Procore Technologies, Inc.

I will be your moderator today. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, press star 1 on your telephone keypad. I would now like to pass the conference over to our host, Matthew Poliz with Procore. Please proceed.

Thanks. Good afternoon and welcome to Procore's 2023 Third Quarter Earnings Call. I'm Matthew Poliz, VP of Finance. With me today are Thuy Cordmanche, founder, president, CEO, and Howard Fu, CFO. Further disclosure of our results can be found in our press release issued today, which is available on the investor relations section of our website, and our periodic reports filed with the SEC. Today's call is being recorded, and a replay will be available following the conclusion of the call. Comments made on this call may include forward-looking statements regarding our financial results, products, customer demand, operations, and macroeconomic and geopolitical conditions. You should not rely on forward-looking statements as predictions of future events. All forward-looking statements are subject to risks and certainties and assumptions and are based on management's current expectations and views as of today, November 1st, 2023. Procore undertakes no obligation to update any forward-looking statements to reflect new information or unanticipated events except as required by law. If this call is replayed or viewed after today, the information presented during the call may not contain current or accurate information. Therefore, these statements should not be relied upon as representing our views as of any subsequent date. We'll also refer to certain non-GAAP financial measures to provide additional information to investors. A reconciliation of non-GAAP to GAAP measures is provided in our press release. And with that, let me hand it to Tui.

Thanks, Matt, and thank you everyone for joining us today. This quarter, we continue to expand the depth and breadth of our platform, as well as make great progress on our efficient growth journey. While Q3 proved to be a challenging quarter amidst an increasingly difficult demand environment, I'd like to start by sharing a few highlights from the quarter. In Q3, we grew revenue 33% year-over-year and surpassed 16,000 customers by the end of the quarter. We made improvements on our efficiency profile, returning to non-gap operating profitability this quarter. And our partnership with the industry continues to be recognized. We were ranked number four on the Software Reports Top 100 Software Companies in 2023, our highest ranking to date. We were awarded the TrustRadius 2023 Tech Cares Award for the third year in a row, and we received the Stevie Award for Most Innovative Tech Company of the Year in the 2023 Annual International Business Awards. These results reflect our continued focus on innovation, delivering technology that transforms the way people build, and our partnership with the construction industry. In September, we hosted our annual user conference, Groundbreak, where we showed a number of exciting product announcements, and I want to highlight a few now, starting with Procore Connectability. We are introducing platform-level functionality, beginning with drawings, which is commonly known as blueprints. All project stakeholders will be able to collaborate on a project and share data with one another, all while staying within their own accounts. This means that when a general contractor updates the drawings, those updates will automatically be pushed to the specialty contractor's account. Procore connectability is a major milestone in our efforts to deepen the connection across all people, workflows, and data on our platform. It reduces double data entry, thereby driving further efficiencies, and is only made possible through our connected platform strategy. But the real benefit of better connecting everyone in construction is that the data generated on our platform becomes even more powerful. Data that can power generative AI technologies to help our customers not just resolve issues, but to anticipate them. Last quarter, I shared some of our existing AI and machine learning capabilities and why we are well positioned to further leverage this technology. Now, with the introduction of Procore Copilot, we'll be bringing a truly conversational and predictive experience to the Procore platform. Procore Copilot essentially serves as an extension of the project team, automating time-consuming processes, surfacing information in real time, and suggesting next best actions. Construction professionals spend an estimated 35% of their time looking for project data, resolving conflicts, or dealing with mistakes and rework. Innovations like Procore Copilot can greatly reduce these inefficiencies and free up time for more productive activities, potentially returning many hours per person per week to the industry. At Groundbreak, we also announced the launch of Procore Pay, which tackles one of the biggest pain points in construction, getting paid. As we've talked about in the past, the real challenges stem not necessarily from the moving of money, but from all of the complicated upstream workflows and processes that must come first. All of these processes exist in the Procore platform today. The beauty of Procore Pay is that it essentially automates the last mile of the payments workflow. We can now seamlessly facilitate the payment and leave waiver process between general contractors and specialty contractors, thereby minimizing complicated paperwork and ultimately giving our customers full transparency into their entire payments flow. Additionally, we recently announced our acquisition of Unearth, a leader in geospatial information mapping for construction. This is a small tuck-in acquisition that's going to allow us to better support all types of construction on our platform, but in particular, civil and infrastructure projects that are horizontal in nature. These horizontal infrastructure projects can be vast, so think of a highway that stretches many miles or an airport that covers a wide expanse of land. These projects often lack easily identifiable reference points, which can make them incredibly challenging to manage. Every minute spent determining the location of materials, equipment, and teams can increase the risk of delays and negatively impact the project's budget and performance. The importance of location intelligence on these massive projects cannot be overstated. Simply put, the unearthed acquisition allows us to put construction on a map, adding a new dimension to Procore data in the context of geolocations. You know, at Groundbreak, I love getting to share some of the latest innovations Procore is bringing to the construction industry. But for me, what's most valuable is getting to connect with so many customers and industry leaders from around the globe. Overall, it is clear that Procore's vision is resonating. Our connected platform is driving value for our customers, especially as they seek ways to find efficiencies and maximize productivity in a dynamic environment. The majority of my conversations with groundbreakers have been positive, yet I recognize that these groundbreakers represent a small sample size of what is typically the industry's most tech-forward and productive businesses. On a broader scale, it is clear that the demand environment has become incrementally more challenging. The construction industry we serve, while massive in scale and highly diversified, is not immune to broader economic conditions. We have continued to see heightened cautiousness from customers in response to external uncertainty around a potential downturn, which has translated to increased scrutiny and purchasing decisions. Howard will expand on this dynamic and how we plan to continue growing while improving our efficiency in this tougher demand environment. While we anticipate these headwinds will continue in the near term, my conviction in the long-term opportunity for ProCorp has not changed. When I zoom out and think about the opportunity ahead of us, a few things remain constant. First, we are serving a massive, critical industry that must continue to build a world around us. Second, our customers work across a diverse array of sectors. And third, many of these customers have been operating for decades and have successfully navigated multiple economic cycles. The key word here is cycles. These customers have experienced these cycles and expect the markets to accelerate and decelerate over time. Many see times like these as a chance to invest in their businesses so that they are ready to capture the next accelerations. In this way, technology can be a deflationary lever they further invest in to streamline their operations and do more with less. In fact, I recently spoke to my good friend and our customer, John Cowles, who has been working in the construction industry for over 30 years. He's the COO at Hathaway Dinwiddie, one of the oldest, largest general contractors in the U.S., and he shared with me the following, quote, construction is cyclical. We know the market will dip, and we know it will pick back up. Similar to the Navy SEALs who have two modes, either training or fighting, we are either training or building. And we're obviously not Navy SEALs, but we use a similar mental model. When the markets dip, it's actually a great opportunity for training, an opportunity for us to retool, add new workflows, add technology, and train ourselves up so that we're ready to take full advantage of the inevitable upswing, end quote. This illustrates how even in the midst of a more tempered demand environment, Procore has multiple levers to sustain our efficient growth trajectory thanks to the evolution and expansion of our product portfolio over the past six years. So I'd like to share an example of a customer that's doing just that, adopting new products. McCallum Gordon is an ENR top 200 general contractor with a long history of building projects in education, healthcare, manufacturing, science and technology, and more. As a long-time Procore customer, they have embraced the Procore platform as a best-in-breed solution for their business needs. They previously managed their payments and lien waiver processes manually through banks, credit cards, Excel, as well as another industry point solution. They have continually searched for ways to improve and consolidate processes on our platform as they grow their business. A critical piece of this was bringing efficiency to their payment process. which is why they participated in our beta payments program. And I'm thrilled to share that this quarter, McAllen Gordon added Procore Pay to their existing suite of Procore solutions. Procore Pay ties in with the tools that they already use every day and will help automate and centralize their entire payments process. Cevatet is a full-service general contractor operating internationally and is one of the current European leaders in the full-level tech utility sector or utility-scale solar power. They've delivered over 500 ground-masted projects with a capacity of over 7.2 gigawatts. They've seen substantial growth in their business, but they've still been managing their projects manually. Summit Tech decided they needed a robust project management solution that could provide productivity and efficiency gains as they continued to scale. After evaluating a competitive point solution, Sunatec chose Procore as the best fit for enabling collaboration across both the field and the office, enhancing visibility across projects, with more than 40 projects running concurrently at any given time, and in the future, integrating with their ERP system. Royal Electric is a leading specialty contractor for electrical and underground projects throughout the Central and Western United States. They previously relied on multiple competitive tools And we're in the process of a full tech audit to migrate systems onto a single platform. They recognize the value of the Procore platform in providing standardization and efficiency across their operations. They selected Procore as their single source of truth to improve communications between the field and the office teams, provide greater visibility across projects, and drive efficiencies across functions, including labor scheduling and management. Their goal is to leverage Procore for the vast majority of their projects, beginning with a widely visible improvement project of the Hollister Municipal Airport in California. The partnership we are building with Royal Electric will undoubtedly help them set themselves apart as an industry leader. So in summary, this quarter we continue to innovate and bolster our platform capabilities while meaningfully improving our operating leverage. Looking ahead, my excitement and conviction in the long-term opportunity for Procore and our ability to execute on that opportunity has not wavered. We continue to focus on delivering value to our customers while thoughtfully balancing growth and profitability. Navigating the increasing pressures of the demand environment with discipline will ensure that we optimize for the best outcomes in the near and long term. With that, I'm going to hand it over to Heather.