Procore Reports Stronger Than Expected Q2, While Inflation Ticks Higher

Q2 Earnings

We are nearing the end of Q2 earnings season excitement with more than 90% of the S&P 500 having already released their quarterly results. Reports from the handful of publicly traded built-world SaaS leaders have provided us with some insights into this paper-trailing industry’s tech adoption as we close in on that illustrious inflection point (25%+ sector adoption).

Leading Construction Management platforms like Procore, Trimble, and Bentley Systems, depicted strong double-digit subscription-fueled growth of 33%, 24%, and 12%, respectively, all surpassing the low double-digit to negative growth metrics of the US market's 5 trillion-dollar tech giants (aka Microsoft, Alphabet, Apple, Amazon, and Nvidia).

Procore’s (NYSE: PCOR) Q2 results outpaced management guidance and Wall Street estimates across the board, demonstrating a 33% YoY sales growth on an unexpected operating margin improvement that brings this high-growth Construction Tech giant just 1% away from operational profitability (a figure that sat at -15% just 1 year ago).

Procore’s seemingly conservative management team – having surpassed its internal earnings expectations by a growing percentage in the last 4 consecutive earnings reports – once again lifted its forward guidance.

The continuous outperformance of the built world's SaaS leaders furnishes the early-stage market with optimistic signals of adoption.

But why is the market selling Procore shares following this unmistakably bullish earnings report?

Pulling profits is a natural function of the public markets following the type of market run PCOR had since the year began, having lifted over 80% from its lows at the beginning of the year, and these quarterly reports represent a catalyst for action. The market had priced for this beat, and raise in management guidance, so I wouldn't read too far into the post-earnings price action at this juncture.

Procore has staked its claim as a must-have solution for any digitally inclined AEC player's tech stack, but that does not mean it is the most effective. With a less than $10 Billion market cap in a $7 Trillion market, there is plenty of room for well-positioned new entrants to play their hand.