What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2024-02-26 compared with 2023-03-01 · 439 added, 431 removed, 792 unchanged (52% of the section changed)

4 unchanged sentences

Consolidated Balance Sheets

Consolidated Statements of Op er ations and Comprehensive Loss

Consolidated Statements of Operations and Comprehensive Loss

Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

26 unchanged sentences

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized

acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

4 unchanged sentences

Revenue Recognition

As described in Notes 2 and 18 to the consolidated financial statements, the Company’s consolidated revenue was $720.2 million for the year ended December 31, 2022.

As described in Note 2 to the consolidated financial statements, the Company’s consolidated revenue was $950.0 million for the year ended December 31, 2023.

The Company generates substantially all of its revenue from subscriptions for access to its software products and related support.

4 unchanged sentences

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls related to the revenue recognition process, including controls over the completeness, accuracy and occurrence of revenue recognized.

These procedures also included, among others, evaluating the completeness, accuracy and occurrence of revenue recognized on a test basis by (i) obtaining and inspecting, where applicable, contracts, customer invoices, and cash receipts from customers and (ii) testing the appropriateness of revenue recognized based on the terms of the related contract.

These procedures included testing the effectiveness of controls related to the revenue recognition process, including controls over the revenue recognized.

These procedures also included, among others (i) evaluating the revenue recognized on a test basis by (a) obtaining and inspecting source documents, such as contracts and cash receipts from customers and (b) recalculating revenue recognized based on the terms of the related contract, and (ii) evaluating occurrence and accuracy of revenue on a test basis, by examining valid contracts and other supporting documents, as applicable.

/s/ PricewaterhouseCoopers LLP

Los Angeles, California

March 1, 202 3

February 26, 2024

We have served as the Company’s auditor since 2015.

4 unchanged sentences

Cash and cash equivalents $ 357,790 $ 296,712

Marketable securities (amortized cost of $ 286,001 and $ 0 at

December 31, 2022 and 2021, respectively)

Accounts receivable, net of allowances for credit losses of $ 4,113

and $ 2,437 at December 31, 2022 and 2021, respectively

Marketable securities (amortized cost of $ 320,166 and $ 286,001 at December 31, 2023 and 2022, respectively)

320,161 285,493

Accounts receivable, net of allowance for credit losses of $ 4,791 and $ 4,113 at December 31, 2023 and 2022, respectively

206,644 148,683

Contract cost asset, current 28,718 23,600

7 unchanged sentences

Intangible assets, net 137,546 162,953

Goodwill 539,354 539,128

Other assets 18,551 21,903

Total assets $ 1,893,568 $ 1,740,410

Liabilities and Stockholders’ Equity

12 unchanged sentences

Stockholders’ equity

Preferred stock, $ 0.0001 par value, 100,000,000 shares authorized

at December 31, 2022 and 2021, respectively;

0 shares issued

and outstanding at December 31, 2022 and 2021, respectively

Common stock, $ 0.0001 par value, 1,000,000,000 shares

authorized at December 31, 2022 and 2021, respectively;

and 134,046,926 shares issued and outstanding at December 31, 2022

and 2021, respectively

Preferred stock, $ 0.0001 par value, 100,000,000 shares authorized at December 31, 2023 and 2022;

0 shares issued and outstanding at December 31, 2023 and 2022.

Common stock, 0.0001 par value, 1,000,000,000 shares authorized at December 31, 2023 and 2022;

144,806,464 and 139,159,534 shares issued and outstanding at December 31, 2023 and 2022, respectively.

Additional paid-in capital 2,295,807 2,068,225

8 unchanged sentences

(in thousands, except share and per share amounts) 2023 2022 2021

Revenue $ 950,010 $ 720,203 $ 514,821

Cost of revenue 174,462 148,416 98,312

Gross profit 775,548 571,787 416,509

Operating expenses

6 unchanged sentences

Interest expense ( 1,957 ) ( 2,135 ) ( 2,328 )

Change in fair value of Series I redeemable convertible

preferred stock warrant liability

Other (expense) income, net

Accretion income, net 9,794 2,035 —

Other expense, net ( 360 ) ( 1,737 ) ( 843 )

Loss before provision for (benefit from) income taxes ( 188,421 ) ( 286,465 ) ( 288,923 )

Provision for (benefit from) income taxes 1,273 466 ( 23,758 )

Net loss per share attributable to common stockholders,

basic and diluted

Weighted-average shares used in computing net loss

per share attributable to common stockholders, basic

Other comprehensive (loss) income

Net loss $ ( 189,694 ) $ ( 286,931 ) $ ( 265,165 )

Net loss per share attributable to common stockholders, basic and diluted $ ( 1.34 ) $ ( 2.10 ) $ ( 2.86 )

Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted 141,961,467 136,525,728 92,673,453

Other comprehensive income (loss)

Foreign currency translation adjustment, net of tax $ 437 $ ( 1,355 ) $ ( 770 )

Unrealized loss on available-for-sale debt

and marketable securities, net of tax

Total other comprehensive (loss) income

Unrealized income (loss) on available-for-sale debt and marketable securities, net of tax 504 ( 378 ) -

Total other comprehensive income (loss) 941 ( 1,733 ) ( 770 )

Comprehensive loss $ ( 188,753 ) $ ( 288,664 ) $ ( 265,935 )

2 unchanged sentences

Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

Stockholders'

Preferred Stock

Preferred Stock Common Stock Additional

Capital Accumulated

Comprehensive

(in thousands, except share amounts)

Income (Loss)

Balance as of December 31, 2019

Cumulative-effect of accounting change due to adoption of ASU 2016-13

Exercise of stock options

Stock-based compensation

Issuance of Series I redeemable convertible preferred stock for cash, net

of issuance costs of $ 83

Issuance of common stock for business combination

Issuance of Series I redeemable convertible preferred stock upon exercise

of Series I redeemable convertible preferred stock warrant

Cancelation of Series H-1 redeemable convertible preferred stock held in

escrow for business acquisition

Vesting of restricted stock units

Other comprehensive income

Income (Loss) Accumulated

Deficit Total

Stockholders ’

(in thousands, except share amounts) Shares Amount Shares Amount

Balance as of December 31, 2020 85,331,278 $ 727,474 30,707,113 $ 3 $ 124,755 $ 187 $ ( 397,047 ) $ ( 272,102 )

1 unchanged sentence

Stock-based compensation — 901 — — 231,507 — — 231,507

Conversion of redeemable convertible preferred stock to common stock

upon initial public offering

Issuance of common stock upon initial public offering, net of underwriting

discounts and offering costs

Issuance of common stock, net of common stock withheld for tax liability

upon settlement of restricted stock units

Conversion of redeemable convertible preferred stock to common stock upon initial public offering ( 85,331,278 ) ( 728,375 ) 85,331,278 9 728,366 — — 728,375

Issuance of common stock upon initial public offering, net of underwriting discounts and offering costs — — 10,410,000 1 657,634 — — 657,635

Issuance of common stock, net of common stock withheld for tax liability upon settlement of restricted stock units — — 2,538,535 — ( 15 ) — — ( 15 )

Issuance of common stock for employee stock purchase plan — — 166,370 — 9,475 — — 9,475

2 unchanged sentences

Other comprehensive loss — — — — — ( 770 ) — ( 770 )

Net loss — — — — — — ( 265,165 ) ( 265,165 )

Balance as of December 31, 2021 — $ — 134,046,926 $ 13 $ 1,852,071 $ ( 583 ) $ ( 662,212 ) $ 1,189,289

5 unchanged sentences

Other comprehensive loss — — — — — ( 1,733 ) — ( 1,733 )

Net loss — — — — — — ( 286,931 ) ( 286,931 )

Balance as of December 31, 2022 — $ — 139,159,534 $ 14 $ 2,068,225 $ ( 2,316 ) $ ( 949,143 ) $ 1,116,780

Exercise of stock options — — 1,371,834 — 17,630 — — 17,630

Stock-based compensation — — — — 184,552 — — 184,552

Issuance of common stock upon settlement of restricted stock units — — 3,699,168 1 — — — 1

Issuance of common stock for employee stock purchase plan — — 575,928 — 25,400 — — 25,400

Other comprehensive income — — — — — 941 — 941

Net loss — — — — — — ( 189,694 ) ( 189,694 )

Balance as of December 31, 2023 — $ — 144,806,464 $ 15 $ 2,295,807 $ ( 1,375 ) $ ( 1,138,837 ) $ 1,155,610

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

4 unchanged sentences

Operating activities

Net loss $ ( 189,694 ) $ ( 286,931 ) $ ( 265,165 )

Adjustments to reconcile net loss to net cash provided by operating activities

2 unchanged sentences

Accretion of discounts on marketable debt securities, net ( 9,790 ) ( 2,009 ) —

Change in fair value of Series I redeemable convertible

preferred stock warrant liability

Abandonment of long-lived assets 1,488 1,344 554

4 unchanged sentences

Decrease (increase) in fair value of strategic investments 287 483 ( 32 )

Changes in operating assets and liabilities, net of effect of

business combinations

Changes in operating assets and liabilities, net of effect of asset acquisitions and business combinations

Accounts receivable ( 57,492 ) ( 35,817 ) ( 34,184 )

12 unchanged sentences

Maturities of marketable securities 372,240 85,632 —

Sales of marketable securities 5,452 — —

Originations of materials financing ( 23,972 ) ( 23,489 ) —

Customer repayments of materials financing 26,242 18,685 —

Asset acquisitions, net of cash acquired ( 7,825 ) — —

Acquisition of businesses, net of cash acquired — — ( 509,837 )

Settlement of post-close working capital adjustments from business

Settlement of post-close working capital adjustments from business combinations — 1,291 —

Net cash used in investing activities $ ( 76,061 ) $ ( 340,476 ) $ ( 541,768 )

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

Procore Technologies, Inc.

Consolidated Statements of Cash Flows (Continued)

Year Ended December 31,

(in thousands) 2023 2022 2021

Financing activities

Proceeds from issuance of redeemable convertible preferred

stock, net of issuance costs

Proceeds from issuance of Series I redeemable

convertible preferred stock warrant

Proceeds from initial public offering $ — $ — $ 665,129

Proceeds from stock option exercises 17,618 22,364 43,086

Proceeds from exercise of Series I redeemable

convertible preferred stock warrant

Payments of debt issuance costs

Proceeds from employee stock purchase plan 25,400 22,133 9,475

1 unchanged sentence

Payments of deferred business acquisition consideration — ( 3,870 ) ( 475 )

Principal payments under finance lease agreements, net

of proceeds from lease incentives

Principal payments under finance lease agreements, net of proceeds from lease incentives ( 1,853 ) ( 1,705 ) ( 1,509 )

Net cash provided by financing activities 41,165 38,652 711,826

Net (decrease) increase in cash, cash equivalents and restricted cash

Net increase (decrease) in cash, cash equivalents and restricted cash 57,119 ( 289,216 ) 206,788

Effect of exchange rate changes on cash 855 ( 180 ) ( 829 )

1 unchanged sentence

Cash, cash equivalents and restricted cash, end of period $ 357,790 $ 299,816 $ 589,212

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

Procore Technologies, Inc.

Consolidated Statements of Cash Flows

Year Ended December 31,

(in thousands)

Reconciliation of cash, cash equivalents and restricted

cash to the consolidated balance sheets

Reconciliation of cash, cash equivalents and restricted cash to the consolidated balance sheets

Cash and cash equivalents at end of period $ 357,790 $ 296,712 $ 586,108

Restricted cash, current at end of period included in prepaid

expenses and other current assets

Restricted cash, non-current at end of period included in other assets — 3,104 3,104

Total cash, cash equivalents and restricted cash at end of

period shown in the consolidated statements of cash flows

Total cash, cash equivalents and restricted cash at end of period shown in the consolidated statements of cash flows $ 357,790 $ 299,816 $ 589,212

Supplemental disclosure of cash flow information

1 unchanged sentence

Cash paid for income taxes, net of refunds received 859 700 419

Stock-based compensation capitalized for cloud-computing arrangement

Stock-based compensation capitalized for cloud-computing arrangement costs 296 256 346

Cash received for lease incentives 789 2,024 1,490

Cash paid for amounts included in the measurement of

lease liabilities:

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from finance leases 1,953 2,017 2,076

2 unchanged sentences

Noncash investing and financing activities

Purchases of property and equipment included in accounts

payable and accrued expenses at year end

Capitalized software development costs included in accounts

payable and accrued expenses at year end

Deferred offering costs included in accounts payable and

accrued expenses at year end

Indemnity holdback consideration associated with business combinations

included in other current liabilities at year end

Stock-based compensation capitalized for software

Purchases of property and equipment included in accounts payable and accrued expenses at year end 754 1,472 2,758

Capitalized software development costs included in accounts payable and accrued expenses at year end 1,905 1,645 1,287

Deferred offering costs included in accounts payable and accrued expenses at year end — — 270

Indemnity holdback consideration associated with business combinations included in other current liabilities at year end — — 4,050

Deferred asset acquisition payment included in other non-current liabilities at year end 1,405 — —

Issuance of common stock as consideration in business combinations — — 58,028

Stock-based compensation capitalized for software development 9,421 8,562 4,901

Conversion of available-for-sale debt securities into equity securities — 3,680 —

Conversion of redeemable convertible preferred stock to

common stock upon initial public offering

Issuance of common stock as consideration in

business combinations

Conversion of redeemable convertible preferred stock to common stock upon initial public offering — — 728,375

Right of use assets obtained in exchange for operating lease liabilities 15,385 10,198 1,857

25 unchanged sentences

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 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, stock-based compensation expense, including the fair value of the Company’s common stock prior to the effective date of the Company’s IPO, 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, and self-insurance reserve estimates.

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.

1 unchanged sentence

Actual results could differ from the Company’s estimates.

The extent to which the COVID-19 pandemic may directly or indirectly impact the Company’s business will depend on future developments that are highly uncertain and cannot be predicted.

As of the date these consolidated financial statements were issued, the COVID-19 pandemic did not have a significant impact on the Company’s estimates or judgments.

Judgments and assumptions may change as new events occur, additional information is obtained, and as other factors arise related to the

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

COVID-19 pandemic and economic recovery that could result in a meaningful impact on the Company’s consolidated financial statements in future reporting periods .

The Company operates as a single operating segment.

3 unchanged sentences

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.

Cash, cash equivalents, and restricted cash

The Company classifies all investments that are readily convertible to known amounts of cash and have maturities of three months or less from the date of purchase as cash equivalents, which are carried at fair value.

Cash includes cash held in checking and savings accounts.

As of December 31, 2022 and 2021, cash equivalents comprised money market funds that were recorded at fair value which approximates amortized cost.

From time to time, the Company posts cash collateral to satisfy certain contractual arrangements that may arise in the normal course of business and that is contractually restricted as to use.

Restricted cash is included in other assets on the accompanying consolidated balance sheets and consists of funds required to secure certain corporate credit card accounts.

The Company held $ 3.1 million of restricted cash as of December 31, 2022 and 2021.

Marketable securities

Investments with stated maturities of greater than three months are classified as marketable securities, which consist of U.S.

treasury securities, commercial paper, corporate notes and obligations, and time deposits.

The Company determines the appropriate classification of each investment at the time of purchase and re-evaluates such classification at each balance sheet date.

The Company classifies each marketable debt security as either short-term or long-term at each balance sheet date based on the underlying investment’s contractual maturity date.

Short-term investments are investments with an original maturity date of less than one year when purchased.

All marketable securities held as of December 31, 2022 are classified and accounted for as short-term available-for-sale debt securities, which are carried at fair value.

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 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 year ended December 31, 2022, there were no credit losses recorded on marketable securities.

Interest recorded on marketable securities is recorded in interest income on the accompanying consolidated statements of operations and comprehensive loss.

Concentrations of credit risk

2 unchanged sentences

However, the Company believes that these financial institutions are financially sound with minimal credit risk.

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

During the years ended December 31, 2023 and 2022, there were no credit losses recorded on cash, cash equivalents, or restricted cash.

Investments in marketable securities consist primarily of investment-grade securities and the Company’s investment policy limits the amount of credit exposure to any individual issuer.

The Company periodically assesses its portfolio of marketable securities for impairment due to credit losses.

The Company evaluates each investment in an unrealized loss position to determine if any portion of the unrealized loss is related to credit losses.

Unrealized losses on marketable securities due to expected credit losses are recognized in other expense, net in the accompanying consolidated statements of operations and comprehensive loss.

During the years ended December 31, 2023 and 2022, there were no credit losses recorded on marketable securities.

Accounts receivable are recorded at the invoiced amounts, do not require collateral or bear interest, and mainly result from subscriptions to access the Company’s software products.

1 unchanged sentence

Each reporting period, the Company evaluates the collectability of its accounts receivable based on a number of factors such as the age of the receivables, credit quality, historical experience, and current and future economic conditions that may affect a customer’s ability to pay.

At December 31, 2022 and 2021, the Company’s allowance for expected credit losses was $ 4.1 million and $ 2.4 million, respectively.

As of December 31, 2023 and 2022, the Company's allowance for expected credit losses was $ 4.8 million and $ 4.1 million, respectively.

No customer represented 10 % or more of the consolidated accounts receivable balance as of December 31, 2023 and 2022.

No single customer accounted for 10 % or more of total revenue for the years ended December 31, 2023, 2022, and 2021.

The Company also has receivables related to its materials financing program that finances customers’ purchases of construction materials on deferred payment terms.

The related allowance recorded on the Company’s materials financing receivables is primarily based on expectations of credit losses based on historical loss data as well as macroeconomic factors.

At December 31, 2022, the Company’s allowance for expected credit losses related to its materials financing program was $2.1 million, and was immaterial at December 31, 2021.

The Company also has receivables related to its materials financing program that financed customers’ purchases of construction materials on deferred payment terms.

The related allowance recorded on the Company’s materials financing receivables is primarily based on expectations of credit losses based on a number of factors, such as the age of the receivables, historical loss data, and macroeconomic conditions that may affect a customer’s ability to pay.

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

Cash, cash equivalents, and restricted cash

Cash includes cash held in checking and savings accounts.

As of December 31, 2023 and 2022, cash equivalents comprised money market funds that were recorded at fair value which approximates amortized cost.

From time to time, the Company may post cash collateral to satisfy certain contractual arrangements that arise in the normal course of business and that is contractually restricted as to use.

The Company held no restricted cash as of December 31, 2023 and $ 3.1 million of restricted cash as of December 31, 2022.

Restricted cash as of December 31, 2022 was included in other assets on the accompanying consolidated balance sheet and consisted of funds required to secure certain corporate credit card accounts.

The cash was released from restriction during 2023.

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 December 31, 2023 and 2022 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 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.

Any 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 in the accompanying consolidated financial statements.

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 consolidated statements of operations and comprehensive loss.

Refer to Note 3 for further details on the Company’s marketable securities portfolio.

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, which facilitates 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.

The fulfillment partner is primarily responsible for fulfilling the materials purchases and the Company does not have control over such materials.

The Company earns revenues from origination fees and finance charges on the amounts it finances for customers on deferred payment terms, which are typically 120 days.

Such fees earned are computed and recognized based on the effective interest method and are presented net of any related reserves and amortization of deferred origination costs.

Gross receivables outstanding from customers under the materials financing program were $ 13.6 million and $ 4.4 million as of December 31, 2022 and 2021, respectively.

(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 has 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 years ended December 31, 2023 and 2022, the Company incurred credit losses of $ 8.1 million and $ 1.8 million, respectively, related to its materials financing program, which are recorded in general and administrative expenses in the accompanying consolidated statements of operations and comprehensive loss.

As of December 31, 2023 and 2022, gross receivables outstanding from customers under the materials financing program were $ 5.7 million and $ 13.6 million, respectively, and the related allowance for expected credit losses was $ 3.8 million and $ 2.1 million, respectively.

Materials financing receivables, net of allowances, are recorded within prepaid expenses and other current assets on the accompanying consolidated balance sheets.

Foreign currency transactions and translation

The functional currency of the Company’s foreign subsidiaries in Australia, Canada, and England is primarily the local currency of such countries, and the functional currency of the Company’s subsidiaries in Mexico, Egypt, Singapore, United Arab Emirates, France, and Ireland is U.S.

For foreign subsidiaries where the functional currency is the local currency of such countries, assets and liabilities are translated into U.S.

The functional currency of the Company’s foreign subsidiaries in Australia, Canada, and England is the local currency of such countries, and the functional currency of the Company’s subsidiaries in Mexico, Egypt, Singapore, United Arab Emirates, France, Ireland, and Germany is U.S.

For foreign subsidiaries where

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

the functional currency is the local currency of such countries, assets and liabilities are translated into U.S.

Dollars at exchange rates in effect at the balance sheet date, stockholders’ equity is translated at the applicable historical exchange rate, and revenue and expenses are translated using the average exchange rates during the period.

The effect of exchange rate changes resulting from the translation of the foreign subsidiary financial statements is accounted for as a component of accumulated other comprehensive loss.

In addition, the Company incurs foreign currency transaction gains and losses, including those related to intercompany agreements among the Company and its subsidiaries, which are recorded in other (expense) income, net in the accompanying consolidated statements of operations and comprehensive loss.

In addition, the Company incurs foreign currency transaction gains and losses, including those related to intercompany agreements among the Company and its subsidiaries, which are recorded in other expense, net in the accompanying consolidated statements of operations and comprehensive loss.

Foreign currency gains and losses were not material for the years ended December 31, 2023, 2022, and 2021.

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

Property and equipment, net

2 unchanged sentences

Depreciation expense is computed on a straight-line basis over the estimated lives of the assets as follows:

Asset Classification

Estimated Useful Life

Leasehold improvements

Lesser of 15 years or lease term

Building improvements

Lesser of 20 years or lease term

Furniture and fixtures

Computers and equipment

Purchased software

Contractual term

Asset Classification Estimated Useful Life

Leasehold improvements Lesser of 15 years or lease term

Building improvements Lesser of 20 years or lease term

Furniture and fixtures 5 years

Computers and equipment 3 years

Purchased software Contractual term

The Company determines an arrangement is a lease at inception if it is both able to identify an asset and conclude it has the right to control the identified asset.

13 unchanged sentences

The Company includes variable lease payments that depend on an index or a rate in the calculation of the ROU lease liabilities and exclude those which depend on facts or circumstances occurring after the commencement date, other than the passage of time.

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

Self-insurance reserves

2 unchanged sentences

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 December 31, 2022, the Company’s net self-insurance accrual was $ 1.9 million, included within other current liabilities on the accompanying consolidated balance sheet.

As of December 31, 2023 and 2022, the Company’s self-insurance accrual was $ 3.3 million and $ 1.9 million, respectively, included within other current liabilities on the accompanying consolidated balance sheets.

Strategic investments

2 unchanged sentences

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

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

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.

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) income, net on the accompanying consolidated statements of operations and comprehensive loss.

All gains and losses on such equity securities, realized and unrealized, are recorded in other expense, net on the accompanying 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.

8 unchanged sentences

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 consolidated statements of operations and comprehensive loss, and the portion related to non-credit related losses is recognized as a component of comprehensive loss.

If the impairment is deemed other-than-temporary, the portion of the impairment related to credit losses is recognized in other expense, net in the accompanying consolidated statements of operations and comprehensive loss, and the portion related to non-credit related losses is recognized as a component of comprehensive loss.

Business combinations

7 unchanged sentences

Under this method of accounting, assets acquired and liabilities assumed are recorded at their respective fair values at the date of the acquisition.

Any excess of the purchase price over the fair value of the net assets acquired is recognized as goodwill.

Any excess of the purchase price over the fair value of the net assets acquired is

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

recognized as goodwill.

During the measurement period, which may be up to one year from the acquisition date, the Company adjusts the provisional amounts of assets acquired and liabilities assumed with the corresponding offset to goodwill to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date.

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Use of different estimates and judgments could yield different results.

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

Although the Company believes the assumptions and estimates it has made are reasonable and appropriate, they are based in part on historical experience and information that may be obtained from management of the acquired company and are inherently uncertain.

Intangible assets and goodwill

All of the Company’s intangible assets are amortized using the straight-line method over their estimated period of benefit, ranging from three to 10 years .

The Company evaluates the recoverability of intangible assets periodically by considering events or changes in circumstances that may warrant revised estimates of useful lives or that indicate the asset may be impaired.

All of the Company’s finite-lived intangible assets are amortized using the straight-line method over their estimated period of benefit, ranging from three to 10 years.

The Company evaluates the recoverability of its finite-lived intangible assets periodically by considering events or changes in circumstances that may warrant revised estimates of useful lives or that indicate the asset may be impaired.

The Company has an in-process research and development (“IPR&D”) intangible asset, which is considered indefinite-lived and is assessed annually for impairment.

Upon completion of the project, the IPR&D intangible asset would be considered a finite-lived intangible asset and amortized over its estimated useful life.

If the project were to be abandoned, the IPR&D would be considered fully impaired and recognized in research and development expenses within the accompanying consolidated statements of operations and comprehensive loss.

Goodwill is tested for impairment at the reporting unit level (i.e., the operating segment or one level below an operating segment).

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Once the preliminary stage is complete, internal and external direct costs are capitalized until the developed software is substantially complete and ready for its intended use.

Costs incurred for post-implementation activities, training, maintenance, and minor upgrades and enhancements without adding additional functionality are expensed as incurred.

Costs incurred for post-implementation activities, training, maintenance, and minor upgrades and enhancements without adding additional functionality are

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

expensed as incurred.

Capitalized internal-use software costs primarily relate to the development of and major enhancements to the Company’s cloud-based software as a service (“SaaS”) construction management platform and related software products.

1 unchanged sentence

The Company also capitalizes certain software development costs which are used internally, rather than developments to the Company’s platform.

Such costs are amortized on a straight-line basis over the developed software’s estimated useful life, which is generally five years , and the related amortization expense is recorded in operating expenses within the accompanying consolidated statements of operations and comprehensive loss.

Such costs are amortized on a straight-line basis over the developed software’s estimated useful life, which is generally three to five years , and the related amortization expense is recorded in operating expenses within the accompanying consolidated statements of operations and comprehensive loss.

Abandonments of software development costs have been immaterial in all periods presented.

Cloud computing arrangements

The Company capitalizes qualifying implementation costs related to hosting arrangements that are service contracts (cloud computing arrangements).

Such costs are amortized on a straight-line basis over the software’s estimated useful life, which is generally the term of the hosting relationship, and ranges from three to five years .

The related amortization expense is recorded in operating expenses within the accompanying consolidated statements of operations and comprehensive loss.

As of December 31, 2023 and 2022, the Company’s gross capitalized costs were $ 10.3 million and $ 7.2 million, respectively, and the related accumulated amortization was $ 2.9 million and $ 1.3 million, respectively.

Capitalized amounts are included in prepaid expenses and other current assets and other assets on the accompanying consolidated balance sheets.

Fair value measurements

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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:

Quoted prices in active markets for identical assets or liabilities.

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.

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 December 31, 2022 and 2021, 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

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

the short-term nature of such items.

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 December 31, 2023 and 2022, 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.

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The Company’s investments in limited partnerships are valued using NAV as a practical expedient and therefore excluded from the fair value hierarchy.

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

Impairment and abandonment of long-lived assets

The Company evaluates long-lived assets, including finite-lived intangible assets, property and equipment, leases, and capitalized software development costs, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable.

The Company evaluates long-lived assets, including finite-lived intangible assets, property and equipment, leases, capitalized software development costs, and cloud computing arrangements, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable.

Impairment testing is performed at an asset level that represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities, or an asset group.

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The Company’s subscription agreements generally have annual or multi-year terms, are typically subject to renewal at the end of the subscription term, are generally non-cancelable, and do not provide for refunds to customers or any other right of return.

The Company generally invoices its customers at the beginning of each annual subscription period, and to a lesser extent, on a quarterly or monthly basis.

The Company generally invoices its customers at the beginning of each annual subscription period, and to a lesser extent, on a semi-annual or quarterly basis.

To the extent the Company invoices its customers in advance of revenue recognition, it records deferred revenue.

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The series of distinct services represents a single performance obligation.

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

The transaction price is determined by the stated fixed fees in the contract, excluding any related sales tax.

1 unchanged sentence

The Company recognizes revenue ratably over the term of the subscription agreement beginning on the date that access to its products is made available to the customer.

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

Deferred revenue

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Substantially all deferred revenue at the beginning of 2023, 2022, and 2021 was recognized as revenue within the following 12-month period.

Remaining performance obligation

The transaction price allocated to remaining performance obligations 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.

As of December 31, 2022, the aggregate amount of the transaction price allocated to remaining performance obligations was $ 797.5 million, of which the Company expects to recognize approximately 70 % as revenue in the next 12 months and substantially all of the remainder between 12 and 36 months thereafter.

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 December 31, 2023, the aggregate amount of the transaction price allocated to RPO was $ 1.0 billion, of which the Company expects to recognize approximately $ 698.3 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.

Assets recognized from the costs to obtain a contract with a customer

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Judgment is required to determine the expected period of benefit, for which the Company considers estimates of customer lives and SaaS product technology life in making this determination.

There were no impairment losses of contract cost assets for the periods presented.

Write-offs of such costs have historically been immaterial.

The following table presents the changes in contract cost assets (in thousands):

Year Ended December 31,

2023 2022 2021

Beginning balance $ 64,077 $ 42,919 $ 33,052

Additions 37,243 41,750 25,978

Amortization ( 28,038 ) ( 20,592 ) ( 16,111 )

Ending balance $ 73,282 $ 64,077 $ 42,919

1 unchanged sentence

Cost of revenue primarily consists of personnel-related compensation expenses for the Company’s customer support team, including salaries, benefits, stock-based compensation, payroll taxes, commissions, and bonuses.

Cost of revenue also includes third-party hosting costs, software license fees, amortization of acquired technology intangible assets, amortization of capitalized software development costs related to the Company’s platform, and allocated overhead.

Additionally, cost of revenue includes non-personnel-related expenses, such as third-party hosting costs, amortization of acquired technology intangible assets, amortization of capitalized software development costs related to the Company’s platform, software license fees, and allocated overhead.

Operating expenses

The Company’s operating expenses consist of sales and marketing, research and development, and general and administrative expenses.

For each of these categories of expense, personnel-related compensation expenses are the most significant component, which include salaries, stock-based compensation, commissions, benefits, payroll taxes, bonuses, and severance expenses.

Procore Technologies, Inc.

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Sales and marketing

Sales and marketing expenses primarily consist of personnel-related compensation expenses for the Company’s sales and marketing organizations, advertising costs, marketing events, travel, trade shows and other marketing activities, contractor costs to supplement the Company’s staff levels, consulting services, amortization of acquired customer relationship intangible assets, and allocated overhead.

Sales and marketing expenses primarily consist of personnel-related compensation expenses for the Company’s sales and marketing organizations.

Additionally, sales and marketing expenses include non-personnel-related expenses, such as advertising costs, marketing events, travel, trade shows, and other marketing activities;

amortization of acquired customer relationship intangible assets;

contractor costs to supplement the Company’s staff levels;

consulting services;

and allocated overhead.

Advertising costs are expensed as incurred.

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Research and development

Research and development expenses primarily consist of personnel-related compensation expenses for the Company’s engineering, product, and design teams, contractor costs to supplement the Company’s staff levels, consulting services, amortization of certain acquired intangible assets used in research and development activities, and allocated overhead.

Research and development expenses primarily consist of personnel-related compensation expenses for the Company’s engineering, product, and design teams.

Additionally, research and development expenses include non-personnel-related expenses, such as contractor costs to supplement the Company’s staff levels, consulting services, amortization of certain acquired intangible assets used in research and development activities, and allocated overhead.

General and administrative

General and administrative expenses primarily consist of personnel-related compensation expenses for the Company’s finance, information technology, executive, human resources, legal, and other administrative functions.

Additionally, general and administrative expenses include non-personnel-related expenses, such as professional fees for audit, legal, tax, and other external consulting services, including acquisition-related transaction expenses, costs associated with operating as a public company, including insurance costs, professional services, investor relations, and other compliance costs, property and use taxes, licenses, travel and entertainment costs, and allocated overhead.

General and administrative expenses primarily consist of personnel-related compensation expenses for the Company’s human resources, information technology, finance, legal, executive, and other administrative functions.

costs associated with operating as a public company, including insurance costs, professional services, investor relations, and other compliance costs;

property and use taxes;

licenses, travel and entertainment costs;

and allocated overhead.

Stock-based compensation

The Company recognizes stock-based compensation cost equal to the grant date fair value of stock-based awards.

Stock-based awards include stock options, RSUs, employee stock purchase plan (“ESPP”), and restricted stock awards (“RSAs”).

The fair value of RSUs and RSAs is based on the estimated fair value of the Company’s common stock on the grant date.

Stock-based awards include stock options, RSUs, employee stock purchase plan (“ESPP”), performance-based restricted stock units (“PSUs”), and restricted stock awards (“RSAs”).

The fair value of RSUs, PSUs, and RSAs is based on the estimated fair value of the Company’s common stock on the grant date.

The fair value of stock options and ESPP purchase rights is estimated on the grant date using the Black-Scholes option pricing model.

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For awards that contain both performance and service vesting conditions, the grant date fair value is recognized as compensation expense using a graded vesting attribution model.

No expense is recognized for awards with performance conditions until that condition is probable of being met.

No expense is recognized for awards with performance conditions until that condition is probable of being met, therefore the portion of expense recognized in any period may fluctuate depending on changing estimates of the achievement of the performance conditions.

Forfeitures are recorded when they occur.

Series I redeemable convertible preferred stock warrant liability

In March 2020, the Company issued a warrant to purchase 1,452,513 shares of Series I redeemable convertible preferred stock (the “Series I warrant”).

The Series I warrant was recorded as a liability on the consolidated balance sheet at fair value of $ 11.9 million at the time of issuance.

Subsequent changes in the fair value of the Series I warrant each reporting period were recorded in the consolidated statements of operations and comprehensive loss, until the Series I warrant was exercised in December 2020.

The Company issued 1,452,513 shares of Series I redeemable convertible preferred stock for proceeds of $ 55.0 million upon exercise of the Series I warrant.

The fair value measurements used in determining the fair value of the Series I warrant liability were categorized as Level 3 on the fair value hierarchy because they were based on unobservable inputs and management’s judgment due to the absence of quoted market prices and inherent lack of liquidity of such financial instruments.

The following inputs were used in the Black-Scholes option pricing model in determining the fair value of the Series I warrant liability for the period from issuance date to September 30, 2020:

Fair value of Series I redeemable convertible

preferred stock per share

$35.04 to $49.95

Risk-free interest rate

0.10% to 0.16%

Expected term (in years)

Estimated dividend yield

Estimated weighted-average volatility

59.10% to 67.80%

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

On the date the Series I warrant was exercised, the Company remeasured its fair value using the Series I redeemable convertible preferred stock fair value of $71.54 per share as of that date.

The following table provides a summary of the changes in the fair value of the Series I warrant liability (in thousands):

Balance as of December 31, 2019

Issuance of Series I warrant

Change in fair value measurement of Series I warrant

Fair value of Series I warrant reclassified to Series I

redeemable convertible preferred stock upon exercise

Balance as of December 31, 2020

The Company accounts for income taxes for the anticipated tax consequences of the reported results of operations using the asset and liability method.

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A valuation allowance is established if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

The Company considers all available evidence, both positive and negative, including historical levels of income, expectations and risk associated with estimates of future taxable income in assessing the need for a valuation allowance.

The Company considers all available evidence, both positive and negative, including historical levels of income, expectations and risk associated with estimates of

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

future taxable income in assessing the need for a valuation allowance.

Significant judgment is required in determining the provision for (benefit from) income taxes and deferred tax assets and liabilities.

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Accrued penalties and interest related to uncertain tax positions were not material to any period presented.

Recently adopted accounting pronouncements

Simplifying the Accounting for Convertible Instruments

In August 2020, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No.

2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40) – Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”).

The new guidance simplifies the accounting for certain financial instruments by removing certain separation models required under current U.S.

GAAP, including the beneficial conversion feature and cash conversion feature.

ASU 2020-06 also improves and amends the related earnings per share guidance for both Subtopics.

ASU 2020-06 is effective for public business entities for fiscal years beginning after December 15, 2021 and interim periods within that fiscal year.

On January 1, 2022, the Company adopted ASU 2020-06, using the full retrospective approach.

As a result, the Company restated its consolidated statements of operations and comprehensive loss and consolidated statements of redeemable convertible preferred stock and stockholders’ equity (deficit) as of and for the year ended December 31, 2020 by removing the impacts of the beneficial conversion feature recognized related to the Series I warrant from these financial statement schedules.

Earnings per share for the period were also restated, as the beneficial conversion feature on preferred stock of $ 3.0 million was previously recorded as a deemed dividend,

Recently issued accounting pronouncements - not yet adopted

Improvements to Reportable Segment Disclosures

In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No.

2023-07, Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures (“ASU 2023-07”).

The new amendment updates and improves reportable segment disclosure requirements through enhanced disclosures about significant segment expenses by requiring disclosure of incremental segment information on an annual and interim basis to enable investors to develop more decision-useful financial analysis.

ASU 2023-07 is effective for public business entities for fiscal years beginning after December 31, 2023 and for interim periods within fiscal years beginning after December 31, 2024, with early adoption permitted.

Upon adoption, public entities should apply the amendments retrospectively to all periods presented in the financial statements.

As the Company operates as a single operating segment, the adoption of ASU 2023-07 is not expected to have a material impact on its consolidated financial statements, including disclosures.

Improvements to Income Tax Disclosure

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740) – Improvements to Income Tax Disclosures (“ASU 2023-09”).

The new amendment enhances transparency and usefulness of income tax disclosures by expanding disclosures in an entity’s income tax rate reconciliation table and income taxes paid.

ASU 2023-09 is effective for public business entities for fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company is evaluating the impact of the adoption of ASU 2023-09 on its consolidated financial statements and disclosures.

Marketable securities

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

Amortized Cost Gross

Losses Fair Value

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

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

which was added to the total net loss attributable to common stockholders used to calculate basic and diluted net loss per share attributable to common shareholders .

Marketable securities

Marketable securities consisted of the following as of December 31, 2022 (in thousands):

Amortized Cost

Amortized Cost Gross

Losses Fair Value

treasury securities $ 86,666 7 $ ( 196 ) $ 86,477

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Total marketable securities $ 286,001 $ 14 $ ( 522 ) $ 285,493

All marketable securities held as of December 31, 2022 had a contractual maturity of less than one year.

All marketable securities held as of December 31, 2023 and 2022 had a contractual maturity of less than one year.

During the year ended December 31, 2023, there were maturities and sales of marketable securities of $ 372.2 million and $ 5.5 million, respectively.

During the year ended December 31, 2022, there were maturities of marketable securities of $ 85.6 million.

There were no sales or impairments of marketable securities during 2022.

The Company held no marketable securities as of December 31, 2021.

There were no sales of marketable securities during the year ended December 31, 2022.

Realized losses on the sale of marketable securities are recorded in other expense, net on the accompanying consolidated statements of operations and comprehensive loss.

Such losses were immaterial during the year ended December 31, 2023.

There were no impairments of marketable securities in any period presented.

Strategic investments

In connection with the acquisition of Levelset in November 2021, further discussed in Note 7, the Company acquired a convertible promissory note (“Convertible Note”) in a privately held company.

At the acquisition date, the fair value of the Convertible Note was $ 3.0 million.

The Convertible Note is classified as an available-for-sale debt security.

Strategic investment activity during the year ended December 31, 2023 is summarized as follows (in thousands):

Equity Securities

Limited Partnerships

Available-for-Sale Debt Securities

Equity Securities Limited Partnerships Available-for-Sale Debt

Securities Total

Balance as of December 31, 2022 $ 7,286 $ 3,402 $ 355 $ 11,043

1 unchanged sentence

Purchases of strategic investments — 764 — 764

Conversion of available-for-sale debt

securities into equity securities

Unrealized (losses) gains

Unrealized gains (losses) 68 ( 180 ) — ( 112 )

Impairment losses ( 175 ) — — ( 175 )

Balance as of December 31, 2023 $ 7,179 $ 3,986 $ 362 $ 11,527

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

In connection with the acquisition of Levelset in November 2021, which is further discussed in Note 7, the Company acquired a convertible promissory note (“Convertible Note”) in a privately held company.

At the acquisition date, the fair value of the Convertible Note was $ 3.0 million.

The Convertible Note was classified as an available-for-sale debt security at the acquisition date and was converted to an equity security in 2022.

Strategic investment activity during the year ended December 31, 2022 is summarized as follows (in thousands):

Equity Securities

Available-for-Sale Debt Securities

Equity Securities Limited Partnerships Available-for-Sale Debt

Securities Total

Balance as of December 31, 2021 $ 3,882 $ — $ 3,450 $ 7,332

Interest accrued — — 105 105

Purchases of strategic investments — 3,609 350 3,959

Convertible note acquired in connection with a

business combination

Unrealized gains

Conversion of available-for-sale debt securities into equity securities 3,680 — ( 3,680 ) —

Unrealized (losses) gains ( 139 ) ( 207 ) 130 ( 216 )

Impairment losses ( 137 ) — — ( 137 )

Balance as of December 31, 2022 $ 7,286 $ 3,402 $ 355 $ 11,043

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

Strategic investments are recorded in other assets in the accompanying consolidated balance sheets.

As of December 31, 2023, in connection with the Company’s investments in limited partnerships, it has a contractual obligation to provide additional investment funding of up to $ 5.6 million at the option of the investees.

No impairment losses were recorded during the year ended December 31, 2021.

FAIR VALUE OF FINANCIAL INSTRUMENTS

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December 31, 2023

Level 1 Level 2 Level 3 Total

Cash equivalents:

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Strategic investments:

Investments in available-for-sale debt

Investments in available-for-sale debt securities

Total $ 432,028 $ 191,585 $ 362 $ 623,975

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

December 31, 2022

Level 1 Level 2 Level 3 Total

Cash equivalents:

Money market funds $ 30,200 $ — $ — $ 30,200

Marketable securities:

treasury securities 86,477 — — 86,477

Commercial paper — 72,914 — 72,914

Corporate notes and obligations — 65,150 — 65,150

Time deposits — 60,952 — 60,952

Strategic investments:

Investments in available-for-sale debt

Investments in available-for-sale debt securities

Total $ 116,677 $ 199,016 $ 355 $ 316,048

PROPERTY AND EQUIPMENT

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Property and equipment

71,243 65,136

accumulated depreciation and amortization ( 34,985 ) ( 25,943 )

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Depreciation and amortization expense was $ 11.8 million, $ 11.1 million, and $ 7.8 million for the years ended December 31, 2023, 2022, and 2021, respectively.

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

The Company has primarily entered into lease arrangements for office space, in addition to other miscellaneous equipment.

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The Company determined that the present value of lease payments represents substantially all of the fair value of the underlying leased asset and therefore recognizes its corporate headquarters as a finance lease.

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

The components of lease expense were as follows (in thousands):

Year Ended December 31,

2023 2022 2021

Finance lease cost:

Amortization of right of use assets

$ 2,672 $ 2,705 $ 2,683

Interest on lease liabilities

1,953 2,017 2,076

Operating lease cost 14,620 11,526 8,943

5 unchanged sentences

Operating right of use assets $ 44,141 $ 41,934

Amount included within other current

Amount included within other current liabilities

Operating lease liabilities, non-current 37,923 38,087

2 unchanged sentences

Finance right of use assets $ 34,375 $ 37,026

Amount included within other current

Amount included within other current liabilities

Finance lease liabilities, non-current 43,581 45,578

Total finance lease liabilities $ 45,600 $ 47,432

2023 2022 2021

Weighted-average remaining lease term (in years)

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Maturities of lease payments for leases where the lease commencement date commenced on or prior to December 31, 2023 are as follows (in thousands):

Years Ending December 31,

Years Ending December 31, Operating

2024 $ 11,950 $ 3,893 $ 15,843

2025 9,982 4,013 13,995

2026 8,221 4,126 12,347

2027 7,165 4,288 11,453

2028 6,303 4,426 10,729

Thereafter 9,450 39,533 48,983

Total lease payments $ 53,071 $ 60,279 $ 113,350

Less imputed interest ( 4,749 ) ( 14,679 ) ( 19,428 )

Total $ 48,322 $ 45,600 $ 93,922

As of December 31, 2023, operating lease payments for leases greater than one month, but less than 12 months in duration were not significant.

As of December 31, 2022, the Company had undiscounted commitments of $ 2.7 million for an operating lease that had not yet commenced, and therefore are not included in the right-of-use assets or operating liabilities in the consolidated balance sheet.

This operating lease commenced in 2023 with a lease term of two years .

As of December 31, 2023, the Company had outstanding letters of credit totaling approximately $ 5.6 million on an unsecured basis to secure various leased office facilities in the U.S.

and Australia.

BUSINESS COMBINATIONS

6 unchanged sentences

Total purchase consideration $ 484,104

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

At closing, the Company issued 610,499 shares of common stock valued at $ 95.05 per share for aggregate purchase consideration of $ 58.0 million.

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Of the total purchase consideration, $ 35.0 million of cash was placed in an escrow account held by a third party for potential breaches of representations and warranties.

The escrow amount, net of any claims for such indemnifiable matters, is scheduled to be released from escrow to shareholders of Levelset 18 months after the acquisition date.

The escrow amount, net of any claims for such indemnifiable matters, was scheduled to be released from escrow to shareholders of Levelset 18 months after the acquisition date.

In May 2023, the $ 35.0 million of cash held in escrow, net of indemnification claims, was released.

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

The purchase consideration was allocated to the following assets and liabilities (in thousands):

Fair value Useful life

Assets acquired

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Other non-current assets 5,740

Developed technology intangible asset

Customer relationships intangible asset

Developed technology intangible asset 105,500 7 years

Customer relationships intangible asset 38,800 4 years

Goodwill 348,318

Total assets acquired $ 515,848

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Customer relationships represent the fair value of the underlying relationships with Levelset’s existing customers, which were valued using the avoided loss of income method, which quantifies the acquiree’s loss of income if it loses the right to existing customers.

Key assumptions under the avoided loss of income method include forecasted revenue to be generated from and expenses to service the customer relationships, customer churn rate, and a discount rate.

The customer relationship intangible asset is amortized on a straight-line basis, which approximates the pattern in which the economic benefits of the

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

customer relationships are consumed, over its estimated useful life of four years .

Key assumptions under the avoided loss of income method include forecasted revenue to be generated from and expenses to service the customer relationships, customer cancellation rate, and a discount rate.

The customer relationship intangible asset is amortized on a straight-line basis, which approximates the pattern in which the economic benefits of the customer relationships are consumed, over its estimated useful life of four years .

The amortization expense is recorded in sales and marketing expenses in the accompanying consolidated statements of operations and comprehensive loss.

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To retain certain Levelset employees, the Company issued 199,670 RSAs which vest based on their continued employment over two years , further discussed in Note 12.

The total grant date fair value of shares issued of $ 19.0 million was excluded from the purchase consideration and is recognized as post-combination expense over the service period on a straight-line basis.

In February 2023, the Company recognized $ 4.8 million stock-based compensation related to early vested RSAs due to the departure of a certain Levelset employee.

The total grant date fair value of shares issued of $ 19.0 million was excluded from the purchase consideration and was recognized as post-combination expense over the service period on a straight-line basis, unless the employees were terminated without cause.

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

As of December 31, 2023, all RSAs have vested and all stock-based compensation has been recognized, including $ 5.5 million of expense related to RSAs whose vesting was accelerated during 2023 upon the departure of certain employees.

In addition to issuing the RSAs discussed above, the Company also paid $ 11.0 million of cash retention payments that vest based on continued employment, at the close of the acquisition.

The cash retention payments vest quarterly over a two-year service period and are subject to clawback if the service vesting condition is not met.

The related compensation is recognized as post-combination expense over the service period on a straight-line basis.

As of December 31, 2022, the remaining unvested amounts of $ 4.6 million are recorded in prepaid expenses and other current assets on the accompanying consolidated balance sheet, $ 3.1 million of which vested early in February 2023 due to the departure of a certain Levelset employee.

As of December 31, 2021, $ 10.1 million of cash retention payments were subject to future vesting, of which $ 5.5 million was recorded in prepaid expenses and other current assets on the accompanying consolidated balance sheet, with the remainder recorded in other assets.

The cash retention payments vest quarterly over a two-year service period and were subject to clawback if the employee was terminated for cause before the service vesting condition was met.

The related compensation was recognized as post-combination expense over the service period on a straight-line basis.

As of December 31, 2023, all expenses related to cash retention payments have been recognized, including $ 3.4 million of such expense which was accelerated during 2023 upon the departure of certain employees.

The acquisition-related transaction costs incurred by the Company of $ 5.0 million were expensed as incurred in the consolidated statements of operations and comprehensive loss.

5 unchanged sentences

Year Ended December 31,

Revenue $ 532,690

Net Loss $ ( 355,612 )

Procore Technologies, Inc.

6 unchanged sentences

The purchase consideration was allocated to the following assets and liabilities (in thousands):

Fair value Useful life

Assets acquired

3 unchanged sentences

Other non-current assets 417

Developed technology intangible asset

Customer relationships intangible asset

Developed technology intangible asset 12,800 4 years

Customer relationships intangible asset 11,100 10 years

Goodwill 55,700

Total assets acquired

17 unchanged sentences

The Company recorded goodwill, which represents the excess of the purchase consideration over the tangible and intangible assets acquired and liabilities assumed, of $ 55.7 million relating to the acquisition.

The goodwill balance is primarily attributed to the synergies and expanded market opportunities that are expected to be achieved from the integration of LaborChart with the Company’s offerings and assembled workforce.

The goodwill balance is primarily attributed to the synergies and expanded market opportunities that are expected to

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

be achieved from the integration of LaborChart with the Company’s offerings and assembled workforce.

Goodwill is not deductible for income tax purposes.

1 unchanged sentence

The cash holdback amount was excluded from the purchase consideration and is recorded as post-combination expense over the service period on a straight-line basis.

During the year ended December 31, 2022, the Company recorded $ 3.0 million of expense for the portion of the balance which vested in the

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

current year .

In February 2023, the Company recorded $ 2.1 million of expense from the remaining unvested balance due to the departure of a certain LaborChart employee .

During the years ended December 31, 2023 and 2022, the Company recorded $ 4.2 million and $ 3.0 million of expense, respectively, for the portion of the balance which vested in the respective year.

The $ 4.2 million recorded during the year ended December 31, 2023 includes $ 2.1 million of expense that was accelerated in February 2023 due to the departure of a certain LaborChart employee.

The Company has not separately presented pro forma results reflecting the acquisition of LaborChart, or revenue and operating losses of LaborChart for the period from the acquisition date through December 31, 2021 as the impacts were not material to the consolidated financial statements.

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Of the total purchase consideration, $ 4.1 million was held back to secure certain indemnification obligations (“Holdback Consideration”) in accordance with the stock purchase agreement, which was scheduled to be paid, subject to any indemnification claims, on the 18-month anniversary of the acquisition.

The Holdback Consideration was recorded in other current liabilities on the consolidated balance sheet as of December 31, 2021.

In November 2022, the Company paid $ 3.9 million in cash for the Holdback Consideration, net of indemnification claims.

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The transaction costs associated with the acquisition were not material, and were expensed as incurred as general and administrative expenses in the accompanying consolidated statements of operations and comprehensive loss.

On October 14, 2020, the Company acquired 100 % of the outstanding voting interests of Esticom, Inc.

("Esticom"), a company that provides an estimating solution which enables contractors to determine the quantities of materials needed from project plans and specifications, and to calculate the cost estimates for the labor hours and materials required on a job.

The purpose of this acquisition is to accelerate the development of the Company’s preconstruction solutions.

The acquisition was accounted for as a business combination.

The total purchase consideration is comprised of the following (in thousands):

Cash consideration

Fair value of common stock

Total purchase consideration

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

At closing, the Company issued 96,749 shares of common stock for aggregate purchase consideration of $ 3.9 million.

As the acquisition occurred prior to the Company’s IPO, the fair value of the common stock was determined by the Company’s board of directors (the “Board”), taking into account a contemporaneous independent valuation by a third-party valuation specialist commissioned by the Board.

The fair value was estimated based on numerous objective and subjective factors including the Company’s historical performance, financial condition, and prospects, the value of companies that the Company considers peers, recent private stock sale transactions, the economic and competitive environment, the rights, preferences, and privileges of the Company’s redeemable convertible preferred stock, and the likelihood of achieving a liquidity event, such as an IPO.

In connection with the acquisition, 58,049 of the 96,749 shares of common stock were held back for potential breaches of representations and warranties, and were assigned to Esticom shareholders 18 months after the closing date.

The transaction costs associated with the acquisition were not material and were expensed as incurred as general and administrative expenses in the accompanying consolidated statements of operations and comprehensive loss.

The major classes of assets and liabilities to which the Company allocated the purchase price were as follows (in thousands):

Assets acquired

Cash and cash equivalents

Developed technology intangible asset

Other acquired intangible assets

Less than 12 months

Total assets acquired

Liabilities assumed

Other current liabilities

Deferred revenue

Net deferred tax liabilities

Total liabilities assumed

Net assets acquired

The purchase price accounting for this acquisition is final.

Developed technology is amortized on a straight-line basis, which approximates the pattern in which the economic benefits of the technology are consumed, over its estimated useful life of five years .

The amortization expense is recorded in cost of revenue in the accompanying consolidated statements of operations and comprehensive loss.

The goodwill was primarily attributable to synergies that are expected to be achieved from the integration of Esticom with the Company’s current product offerings and assembled workforce.

The goodwill balance is not deductible for income taxes purposes.

The Company has not separately presented pro forma results reflecting the acquisition of Esticom, or revenue and operating losses of Esticom for the period from the acquisition date through December 31, 2020 as the impacts are not material to the consolidated financial statements.

Avata Intelligence

On February 3, 2020, the Company acquired intellectual properties, rights and agreements from Avata Intelligence Inc.

(“Avata”) for $ 3.8 million in cash consideration.

As part of the acquisition, the Company also entered into employment agreements with the majority of Avata’s employees.

The purpose of this acquisition is to accelerate the development of the Company’s AI and machine learning solutions.

The purchase consideration was primarily allocated to developed technology intangible assets with an estimated fair value of $ 2.2 million.

The excess of the purchase consideration over the net assets acquired of $ 1.6 million was recorded as

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

The amount of goodwill that is deductible for income tax purposes as of December 31, 2020 is $ 1.6 million .

The purchase price accounting for this acquisition i s final.

INTANGIBLE ASSETS AND GOODWILL

Intangible assets

The Company’s finite-lived intangible assets are summarized as follows (in thousands):

On September 15, 2023, the Company completed the acquisition of all outstanding equity of Unearth Technologies Inc.

This acquisition was accounted for as an asset acquisition as substantially all of the fair value of the gross assets acquired were concentrated in a single identifiable asset.

The total value of developed technology acquired was $ 9.2 million, which is comprised of $ 6.8 million in cash paid, $ 2.3 million as a result of the tax consequences of the transaction, and capitalized transaction expenses, which were immaterial.

The acquired developed technology has an estimated useful life of five years , and the amortization expense is recorded in cost of revenue on the accompanying consolidated statements of operations and comprehensive loss.

During the year ended December 31, 2023, the Company also acquired a $ 2.8 million IPR&D intangible asset, which was capitalized as an indefinite-lived intangible asset and recorded in intangible assets within the accompanying consolidated balance sheet.

No impairments of IPR&D were recorded during the year ended December 31, 2023

The Company’s finite-lived and indefinite-lived intangible assets are summarized as follows (dollars in thousands):

December 31, 2023

Weighted-Average Remaining Useful Life (Years)

Amount Accumulated

Amortization Net

Amount Weighted-Average Remaining Useful Life

Developed technology $ 166,453 $ ( 67,221 ) $ 99,232 4.3

Customer relationships 66,350 ( 30,884 ) 35,466 4.2

Total finite-lived intangible assets

232,803 ( 98,105 ) 134,698 4.3

In-process research and development 2,848 — 2,848

Total intangible assets $ 235,651 $ ( 98,105 ) 137,546

December 31, 2022

Weighted-Average Remaining Useful Life (Years)

Amount Accumulated

Amount Weighted-Average Remaining Useful

Developed technology $ 157,130 $ ( 41,968 ) $ 115,162 5.1

Customer relationships 66,350 ( 18,559 ) 47,791 4.9

The Company estimates that there is no significant residual value related to its intangible assets.

Intangible assets amortization expense is summarized as follows (in thousands):

Total $ 223,480 $ ( 60,527 ) $ 162,953 5.1

The Company held no indefinite-lived intangible assets as of December 31, 2022.

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

The Company estimates that there is no significant residual value related to its finite-lived intangible assets.

Amortization expense recorded on the Company's finite-lived intangible assets is summarized as follows (in thousands):

Year Ended December 31,

2023 2022 2021

Cost of revenue $ 22,396 $ 22,428 $ 7,522

1 unchanged sentence

Research and development 2,757 3,528 2,674

Total amortization of acquired intangible assets

Total amortization of acquired finite-lived intangible assets

$ 37,578 $ 38,381 $ 13,796

The following table outlines the estimated future amortization expense related to finite-lived intangible assets (in thousands):

Years Ending December 31,

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

2024 $ 38,710

Thereafter 3,986

Total $ 134,698

The following table presents the changes in carrying amount of goodwill (in thousands):

2 unchanged sentences

Other adjustments, net (1)

226 ( 1,794 )

Ending balance

$ 539,354 $ 539,128

(1) Includes post-closing working capital adjustments and the effect of foreign currency translation.

The additions to goodwill in 2021 were due to the acquisitions of Levelset, LaborChart, and Indus, as disclosed in Note 7 to the consolidated financial statements.

There was no impairment of goodwill during any period presented.

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Net capitalized software costs (1)

Amortization of capitalized software was $ 10.9 million, $ 12.0 million, and $ 10.4 million for the years ended December 31, 2022, 2021, and 2020, respectively, and is recorded primarily in cost of revenue within the accompanying consolidated statements of operations and comprehensive loss.

$ 83,045 $ 58,577

(1) As of December 31, 2023 and 2022, the above balances include $ 12.5 million and $ 7.8 million, respectively, of capitalized software costs developed by the Company for internal use.

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

Amortization of capitalized software related to the Company's SaaS platform was $ 17.6 million, $ 10.6 million, and $ 12.0 million for the years ended December 31, 2023, 2022, and 2021, respectively, and is recorded in cost of revenue within the accompanying consolidated statements of operations and comprehensive loss.

Amortization of capitalized software related to software used internally was $ 1.7 million and $ 0.3 million for the years ended December 31, 2023 and 2022, respectively, and is recorded in operating expenses within the accompanying consolidated statements of operations and comprehensive loss.

During 2023, 2022, and 2021, the Company recorded expense for certain software development costs of $ 0.4 million, $ 0.3 million, and $ 0.6 million, respectively, within research and development expense in the accompanying consolidated statements of operations and comprehensive loss, relating to development projects the Company decided to abandon prior to completion.

2 unchanged sentences

Years Ending December 31,

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

2024 $ 31,796

ACCRUED EXPENSES

2 unchanged sentences

Accrued commissions 16,494 20,389

Accrued salary, payroll tax, and employee

benefit liabilities

Accrued salary, payroll tax, and employee benefit liabilities 36,171 34,113

Other accrued expenses 15,624 16,323

Total accrued expenses $ 100,075 $ 99,182

CREDIT FACILITY

The Company had a credit agreement (the “Credit Facility”) provided by Silicon Valley Bank, to be used for general corporate purposes, including the financing of working capital requirements.

As of December 31, 2021, the aggregate principal amount available under the Credit Facility was up to $ 75.0 million with the option to increase the availability up to $ 100.0 million.

The Credit Facility had a maturity date of May 7, 2022 , and the Company elected to terminate the Credit Facility on April 29, 2022 , prior to such maturity date.

As of December 31, 2021, no amounts had been drawn down under the Credit Facility, and the Company was in compliance with all financial covenants.

As of December 31, 2021, the Company had letters of credit outstanding under the Credit Facility of $ 6.5 million to secure various U.S.

and Australia leased office facilities.

Upon termination of the Credit Facility, all outstanding letters of credit remain outstanding on an unsecured basis, without any requirement to set aside restricted cash.

As of December 31, 2022, such letters of credit totaled $ 6.5 million.

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

COMMITMENTS AND CONTINGENCIES

Purchase commitments

As of December 31, 2022, future unconditional purchase commitments for software service subscriptions and other services were as follows (in thousands):

As of December 31, 2023, future minimum payments under our non-cancellable purchase commitments for software service subscriptions and other services were as follows (in thousands):

Years Ending December 31,

In January 2023, the Company executed a renewal agreement for a total commitment of $ 45.0 million to be paid over the period from 2023 through 2025 .

The commitment is excluded from the table above as the agreement was not signed as of December 31, 2022.

2024 $ 37,492

Total $ 59,948

From time to time, the Company may be subject to various litigation matters arising in the ordinary course of business.

However, the Company is not aware of any currently pending legal matters or claims that could have a material adverse effect on its financial position, results of operations, or cash flows should such litigation be resolved unfavorably.

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

Indemnifications

In the ordinary course of business, the Company may provide indemnification of varying scope and terms to customers, vendors, investors, directors, and officers with respect to certain matters, including, but not limited to, losses arising out of its breach of such agreements, services to be provided by the Company, or from intellectual property infringement claims made by third parties.

In the ordinary course of business, the Company may provide indemnification of varying scope and terms to customers, vendors, investors, directors, and officers with respect to certain matters, including, but not limited to, losses arising out of its breach of agreements, services to be provided by the Company, or from intellectual property infringement claims made by third parties.

These indemnification provisions may survive termination of the underlying agreement, and the maximum potential amount of future payments the Company could be required to make under these indemnification provisions may not be subject to maximum loss clauses.

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To date, the Company has not accrued a liability for these guarantees because the likelihood of incurring a payment obligation, if any, in connection with these guarantees is not probable or reasonably estimable.

Upon the closing of its IPO, the Company filed an Amended and Restated Certificate of Incorporation which authorized 1,000,000,000 shares of common stock with a par value of $ 0.0001 per share, and 100,000,000 shares of undesignated preferred stock with a par value of $ 0.0001 per share.

Each share of common stock is entitled to one vote per share.

STOCK-BASED COMPENSATION

Equity Incentive Pl ans

In May 2021, the Board adopted, and the stockholders approved, the 2021 Equity Incentive Plan (the "2021 Plan") with the purpose of granting stock-based awards, including stock options, stock appreciation rights, RSAs, RSUs, performance awards and other forms of awards, to employees, directors, and consultants.

A total of 30,962,615 shares of common stock were authorized for issuance under the 2021 Plan in May 2021.

Equity Incentive Plans

In May 2021, the board of directors of the Company (the “Board”) adopted, and the stockholders approved, the 2021 Equity Incentive Plan (the “2021 Plan”) with the purpose of granting stock-based awards, including stock options, stock appreciation rights, RSAs, RSUs, PSUs, and other forms of awards, to employees, directors, and consultants.

As of December 31, 2022, a total of 37,664,961 shares of common stock were authorized for issuance under the 2021 Plan.

The number of shares of the Company’s common stock reserved for issuance under the 2021 Plan automatically increases on January 1 of each calendar year, starting on January 1, 2022 through January 1, 2031, in an amount equal to (i) 5 % of the total number of shares of the Company’s common stock outstanding on December 31 of the fiscal year before the date of each automatic increase, or (ii) a lesser number of shares determined by the Board prior to the applicable January 1.

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No stock options have been issued under the 2021 Plan.

In June 2014, the Company adopted the 2014 Equity Incentive Plan (the “2014 Plan”), which was amended in April 2020 to increase the number of shares of common stock authorized for issuance.

The 2014 Plan provided for the issuance of incentive and non-statutory stock options to purchase common shares and the grant of other common stock awards to employees, officers, directors, and consultants of the Company.

The 2014 Plan served as the successor to the Company’s 2012 Incentive Plan (the “2012 Plan”) and 2004 Equity Incentive Plan (the “2004 Plan”).

On the date the Company adopted the 2014 Plan, any options issued and outstanding under the 2012 and 2004 Plans were substituted by options with identical terms to purchase the Company’s common stock under the 2014 Plan.

On the date the 2021 Plan was adopted, no further shares could be issued under the 2014 Plan;

however, all shares outstanding under the 2014 Plan remain subject to the terms of the 2014 Plan.

Options issued under the 2014 Plan generally are exercisable for periods not to exceed 10 years and generally vest over a four to five-year period.

The Company issues new shares upon exercise of stock-based awards.

Procore Technologies, Inc.

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The following table summarizes the stock option activity during the year ended December 31, 2023 (aggregate intrinsic value in thousands):

of Shares Weighted-

Price Weighted-

Life Aggregate

Outstanding at December 31, 2022 5,723,772 $ 12.65 5.2 $ 197,620

Exercised ( 1,371,834 ) 12.85

Canceled/Forfeited ( 11,886 ) 22.08

1 unchanged sentence

Exercisable at December 31, 2023 4,340,052 $ 12.57 4.1 $ 245,884

As of December 31, 2022, the total unrecognized stock-based compensation cost for unvested stock options was $ 1.8 million, which is expected to be recognized over a weighted-average period of 0.4 years.

As of December 31, 2021, the total unrecognized stock-based compensation cost for unvested stock options was $ 12.2 million, which was expected to be recognized over a weighted-average period of 1.1 years.

The intrinsic value of options exercised during the years ended December 31, 2023, 2022, and 2021 was $ 66.7 million, $ 75.1 million, and $ 262.4 million, respectively.

As of December 31, 2023, there is no unrecognized stock-based compensation cost for stock options previously granted by the Company.

Restricted stock units

In 2018, the Company began issuing RSUs to certain employees, officers, directors, and consultants.

The RSUs granted prior to the Company’s IPO vested upon the satisfaction of both a service and a performance condition, if both conditions are met before the award’s expiration date.

The awards granted prior to the Company’s IPO vested upon the satisfaction of both a service and a performance condition, if both conditions are met before the award’s expiration date.

For certain awards, the performance condition was satisfied solely on the effective date of a registration statement for the Company’s IPO, and for other awards, the performance condition was satisfied on the earlier of either the effective date of a registration statement for the Company’s IPO or a change in control.

RSUs granted with service vesting conditions generally vest over four years on either a quarterly or annual vesting schedule.

Awards granted with service vesting conditions generally vest over four years on either a quarterly or annual vesting schedule.

Prior to its IPO, given the Company’s common stock was not publicly traded, the grant date fair value of RSUs was determined based upon the fair value of the Company’s common stock.

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The fair value was determined in accordance with applicable elements of the practice aid issued by the American Institute of Certified Public Accountants, Valuation of Privately Held Company Equity Securities Issued as Compensation.

Service-based restricted stock units

Subsequent to the completion of the Company’s IPO in May 2021, the fair value of RSUs was determined based on the trading price of its publicly traded common stock.

2 unchanged sentences

Upon the effective date of the registration statement for the Company’s IPO, the performance vesting condition for all RSUs granted was satisfied and the Company recognized on a graded vesting basis a cumulative catch-up stock-based compensation adjustment of $ 115.3 million in its consolidated statement of operations and comprehensive loss for the portion of the service period satisfied from the grant date through the effective date of the registration statement.

Substantially all of the RSUs granted subsequent to the Company’s IPO vest based solely on continued service, which is generally over four years .

The intrinsic value of RSUs vested during the years ended December 31, 2022 and 2021 was $ 156.9 million and $ 187.7 million, respectively.

Substantially all of the

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

RSUs granted subsequent to the Company’s IPO vest based solely on continued service, which is generally over four years .

The intrinsic value of RSUs vested during the years ended December 31, 2023, 2022, and 2021 was $ 221.9 million, $ 156.4 million, and $ 187.7 million, respectively.

As of December 31, 2023, the total unrecognized stock-based compensation cost for all RSUs outstanding at that date was $ 387.1 million, which is expected to be recognized over a weighted-average vesting period of 2.5 years.

As of December 31, 202 1 , the total unrecognized stock-based compensation cost for all RSUs outstanding at that date was $ 281.0 million , which was expected to be recognized over a weighted-average vesting period of 2.0 years .

The following table summarizes the RSU activity during the year ended December 31, 2023:

Weighted-Average Grant Date Fair Value

Shares Weighted-Average Grant

Date Fair Value

Unvested at December 31, 2022 8,436,671 $ 57.99

Granted 3,977,470 60.05

Vested ( 3,688,075 ) 54.86

Canceled/Forfeited ( 1,343,993 ) 65.20

Unvested at December 31, 2023 7,382,073 $ 59.35

Performance-based restricted stock units

During 2022 and 2023, the Company granted PSUs to certain non-executive employees, which vest based on the achievement of certain operating performance targets.

Such PSUs are valued based on the trading price of its publicly traded common stock and require the employee's continued service through the date the related shares vest.

The Company recognizes compensation expense for such awards on a graded vesting basis through the expected vest date, beginning in the period in which it becomes probable that the performance target will be achieved.

Management reassesses the probability of achievement for PSUs each reporting period.

As of December 31, 2023, the Company has granted 98,572 PSUs to certain non-executive employees at a weighted-average grant date fair value of $ 54.58 per share.

During the years ended December 31, 2023 and 2022, the Company recognized stock-based compensation expense of $ 0.9 million and $ 0.9 million, respectively, relating to these shares.

Restricted stock awards

2 unchanged sentences

These shares are released from restriction quarterly over a two-year period assuming the continued service of the employees.

As of December 31, 2022, 99,833 shares have vested.

As of December 31, 2021, no shares had vested.

During 2022 and 2021, the Company recognized stock-based compensation expense of $ 9.5 million and $ 1.6 million, respectively, relating to these shares.

As of December 31, 2023, all shares have vested.

As of December 31, 2022, 99,833 shares had vested.

During the years ended December 31, 2023, 2022, and 2021, the Company recognized stock-based compensation expense of $ 7.8 million, $ 9.5 million, and $ 1.6 million, respectively, relating to these shares.

In July 2019, the Company issued 205,464 restricted Series H-1 redeemable convertible preferred stock awards (“Series H-1 RSAs”) to certain employees at a grant date fair value of $ 26.75 in connection with the acquisition of Honest Buildings, Inc.

2 unchanged sentences

As of December 31, 2021, all of the Series H-1 RSAs were fully vested.

During the year ended December 31, 2021 and 2020, the Company recognized stock-based compensation expense of $ 1.6 million and $ 2.7 million, respectively, for these shares.

Sales of common stock

During the year ended December 31, 2021, certain of the Company’s investors acquired outstanding common stock from the Company’s employees.

For the shares acquired at a price in excess of the estimated fair value of the Company’s common stock, the Company recorded stock-based compensation expense of $ 5.5 million for the period from January 1, 2021 through the Company’s IPO on May 20, 2021 for the difference between the price paid by the investors and the estimated fair value on the date of the transactions.

During the year ended December 31, 2021, the Company recognized stock-based compensation expense of $ 1.6 million for these shares.

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

Employee Stock Purchase Plan

In May 2021, the Board adopted, and the stockholders approved, the ESPP, which became effective immediately prior to the effective date of the Company’s IPO.

A total of 2,600,000 shares of common stock were initially reserved for issuance under the ESPP.

As of December 31, 2022, a total of 3,940,469 shares of common stock had been reserved for issuance under the ESPP.

The number of shares of the Company’s common stock reserved for issuance under the ESPP automatically increases on January 1 of each year for a period of ten years , beginning on January 1, 2022 and continuing through January 1, 2031, by the lesser of (i) 1 % of the total number of shares of the Company’s common stock outstanding on December 31 of the immediately preceding year;

1 unchanged sentence

Accordingly, on January 1, 2023, the number of shares of common stock reserved under the ESPP increased by an additional 1,391,595 shares.

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

The offering periods are scheduled to start in May and November of each year.

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The fair value of the ESPP purchase rights on the date of grant using the Black-Scholes option pricing model was estimated using the following assumptions:

Risk-free interest rate

2023 2022 2021

Risk-free interest rate 4.68 % to 5.33 %

1.47 % to 4.55 %

0.03 % to 0.18 %

Expected term (in years)

Expected term (in years) 0.5 to 1.0

Estimated dividend yield 0.00 % 0.00 % 0.00 %

Estimated weighted-average volatility

Estimated weighted-average volatility 46.29 % to 64.76 %

61.14 % to 72.69 %

1 unchanged sentence

The term for the ESPP purchase rights is the offering period.

The Company estimates volatility using historical volatilities of a group of public companies in a similar industry and stage of life cycle, selected by management, for a period commensurate with the term.

Beginning in the fourth quarter of 2023, the Company estimates volatility for ESPP purchase rights based on the historical volatility of its own common stock price.

Prior to that, given the Company’s limited trading history, the Company estimated volatility using the historical volatilities of a group of public companies in a similar industry and stage of life cycle, selected by management, in addition to considering the Company’s own historical volatility, for a period commensurate with the term of the ESPP purchase rights.

The interest rate is derived from government bonds with a similar term to the ESPP purchase right granted.

2 unchanged sentences

The fair value of the Company’s common stock used to value ESPP purchase rights is based on the trading price of its publicly traded common stock.

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

Employee payroll contributions accrued in connection with the ESPP were $ 5.0 million and $ 4.7 million as of December 31, 2023 and 2022, respectively, and are included within accrued expenses in the accompanying consolidated balance sheets.

1 unchanged sentence

Stock-based compensation expense related to the ESPP is recognized on a straight-line basis over the offering period.

During the years ended December 31, 2022 and 2021, the Company recorded stock-based compensation of $ 15.0 million and $ 8.5 million, respectively, in connection with the ESPP.

During the years ended December 31, 2023, 2022, and 2021, the Company recognized stock-based compensation of $ 10.7 million, $ 15.0 million, and $ 8.5 million, respectively, in connection with the ESPP.

During the years ended December 31, 2023, 2022, and 2021, 575,928 , 551,753 , and 166,370 shares of the Company’s common stock were purchased under the ESPP, respectively.

As of December 31, 2023, unrecognized stock-based compensation expense related to the ESPP was $ 4.7 million, which is expected to be recognized over a weighted-average period of 0.4 years.

As of December 31, 2021 , unrecognized stock-based compensation expense related to the ESPP was $ 13.8 million, which was expected to be recognized over a weighted-average period of 0.6 years.

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

Sales of common stock

During the year ended December 31, 2021, certain of the Company’s investors acquired outstanding common stock from the Company’s employees.

Stock-based compensation

The Company recorded total stock-based compensation cost from stock options, RSUs, ESPP, RSAs, and sales of stock by employees in excess of fair value as follows (in thousands):

The Company recorded total stock-based compensation cost from stock options, RSUs, PSUs, ESPP, RSAs, and sales of stock by employees in excess of fair value as follows (in thousands):

Year Ended December 31,

2023 2022 2021

Cost of revenue $ 7,388 $ 7,253 $ 8,094

3 unchanged sentences

Total stock-based compensation expense $ 174,835 $ 162,886 $ 227,161

Stock-based compensation capitalized for software

development and cloud-computing arrangement

implementation costs

Stock-based compensation capitalized for software development and cloud-computing arrangement implementation costs 9,717 8,818 5,247

Total stock-based compensation cost $ 184,552 $ 171,704 $ 232,408

2 unchanged sentences

Year Ended December 31,

2023 2022 2021

Domestic $ ( 191,132 ) $ ( 287,569 ) $ ( 289,187 )

Foreign 2,711 1,104 264

Total $ ( 188,421 ) $ ( 286,465 ) $ ( 288,923 )

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

The provision for (benefit from) income taxes is comprised of the following (in thousands):

Year Ended December 31,

2023 2022 2021

State $ 709 $ 442 $ 480

Foreign 1,333 307 255

Total 2,042 749 735

Federal 4 ( 34 ) ( 17,841 )

State 6 93 ( 6,301 )

Foreign ( 779 ) ( 342 ) ( 351 )

Total ( 769 ) ( 283 ) ( 24,493 )

Provision for (benefit from) income taxes $ 1,273 $ 466 $ ( 23,758 )

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

The following table provides a reconciliation between income taxes computed at the U.S.

1 unchanged sentence

Year Ended December 31,

2023 2022 2021

Computed expected income tax benefit $ ( 39,568 ) $ ( 60,120 ) $ ( 60,674 )

2 unchanged sentences

Non-deductible expenses 4,489 2,687 2,623

Series I warrant

Non-deductible base erosion expenses 11,403 — —

Non-deductible officers’ compensation

12,775 3,648 8,345

Stock-based compensation ( 9,678 ) 135 ( 30,523 )

1 unchanged sentence

Foreign rate differential 40 35 35

Other 3,358 ( 110 ) ( 3,498 )

Provision for (benefit from) income taxes $ 1,273 $ 466 $ ( 23,758 )

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

Significant components of the Company’s deferred tax assets and liabilities are presented below (in thousands):

1 unchanged sentence

Net operating loss $ 215,915 $ 209,795

Tax credits 76,504 58,724

Lease liabilities 20,213 23,203

1 unchanged sentence

Capitalized software cost 59,487 39,582

Other 5,531 5,013

Total deferred tax assets 392,549 358,498

2 unchanged sentences

Deferred tax liabilities:

Lease assets ( 16,376 ) ( 19,296 )

Acquired intangible assets ( 32,120 ) ( 39,497 )

Capitalized software

Contract cost asset ( 16,868 ) ( 15,324 )

Prepaid and accrued expenses ( 3,184 ) ( 2,897 )

Other ( 1,201 ) ( 1,522 )

Total deferred tax liabilities ( 69,749 ) ( 78,536 )

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

Total $ ( 1,622 ) $ ( 2,375 )

In assessing the realizability of deferred tax assets, management considers whether it is “more likely than not” that some portion or all of the deferred tax assets will be realized.

1 unchanged sentence

Based on all available objective evidence management believes it is “more likely than not” that the net deferred tax assets will not be fully realizable in the U.S.

and United Kingdom (“U.K.”) as of December 31, 2022 and 2021.

as of December 31, 2023 and 2022.

Accordingly, the Company’s U.S.

4 unchanged sentences

Year Ended December 31,

2023 2022 2021

Beginning balance $ 282,337 $ 204,182 $ 112,389

Current year change 40,810 78,155 114,639

Release of valuation allowance as a result of purchase

accounting for business combinations

Increase (decrease) in valuation allowance as a result of purchase accounting for business combinations 1,275 — ( 22,846 )

Ending balance $ 324,422 $ 282,337 $ 204,182

1 unchanged sentence

These net deferred tax liabilities are an available source of income to realize the Company’s deferred tax assets.

Accordingly, the Company released $ 24.2 million of valuation allowance which resulted in an income tax benefit in the consolidated statements of operations and comprehensive loss for 2021.

Accordingly, the Company released $ 24.2

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

million of valuation allowance which resulted in an income tax benefit in the consolidated statements of operations and comprehensive loss for 2021.

The Company did not provide for U.S.

6 unchanged sentences

The Internal Revenue Code (the “IRC”) of 1986, as amended, imposes restrictions on the utilization of net operating losses and credits when a Company experiences a cumulative change in ownership of more than 50 % over a three-year period.

As of December 31, 2022, the Company completed an analysis to determine if the Company was subject to the provisions of IRC Section 382.

Although a portion of the net operating losses and credit carryovers are subject to annual limitations, the Company has determined that it should be able to fully utilize these net operating losses and credit carryovers before they expire, provided the Company generates sufficient taxable income.

The Company has identified a portion of net operating losses and credit carryovers are subject to annual limitations, which the Company has also determined that it should be able to fully utilize these net operating losses and credit carryovers before they expire, provided the Company generates sufficient taxable income.

As of December 31, 2023, the Company had credits for research activities available for carryforward for federal income tax purposes of $ 73.8 million and for state income tax purposes of $ 33.2 million, which are available to offset future income tax in those jurisdictions and which began to expire in 2023 for federal and have no expiration for state.

1 unchanged sentence

Year Ended December 31,

2023 2022 2021

Beginning balance $ 21,727 $ 17,010 $ 8,369

2 unchanged sentences

Ending balance $ 29,041 $ 21,727 $ 17,010

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

Due to the Company’s full valuation allowance on federal and state taxes, no ne of the unrecognized tax benefits would affect the Company’s effective tax rate, if recognized.

Due to the Company’s full valuation allowance on federal and state taxes, none of the unrecognized tax benefits would affect the Company’s effective tax rate, if recognized.

The Company does not anticipate any significant increases or decreases to its unrecognized tax positions within the next 12 months.

7 unchanged sentences

However, the taxing authorities may continue to examine the Company’s federal and state NOL carryforwards until the statute of limitations closes on the tax years in which the federal and state net operating losses are utilized.

The Company is not currently under exam in any jurisdiction.

At December 31, 2023, tax years 2016 to 2020 were under examination by the Egyptian Taxing Authority.

Our foreign operations in Egypt represent an immaterial portion of our overall business.

NET LOSS PER SHARE

1 unchanged sentence

The Company’s redeemable convertible preferred stock were participating securities as the holders of the redeemable convertible preferred stock were entitled to participate in dividends with common stock.

The Company’s common stock, which was converted from redeemable convertible preferred stock upon the closing of its IPO, is weighted based on the period of time the common stock was outstanding after conversion in 2021.

The Company’s common stock, which was converted from redeemable convertible preferred stock upon

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

the closing of its IPO, is weighted based on the period of time the common stock was outstanding after conversion in 2021.

Net losses were not allocated to the redeemable convertible preferred stock as the holders of the redeemable convertible preferred stock did not have a contractual obligation to share in any losses.

3 unchanged sentences

Year Ended December 31,

Shares of common stock issuable upon

conversion of redeemable convertible

preferred stock

Shares of common stock issuable upon

conversion of Series I warrant

RSUs and RSAs subject to future vesting

2023 2022 2021

Shares of common stock issuable upon conversion of redeemable convertible preferred stock — — 33,431,158

RSUs, PSUs, and RSAs subject to future vesting 8,489,902 8,189,247 6,155,387

Shares issuable pursuant to the ESPP 495,554 627,698 326,819

Shares of common stock issuable from stock

Shares of common stock issuable from stock options 4,979,813 6,450,019 9,618,882

Total 13,965,269 15,266,964 49,532,246

EMPLOYEE BENEFIT PLANS

5 unchanged sentences

Matching contributions to the 401(k) Plan totaled $ 17.2 million, $ 14.7 million, and $ 9.6 million for the years ended December 31, 2023, 2022, and 2021, respectively.

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

The Company also has defined-contribution plans in certain other countries.

3 unchanged sentences

Year Ended December 31,

2023 2022 2021

Revenue by geographic region

$ 815,773 $ 616,654 $ 439,871

Rest of the world 134,237 103,549 74,950

1 unchanged sentence

Percentage of revenue by geographic region

86 % 86 % 85 %

Rest of the world 14 % 14 % 15 %

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

The following table sets forth the total of property and equipment, net, and ROU lease assets by geographic region (in thousands):

$ 97,936 $ 108,884

Rest of the world 16,838 9,269

RESTRUCTURING

In July 2020 , the Company approved, committed to, and initiated a business transformation plan which resulted in the termination of 139 employees, which represented approximately 7 % of the Company’s workforce.

By restructuring, the Company intended to streamline its organization to better align with the Company’s current strategic goals.

The restructuring event was completed by December 31, 2020 .

During the year ended December 31, 2020, the Company recorded severance and other benefit costs of $ 4.4 million in connection with the business transformation plan.

There have been no restructuring events or expenses in the years ended December 31, 2022 and 2021.

The following table summarizes the above restructuring-related expenses for 2020 by line item within the consolidated statement of operations and comprehensive loss (in thousands):

Cost of revenue

Sales and marketing

Research and development

General and administrative

Total $ 114,774 $ 118,153

SUBSEQUENT EVENTS

The Company has evaluated subsequent events through March 1, 2023, the date these consolidated financial statements were available to be issued, and has determined that no subsequent events, other than those disclosed in Note 7 and Note 12, require adjustment or disclosure in these consolidated financial statements.

The Company has evaluated subsequent events through February 26, 2024, the date these consolidated financial statements were available to be issued, and has identified the following subsequent event.

On January 30, 2024, the Company executed a reduction of approximately 4 % of its global workforce as part of its ongoing evaluation of its operations to ensure alignment of its workforce with, and to enable greater investment in, key growth opportunities.

The Company estimates that it will incur charges of approximately $ 4.6 million related to severance and employee benefits, which is expected to be substantially incurred in the first quarter of fiscal year 2024, and will consist primarily of cash expenditures.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data