Procore finally IPOs; valued at $8.5 billion
No doubt about it: the market for makers of IT solutions targeted at the construction industry is HOT. Procore finally completed its initial public offering yesterday, raising $635 million by selling 9.5 million shares at $67 per share on the New York Stock Exchange. After the open, shares in PCOR rose quickly and closed at $88, a 30% premium and an $8.5 billion market capitalization. (According to Bloomberg, “Diluted to include employee stock options and restricted stock units, that value increases to at least $9.6 billion”. We’ll go with the more modest, though still HUGE, number for now.)
CEO and founder Tooey Courtemanche, center in the title photo, said that “Procore’s IPO is a significant moment in our journey. Even though I founded Procore nearly twenty years ago, it feels like we’re just getting started. The construction industry is in the early stages of massive digital transformation. We are proud to be at the forefront of this shift.”
Its been an interesting journey to this point. The company had filed for an IPO early last year but then opted to raise cash via a private placement instead, pulling the IPO since there was so much uncertainty about how the construction industry could work during a pandemic. Last year, Procure raised more than $150 million from investors at a $5 billion valuation. Things stabilized, the world started to move again, and the company felt it was time to restart the IPO process — and here we are, at an $8.5 billion valuation.
Why so high? Because the construction industry still uses many legacy, disconnected systems (where it is digital at all, another topic). Procore’s filings show that it was able to attract new users during the pandemic, increasing its customer base by 19% in 2020. Part of this, anecdotally, was due to the pause that enabled companies to rethink how they work, and to the reality of connecting workers from home to the job site for projects that were continuing. Procore’s platform aims to connect more and more of the functions of a construction project –whether apps it makes/buys or third-party apps, low-code, and the rest– to improve visibility and lower risk.
People keep asking me how penetrated the construction industry is and, Excel aside, the industry’s use of technology is very low overall. At the big-ticket-project end, obviously, there’s more technology in play than at the single-housing-unit level, but even at the high end, there’s a lot of disconnected IT — and that’s what investors love: a vendor that can start connecting these for customers who are willing to pay.
Also from the filings, Procore in Q1 reported revenue of $114 million, up 24% from a year earlier, with a net loss of $14 million.
Image courtesy of Procore via ENR