Procore Joins Revenue Unicorn Club

Congratulations to Procore Technologies as it crosses $1 Billion in annual revenue and joins the software Revenue Unicorns!

Let's see what we can learn from Procore's journey...

Revenue Growth

Procore maintained a median revenue growth of 30% or higher on the path to $1 Billion in annual revenue. Procore displayed strong growth in a difficult market environment as they scaled to $1 Billion in revenue during a period of macroeconomic headwinds.

Gross Margin

Procore’s gross margin profile exceeded the Revenue Unicorn median at each revenue range and maintained a gross margin of 80%+ at scale. Dynatrace and Zscaler displayed similar gross margin strength on their path to $1 Billion in annual revenue.

Sales & Marketing

Procore started the journey to $1 Billion in annual revenue with a higher investment in sales and marketing as compared to the median Revenue Unicorn. Procore then reduced sales and marketing spend as it grew before reaccelerating sales and marketing investment compared to the median Revenue Unicorn. HubSpot and Palo Alto Networks exhibited a similar sales and marketing trend on their journey to $1 Billion in annual revenue.

Research & Development

Procore invested heavily in research and development early in the company’s lifecycle and later exhibited leverage with its research and development spend. Both BILL and MongoDB exhibited a similar trend on the path to $1 Billion in annual revenue.

General & Administrative

Procore’s general and administrative expenses converged with, yet remained above, the median Revenue Unicorn as it approached $1 Billion in annual revenue.

Stock Based Compensation

Procore started the journey to $1 Billion in annual revenue with a lower SBC expense as a percentage of revenue compared to the Revenue Unicorn median. Procore accelerated SBC expense as a percentage of revenue throughout their journey to $1 Billion in annual revenue before converging below the median Revenue Unicorn. When viewing SBC expense as a percentage of enterprise value, Procore is at 2.0%, which is slightly higher than the Revenue Unicorn median of 1.7% in the $1 Billion+ revenue range.

Free Cash Flow

Procore started the journey to $1 Billion in annual revenue with a free cash flow margin below the Revenue Unicorn median and later exhibited leverage with its margin profile throughout its path to $1 Billion in annual revenue. Elastic and Okta delivered similar free cash flow margin durability at scale.

Time to Reach $1 Billion in Revenue

Procore reached $1 Billion in revenue after 21.25 years. This is longer than the median time of 13.25 years it took other Revenue Unicorns to reach the $1 Billion revenue mark. Squarespace took a similar amount of time to achieve the $1 Billion revenue threshold (20.00 years).

Other Revenue Unicorns founded around the same time as Procore (2002 founding) include Atlassian (2002) and Palantir (2003). These two companies took a median of 16.50 years to achieve $1 Billion in revenue (Atlassian at 16.00 years, and Palantir at 17.00 years).

The Journey to $1 Billion in Revenue

For those of you that love data as much as we do, below is the full data set used for this analysis. Again, congratulations to the Squarespace team! Stay tuned for the next Revenue Unicorn update.

Note: The complete list of Revenue Unicorns used in the comparison can be found in the presentation here.

About Procore

As per the company’s materials, Procore creates software for people who build the world. The company was founded in 2002 by Tooey Courtemanche . Procore is a leading global provider of cloud-based construction management software, and is helping transform one of the oldest, largest, and least digitized industries in the world. Procore focuses exclusively on connecting and empowering the construction industry’s key stakeholders, such as owners, general contractors, specialty contractors, architects, and engineers, to collaborate and access the company’s capabilities from any location on any internet-connected device. The Procore 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, all of which the company believe positions them to serve as the system of record for the construction industry.

The company reported $269 Million in first quarter revenue for the period ended March 31, 2024. Combined with results from the preceding quarters, this recent performance boosts Procore across the $1 Billion in annual revenue threshold as measured on a last twelve month basis to become the latest software Revenue Unicorn.

About the Revenue Unicorn Playbook

The Revenue Unicorn Playbook is an analytical guide that explores the growth of public software companies from $100 Million to $1 Billion in revenue. The goal of the Playbook is to offer founders and company leaders a framework to examine their growth and investments as they scale. You can find the original Revenue Unicorn article here and presentation here.

The information provided herein is the opinion of Friends & Family Capital and does not reflect the view of any other person or entity. It is for informational purposes and should not be construed as an investment recommendation. Data sources include CapIQ and Wall Street research. Copyright ? 2024, S&P Global Market Intelligence (and its affiliates, as applicable). Friends & Family Capital is an investment adviser registered with the U.S. Securities and Exchange Commission.