Slide 1: 2023 Investor Day
2023 Investor Day Chicago, IL | September 20, 2023
Slide 2: Agenda
Agenda Wednesday, September 20 | 9:00am - 12:00pm CST 9:00a - 9:05a Opening Remarks Matthew Puljiz - VP, Finance Vivian Barnett - Senior Manager of Investor Relations 9:05a - 9:25a Deep Dive #1: Construction Industry Dynamics Tooey Courtemanche - Founder, President, & CEO 9:25a - 10:10a Deep Dive #2
Slide 3: Disclaimer
Disclaimer Forward-Looking Statements This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, about Procore Technologies, Inc. (“Procore”) and its industry t
Slide 4: Deep Dive #1: Construction Industry Dynamics
— INVESTOR DAY 2023 Deep Dive #1: Construction Industry Dynamics Tooey Courtemanche Founder, President, & CEO
Slide 5: The Construction Industry Is Massive
The Construction Industry Is Massive … $11T 13% 7% 2.5Tft² $15T global construction of global GDP of global workforce est. square footage of est. global construction spend in 2020 in 2017 in 2017 new construction in the spend in 2030 next 40 years Source: Oxford Economics: Future of Construction (Se
Slide 6: … and Continues to Grow Globally
… and Continues to Grow Globally Global Construction Spend (Indexed) Dot-Com Bubble Great Financial Crisis COVID-19 Index: 1995 = 100 (8 months) (18 months) (2 months) Jun 1998: Feb 2009: ~$217B ~$48B1 transportation ARRA bill Nov 2021: bill ~$1.2T infrastructure bill Global Construction Spend Sourc
Slide 7: U.S. Construction Growing at 5% CAGR
U.S. Construction Growing at 5% CAGR U.S. Construction Spend (Indexed) Dot-Com Bubble Great Financial Crisis COVID-19 Index: 1995 = 100 (8 months) (18 months) (2 months) Jun 1998: Feb 2009: ~$217B ~$48B1 transportation ARRA bill Nov 2021: bill ~$1.2T infrastructure bill U.S. Construction Spend Sourc
Slide 8: U.S. is Balance of Resi vs. Non-Resi
U.S. is Balance of Resi vs. Non-Resi U.S. Construction Value Put in Place (2022)1 Based on U.S. Census Bureau Data Total: ~$1.8T Source: U.S. Census Bureau. Note: 1 Reflects the total value of construction installed or erected at the site in the U.S. in 2022. 8
Slide 9: Both Resi & Non-Resi Have Sub-Sectors
Both Resi & Non-Resi Have Sub-Sectors U.S. Construction Value Put in Place (2022)1 Total: ~$1.8T Source: U.S. Census Bureau. Note: 1 Reflects the total value of construction installed or erected at the site in the U.S. in 2022. “Improvements” include remodeling, additions, and major replacements. “C
Slide 10: Construction Mix Resilient Despite COVID
Construction Mix Resilient Despite COVID U.S. Construction U.S. Construction Value Put in Place (2018)1 Value Put in Place (2022)1 Lodging: -1 ppt Improvements: +5 ppts Office: -1 ppt Educational: -2 ppts Power: -2 ppts New Single Family: +3 ppts Total: ~$1.3T Total: ~$1.8T Source: U.S. Census Burea
Slide 11: Procore's Primary Focus Areas
Procore’s Primary Focus Areas U.S. Construction Value Put in Place (2022)1 Cus Large tom S Imp pec / rove men ts Homes Custom ec / p Large S Procore’s Primary Focus Areas Source: U.S. Census Bureau. Note: 1 Reflects the total value of construction installed or erected at the site in the U.S. in 2018
Slide 12: Sectors Behave Differently Over Time
Sectors Behave Differently Over Time Largest Sectors Within Procore’s Primary Focus Areas (Indexed) Great Financial Crisis COVID-19 Index: 2002 = 100 (18 months) (2 months) 800 Source: U.S. Census Bureau | National Bureau of Economic Research | U.S. Bureau of Economic Analysis - FRED, Federal Reserv
Slide 13: GCs & SCs Manage Diverse Portfolios
GCs & SCs Manage Diverse Portfolios U.S. General Contractor Electrical Specialty Contractor Multinational Based in the Northeast in Western Canada Fortune 500 Retail Owner Historic building renovation for a Outdoor university stadium with Ground-up construction of new Healthcare Educational Commerci
Slide 14: Diversification Across Largest Global Contractors
Diversification Across Largest Global Contractors Global ENR 250 Project Mix 2 2 2 1 1 1 Source: Engineering News-Record (ENR): The Top 250 International Contractors. Note: 1 “General Building” includes commercial buildings, offices, stores, educational facilities, government buildings, hospitals, m
Slide 15: International Markets Also Diverse
International Markets Also Diverse UK Value of Construction Canada Investment in Building Australia Value of Construction Output (2021)1 Construction (2022)2 Work Done (2022)3 Total: ~$223B Total: ~$183B Total: ~$144B Source: Australian Bureau of Statistics | Statistics Canada | UK Office for Nation
Slide 16: Early Innings of Market Penetration
Early Innings of Market Penetration <1% of Logos and <7% of Annual Construction Volume (ACV) Captured in Primary Countries Served U.S. Annual Construction Volume: ~$1.8T International Annual Construction Volume: ~$2.0T X 2.5 “Triple TAM” Multiplier (majority of spend flows through all three stakehol
Slide 17: Key Takeaways
Key Takeaways Construction is Construction is Procore is in the Construction Massive & Highly Early Innings of Naturally Drives Growing Diversified Penetration Network Effects 17
Slide 18: General Contractors As Gateway to Network
General Contractors As Gateway to Network Vertigo Project #1 (WA) Eco Source # of Projects Active within 2yr Collaborator Construction Invited Non-Paying Eco Source 756 Trade: Materials General Contractor Project #2 (TX) Main Character Construction 131 RivCloud Healthcare 105 MKM Engineering 98 JD G
Slide 19: Deep Dive #2: Platform & Product
— INVESTOR DAY 2023 Deep Dive #2: Platform & Product Procore’s Platform Steve Davis President, Product & Technology
Slide 20: Procore Was Built in the Cloud for Construction
Procore Was Built in the Cloud for Construction Prequalification Bid Management THE PROCORE PLATFORM Estimating Project Management Architects Engineers Owners General Contractors Specialty Contractors Material Suppliers Quality & Safety Design Coordination PROCORE CONSTRUCTION NETWORK BIM Project Fi
Slide 21: Procore's Open Platform Enables Network Effects
Procore’s Open Platform Enables Network Effects Across Partners, Collaborators, and Customers Cloud Connector Your Data, Your Cloud 400,000+ 520,000+ 11+ Monthly Mobile Collaborator Petabytes of Companies1 Data App Users 500+ App Marketplace Integrations Accounting Accounting Accounting Accounting A
Slide 22: Platform Tech Strategy Enabling Leverage, Scale, and AI Readiness
Platform Tech Strategy Enabling Leverage, Scale, and AI Readiness Procore Platform Leverage Strategy + Cloud app and data zone strategy Universal Access Mobile App enabling global scale and compliance Web Phone / Tablet Solutions Unified + Leverage of core platform services Experiences Preconstructi
Slide 23: Delivering a Unified & Magical User Experience Through Our Helix Strategy
Delivering a Unified & Magical User Experience Through Our Helix Strategy Contextual | Micro Experiences | AI Enabled 23
Slide 24: Copilot AI Intelligence Platform Using Generative AI
Copilot AI Intelligence Platform Using Generative AI (Coming Soon) Copilot Intelligence Platform + Intelligent virtual assistant via our Generative AI Services + Common capability across all solutions + Documents, PDF’s, Structured, Unstructured data + Supporting multiple large language models at sc
Slide 25: Deep Dive #2: Platform & Product - Procore's Products
— INVESTOR DAY 2023 Deep Dive #2: Platform & Product Procore’s Products Wyatt Jenkins Chief Product Officer
Slide 26: Construction Lifecycle
Construction Lifecycle Connect everyone in construction on a global platform. Preconstruction Project Execution Resource Management Financial Management Operations & Maint Design Design Bidding & Project Quality & Project Invoicing & Estimating Labor Equipment Materials O&M Authoring Mgmt Prequal Mg
Slide 27: The Procore Platform
The Procore Platform Architects & General Specialty Material Owners Engineers Contractors Contractors Suppliers PROCORE CONSTRUCTION NETWORK Project Workforce Financial Preconstruction Execution Management Management PARTNER ECOSYSTEM Connected Workflows Through Integrations & Services CONSTRUCTION
Slide 28: General Contractors Are Supernodes in the Network
General Contractors Are Supernodes in the Network Example Project Types Owner 17,000+ Multi-Family Office Architect Financier Company Directory Entries for an Example Enterprise GC General Commercial Healthcare Engineer Contractor Insurer 520,000+ Collaborator Companies: GCs, SCs, Owners, Architects
Slide 29: Midwest Media Center
Vertigo Construction Midwest Media Center Project Type: Office Building Location: Midwest, USA Owner: TLD Research Size: ~$45M Architect: Lumina Design Collaborator Companies 32 Total 6 (19%) Procore Customers 26 (81%) Non-Customers 4 ENR 400 Companies Note: All characters, companies, and project da
Slide 30: Procore Connectability
Procore Connectability Enables Customers to collaborate on Owner projects across accounts. Architect Financier General Allows Collaborators to easily retain Engineer Contractor project data within their own account. Mechanical Concrete Electrical Contractor Contractor Contractor Creates unique value
Slide 31: How We Deliver Unique Value to Each Stakeholder
How We Deliver Unique Value to Each Stakeholder General Contractors Specialty Contractors Owners Delivering projects on time Getting labor, equipment, and materials in Creating value across and on budget the right place at the right time a portfolio of investments Top 5 Pain Points Addressed by Proc
Slide 32: Global Value for Stakeholders
Global Value for Stakeholders Top Market Needs Project Management Document Management Correspondence Management Building Information Modeling (BIM) Quality & Safety Action Plans Project Financials Multi-Currency 32
Slide 33: Hard to Copy Differentiators
Hard to Copy Differentiators Built Natively, Collaboration Round-Tripping Financials Procore Pay End to End Network Data & Insights and ERP Extends Financial Construction Effects Connectors Network Effects Lifecycle 33
Slide 34: Deep Dive #2: Platform & Product - Procore Pay
— INVESTOR DAY 2023 Deep Dive #2: Platform & Product Procore Pay Geoff Lewis Vice President, Product Management
Slide 35: The Current State of Construction Payments
The Current State of Construction Payments The initial focus of Procore Pay will be the GC→SC relationship. Note: All characters, companies, and project data are fictional for storytelling purposes. 35
Slide 36: The Current State of Construction Payments
The Current State of Construction Payments GC’s Pay Application Expectations SC’s Pay Application When SCs submit pay applications, they are attempting to meet the GC’s expectations with limited visibility into what documentation the GC already has and what the GC needs. 36
Slide 37: The Current State of Construction Payments
The Current State of Construction Payments Managing dozens of incoming pay apps across dozens of projects is extremely painful for GCs. 37
Slide 38: The Construction Payment Process is Unique
The Construction Payment Process is Unique Generic invoicing and payments solutions do not solve for the construction use case. 15+ processes must be supported before processing payments truly matters. 38
Slide 39: Procore Pay Builds on Everything That Procore Already Does
Procore Pay Builds on Everything That Procore Already Does for Our Customers Send Approve Owner invoice owner payment Turn bid Open Compile Receive General Award to sub- billing Approve owner owner Send Contractor project invoice payment contract period invoice payment Submit Specialty Submit Begin
Slide 40: Procore Pay completely reimagines this process
Procore Pay completely reimagines this process and eliminates the pain. Note: All characters, companies, and project data are fictional for storytelling purposes. 40
Slide 41: Launched September 2023
Launched September 2023 Available to select US-based General Contractors who currently use Invoice Management 41
Slide 42: Pay Opportunity Considerations
Pay Opportunity Considerations Illustrative General Contractor Annual Construction Volume on PCOR $100M ‒ GC’s Margin (~5%) $5M GC enables ‒ GC’s Costs (~5%) $5M Pay on all projects ‒ GC’s Self-Perform Work (~5%) $5M GC enables Eligible Payment Volume on PCOR $85M Pay on more projects Payment May in
Slide 43: Will Offer Multiple Pricing Models
Will Offer Multiple Pricing Models GC Chooses Standard Pricing Model Shared Cost Model ● Enterprise GCs ● Midmarket & SMB GCs Likely ● Typically comfortable with this pricing model due ● Typically underserved by existing solutions Interest From to existing options in the market ● GC pays typical ann
Slide 44: Procore Pay Represents an Attractive Opportunity
Procore Pay Represents an Attractive Opportunity “The subs are loving Procore Pay]. They are Provides Cross-Sell Opportunities already working inside of it Opportunity to cross-sell Pay to existing customers and and they're having no drive further adoption of other Financials products issues because
Slide 45: Deep Dive #3: Fintech Update
— INVESTOR DAY 2023 Deep Dive #3: Fintech Update Paul Lyandres President of Fintech Risk Advisors Capital
Slide 46: Risk Advisors: Insurance
Risk Advisors Insurance Procore Is Serving As… Broker Underwriting Agent (for select policies) Problem Statement: + Sell policies from third-party + Partner with carriers (who assume carriers claims risk) to evaluate policies + Earn brokerage commission + Provide additional industry Insurance proces
Slide 47: Early Progress & Learnings
Early Progress & Learnings “I am a construction attorney and have been following the growth of Procore’s brokerage and risk management initiatives 30+ 26-40% over the past year. I believe that there is often a major Carrier relationships Lower incident rate1 for Procore customers compared to constru
Slide 48: Continuing to Prove Out Our Thesis
Continuing to Prove Out Our Thesis Insurance Is a Relationship-Based Business Our Focus Going Forward: 50% 1 Educating the industry on what a modern broker can truly do for their business of customers surveyed are interested in purchasing construction insurance Conveying the value of our proprietary
Slide 49: Working Capital
Capital Working Capital We Have Been Experimenting With… And Are Actively Evaluating… Materials Financing Early Pay/Factoring + ~$50M lifetime originations + Up to ~90 days on average1 for SCs to get Problem Statement: + Purchase materials from suppliers and sell to SCs on deferred payment terms + p
Slide 50: Deep Dive #4: Financial Philosophy
— INVESTOR DAY 2023 Deep Dive #4: Financial Philosophy Howard Fu CFO & Treasurer
Slide 51: My CFO Priorities
My CFO Priorities Capital Operational Growth & Allocation Excellence Monetization 51
Slide 52: Financial History & Context
Financial History & Context 2019 Strong Growth Year 2020 COVID 2021 Recovery 2022 Strong Growth Year 2023 Tougher Focus on driving topline growth Impact on growth Growth reaccelerates Pent-up demand post-COVID Demand Environment Scaling back on spend “Ramp up” of investments Add’l “ramp up” of inves
Slide 53: Financial Framework
Financial Framework How we intend to manage our financials in stronger vs. weaker economic conditions. Framework relevant over next few years. Further macro deterioration Economic tailwinds Potential Drivers Tighter financing environment Digitization catalysts Revenue Growth % YoY Low 20’s High 20’s
Slide 54: CFO Priorities → FCF Per Share Growth
CFO Priorities → FCF Per Share Growth ● Ensure resources are allocated to the highest-ROI opportunities ● Strategically sequence the timing of investments and associated returns to foster sustainable growth Capital Allocation ● Thoughtfully balance cash vs. equity when evaluating both organic and in
Slide 55: Break
Break 55
Slide 56: Executive Q&A
. > . a r/~ ae * >. . AY aS | Executive Q&A
Slide 57: Thank You
Thank You PROCORE
Slide 58: Appendix
— INVESTOR DAY 2023 Appendix PROCORE
Slide 59: References and Definitions
References and Definitions CUSTOMERS We define the number of customers at the end of a particular period as the number of entities that have entered into one or more subscriptions with us that have recurring charges for which the term has not ended, or that which we are negotiating a subscription re
Slide 60: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation (dollars in thousands) FY19 FY20 FY21 FY22 Q1'23 Q2'23 Revenue $ 289,194 $ 400,291 $ 514,821 $ 720,203 $ 213,526 $ 228,536 Reconciliation of gross profit and gross margin to non-GAAP gross profit and non-GAAP gross margin: GAAP gross profit $ 236,028 $ 328,628 $ 416,5
Slide 61: GAAP to Non-GAAP Reconciliation (Cont.)
GAAP to Non-GAAP Reconciliation (Cont.) (dollars in thousands) FY19 FY20 FY21 FY22 Q1'23 Q2'23 GAAP research and development $ 87,022 $ 124,661 $ 237,290 $ 270,982 $ 80,036 $ 73,216 Stock-based compensation expense (6,584) (12,930) (85,040) (63,262) (19,781) (16,270) Amortization of acquired technol
Slide 62: Free Cash Flow Bridge
Free Cash Flow Bridge (dollars in thousands) FY19 FY20 FY21 FY22 Q1'23 Q2'23 Revenue $ 289,194 $ 400,291 $ 514,821 $ 720,203 $ 213,526 $ 228,536 Computation of free cash flow and free cash flow margin: Net cash (used in) provided by operating activities $ (7,004) $ 21,853 $ 36,730 $ 12,608 $ 29,275
Slide 63: PROGCORE
PROGCORE