What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-02-26 compared with 2024-02-26 · 254 added, 312 removed, 919 unchanged (38% of the section changed)

49 unchanged sentences

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.

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 with 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

14 unchanged sentences

Total current assets 1,099,879 955,734

Marketable securities, non-current (amortized cost of $ 46,042 and $ 0 at December 31, 2024 and 2023, respectively)

Capitalized software development costs, net 112,321 83,045

48 unchanged sentences

Other expense, net ( 3,136 ) ( 360 ) ( 1,737 )

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 )

Loss before provision for income taxes ( 104,181 ) ( 188,421 ) ( 286,465 )

Provision for income taxes 1,775 1,273 466

Net loss $ ( 105,956 ) $ ( 189,694 ) $ ( 286,931 )

1 unchanged sentence

Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted 147,444,772 141,961,467 136,525,728

Other comprehensive income (loss)

Other comprehensive (loss) income

Foreign currency translation adjustment, net of tax $ ( 1,787 ) $ 437 $ ( 1,355 )

Unrealized income (loss) on available-for-sale debt and marketable securities, net of tax 425 504 ( 378 )

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

Total other comprehensive (loss) income ( 1,362 ) 941 ( 1,733 )

Comprehensive loss $ ( 107,318 ) $ ( 188,753 ) $ ( 288,664 )

2 unchanged sentences

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

Preferred Stock Common Stock Additional

Common Stock Additional

Capital Accumulated

Comprehensive

Income (Loss) Accumulated

(Loss) Income Accumulated

Deficit Total

Stockholders’

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

(in thousands, except share amounts) Shares Amount

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

1 unchanged sentence

Stock-based compensation — — 171,704 — — 171,704

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 upon settlement of restricted stock units 2,845,174 1 — — — 1

Issuance of common stock for employee stock purchase plan 551,753 — 22,133 — — 22,133

Issuance of common stock for business combination — — 610,499 — 58,028 — — 58,028

Issuance of restricted stock awards — — 199,670 — — — — —

Adjustment of holdback shares released for business combination ( 605 ) — — — — —

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

5 unchanged sentences

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

Adjustment of holdback shares released for business combination — — ( 605 ) — — — — —

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

Other comprehensive income — — — 941 — 941

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

4 unchanged sentences

Issuance of common stock for employee stock purchase plan 465,698 — 24,069 — — 24,069

Other comprehensive income — — — — — 941 — 941

Other comprehensive loss — — — ( 1,362 ) — ( 1,362 )

Net loss — — — — ( 105,956 ) ( 105,956 )

13 unchanged sentences

Noncash operating lease expense 11,102 13,092 10,170

Unrealized foreign currency (gain) loss, net ( 524 ) ( 351 ) 685

Unrealized foreign currency loss (gain), net 2,304 ( 524 ) ( 351 )

Deferred income taxes ( 881 ) ( 769 ) ( 283 )

Provision for credit losses 591 8,052 2,584

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

(Increase) decrease in fair value of strategic investments ( 454 ) 287 483

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

26 unchanged sentences

Financing activities

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

Proceeds from stock option exercises $ 15,737 $ 17,618 $ 22,364

1 unchanged sentence

Payments of deferred offering costs — — ( 270 )

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

Payment of deferred business combination consideration ( 1,470 ) — ( 3,870 )

Payment of deferred asset acquisition consideration ( 81 ) — —

Principal payments under finance lease agreements, net of proceeds from lease incentives ( 2,019 ) ( 1,853 ) ( 1,705 )

20 unchanged sentences

Capitalized software development costs included in accounts payable and accrued expenses at year end 3,775 1,905 1,645

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

Deferred asset acquisition payment included in other current liabilities and other non-current liabilities at year end 1,400 1,405 —

Stock-based compensation capitalized for software development 13,235 9,421 8,562

Conversion of available-for-sale debt securities into equity securities 350 — 3,680

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 ( 3,875 ) 15,385 10,198

6 unchanged sentences

Procore Technologies, Inc.

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

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

The Company was incorporated in California in 2002 and re-incorporated in Delaware in 2014.

The Company is headquartered in Carpinteria, California, and has operations globally.

Initial Public Offering

The Company’s registration statement on Form S-1 related to its initial public offering (“IPO”) was declared effective on May 19, 2021, and the Company’s common stock began trading on the New York Stock Exchange on May 20, 2021.

On May 24, 2021, the Company completed its IPO, in which it issued and sold 10,410,000 shares of common stock at a price of $ 67.00 per share, including 940,000 shares of common stock pursuant to the exercise in full of the underwriters’ option to purchase additional shares.

The Company received $ 665.1 million in net proceeds, after deducting underwriting discounts and commissions of $ 32.3 million and before other offering costs of $ 7.5 million.

At the closing of the IPO, all outstanding shares of redeemable convertible preferred stock were automatically converted into an aggregate of 85,331,278 shares of common stock on a one -for-one basis.

Upon the effectiveness date of the registration statement for the IPO, the performance vesting condition of restricted stock units (“RSUs”) was met, and the Company recognized $ 115.3 million of stock-based compensation expense in its consolidated statement of operations and comprehensive loss, for the portion of the service period completed by employees and non-employees from the grant date through the effectiveness date of the registration statement for the IPO.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 unchanged sentences

Actual results could differ from the Company’s estimates.

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

The Company operates as a single operating segment.

Operating segments are defined as components of an enterprise for which separate financial information is evaluated regularly by the chief operating decision maker (“CODM”), in deciding how to allocate resources and assess performance.

The Company’s CODM is its Chief Executive Officer.

In recent years, the Company has completed a number of acquisitions which have allowed it to expand its platform capabilities and related product and service offerings.

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

The Company’s CODM is its Chief Executive Officer (“CEO”).

In recent years, the Company has completed a number of acquisitions which have allowed it to expand its platform capabilities and related products and services.

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

While the Company provides different products and services, including as a result of its acquisitions, its business operates as one operating segment because its CODM evaluates the Company’s revenue, expenses and assets as reported on the consolidated income statement and balance sheet for purposes of assessing financial performance and allocating resources on a consolidated basis.

The CODM uses consolidated revenue, expenses, and assets in deciding whether to invest into various parts of the Company, such as managing budget and acquisitions.

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

Concentrations of credit risk

15 unchanged sentences

No single customer accounted for 10 % or more of total revenue for the years ended December 31, 2024, 2023, and 2022.

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

The Company also had 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 was 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.

The Company ceased originations under its materials financing program in October 2023.

Cash, cash equivalents, and restricted cash

3 unchanged sentences

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.

The Company held no restricted cash as of December 31, 2024 or 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.

All marketable securities held as of December 31, 2024 and 2023 are classified as 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

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

contractual maturity at the balance sheet date.

The Company re-evaluates such classification at each balance sheet date.

2 unchanged sentences

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 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 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.

For foreign subsidiaries where 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.

19 unchanged sentences

The Company estimates the likelihood that it will incur and be reimbursed for such costs at the commencement of the lease and reduce the ROU liability for the discounted future cash receipt, with a corresponding offset to the ROU asset.

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

ROU assets represent the Company’s right to control an underlying asset for the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease.

6 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

In January 2022, the Company elected to partially self-fund its health insurance plan.

The Company has elected to partially self-fund its health insurance plan.

To reduce its risk related to high-dollar claims, the Company maintains individual stop-loss insurance.

15 unchanged sentences

Available-for-sale debt securities

The Company also holds certain investments in debt securities of privately held companies, which are classified as available-for-sale debt securities.

The Company may hold investments in debt securities of privately held companies, which are classified as available-for-sale debt securities.

Such available-for-sale debt securities are recorded at fair value with changes in fair value recorded in other comprehensive income or loss.

1 unchanged sentence

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.

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

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

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

recognized as goodwill.

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

11 unchanged sentences

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.

Upon completion of the project, the IPR&D intangible asset will 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.

1 unchanged sentence

The Company has one reporting unit and tests goodwill impairment on an annual basis during the fourth quarter of the Company’s fiscal year, and between annual tests if an event occurs or circumstances change that indicate that goodwill may be impaired.

In assessing impairment, the Company has the option to first assess qualitative factors to determine whether or not a reporting unit is more likely than not impaired.

In assessing impairment, the Company has the option to first assess qualitative factors to determine whether or not a reporting unit is more likely than not

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

Alternatively, the Company may perform a quantitative impairment assessment or if the qualitative assessment indicates that it is more likely than not that the reporting unit’s fair value is less than its carrying amount, a quantitative analysis is required.

6 unchanged sentences

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

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

expensed as incurred.

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

16 unchanged sentences

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.

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

As of December 31, 2024 and 2023, the carrying value of the Company’s financial instruments included in current assets and current liabilities (including accounts receivable, accounts payable, and accrued expenses) approximate fair value due to the short-term nature of such items.

4 unchanged sentences

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

I mpairment and abandonment of long-lived assets

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.

3 unchanged sentences

Assets to be abandoned with no remaining future service potential are written down to amounts expected to be recovered.

Materials financing revenues and receivables

In connection with its acquisition of Express Lien, Inc.

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

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

During the year ended December 31, 2024, credit losses incurred in connection with the Company's materials financing program were immaterial .

During the year ended December 31, 2023, the Company incurred credit losses of $ 8.1 million in connection with 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, 2024, there were no gross receivables outstanding from customers or allowance for credit losses related to the materials financing program.

As of December 31, 2023, gross receivables under the materials financing program were $ 5.7 million, and the related allowance for expected credit losses was $ 3.8 million.

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

Revenue recognition

1 unchanged sentence

The software products are hosted on its cloud-based SaaS construction management platform.

Subscriptions are sold for a fixed fee and revenue is recognized ratably over the term of the subscription.

Subscriptions are sold for a fixed fee and revenue is recognized ratably over the term of

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

the subscription.

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.

19 unchanged sentences

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

5 unchanged sentences

As of December 31, 2024, the aggregate amount of the transaction price allocated to RPO was $ 1.3 billion, of which the Company expects to recognize approximately $ 829.7 million, or 64 %, as revenue in the next 12 months and substantially all of the remaining $ 456.8 million between 12 and 36 months thereafter.

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

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

19 unchanged sentences

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, and bonuses.

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

Sales and marketing

9 unchanged sentences

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.

Additionally, research and development expenses include non-personnel-related expenses, such as contractor costs to supplement the Company’s staff levels,

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

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 human resources, information technology, finance, legal, executive, and other administrative functions.

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

5 unchanged sentences

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”), performance-based restricted stock units (“PSUs”), and restricted stock awards (“RSAs”).

Stock-based awards include stock options, restricted stock units ("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.

9 unchanged sentences

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

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.

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.

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

The Company recognizes a tax benefit from an uncertain position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on its technical merits.

If this threshold is met, the Company measures the tax benefit as the largest amount of the benefit that is greater than 50% likely of being realized upon ultimate settlement.

The Company recognizes penalties and interest accrued with respect to uncertain tax positions, if any, in the provision for (benefit from) income taxes in the accompanying consolidated statements of operations and comprehensive loss.

The Company recognizes penalties and interest accrued with respect to uncertain tax positions, if any, in the provision for income taxes in the accompanying consolidated statements of operations and comprehensive loss.

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

Recently issued accounting pronouncements - not yet adopted

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

Recently adopted accounting pronouncements

Improvements to Reportable Segment Disclosures

1 unchanged sentence

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.

The new amendment expands 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.

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

The Company adopted the guidance for the fiscal year beginning January 1, 2024, and will implement the interim disclosure requirements in fiscal year 2025.

There was no impact on the Company’s consolidated financial statements upon adoption.

Recently issued accounting pronouncements - not yet adopted

Disaggregation of Income Statement Expenses

In November 2024, the FASB issued ASU No.

2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40) – Disaggregation of Income Statement Expenses (“ASU 2024-03”).

The new amendment expands financial reporting by requiring that public entities disclose additional information about certain expense categories in tabular form in the notes to financial statements at interim and annual reporting periods.

ASU 2024-03 is effective for public business entities for fiscal years beginning after December 15, 2026 and for interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted.

Upon adoption, public entities should apply the amendment either (1) prospectively to financial statements issued for reporting periods after the effective date or (2) retrospectively to all periods presented in the financial statements.

The Company is evaluating the impact of the adoption of ASU 2024-03 on its consolidated financial statements and disclosures.

Improvements to Income Tax Disclosure

11 unchanged sentences

Corporate notes and obligations 237,965 339 ( 67 ) 238,237

Time deposits 4,525 — ( 1 ) 4,524

Total marketable securities $ 383,295 $ 500 $ ( 80 ) $ 383,715

9 unchanged sentences

Total marketable securities $ 320,166 $ 186 $ ( 191 ) $ 320,161

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.

The following table summarizes the estimated fair value of investments classified as marketable securities by contractual maturity date (in thousands):

Due within 1 year $ 337,673 $ 320,161

Due in 1 to 2 years 46,042 —

Total marketable securities $ 383,715 $ 320,161

During the year ended December 31, 2024, there were maturities of marketable securities of $ 440.5 million.

There were no sales of marketable securities during the year ended December 31, 2024.

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.

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

There were $ 5.5 million sales of marketable securities during the year ended December 31, 2023.

Realized losses on sales 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 years ended December 31, 2024 and 2023.

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

6 unchanged sentences

Purchases of strategic investments 498 1,869 — 2,367

Conversion of available-for-sale debt securities into equity securities 368 — ( 368 ) —

Unrealized gains (losses) 824 ( 186 ) — 638

3 unchanged sentences

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, 2023 is summarized as follows (in thousands):

4 unchanged sentences

Purchases of strategic investments — 764 — 764

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

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

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

Impairment losses ( 175 ) — — ( 175 )

5 unchanged sentences

December 31, 2024

Level 1 Level 2 Level 3 Total

Level 1 Level 2 Total

Cash equivalents:

Money market funds $ 384,648 $ — $ 384,648

Corporate notes and obligations — 524 524

Marketable securities:

2 unchanged sentences

Corporate notes and obligations — 238,237 238,237

Time deposits — 4,524 — 4,524

Strategic investments:

Investments in available-for-sale debt securities

Total $ 511,693 $ 257,194 $ 768,887

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

December 31, 2023

10 unchanged sentences

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

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

PROPERTY AND EQUIPMENT

17 unchanged sentences

If facts and circumstances regarding those judgments change in future periods, the Company reassesses its initial estimate of the term.

The Company’s corporate headquarters offices have initial lease terms expiring in 2027, and a 10 -year renewal option that the Company is reasonably certain it will exercise.

The Company’s corporate headquarters offices have initial lease terms expiring in 2027, and 10 -year renewal options that the Company was reasonably certain it would exercise at lease commencement.

The Company reassesses lease terms when there is a significant event or a significant change that is within its control that directly affects whether the Company is reasonably certain to exercise or not to exercise an option.

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):

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Total lease cost $ 23,563 $ 25,410 $ 22,589

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

Supplemental information related to leases is as follows (in thousands):

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Operating leases 6.10 % 3.58 % 2.89 %

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

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

Maturities of lease payments, net of tenant improvement reimbursement, for leases where the lease commencement date commenced on or prior to December 31, 2024 are as follows (in thousands):

Years Ending December 31, Operating

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Thereafter 37,258 35,021 72,279

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

Total lease payments, net of tenant improvement reimbursement $ 54,684 $ 56,384 $ 111,068

Less imputed interest ( 18,241 ) ( 12,804 ) ( 31,045 )

Total $ 36,443 $ 43,580 $ 80,023

During the year ended December 31, 2024, the Company modified its office leases in Austin, Texas to extend the lease terms and adjust the rent obligations, which resulted in an increase of $ 10.7 million in future rent commitments from the modification date through 2036.

In February 2025, the Company further modified its office leases in Austin, Texas to expand the leased premises and extend the lease terms, which resulted in an additional $ 22.0 million in future rent commitments, net of tenant improvement reimbursement, starting in 2025.

Total operating lease commencements and modifications during the period resulted in net decreases to right of use assets–operating leases and corresponding operating lease liabilities on the accompanying consolidated balance sheets of $ 4.0 million and $ 4.3 million, respectively, which primarily relate to the modified lease in

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

These decreases to the asset and liability were primarily due to higher discount rates in 2024 as compared to the original lease commencement periods, and tenant improvement allowances.

As of December 31, 2024, operating lease payments for leases greater than one month, but less than 12 months in duration were not significant.

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BUSINESS COMBINATIONS

On November 2, 2021, the Company completed the acquisition of all outstanding equity of Levelset, a lien rights management company.

The purpose of this acquisition is to add lien rights management to the Procore platform, enabling Procore to manage complex workflows and improve the payment process in construction.

The acquisition was accounted for as a business combination.

The purchase consideration totaled $ 484.1 million, which consisted of the following (in thousands):

Cash consideration $ 426,076

Fair value of common stock 58,028

Total purchase consideration $ 484,104

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.

The fair value of the common stock of $ 95.05 per share was determined using the closing stock price of the Company’s common stock on the acquisition date.

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, 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):

On May 30, 2024, the Company completed the acquisition of all outstanding equity of Intelliwave Technologies Inc.

(“Intelliwave”), a construction materials management company, for $ 29.8 million in cash consideration.

The purpose of this acquisition was to accelerate development of the Company’s Resource Management solution.

On the acquisition date, $ 4.3 million in cash was placed in an escrow account held by a third-party escrow agent for potential breaches of representations, warranties, and indemnities.

$ 3.8 million of the escrow amount was included in the purchase consideration and is scheduled to be released from escrow to Intelliwave stockholders 18 months after the acquisition date (subject to any indemnification claims).

The remaining $ 0.5 million of the escrow amount was released in February 2025.

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

Fair Value Useful Life

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Liabilities assumed

Accounts payable $ ( 1,037 )

Accrued expenses ( 1,945 )

Deferred revenue, current ( 2,210 )

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Net assets acquired $ 29,799

The purchase price accounting for this acquisition is final.

Developed technology intangible asset represents the fair value of the Levelset’s technology, which was valued considering both the cost to rebuild and relief from royalty methods.

Key assumptions under the cost to rebuild method include the estimated level of effort and related costs of reproducing or replacing the acquired technology.

Key assumptions under the relief from royalty method include forecasted revenue to be generated from the developed technology, an estimated royalty rate applicable to the technology, and a discount rate.

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 seven years .

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

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 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.

The $ 348.3 million goodwill balance is primarily attributable to synergies and expanded market opportunities that are expected to be achieved from the integration of Levelset with the Company’s offerings and assembled workforce.

The goodwill balance is not deductible for income taxes purposes.

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 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 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.

Levelset’s results of operations have been included in the Company’s consolidated financial statements from the acquisition date.

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

The following unaudited pro forma financial information combines the results of operations for Procore and Levelset as if the closing of the acquisition had occurred on January 1, 2020 and adjusts for amortization of acquired intangible assets, transaction costs associated with the acquisition, compensation expense assuming the retention payments discussed above vested, stock-based compensation expense for RSUs granted to continuing employees discussed in Note 12 and the 199,670 shares of RSAs issued to certain key Levelset employees as discussed above, and tax benefits recorded as a result of the acquisition.

The unaudited pro forma results do not reflect any cost saving synergies from operating efficiencies or the effect of the incremental costs incurred from integrating these companies.

Accordingly, these unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results of operations of the combined company would have been if the acquisitions had occurred at the beginning of 2020, nor are they indicative of future results of operations (in thousands):

Year Ended December 31,

Revenue $ 532,690

Net Loss $ ( 355,612 )

The measurement period for the valuation of assets acquired and liabilities assumed ends as soon as information on the facts and circumstances that existed as of the acquisition date becomes available, but does not exceed 12 months.

The purchase price allocation is subject to future adjustments.

During the year ended December 31, 2024, the Company recorded a measurement period adjustment which did not have a material impact on goodwill.

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

On October 21, 2021, the Company completed the acquisition of all outstanding equity of LaborChart, Inc.

(“LaborChart”) for $ 76.2 million in cash purchase consideration.

LaborChart is a labor management solution that facilitates labor scheduling, forecasting, office-to-field communications, certification tracking, data management, and labor analysis.

The purpose of this acquisition is to enhance Procore’s existing labor management solution.

The acquisition was accounted for as a business combination.

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

Fair value Useful life

Assets acquired

Cash and cash equivalents

Accounts receivable 730

Prepaid expenses and other current assets 737

Other non-current assets 417

Developed technology intangible asset 12,800 4 years

Customer relationships intangible asset 11,100 10 years

Goodwill 55,700

Total assets acquired

Liabilities assumed

Accrued expenses $ ( 120 )

Deferred revenue, current ( 1,704 )

Other current and non-current liabilities ( 690 )

Net deferred tax liabilities ( 4,891 )

Total liabilities assumed $ ( 7,405 )

Net assets acquired $ 76,228

The purchase price accounting for this acquisition is final.

Developed technology intangible asset represents the fair value of LaborChart’s technology, which was valued considering both the cost to rebuild and relief from royalty methods.

Developed technology intangible asset represents the fair value of Intelliwave’s technology, which was valued considering both the cost to rebuild and relief from royalty methods.

Key assumptions under the cost to rebuild method include the estimated level of effort and related costs of reproducing or replacing the acquired technology.

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

Customer relationships represent the fair value of the underlying relationships with LaborChart’s existing customers, which were valued using the multi-period excess earnings method.

Key assumptions under the multi-period excess earnings method include estimated future revenues, costs, cash flows, and a discount rate.

Customer relationships represent the fair value of the underlying relationships with Intelliwave’s existing customers, which were valued using the excess earnings method.

Key assumptions under the excess earnings method include estimated future revenues, costs, cash flows, and a discount rate.

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

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

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.

To retain certain LaborChart employees, the Company held back $ 9.0 million of the cash purchase price, which will vest based on continued employment over a three-year period.

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 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.

The $ 11.3 million goodwill balance is primarily attributable to synergies and expanded market opportunities that are expected to be achieved from the integration of Intelliwave with the Company’s products, services, platform, and assembled workforce.

Substantially all of the goodwill balance is not deductible for income taxes purposes.

The Company issued 65,269 PSUs and 67,807 RSUs at a grant date fair value of $ 68.96 per share in order to retain certain employees of Intelliwave.

The PSUs issued to Intelliwave employees will vest upon the achievement of certain integration milestones.

The total grant date fair value of the PSUs and RSUs was excluded from purchase consideration and is recognized as post-combination expense.

See Note 10 to these consolidated financial statements for details on how the Company expenses stock-based compensation.

The Company has not separately presented pro forma results reflecting the acquisition of Intelliwave or revenue and operating losses of Intelliwave for the period from the acquisition date through December 31, 2024, as the impacts were not material to the consolidated financial statements.

The acquisition-related transaction costs were not material and were expensed as incurred in the accompanying consolidated statements of operations and comprehensive loss.

Indus.ai Inc.

On May 3, 2021, the Company completed the acquisition of Indus.ai Inc.

(“Indus”), a Canada-based privately held company that offers an artificial intelligence (“AI”)-powered analytics platform to provide actionable insights for the construction industry, by acquiring 100 % of the outstanding voting interests in Indus for purchase consideration of $ 24.3 million in cash.

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.

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

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 the developed technology intangible asset with an estimated fair value of $ 14.8 million at the acquisition date, which was valued using the cost to rebuild method.

Key assumptions under the cost to rebuild method include the estimated level of effort and related costs of reproducing or replacing the acquired technology.

The fair value of the remaining acquired tangible and intangible net assets was immaterial.

The Company also recorded a deferred tax liability of $ 2.0 million as a result of the acquisition.

The Company recorded goodwill, which represents the excess of the purchase consideration over the tangible and intangible assets acquired and liabilities assumed, of $ 11.5 million relating to the acquisition.

The goodwill balance is primarily attributed to the synergies expected and the skilled workforce acquired.

Goodwill is not deductible for income tax purposes.

The purchase price accounting for this acquisition is final.

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

The amortization expense is recorded in research and development in the accompanying consolidated statements of operations and comprehensive loss, as the acquired developed technology will be used to improve the Company’s internal research and development capabilities.

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

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.

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

INTANGIBLE ASSETS AND GOODWILL

Intangible assets

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

During the year ended December 31, 2024, the Company completed the acquisition of Intelliwave, which was accounted for as a business combination, as described in Note 7 above.

The Company also completed an asset acquisition for $ 3.9 million.

The acquired developed technology intangible asset has an estimated useful life of four 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 completed the acquisition of all outstanding equity of Unearth Technologies Inc.

for $ 9.2 million.

The 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 acquired developed technology intangible asset 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.

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 years ended December 31, 2024 or 2023.

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

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

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Amount Accumulated

Amount Weighted-Average Remaining Useful

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 $ 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

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

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

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$ 40,794 $ 37,578 $ 38,381

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

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

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Beginning balance $ 539,354 $ 539,128

Additions 11,333 —

Other adjustments, net (1)

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$ 112,321 $ 83,045

(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

(1) December 31, 2024 and 2023, the above balances include $ 9.7 million and $ 12.5 million, respectively, of capitalized software costs developed by the Company for internal use.

Amortization of capitalized software related to the Company's SaaS platform was $ 29.3 million, $ 17.6 million, and $ 10.6 million for the years ended December 31, 2024, 2023, and 2022, respectively, and is recorded in cost of revenue within the accompanying consolidated statements of operations and comprehensive loss.

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During 2024, 2023, and 2022, the Company recorded expense for certain software development costs of $ 0.4 million, $ 0.4 million, and $ 0.3 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.

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

The estimated amortization is comprised of (i) amortization of completed software and (ii) the expected amortization for software that is not yet complete based on its estimated economic lives and projected completion dates.

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Total accrued expenses $ 88,740 $ 100,075

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

COMMITMENTS AND CONTINGENCIES

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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 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.

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, breaches of confidentiality or data protection requirements, services to be provided by the Company, or from intellectual property infringement claims made by third parties.

The maximum potential amount of future payments the Company could be required to make under these indemnification provisions is indeterminable.

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STOCK-BASED COMPENSATION

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.

2021 Equity Incentive Plan

In May 2021, the Company’s board of directors (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, 2023, a total of 44,622,937 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.

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 either (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.

Accordingly, on January 1, 2024, the number of shares of common stock that may be issued under the 2021 Plan increased by an additional 7,240,323 shares.

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No stock options have been issued under the 2021 Plan.

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

Stock options

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Exercisable at December 31, 2024 3,152,158 $ 12.29 3.2 $ 198,832

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

The intrinsic value of options exercised during the years ended December 31, 2024, 2023, and 2022 was $ 67.6 million, $ 66.7 million, and $ 75.1 million, respectively.

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Restricted stock units

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

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.

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.

The Board exercised significant judgment in determining the fair value of the Company’s common stock with input from management, based on several objective and subjective factors.

Factors considered by the Board included the price paid by investors for the Company’s common and preferred stock, actual and forecasted operating and financial performance, market conditions, performance of comparable publicly traded companies and transactions of comparable companies, developments and milestones within the Company, the rights, preferences, and privileges of its common and preferred stock, the likelihood of achieving a liquidating event, and the results of contemporaneous third-party valuations.

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.

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

Other than as described below, all of the RSUs granted subsequent to the Company’s initial public offering (“IPO”) vest based solely on continued service, which is generally over four years on either a quarterly or annual vesting schedule.

The grant date fair value of RSUs granted during 2024, 2023, and 2022 was $ 318.4 million, $ 238.8 million, and $ 323.0 million, respectively.

Prior to the effective date of the registration statement for the Company’s IPO, achievement of the performance conditions was not probable.

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

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.

The following table summarizes the RSU activity during the year ended December 31, 2024:

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Unvested at December 31, 2024 7,071,443 $ 65.85

The intrinsic value of RSUs vested during the years ended December 31, 2024, 2023, and 2022 was $ 232.9 million, $ 221.9 million, and $ 156.4 million, respectively.

As of December 31, 2024, the total unrecognized stock-based compensation cost for all RSUs outstanding at that date was $ 434.1 million, which is expected to be recognized over a weighted-average vesting period of 2.6 years.

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.

In 2022, the Company began granting PSUs to certain non-executive employees with vesting terms based on the achievement of certain operating performance goals.

In March 2024, the Company granted its CEO an aggregate target number of 46,986 PSUs (the “CEO PSUs”) that would vest (if at all) over a three-year period, subject to the achievement of certain financial performance goals and continued service through the applicable vesting date.

A target number of 35,239 CEO PSUs ( 75 % of the CEO PSUs) was eligible to vest based on the attainment level of a revenue performance goal for fiscal year 2024, which was set at the beginning of fiscal year 2024, with a payout range of 0 % to 200 % of target.

A target number of 11,747 CEO PSUs ( 25 % of the CEO PSUs) was eligible to vest based on the attainment of a non-GAAP operating margin performance goal for fiscal year 2024, which was set at the beginning of fiscal year 2024, with a payout range of 0 % to 150 % of target.

The actual number of CEO PSUs that became eligible to vest was determined based on the attainment level of the applicable performance goal, as certified by the Compensation Committee of the Board.

As of December 31, 2024, the non-GAAP operating margin performance goal was achieved and the revenue performance goal was not achieved, which were certified in February 2025.

As a result, one-third of the CEO PSUs that became eligible to vest vested on February 20, 2025.

The remaining CEO PSUs that became eligible to vest will vest in substantially equal installments quarterly over the two years following February 20, 2025.

The Company recognizes compensation expense for PSUs in the period in which it becomes probable that the underlying performance target will be achieved.

Compensation expense for awards that contain

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

performance conditions is calculated using the graded vesting method and the portion of expense recognized in any period may fluctuate depending on changing estimates of the achievement of the performance conditions.

The grant date fair value of PSUs granted during 2024, 2023, and 2022 was $ 9.5 million, $ 1.9 million, and $ 3.4 million, respectively.

The following table summarizes the PSU activity during the year ended December 31, 2024:

Shares Weighted-Average Grant

Date Fair Value

Unvested at December 31, 2023 77,971 $ 55.63

127,465 74.36

Vested ( 34,435 ) 67.21

Canceled/Forfeited ( 15,210 ) 63.52

Unvested at December 31, 2024 155,791 $ 67.63

(1) This represents awards granted at 100 % attainment of the performance conditions.

The intrinsic value of PSUs vested during the years ended December 31, 2024, 2023, and 2022 was $ 2.3 million, $ 0.7 million, and $ 0.5 million, respectively.

As of December 31, 2024, the total unrecognized stock-based compensation cost for all PSUs outstanding at that date was $ 2.8 million, which is expected to be recognized over a weighted-average vesting period of 1.7 years.

Restricted stock awards

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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.

These shares were released from restriction 50 % on the first anniversary and 50 % on the second anniversary of the acquisition date based on the continued service of the employees.

Upon the closing of the Company’s IPO, the Series H-1 RSAs automatically converted into shares of restricted common stock on a one -for-one basis.

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

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

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

Employee Stock Purchase Plan

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

The first offering period commenced on the Company’s first day of trading on May 20, 2021 and comprised three purchase periods of approximately six months in length.

The ESPP provides for consecutive offering periods that will typically have a duration of 12 months in length and comprise two purchase periods of six months in length, subject to reset and rollover provisions.

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

The ESPP provides eligible employees with an opportunity to purchase shares of the Company’s common stock through payroll deductions of up to 15 % of their eligible compensation, subject to a maximum of $ 25,000 of stock per calendar year.

1 unchanged sentence

Amounts deducted and accumulated by the participant are used to purchase shares of common stock at the end of each six-month purchase period.

The purchase price of the shares shall be 85 % of the lower of the fair market value of the common stock on (i) the first trading day of the applicable offering period and (ii) the last trading day of each purchase period in the related offering period.

The purchase price of the shares will be 85 % of the lower of the fair market value of the common stock on (i) the first trading day of the applicable offering period and (ii) the last trading day of each purchase period in the related offering period.

However, in the event the fair value of the common stock on the purchase date is lower than the fair value on the first trading day of the offering period, the offering period is terminated immediately following the purchase and a new offering period begins the following day.

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61.14 % to 72.69 %

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

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

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.

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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 $ 5.4 million and $ 5.0 million as of December 31, 2024 and 2023, respectively, and are included within accrued expenses in the accompanying consolidated balance sheets.

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As of December 31, 2024, unrecognized stock-based compensation expense related to the ESPP was $ 7.5 million, which is expected to be recognized over a weighted-average period of 0.5 years.

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.

Stock repurchase program

In October 2024, the Board authorized a stock repurchase program to repurchase up to $ 300.0 million of the Company’s outstanding common stock.

The Company intends to opportunistically repurchase shares of its common stock from time to time through the open market, or other transactions in accordance with applicable securities laws, in each case, subject to market conditions, applicable legal requirements, and other relevant factors.

Open market repurchases may be structured to occur in accordance with the requirements of Rule 10b-18 of the Securities Exchange Act of 1934, as amended.

The Company may also, from time to time, enter

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

into Rule 10b5-1 trading plans to facilitate repurchases of its common stock under this authorization.

The timing of stock repurchases and the actual number of shares repurchased will depend on a variety of factors, including price, general business and market conditions, and alternative investment opportunities, and will be subject to the discretion of the Company’s management within its authorization.

The stock repurchase program will be funded using the Company's working capital.

The stock repurchase program does not obligate the Company to acquire any particular number of shares of the Company’s common stock, or any shares at all.

The stock repurchase program expires on October 29, 2025, and may be suspended or discontinued at any time at the Company's discretion and without notice.

The Company did not repurchase any shares under its stock repurchase program during the year ended December 31, 2024.

Stock-based compensation

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There were no net tax benefits recognized in the accompanying consolidated statements of operations and comprehensive loss for stock-based compensation arrangements for the years ended December 31, 2024, 2023, and 2022 due to the Company having a full valuation allowance against its deferred tax assets.

The domestic and foreign components of loss before provision for (benefit from) income taxes consisted of the following (in thousands):

The domestic and foreign components of loss before provision for income taxes consisted of the following (in thousands):

Year Ended December 31,

5 unchanged sentences

Notes to Consolidated Financial Statements

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

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

Year Ended December 31,

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Total ( 881 ) ( 769 ) ( 283 )

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

Provision for income taxes $ 1,775 $ 1,273 $ 466

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

federal statutory rate and the Company’s provision for (benefit from) income taxes (in thousands):

federal statutory rate and the Company’s provision for income taxes (in thousands):

Year Ended December 31,

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Foreign rate differential ( 102 ) 40 35

Return-to-provision ( 8,127 ) 3,110 ( 7 )

Other ( 57 ) 248 ( 113 )

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

Provision for income taxes $ 1,775 $ 1,273 $ 466

Procore Technologies, Inc.

32 unchanged sentences

Current year change 48,479 40,810 78,155

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

Increase in valuation allowance as a result of purchase accounting for business combinations — 1,275 —

Ending balance $ 372,901 $ 324,422 $ 282,337

At the date of acquisition of Levelset and LaborChart in 2021, each entity was in a net deferred tax liability position, primarily as a result of acquired intangible assets.

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

The current year change in the valuation allowance for the year ended December 31, 2024, resulted primarily from a net increase in our U.S.

federal and state deferred tax assets.

The Company did not provide for U.S.

income taxes on the undistributed earnings and other outside temporary differences of foreign subsidiaries

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.

income taxes on the undistributed earnings and other outside temporary differences of foreign subsidiaries as they are considered indefinitely reinvested outside the U.S.

as they are considered indefinitely reinvested outside the U.S.

At December 31, 2024 and 2023, the amount of temporary differences related to undistributed earnings and other outside temporary differences upon which U.S.

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Increases related to current period positions 8,564 7,513 5,915

(Decreases) increases related to prior period positions ( 199 ) ( 1,198 ) 1,483

Increases (decreases) related to prior period positions 625 ( 199 ) ( 1,198 )

Ending balance $ 38,230 $ 29,041 $ 21,727

13 unchanged sentences

Basic and diluted net loss per share is presented in conformity with the two-class method required for participating securities.

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

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.

Basic net loss per share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period.

As the Company has reported net losses attributable to common stockholders for all periods presented, all potentially dilutive securities are antidilutive and accordingly, basic net loss per share attributable to common stockholders equals diluted net loss per share attributable to common stockholders.

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

The following weighted-average potentially dilutive shares are excluded from the calculation of diluted earnings per share as they are anti-dilutive:

1 unchanged sentence

2024 2023 2022

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

RSUs, PSUs, and RSAs subject to future vesting 7,687,943 8,489,902 8,189,247

7 unchanged sentences

employees who meet minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pre-tax basis.

The Company makes contributions to the plan up to 4 % of the participating employee’s W-2 earnings and wages.

The Company makes contributions to the plan up to 4 % of the participating employee’s W-2 earnings and wages, up to a maximum contribution of $ 5,000 .

Matching contributions to the 401(k) Plan totaled $ 13.4 million, $ 17.2 million, and $ 14.7 million for the years ended December 31, 2024, 2023, and 2022, respectively.

12 unchanged sentences

Rest of the world 15 % 14 % 14 %

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):

2 unchanged sentences

Total $ 104,109 $ 114,774

Procore Technologies, Inc.

Notes to Consolidated Financial Statements

RESTRUCTURING

In January 2024, the Company executed a reduction of 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 reduction in force was completed by March 31, 2024.

The following table summarizes the severance and other benefit costs incurred during the year ended December 31, 2024 by line item within the consolidated statement of operations and comprehensive loss related to this restructuring event (in thousands):

Cost of revenue $ 318

Sales and marketing 1,298

Research and development 1,750

General and administrative 819

Total restructuring-related costs $ 4,185

As of December 31, 2024, there was no liability remaining for restructuring-related costs.

SUBSEQUENT EVENTS

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.

The Company has evaluated subsequent events through February 26, 2025, the date these consolidated financial statements were available to be issued, and has identified the following subsequent events.

On January 28, 2025, the Company completed the acquisition of all outstanding equity of Novorender AS (“Novorender”), a Norway-based leader in advanced building informational modeling rendering technology, to enhance Procore’s capabilities for large-scale construction projects.

The estimated purchase price is approximately $ 50.5 million in cash, subject to customary post-closing adjustments for working capital, transaction expenses, cash, debt, and the determination of any consideration for post-combination services.

Due to the timing of this acquisition, the initial accounting for the acquisition, including the final purchase price and purchase price allocation, which will require a valuation as of the acquisition date, is incomplete.

As such, the Company is not able to disclose certain information relating to the acquisition, including the preliminary fair value of assets acquired and liabilities assumed.

In February 2025, the Company began using cash to fund withholding taxes due upon the vesting of employee RSUs by net share settlement, rather than the Company's previous approach of selling shares of its common stock issued to employees to cover applicable withholding taxes.

The amount of withholding taxes related to net share settlement of employee RSUs was $ 28.3 million in February 2025.

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