Exit: Procore IPO filing
Cloud-based construction management software (a huge and under-digitised industry!)
On Friday last week, Procore filed it’s S-1 for a $100m IPO - hopefully the first of a number of high quality SaaS businesses that will go public in 2020.
Below are a few highlights from an Enterprise Software VC perspective.
What do they do?
Procore (HQ: California) is a leading provider of cloud-based construction management software. Essentially, they digitise and streamline multiple stages of the construction process (a huge market with very low digital penetration).
How are the metrics?
Growth: Procore generated $289m of revenue in 2019, up 55% year-on-year, a very impressive feat at this scale. ARR is c.$340m (multiplying the last quarter’s revenue by four).
Margins: 82% GAAP Gross Margin is comfortably inside the expected range for a solid SaaS business.
Customers: Procore saw 95% gross $ retention in 2019 and 117% net $ retention, with a customer base of over 8,500 (of which over 650 generate ARR of $100k+). Not quite best-in-class, but not far off.
Efficiency: Alex Clayton’s excellent analysis suggests the company burned $215m to get to $340m ARR, implying an ARR / burn efficiency of 1.6x - very solid and definitely a big positive in the current cash-conscious market environment.
My take
I’m excited about this IPO because it looks different to many of the SaaS exits we have seen over the past 24 months. The main themes in Enterprise Software recently have predominantly been around data / analytics, cloud infrastructure and trendy future of work tools.
Procore is an example of a very solid vertical SaaS business that should trade north of its recent $4bn private valuation.
Hurrah for some great exits in 2020!