Company Name / Ticker
Procore Technologies, Inc. $PCOR
What it does
Rapidly improving metrics
Revenue Growth in Millions
- 2018 186
- 2019 289
- 2020 328
- 2021 381
- 2022 719
Last nine quarters of revenue in Millions:
92, 113, 122, 132, 146, 159, 172, 186, 202
NRR 2021: 109%
NRR 2022: 116%
Moat
- First-mover / Top Dog
- Has rolled out modules covering more aspects of the Construction process vs. its competitors (Details below). Linear integration of additional modules provides non-linear benefits to Customers
Sales Pitch
- Extreme benefits resulting from simplification and acceleration of notoriously complicated workflows
- !!! 48% !!! MORE BUSINESS PER EMPLOYEE running PCOR
- Super-fast ROI
- Construction Focused, “Mobile First”
- Unique pricing model facilitates organizational (…AND cross-functional) use of the platform and thus STRONGLY facilitates project success
EXAMPLE PAIN POINT: Change Orders
- Change Orders are needed every time any aspect of a finalized Construction design needs to be added-to, modified or discarded
- Change Orders cause long/tedious laundry-list of tasks to get approval from numerous parties
- Implementation requires lots of handoffs and dependencies amongst affected parties
- Currently, the Change Order process moves at the speed of PHYSICAL PAPER for many Construction companies.
- Change Orders can cause HUGE delays due to the brittle nature of scheduling in the Construction industry
- The Procore platform dramatically reduces the time it takes to implement Change Orders, which has huge positive impacts on Scheduling and time-to-completion
Plan for Durable Growth
- HUGE greenfield opportunity driven by current market fragmentation and extremely low levels of process digitization in the Construction industry
- (In-progress): Land bigger customers
- (In-progress): add offerings for Specialty Contractors and for Owners, who often end up serving as General Contractors
- Expansion of sales to existing Customers via adoption of additional Modules
- Near-term initiative: Materials Financing (…comparable to financing offered by $SQ to their Small-Business customers). They believe their products provide them with information that enables them to offer low-risk loans based on “hard assets” materials needed for particular Construction projects. The hope is that this initiative creates a flywheel effect by bringing thankful/loyal Customers onto their platform
- International expansion
- Planned Construction Insurance module
Competitors
- (Literally): Paper-and-pen-based processes
- $ADSK though they don’t have the scope of interoperable modules that $PCOR does
My Take
- $PCOR has a breadth of already-integrated products that is approaching the breadth of scope of all business processes in the entire Construction industry.
- Similar to $GTLB, their only real competition is one-off standalone solutions ineffectively MacGyver-d together by already-overloaded Construction Company employees.
To grasp the importance of the above, it’s necessary to list out their modules:
- Project Management
- Project Financials
- Quality
- Safety
- Invoice Management
- (Planned launch this-year): “Procore Pay”, a payment module compatible with its Invoice Management module
- Building Information Management (…whatever that is?)
- Analytics
- Workforce Planning
- Estimating
- Bid Management
- Lien Rights Management (facilitates faster payments TO Construction companies, and faster paymets FROM Construction companies to their suppliers)
…by making it faster/easier to deal with Compliance issues
Their pricing model is also critical to their success
- It’s important to understand that because there are no named user associated with the license, the Company running a project using Procore products and grant access to ANYONE, including third parties that have not purchased any Procore licensing.
- This creates a flywheel: sub-Contractors etc. are introduced to Procore products by virtue of joining a Construction project that is utilizing Procore software, and end up purchasing Procore for their own needs.
- More importantly, the licensing model means nobody has to wait for a critical mass of adoption before the software is useful: it’s useful IMMEDIATELY to anyone who has licensed it and has a Construction project to get done.
Risks
They are integrating a lot of new functionality all at once:
- Integration of recently-purchased Company Levelset
- Launch of Procore Payments
- Newly-launched Materials Financing capability
Also: they have elevated Sales/Marketing expenses driven by the difficulty of identifying and getting the attention of decision makers in a fractured industry. IMO because they are able to overcome this dynamic, it is actually a part of their Moat. However there’s no denying the expense.
Regarding macro
$PCOR continues to expand at market-beating rates despite the supposed cyclical nature of Construction spending. IMO this is because 1) Procore has great products that have a quick ROI and if anything are MORE important in a down-market and 2) Although particular Construction sectors are cyclical, “Construction” considered as a whole is perhaps not as wildly cyclical as the popular narrative asserts.
Leadership
I need to look more into Leadership.
According to his linkedin page, Craig “Tooey” Courtemanche has a long history in Construction, Real Estate and Software. He was inspired to start Procore by difficulties he faced when building his own home.
He owns 5.3% of $PCOR
Conclusion
WHO KNOWS how far ahead of their competition will be once macro-conditions improve.
I’m in for a starter position and look hope for some more thoughts from y’all 