Procore Technologies has filed for a public offering of its stock.
Procore Technologies ( PCOR ) announced its IPO back on February 28 and like many other companies preparing to go public, postponed the moment of going public. But in the last couple of weeks, investment activity has started to recover. Procore Technologies’ last valuation was $4.7 billion in September 2019.
Craig Courtemanche founded Procore Technologies in 2002. The California-based company provides construction management software. It provides access to project information, simplifies workflows, and enables collaboration among project participants.
Construction is one of the oldest and least digitized industries. Procore is leading the industry into the future with cloud technology.
The company’s mission is to “connect everyone in construction on a global platform. In 2017, the construction industry represented 13% of global GDP and occupied 7% of the global workforce. Analysts estimate it could be $14 trillion by 2025.
Procore offers four product categories, allowing customers to manage each stage of a project.
- Before construction
- Project Management
- Resource Management
- Financial Management
Market and competition
According to a 2019 study by Technavio, the target market for construction project management software products is expected to grow by $725 million from 2020 to 2024.
A study commissioned by the company and conducted by Frost & Sullivan found that the target market for existing Procore products is $9.4 billion. Consulting firm Deloitte estimates the share of spending on IT products and services in total construction spending worldwide at 1.5%, which quantifies to about $15 billion.
The key factors for this expected growth will be the continuing trend of urbanization in large countries around the world, as well as the continuing need to improve existing infrastructure and create new infrastructure.
The company’s main competitors include:
- Oracle (ORCL)
- Autodesk (ADSK)
- Trimble (TRMB)
- Jonas Software
Procore management says the combination of its software tools and its growing application marketplace has the potential to provide customers with a better value proposition.
Comments from our company
Procore hopes to secure finances in the public capital market to continue expansion in the resilient construction industry.
The company’s financial figures show rapid growth in revenue and gross profit.
Marketing and sales expenses, remain relatively stable; the net retention rate is above 100%, which is a good sign.
In addition, Procore incurs large and increasing operating and net costs, while the cash flow involved in the core business remains negative.
The market opportunity for a company that provides database management services to companies in the construction industry is still impressive, although the industry is notoriously resistant to change. This means that sales and marketing activities will be costly for Procore.
Overall, the company looks good as an IPO candidate, although some of its metrics need improvement.
The main underwriters of the IPO are: Goldman Sachs, J.P. Morgan, Barclays, Jefferies, Canaccord Genuity, KeyBanc Capital Markets, Oppenheimer & Co., Piper Sandler, Stifel и William Blair.