pcor-20240331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________________________________________________

FORM 10-Q

_________________________________________________________________

(Mark One)


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to _______

Commission File Number: 001-40396

_________________________________________________________________

Procore Technologies, Inc.

(Exact Name of Registrant as Specified in its Charter)

_________________________________________________________________


Delaware			73-1636261
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
6309 Carpinteria Avenue Carpinteria, CA			93013
(Address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code: (866) 477-6267

_________________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading
Symbol(s)

Name of each exchange on which registered

Common stock, $0.0001 par value

PCOR

The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	x	Accelerated filer	o

Non-accelerated filer	o	Smaller reporting company	o

Emerging growth company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of April 25, 2024, the registrant had 146,324,616 shares of common stock, $0.0001 par value per share, outstanding.

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		Page
PART I.	FINANCIAL INFORMATION	3
Item 1.	Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations and Comprehensive Loss	4
	Condensed Consolidated Statements of Stockholders’ Equity	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35
Item 4.	Controls and Procedures	36
PART II.	OTHER INFORMATION	37
Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 5.	Other Information	38
Item 6.	Exhibits	39
Signatures		41

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical fact contained in this Quarterly Report on Form 10-Q are forward-looking statements regarding our future operating results and financial position, our business strategy and plans, market growth and trends, and our objectives for future operations. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would,” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans, or intentions. These forward-looking statements include, but are not limited to, statements concerning the following:

•our expectations regarding our financial performance, including revenues, expenses, and margins, and our ability to achieve or maintain future profitability;

•our ability to effectively manage our growth;

•anticipated performance, trends, growth rates, and challenges in our business and in the markets in which we operate or anticipate entering into;

•economic and industry trends, in particular the rate of adoption of construction management software and digitization of the construction industry, inflation, and challenging macroeconomic and geopolitical conditions;

•our ability to attract new customers and retain and increase sales to existing customers;

•our ability to expand internationally;

•the effects of increased competition in our markets and our ability to compete effectively;

•our ability to develop new products, services, and features, and whether our customers and prospective customers will adopt these new products, services, and features;

•our ability to maintain, protect, and enhance our brand;

•the sufficiency of our cash to meet our cash needs for at least the next 12 months;

•future acquisitions, joint-ventures, or investments, including our strategic investments and investments in marketable securities;

•our ability to comply or remain in compliance with laws and regulations that currently apply or become applicable to our business in the United States (“U.S.”) and internationally;

•our reliance on key personnel and our ability to attract, maintain, and retain management and skilled personnel;

•the future trading price of our common stock; and

•our ability to identify, assess, and manage cybersecurity threats and risks.

You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, and operating results. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors described in Part I, Item 1A, “Risk Factors” and elsewhere in our Annual Report on Form 10-K dated February 26, 2024 (our “2023 Form 10-K”), and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. The results, events, and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.

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In addition, statements that “we believe,” and similar statements, reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Quarterly Report on Form 10-Q. While we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.

The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments.

Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to the “Company,” “Procore,” “we,” “us,” and “our” refer to Procore Technologies, Inc. and its consolidated subsidiaries.

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Part I – FINANCIAL INFORMATION

Item 1. Financial Statements

Procore Technologies, Inc.

Condensed Consolidated Balance Sheets (unaudited)


(in thousands, except number of shares and par value)	March 31, 2024		December 31, 2023
Assets
Current assets
Cash and cash equivalents	$	427,656	$	357,790
Marketable securities (amortized cost of $317,175 and $320,166 at March 31, 2024 and December 31, 2023, respectively)	316,963		320,161
Accounts receivable, net of allowance for credit losses of $3,279 and $4,791 at March 31, 2024 and December 31, 2023, respectively	138,996		206,644
Contract cost asset, current	29,618		28,718
Prepaid expenses and other current assets	41,707		42,421
Total current assets	954,940		955,734
Capitalized software development costs, net	88,409		83,045
Property and equipment, net	35,417		36,258
Right of use assets - finance leases	33,712		34,375
Right of use assets - operating leases	36,727		44,141
Contract cost asset, non-current	43,757		44,564
Intangible assets, net	127,747		137,546
Goodwill	539,131		539,354
Other assets	18,870		18,551
Total assets	$	1,878,710	$	1,893,568
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	16,446	$	13,177
Accrued expenses	67,008		100,075
Deferred revenue, current	487,944		501,903
Other current liabilities	23,585		27,275
Total current liabilities	594,983		642,430
Deferred revenue, non-current	7,403		7,692
Finance lease liabilities, non-current	43,076		43,581
Operating lease liabilities, non-current	33,691		37,923
Other liabilities, non-current	5,876		6,332
Total liabilities	685,029		737,958
Contingencies (Note 8)
Stockholders’ equity
Preferred stock, $0.0001 par value, 100,000,000 shares authorized at March 31, 2024 and December 31, 2023; 0 shares issued and outstanding at March 31, 2024 and December 31, 2023.	—		—
Common stock, $0.0001 par value, 1,000,000,000 shares authorized at March 31, 2024 and December 31, 2023; 146,271,803 and 144,806,464 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively.	15		15
Additional paid-in capital	2,345,537		2,295,807
Accumulated other comprehensive loss	(2,068)		(1,375)
Accumulated deficit	(1,149,803)		(1,138,837)
Total stockholders’ equity	1,193,681		1,155,610
Total liabilities and stockholders’ equity	$	1,878,710	$	1,893,568

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Procore Technologies, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited)


	Three Months Ended March 31,
(in thousands, except share and per share amounts)	2024		2023
Revenue	$	269,428	$	213,526
Cost of revenue	45,723		40,202
Gross profit	223,705		173,324
Operating expenses
Sales and marketing	120,994		117,363
Research and development	70,599		80,036
General and administrative	51,018		45,188
Total operating expenses	242,611		242,587
Loss from operations	(18,906)		(69,263)
Interest income	5,938		4,948
Interest expense	(479)		(496)
Accretion income, net	3,088		1,632
Other expense, net	(344)		(210)
Loss before provision for income taxes	(10,703)		(63,389)
Provision for income taxes	263		58
Net loss	$	(10,966)	$	(63,447)
Net loss per share attributable to common stockholders, basic and diluted	$	(0.08)	$	(0.45)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted	145,476,006		139,646,465
Other comprehensive (loss) income
Foreign currency translation adjustment, net of tax	$	(486)	$	(16)
Unrealized (loss) income on available-for-sale debt and marketable securities, net of tax	(207)		324
Total other comprehensive (loss) income	(693)		308
Comprehensive loss	$	(11,659)	$	(63,139)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Procore Technologies, Inc.

Condensed Consolidated Statements of Stockholders’ Equity (unaudited)


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders’ Equity
(in thousands, except share amounts)	Shares	Amount
Balance as of December 31, 2022	139,159,534	$	14	$	2,068,225	$	(2,316)	$	(949,143)	$	1,116,780
Exercise of stock options	272,032	—		3,651		—		—		3,651
Stock-based compensation	—	—		47,060		—		—		47,060
Issuance of common stock upon settlement of restricted stock units	940,122	—		—		—		—		—
Other comprehensive income	—	—		—		308		—		308
Net loss	—	—		—		—		(63,447)		(63,447)
Balance as of March 31, 2023	140,371,688	$	14	$	2,118,936	$	(2,008)	$	(1,012,590)	$	1,104,352


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders’ Equity
(in thousands, except share amounts)	Shares	Amount
Balance as of December 31, 2023	144,806,464	$	15	$	2,295,807	$	(1,375)	$	(1,138,837)	$	1,155,610
Exercise of stock options	471,310	—		7,140		—		—		7,140
Stock-based compensation	—	—		42,590		—		—		42,590
Issuance of common stock upon settlement of restricted stock units	994,029	—		—		—		—		—
Other comprehensive loss	—	—		—		(693)		—		(693)
Net loss	—	—		—		—		(10,966)		(10,966)
Balance as of March 31, 2024	146,271,803	$	15	$	2,345,537	$	(2,068)	$	(1,149,803)	$	1,193,681

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Procore Technologies, Inc.

Condensed Consolidated Statements of Cash Flows (unaudited)


	Three Months Ended March 31,
(in thousands)	2024		2023
Operating activities
Net loss	$	(10,966)	$	(63,447)
Adjustments to reconcile net loss to net cash provided by operating activities
Stock-based compensation	40,132		44,938
Depreciation and amortization	20,051		16,874
Accretion of discounts on marketable debt securities, net	(3,088)		(1,632)
Abandonment of long-lived assets	268		441
Noncash operating lease expense	2,734		2,628
Unrealized foreign currency loss, net	1,079		408
Deferred income taxes	1		2
Provision for credit losses	189		1,726
Increase in fair value of strategic investments	(759)		(36)
Changes in operating assets and liabilities, net of effect of asset acquisition
Accounts receivable	68,013		42,948
Deferred contract cost assets	(427)		(460)
Prepaid expenses and other assets	(684)		4,549
Accounts payable	3,155		4,648
Accrued expenses and other liabilities	(34,154)		(28,181)
Deferred revenue	(14,108)		6,489
Operating lease liabilities	(2,291)		(2,620)
Net cash provided by operating activities	69,145		29,275
Investing activities
Purchases of property and equipment	(2,089)		(2,173)
Capitalized software development costs	(9,514)		(7,951)
Purchases of strategic investments	(210)		(149)
Purchases of marketable securities	(101,434)		(89,996)
Maturities of marketable securities	107,301		103,909
Originations of materials financing	—		(9,077)
Customer repayments of materials financing	1,281		5,358
Asset acquisition, net of cash acquired	(5)		—
Net cash used in investing activities	(4,670)		(79)
Financing activities
Proceeds from stock option exercises	7,125		3,722
Principal payments under finance lease agreements, net of proceeds from lease incentives	(449)		(410)
Net cash provided by financing activities	6,676		3,312
Net increase in cash, cash equivalents, and restricted cash	71,151		32,508
Effect of exchange rate changes on cash	(1,285)		(256)
Cash, cash equivalents, and restricted cash, beginning of period	357,790		299,816
Cash, cash equivalents, and restricted cash, end of period	$	427,656	$	332,068

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Procore Technologies, Inc.

Condensed Consolidated Statements of Cash Flows (unaudited)


	Three Months Ended March 31,
(in thousands)	2024		2023
Reconciliation of cash, cash equivalents, and restricted cash to the condensed consolidated balance sheets
Cash and cash equivalents at end of period	$	427,656	$	328,964
Restricted cash, non-current at end of period included in other assets	—		3,104
Total cash, cash equivalents, and restricted cash at end of period shown in the condensed consolidated statements of cash flows	$	427,656	$	332,068
Supplemental disclosure of cash flow information
Cash paid for income taxes, net of refunds received	171		79
Stock-based compensation capitalized for cloud-computing arrangement costs	32		69
Cash received for lease incentives	197		239
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from finance leases	477		496
Operating cash flows from operating leases	2,879		3,119
Financing cash flows from finance leases	532		496
Noncash investing and financing activities:
Purchases of property and equipment included in accounts payable and accrued expenses at period end	1,101		1,306
Capitalized software development costs included in accounts payable and accrued expenses at period end	1,977		2,088
Stock-based compensation capitalized for software development	2,426		2,053
Deferred asset acquisition payment included in other non-current liabilities at period end	1,400		—
Right of use assets obtained or modified in exchange for operating lease liabilities	(4,508)		2,615

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Procore Technologies, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

1.ORGANIZATION AND DESCRIPTION OF BUSINESS

Description of business

Procore Technologies, Inc. (together with its subsidiaries, “Procore” or the “Company”) provides a cloud-based construction management platform and related products and services that allow the construction industry’s key stakeholders, such as owners, general contractors, specialty contractors, architects, and engineers, to collaborate on construction projects.

The Company was incorporated in California in 2002 and re-incorporated in Delaware in 2014. The Company is headquartered in Carpinteria, California, and has operations globally.

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The accompanying condensed consolidated financial statements include the interim financial statements of Procore. The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and are unaudited. Certain information and disclosures normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. Accordingly, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes for the year ended December 31, 2023. The condensed consolidated balance sheet information as of December 31, 2023 has been derived from the Company’s audited consolidated financial statements. The condensed consolidated financial statements have been prepared on a basis consistent with that used to prepare the audited annual consolidated financial statements and include, in the opinion of management, all adjustments, consisting of normal recurring items, necessary for the fair statement of the condensed consolidated financial statements. All intercompany balances and transactions have been eliminated in consolidation.

Use of estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Management periodically evaluates its estimates and assumptions for continued reasonableness, primarily with respect to revenue recognition, the period of benefit of contract cost assets, the fair value of assets acquired and liabilities assumed in a business combination or asset acquisition, stock-based compensation expense, the recoverability of goodwill and long-lived assets, useful lives of long-lived assets, capitalization of software development costs, income taxes, including related reserves and allowances, provision for credit losses, incremental borrowing rates and estimation of lease terms applied in lease accounting, and self-insurance reserve estimates. Appropriate adjustments, if any, to the estimates used are made prospectively based upon such periodic evaluation. Management bases its estimates on historical experience and on various other assumptions that management believes to be reasonable. Actual results could differ from the Company’s estimates.

Segments

The Company operates as a single operating segment. Operating segments are defined as components of an enterprise for which separate financial information is evaluated regularly by the chief operating decision maker (“CODM”), in deciding how to allocate resources and assess performance. The Company’s CODM is its Chief Executive Officer (“CEO”). In recent years, the Company has completed a number of acquisitions which have allowed it to expand its platform capabilities and related product and service offerings.

While the Company provides different product and service offerings, including as a result of its acquisitions, its business operates as one operating segment because its CODM evaluates the Company’s financial information for purposes of assessing financial performance and allocating resources on a consolidated basis.

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Procore Technologies, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

Marketable securities

Investments with stated maturities of greater than three months are classified as marketable securities, which consist of United States (“U.S.”) treasury securities, commercial paper, corporate notes and obligations, and time deposits. All marketable securities held as of March 31, 2024 and December 31, 2023 are classified as short-term available-for-sale debt securities, which are recorded at fair value. The Company’s marketable securities are classified as either short-term or long-term in the accompanying condensed consolidated balance sheets based on the security’s contractual maturity at balance sheet date. The Company re-evaluates such classification at each balance sheet date.

The Company periodically assesses its portfolio of marketable securities for impairment. The Company evaluates each investment in an unrealized loss position to determine if any portion of the unrealized loss is related to credit losses. In determining whether a credit loss may exist, the Company considers the extent of the unrealized loss position, any adverse conditions specifically related to the security or the issuer’s operating environment, the pay structure of the security, the issuer’s payment history, and any changes in the issuer’s credit rating. Unrealized losses on marketable securities due to expected credit losses are recognized in other (expense) income, net in the accompanying condensed consolidated statements of operations and comprehensive loss, and any excess unrealized gains and losses, net of tax, that are not due to expected credit losses are included in accumulated other comprehensive loss, a component of stockholders’ equity. During the three months ended March 31, 2024 and 2023, there were no credit losses recorded on marketable securities. Interest recorded on marketable securities is recorded in interest income, with accretion of discounts, net of amortization of premiums, recorded in accretion income, net, on the accompanying condensed consolidated statements of operations and comprehensive loss.

Materials financing revenues and receivables

In connection with its acquisition of Express Lien, Inc. (d/b/a Levelset) (“Levelset”), in November 2021, the Company assumed a materials financing program to help facilitate the purchase of construction materials from fulfillment partners (the Company’s suppliers) on behalf of its customers, allowing such customers to finance their materials purchases from the Company on deferred payment terms. Prior to the Company ceasing originations under its materials financing program in October 2023, the fulfillment partner was primarily responsible for fulfilling the materials purchases and the Company did not have control over such materials. The Company earned revenues from origination fees and finance charges on the amounts it financed for customers on deferred payment terms, which were typically 120 days. Such fees earned were computed and recognized based on the effective interest method and are presented net of any related reserves and amortization of deferred origination costs. During the three months ended March 31, 2024 and 2023, the Company incurred credit losses of $0.6 million and $2.1 million, respectively, related to its materials financing program, which are recorded in general and administrative expenses in the accompanying condensed consolidated statements of operations and comprehensive loss.

Gross receivables outstanding from customers under the materials financing program were $5.7 million and the related allowance for expected credit losses for materials financing receivables was $3.8 million as of December 31, 2023. As of March 31, 2024, the entire gross materials financing receivables of $3.5 million were fully reserved. Materials financing receivables, net of allowances, are recorded within prepaid expenses and other current assets on the accompanying condensed consolidated balance sheets.

Self-insurance reserves

In January 2022, the Company elected to partially self-fund its health insurance plan. To reduce its risk related to high-dollar claims, the Company maintains individual stop-loss insurance. The Company estimates its exposure for claims incurred at the end of each reporting period, including claims not yet reported, with the assistance of an independent third-party actuary. As of March 31, 2024 and December 31, 2023, the Company’s self-insurance accrual was $3.1 million and $3.3 million, respectively, included within other current liabilities on the accompanying condensed consolidated balance sheets.

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Procore Technologies, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

Strategic investments

Investments in equity securities

The Company holds investments in equity securities of certain privately held companies, which do not have readily determinable fair values. The Company does not have a controlling interest or significant influence in these companies. The Company has elected to measure the non-marketable equity securities at cost, with remeasurements to fair value only upon the occurrence of observable price changes in orderly transactions for the identical or similar securities of the same issuer, or in the event of any impairment. This election is reassessed each reporting period to determine whether a non-marketable equity security has a readily determinable fair value, in which case the security would no longer be eligible for this election. All gains and losses on such equity securities, realized and unrealized, are recorded in other expense, net on the accompanying condensed consolidated statements of operations and comprehensive loss. The Company evaluates its non-marketable equity securities for impairment at each reporting period based on a qualitative assessment that considers various potential impairment indicators. If an impairment exists, a loss is recognized in the accompanying condensed consolidated statements of operations and comprehensive loss for the amount by which the carrying value exceeds the fair value of the investment.

Investments in limited partnership funds

The Company also holds investments in certain limited partnership funds. The Company does not hold a controlling interest or significant influence in these limited partnerships. The fair value of such investments is valued using the Net Asset Value (“NAV”) provided by the fund administrator as a practical expedient.

Available-for-sale debt securities

The Company also holds certain investments in debt securities of privately held companies, which are classified as available-for-sale debt securities. Such available-for-sale debt securities are recorded at fair value with changes in fair value recorded in other comprehensive income or loss. The Company periodically reviews its available-for-sale debt securities to determine if there has been an other-than-temporary decline in fair value. If the impairment is deemed other-than-temporary, the portion of the impairment related to credit losses is recognized in other (expense) income, net in the accompanying condensed consolidated statements of operations and comprehensive loss, and the portion related to non-credit related losses is recognized as a component of comprehensive loss.

Fair value measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Fair value measurements are based on a fair value hierarchy using three levels of inputs, of which the first two are considered observable and the last is considered unobservable, as follows:

Level 1 Quoted prices in active markets for identical assets or liabilities.

Level 2 Quoted prices for identical or similar assets and liabilities in markets that are not active or observable inputs other than quoted prices in active markets for identical or similar assets or liabilities.

Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

As of March 31, 2024 and December 31, 2023, the carrying value of the Company’s financial instruments included in current assets and current liabilities (including accounts receivable, accounts payable, and accrued expenses) approximate fair value due to the short-term nature of such items. The Company measures its cash held in money market funds, marketable securities, and investments in available-for-sale debt securities at fair value each reporting period. The estimation of fair value for available-for-sale debt securities in private companies requires the use of significant unobservable inputs, and as a result, the Company classifies these assets as Level 3 within the fair value hierarchy.

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Procore Technologies, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

The Company’s investments in equity securities of privately held companies are recorded at fair value on a non-recurring basis. For investments without a readily determinable fair value, the Company looks to observable transactions, such as the issuance of new equity by an investee, as indicators of investee enterprise value and uses them to estimate the fair value of the investments. The Company’s investments in limited partnerships are valued using NAV as a practical expedient and therefore excluded from the fair value hierarchy.

Restricted cash

As of March 31, 2023, the Company held $3.1 million of restricted cash to secure corporate credit cards. During 2023, the $3.1 million of restricted cash was released from restriction. The Company held no restricted cash as of March 31, 2024 or December 31, 2023.

Deferred revenue

Contract liabilities consist of revenue that is deferred when the Company has the contractual right to invoice in advance of transferring services to its customers. The Company recognized revenue of $220.6 million and $171.5 million during the three months ended March 31, 2024 and 2023, respectively, that was included in deferred revenue balances at the beginning of the respective periods.

Remaining performance obligations

The transaction price allocated to remaining performance obligations (“RPO”) represents the contracted transaction price that has not yet been recognized as revenue, which includes deferred revenue and amounts under non-cancelable contracts that will be invoiced and recognized as revenue in future periods. The Company’s current RPO represents future revenue under existing contracts that is expected to be recognized as revenue in the next 12 months. As of March 31, 2024, the aggregate amount of the transaction price allocated to RPO was $1.0 billion, of which the Company expects to recognize $704.7 million, or 70%, as revenue in the next 12 months, and substantially all of the remaining $302.2 million between 12 and 36 months thereafter.

3.INVESTMENTS

Marketable securities

Marketable securities consisted of the following as of March 31, 2024 (in thousands):


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
U.S. treasury securities	$	149,992	$	7	$	(64)	$	149,935
Commercial paper	33,343		—		(37)		33,306
Corporate notes and obligations	133,840		9		(127)		133,722
Total marketable securities	$	317,175	$	16	$	(228)	$	316,963

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Procore Technologies, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

Marketable securities consisted of the following as of December 31, 2023 (in thousands):


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
U.S. treasury securities	$	128,479	$	124	$	(27)	$	128,576
Commercial paper	47,415		1		(35)		47,381
Corporate notes and obligations	139,747		61		(128)		139,680
Time deposits	4,525		—		(1)		4,524
Total marketable securities	$	320,166	$	186	$	(191)	$	320,161

All marketable securities held as of March 31, 2024 and December 31, 2023 had a contractual maturity of less than one year. During the three months ended March 31, 2024 and 2023, there were maturities of marketable securities of $107.3 million and $103.9 million, respectively. There were no sales, realized losses, or impairments of marketable securities during the three months ended March 31, 2024 or 2023.

Strategic investments

Strategic investment activity during the three months ended March 31, 2024 is summarized as follows (in thousands):


	Equity Securities		Limited Partnerships		Available-for- Sale Debt Securities		Total
Balance as of December 31, 2023	$	7,179	$	3,986	$	362	$	11,527
Interest accrued on available-for-sale debt securities	—		—		2		2
Purchases of strategic investments	—		210		—		210
Unrealized gain on strategic investments	671		88		—		759
Balance as of March 31, 2024	$	7,850	$	4,284	$	364	$	12,498

Strategic investment activity during the three months ended March 31, 2023 is summarized as follows (in thousands):


	Equity Securities		Limited Partnerships		Available-for- Sale Debt Securities		Total
Balance as of December 31, 2022	$	7,286	$	3,402	$	355	$	11,043
Interest accrued on available-for-sale debt securities	—		—		2		2
Purchases of strategic investments	—		149		—		149
Unrealized (loss) gain on strategic investments	(1)		37		—		36
Balance as of March 31, 2023	$	7,285	$	3,588	$	357	$	11,230

Strategic investments are recorded in other assets on the accompanying condensed consolidated balance sheets. As of March 31, 2024, in connection with the Company’s investments in limited partnerships, it has a contractual obligation to provide additional investment funding of up to $5.4 million at the option of the investees. No impairment losses were recorded in any period presented.

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Procore Technologies, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

4.FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial assets measured at fair value on a recurring basis within the fair value hierarchy are summarized as follows (in thousands):


	March 31, 2024
	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	390,889	$	—	$	—	$	390,889
Marketable securities:
U.S. treasury securities	149,935		—		—		149,935
Commercial paper	—		33,306		—		33,306
Corporate notes and obligations	—		133,722		—		133,722
Strategic investments:
Investments in available-for-sale debt securities	—		—		364		364
Total	$	540,824

SEC Form 10-Q filed by Procore Technologies Inc.