Procore Technologies, Inc.

Excuse me, everyone. Please remain holding and the conference will begin momentarily. Again, please remain holding. The conference will begin momentarily. Good afternoon. Thank you for attending today's Procore Technologies Inc. Fiscal Year 24 Q1 Earnings Call. My name is Cameron, and I'll be your moderator for today. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. And now I'd like to turn the conference over to our host, Matthew. You may proceed.

Hey, thanks, everyone. Good afternoon. Welcome to Procore's 2024 First Quarter Earnings Call. I'm Matthew Pulleys, VP of Finance, And with me today are Thuy Cordmanche, founder, president and 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 FCC. 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, May 1st, 2024. 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 so with that, let me give it to Dewey. Hey, thanks, Matt.

And thank you everyone for joining us today. I'd like to start by expressing gratitude for the team's hard work this past quarter. and by thanking all of our customers for their continued trust and partnership with Procore. Some notable highlights were in Q1, we grew revenue 26% year over year. We continued to make improvements to our efficiency profile, delivering strong margin performance in the quarter, and Procore was ranked number eight among G2's top 100 global software companies for 2024. This is our fourth year of being included on this list and our first time ranking in the top 10. A huge testament to the strength of the Procore brand and the value that we continue to deliver to our customers. The standout event of the quarter was hosting our ECAB, which stands for our Executive Customer Advisory Board at our Carpinteria offices. This is an event that we hold twice a year, and this quarter we brought together executives from over 30 of our largest owners, GCs, and specialty contractor customers, along with several members of the Procore leadership team from across the organization. This event is an invaluable opportunity for us to share Procore strategy, hear feedback on their needs, discuss construction dynamics, and ultimately determine how Procore can become an even stronger partner to the industry. So I'd like to share five major takeaways I took from the event. First is industry sentiment. You know, overall, customers expressed more long-term optimism than I had anticipated. Despite the very real uncertainties and challenges in the near term, these customers are increasingly optimistic about the long-term future of construction and their businesses. They shared that this optimism is in part driven by the pockets of strength that they continue to see in construction. Those that have diversified portfolios are benefiting from increased spend in sectors such as data centers and infrastructure. So while it's clear the environment remains dynamic in the near term, Sentiment is trending in a positive direction, and the industry's confidence in the long term is getting stronger. Second is our product roadmap. Last quarter, I shared that a key focus area within our product roadmap would be improving the flexibility, configurability, and connectability of our products to meet the needs of all types of stakeholders. Customers at the event overwhelmingly validated that our roadmap is aligned with where the industry is headed. These customers report that the complexity of projects is increasing, placing large demands on workers' time and attention, which Procore can help alleviate by focusing on enhancing our current product capabilities and integrations. Ultimately doing so will solidify Procore as the system of record and engagement at the center of our customers' operations. This brings me to my third takeaway, which is data. It's clear that these customers believe that they are at an inflection point dealing with massive amounts of data. Their biggest challenges with data are aggregating it across systems, connecting it from one phase of construction to another, and knowing what data to focus on. Our customers see Procore as central to their technology and operations because of our ability to act as a true data aggregator. Unlike other solutions in the market that are comprised of multiple disconnected point solutions, Procore's single platform connects products, stakeholders, and workflows across the entire construction lifecycle and enables customers to centralize data and run analytics across their entire business. Data is foundational to our connected platform, which creates possibilities for conversational experiences within projects through upcoming products such as Procore Copilot. You know, I had an interesting conversation with one of the most forward-thinking contractors on this topic. And they shared that they are particularly concerned about productivity rates and identifying early warning signs before a job goes sideways. They asked a host of questions that can't be answered by any one system and spent a lot of time putting these answers together to anticipate if a job will be profitable or not. You know, this is why we're so excited about things like Copilot. With Procore Copilot, they're going to be able to create custom reports to look across multiple systems and allow them to identify those early warning signs and take action sooner, which is only made possible by our aggregated data platform. This is just one example of how Procore's foundational data asset is enabling us to leverage AI to help customers analyze, optimize, and change how they operate their businesses. Speaking of which, the fourth takeaway is AI. Discussions around the use of AI have increased dramatically in the last year. I'm often asked about the transformational shift in AI, and whether or not it may threaten jobs in construction. There was a strong consensus across these customers on two themes. One, the potential for AI to transform how our customers build is real. And two, there are no shortcuts in construction. Our customers continually seek ways to build more efficiently, but not at the expense of quality or safety. AI's best use is likely not to do what someone forgot to do or replace what someone might do, but rather to act as a force multiplier by automating processes, surfacing information in real time, and recommending next best actions. Customers are clearly excited about how AI can be used to solve the biggest challenges for the industry, and Procore is well positioned to leverage this technology. You know, I pride myself on being the earliest customer of our products, and in fact, I am currently an early beta customer of Procore Copilot and tested it on my own personal construction projects. I was recently able to have my first conversation with Copilot on one of my projects, where I asked it to show me which RFIs have an associated scope change. Copilot responded with a specific RFI name and number, the scope of work, the estimated cost of the change, which subcontractor was responsible, and the status. You know, previously, this would have taken me hours of coming through hundreds of RFIs, cross-checking drawings and change orders, and running several reports to glean this information myself. This simple action saved me valuable time and eliminated risk. While it's still early to predict the full impact of AI on construction, it's clear that the conversational and predictive capabilities of this technology are going to be game changers for the industry. And finally, partnership. Ultimately, my goal for these types of events is to strengthen our understanding of how we can help our customers tackle challenges in construction One of the biggest being the persistent labor shortage. Customers are responding in a variety of ways, including instituting mentoring programs, lobbying to incentivize trade school placements in high schools, leverage AI to support new talent, and focusing more on field staff. You know, this clearly aligns with our Procore.org efforts to help bridge the gap for skilled labor and inspire the next generation of construction professionals. This event underscored just how important it is that we continue to partner with the industry beyond the technology we provide to help solve for the challenges of construction. You know, our customers deal with so much complexity. I'd like to share a real-world story of a customer that attended the event to help illustrate our partnership. A group of Procore leaders recently joined our customer, Hogland Group, a large energy and infrastructure contractor, for a site visit to a wind energy project in Long Island, New York. This important project will connect offshore wind farms to the main power grid and involves the construction of a converter station, over 17 miles of trenched power lines, and a final connection station to the grid. For this project, Hogland has to contend with multiple regulatory bodies. They have to meet environmental regulations, control traffic and safety, secure multiple permits, get scheduled clearance from multiple government agencies, and conduct night work in all types of weather. The sheer complexity and the amount of data involved in these heavy civil projects cannot be overstated. Hoagland, with a reputation in the industry for safety, efficiency, and a tech-forward approach, turned to Procore as a technology solution and partner to manage this project. Beyond ramping team usage of Procore's post-implementation, their leaders are working with our team to find better ways to build. They see the opportunity to strategically leverage Procore to identify and roll out new standard operating procedures that reduce risk around quality, safety, schedule, and improved visibility into their project budget. They will be leveraging Procore's action plans to standardize project performance and capture insightful data. Procore empowers Hoglund's management to ensure consistency across projects, powering their analytics and ultimately, helping save costs and meaningfully reduce risks on projects. Hoagland's willingness to collaborate at this level underscores the value of Procore's comprehensive solution, partnership, and industry expertise. This reflects a clear trend we've seen, especially within the enterprise. Construction executives want to become better builders to grow their margins in the face of a tougher economic environment and are turning to Procore to help them accomplish this goal. I'm honored that Hogland chose Procore to help, and I look forward to continuing to serve them and support them. Speaking of choosing Procore, I'd like to share a few notable customer wins in the quarter. Alberisi is a leading North American construction company that's ranked number 39 on EMR's top 400 contractors list and has been a Procore customer for over five years. This quarter, Alberisi expanded their construction volume with us and decided to implement Procore Pay, on top of the robust suite of products that they were already using. This is a great example of how our largest customers believe in our vision to streamline the construction payment process. Alvarese will continue to use Procore on innovative projects such as Canada's first large-scale lithium-ion battery production plant and the U.S. Navy's Kings Bay facility, which is being overhauled for the very first time in its 30-year history and was nominated for ENR's 2023 project of the year. We continue to strengthen our relationships with leading general contractors, and I'd like to share another example of our deepening partnership with the ENR 400. McGough is an ENR 400 contractor with a nearly 70-year legacy serving the commercial, educational, and government sectors. They recently expanded significantly with us, deploying Procore enterprise-wide across their business. Initially, they had purchased Procore as part of a rigorous two-year pilot program, and I am happy to share that they ultimately chose Procore over competitive solutions due to our ability to streamline the field to office experience, integrate with their existing technology solutions, and support their data strategies and ambitious growth plans over the next several years. Additionally, McGough saw Procore as a tool to help them attract and retain top talent, given how adamantly their field teams advocated for it. Not only did their employees want to use Procore, but McGough also saw the value of using a platform that many recruits have already used through university programs or at their prior companies. With Procore, McGough plans to continue to expand into markets like healthcare, industrial, and multifamily, and renew their focus on data centers and federal projects. In addition to expanding with customers, we continue to build new customer relationships. Data Bank Holdings is a leading provider of enterprise class data center, cloud, and interconnection services in the U.S. and became a Procore customer in Q1. They have an infrastructure footprint consisting of over 65 data centers representing over 3 million of combined square footage. Their team was looking for a solution that could standardize processes across their business, provide a single source of truth to better manage their growing number of projects, provide portfolio-level reporting, and to help them scale efficiently as they set out to double the number of their capital projects in the next five to seven years. After in-depth research of available technology solutions, I am happy to share that they chose Procore as their primary construction management platform. And they shared that the unmatched value Procore provides far outweighs the cost. So before I close, I'd like to leave you with an anecdote that brings to life the ROI that Procore provides. You know, in construction, our customers allocate a budget for BIM expenses. These expenses effectively reflect the large amount of high-priced labor hours spent on design coordination, fixing design issues, minimizing rework, and ensuring the designs are feasible for builders in the field. Every labor hour saved on this process increases our customers' profit margins. Recently, one of our ENR 400 general contractor customers, Bernards, began deploying our BIM solution on their projects. Their VP of BIM shared the following, quote, based on the initial set of projects that we have deployed Procore's BIM solution on, we've been able to reduce our BIM expenses by anywhere from 50% to 80%. These significant savings allow us to reduce our BIM budget, which our estimators are going to leverage to make us more competitive on future bids, end quote. So these stories, along with the conversations I've had with customers at events like our customer advisory board meeting, all directly influence how I think about the strategy and the direction of the business. You've heard me say before that we are greatly emphasizing focus in how we plan and operate. My time with customers not only reinforces that our decision to focus is the right one, but that we're focusing our efforts on the right areas that are going to deliver the greatest value to our customers in both the short and the long term. So with that, let me turn it over to Howard to walk through the financial results.