentioned you just that reps sales international

Tooey Courtemanche

maturation the only not would of but how sellers. as And our always this have characterize well. is enable working on So, are we been the way domestically we I evolving we it internationally, kind of

not. even never-ending and that And enabling we I really say we would until when the are this of a process to so entity, think we I an talk think year. newer But getting say ramping. don’t about ones would are better. helps. international going as I see are significant would later the we ramped, kind some But about And folks it’s that is process hope changes of

Tim Grieves

Thank you.

Tooey Courtemanche

you. Thank Yes.

Howard Fu

you. Thank

Operator

There additional waiting Thank questions you this for no question. at are time. your

participation. So, concludes the you your conference that call. for Thank

You lines. may your now disconnect

Procore (PCOR) 2 Aug 232023 Q2 Earnings call transcript