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Untangling Procore’s 33% Half-Year Windfall: The Power of Triple TAM or Industry Illusion?

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Procore Technologies Inc (NYSE : PCOR)

  • Procore’s Q2 results surpass forecasts: $0.02 EPS (+$0.11 consensus), -$0.37 GAAP EPS, $228.54M revenue.
  • U.S. revenue up 33.4% Q2, 34.2% H1 2023; global growth at 28.7% Q2, 27.9% H1, showcasing U.S. dominance.
  • Procore’s adaptive model drives adoption, taps into $ 9T global construction volume, and showcases strong Q2 2023 growth, meeting evolving post-COVID industry demands.

Earnings Beat

Based on the latest quarter’s earnings report for PCOR Inc, the company has exceeded market expectations and delivered solid financial performance with EPS reported as $0.02, outpacing  the consensus estimate by $0.11; GAAP EPS was -$0.37, beating by $0.14; revenue at $228.54M exceeded by $10.56M.

Upcoming Growth Projections

Next quarter anticipates slightly lower EPS estimates at -$0.05, with projected GAAP EPS at -$0.48 and revenue expected to slightly increase to an average of $233.76 million.

Revenue Growth

Revenue for H1 2023 increased by approximately 33.1% from H1 2022, and for Q2 2023, the growth from Q2 2022 was approximately 33.1%. Gross profit experienced a rise of approximately 37.4% from H1 2022 to H1 2023, and for the quarterly figures, there was a growth of about 37.8% from Q2 2022 to Q2 2023.

Revenue By Geographic Region

The revenue breakdown analysis showcases a noticeable growth in the Company’s revenues across both the U.S. and the rest of the world, with the U.S. seeing a marginally stronger growth. In the U.S., revenues surged by 33.4% for the quarter ending June 30, 2023, and 34.2% over the first half of the year, highlighting consistent domestic market strength. Meanwhile, international revenues increased by 28.7% for the quarter and 27.9% for the half-year.

What Are The Catalyts?

Procore’s volume-based subscription price fits the construction industry’s needs. The project-focused industry’s unlimited user model encourages widespread adoption, easy data capture, and collaboration.

Industry shift increases Procore Technology adoption: Construction invests below the 3.6% IT average, but platforms like Procore are valuable. Previous industry productivity underperformance highlights the necessity for Procore’s innovations. Procore will benefit from global construction reaching $15 trillion by 2030.

Capitalising on a Huge Market: Procore Technologies strategically positions itself in the U.S., Europe, APAC, Canada, LATAM, and MENA to capitalise on tremendous market potential. Procore hopes to capitalise on $ 9 trillion in yearly construction volume by using a “Triple TAM” strategy for General Contractors, Specialty Contractors, and Owners. Their complete platform and customised solutions match these regions’ construction trends and expand their reach. Procore’s global presence and dedication to project management position it to capitalise on the growing global construction sector.

Good Performance Indicators Promote Procore’s Growth: Q2 2023 showed Procore’s growth with an 85% non-GAAP gross margin and 33% YoY sales growth. The company’s excellent market position is strengthened with 615 new customers and a solid outlook for Q3 and 2023.

Multifaceted Dynamics Expanding Procore Technologies: Procore facilitates real-time collaboration by taking use of construction employees’ 96% smartphone use. Optimisation tools from Procore address 375,000 U.S. construction job openings. The expanding regulatory requirements show Procore’s data management precision. Procore’s analytics inform decision-making with 91% of industry data underutilised. During COVID-19, Procore’s tech meets industrial needs for remote work and digital collaboration.

Considering Procore’s strong financial performance, growth indicators, industry leadership, and promising future prospects, we believe the stock is poised to deliver growth to value investors and now is the time. Based on the chart we’ve seen; this stock has been in consolidation since the past year like its comparable within the industry. We believe this is the right time to accumulate and hold on to the stock as the stock is set to march to $85.

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