Revenues in 2017-2019
Invest in Procore
Procore is a leading provider of cloud-based construction management software. It is helping transform one of the oldest, largest, and least digitized industries in the world. The platform is modernizing and digitizing construction management by enabling real-time access to critical project information, simplifying complex workflows, and facilitating seamless communication among key stakeholders.
Adoption of Procore platform helps customers increase productivity and efficiency, reduce rework and costly delays, improve safety and compliance, and enhance financial transparency and accountability. The company was founded in 2002 in California. It has more than 8500 customers running projects in 125+ countries.
Construction is critical to the global economy but is in need of digitization. The construction industry represented approximately 13% of global gross domestic product, or GDP, and employed 7% of the global workforce in 2017.
Given growing pressures on the industry, key stakeholders face an increasing imperative to adopt modern technology or jeopardize future business success. In fact, 80% of contractors surveyed in a USG Corporation and U.S. Chamber of Commerce survey believe that they will use some newer technology by 2022.
Procore business may be significantly impacted by changes in the economy and related reductions in spend across the construction industry.
Procore operates in a competitive market and may not continue to compete effectively. It faces significant competition from Autodesk (ADSK) and Oracle (ORCL).
Procore has a history of losses and may not be able to achieve or sustain profitability in the future.
Procore generates substantially all of revenue from subscriptions to access its products. The company sells products on a subscription basis for a fixed fee with pricing generally based on the number and mix of products a customer subscribes to and the fixed aggregate dollar volume of construction work contracted to run on platform annually.
Procore generated revenue of $112.3 million in 2017, $186.4 million in 2018, and $289.2 million in 2019, representing year-over-year growth of 66% in 2018 and 55% in 2019. Procore has raised a total of $648.9M in funding over 13 rounds. Their latest funding was raised on May 1, 2020 at $5B valuation. In the beginning of July Procore shares are trading at $51.8 on the secondary market, which implies ~$6.8B valuation.
Similar public companies by business model and product functionality are Veeva (VEEV) and Okta (OKTA). The average P/S ratio is 30x. Given Procore current growth rate and revenue number, the equity value of Procore in the public market would be $10B. We expect that Procore equity value on the public market will be $15B by the next year. The expected return on investment is 120%.
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- Time uncertainty. There is no information regarding next financing round or exit strategy timeframe (IPO or M&A).
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