Procore Technologies, Inc. (PCOR) Earnings Call Transcript & Summary

All right. Let's get started. Thank you for everyone for coming. Welcome to Groundbreak, welcome to Investor Day. I'm Matthew Puljiz, Vice President of FP&A and Investor Relations.

[ Vivian Wu ] Senior Manager of Investor Relations.

We very much appreciate you all being here in person. This event was no small feat. There's a lot of folks that put a lot of time into it. And so for all of you to come in person means a lot to us. And also thank you that's online on the webcast listening in. We'll make sure we get engagement with you as well. So let's get into a little bit about what we're going to cover today. So we got a pretty jam-packed agenda. This should be valuable for those of you that know us well and for those of you that are brand new to the story. So we're going to start today by having Tooey talk a bit about the construction industry itself, the nuances, the dynamics, what's happened to that industry in the past, how it operates kind of give you a flavor of the industry that we serve and support. And then he'll transition a bit into how Procore operates and what makes us unique in our opinion. Excuse me. Paul will come up next. And the theme of Paul's content is really about our business evolution. So several years ago, the company looked very different than it does today. We were serving 1 stakeholder. We really had one product. We were just in one country and just a one customer size. And we're very different today, and that evolution required pretty material investment. And not only are we starting to see ROI from that investment. We're also setting ourselves up for the next act, which is what Tooey will then come back on stage and talk about those bets that we're making and those pursuits that we're having. Followed by a short break, we'll have some of our product leadership come on stage and go through a few different things. So one, when you hear us say a connected platform, we'll give you an example of what we mean by that. How does the network effect work? How do the workflows interact with one another to kind of benefit all stakeholders in the industry. And we will do a deep dive on two of our new personas, the subcontractor and the owner. These are relatively new motions for Procore and so you'll understand what makes them unique, what are their problem sets and why we believe it's necessary to serve them as well to kind of achieve our mission and vision. And followed by all of that, you'll have plenty of time for Q&A of a good hour. [Operator Instructions]

All right. So before we get started, some quick disclaimers. Comments made as part of this presentation may include forward-looking statements. These statements are subject to risks, uncertainties and assumptions and are based on management's current expectations as of today, November 9, 2022. Procore undertakes no obligation to update any forward-looking statements, except as required by law and a reconciliation of non-GAAP to GAAP measures can be found in the appendix of the slides that will be posted later today as well as our SEC filings. So with that, please give a very warm welcome to our Founder and CEO, Tooey Courtemanche who will be taking up the day for us.

Thank you. Thank you. Thanks, Vivian. Great work. Thanks, Matt. Well, good morning, everybody. I think it's probably time we turn the energy up a little bit in the room. So is everybody having a good time? Yes. Who here has had a chance to talk to our customers? That's awesome. Well, they are our best advocates and you're learning most you can to all of them. So I'm really, really grateful. Very grateful that you're all with us here today. And by the way, this is Procore's very first Investor Day. So bear with us, but also it's really exciting to get to see you all in person. A lot of you have known our story for a while and have gotten to know us pretty well. But I know that we -- as we've grown as a business, our shareholder base has also expanded. So I'm really excited to kind of walk all of you through the amazing opportunity ahead for Procore. So if you've already heard the story, I'm sorry, but it's an important story to tell. So you can't start talking about the opportunity at Procore without talking about the scale, because I think a lot of the questions we're going to get to a Q&A, we got to remember, we got to come back to the fact that, that this is an $11 trillion industry growing to $15 trillion. This is a global industry is just enormous. And as a matter of fact, that our growth rate is going to happen over the next decade, which means that the overall construction economy is growing faster than the global economy. So there's just a lot of opportunity there. Construction represents 15% of the GDP, 7% of the global workforce. And this is one is going to get you, the UN estimates that over the next 40 years, this is funny, we have to build 2.5 trillion square feet of real estate in order to keep up with population growth in the urbanization needs. 2.5 trillion square feet, I mean, even you all like aren't going to add an addition on your house, 2.5 trillion square feet. It's so hard to conceptualize. But a good way to think about it is this. That's like building a Manhattan a month, every single month for the next 40 years, which is just absolutely crazy. And what's really interesting is this industry continues to grow even during uncertain economic times. And there's also this very interesting dynamic. This relationship is between the average size of our customers' backlog and the average length of a recession. So the average backlog is about 2 to 3 years when the average recession lasts approximately 9 months. So clearly, the bigger the backlogs, the more comfortable the industry feels about the long-term demand and the fact that they can hire and that they can grow and so big backlogs matter. So the point I'm trying to make here is that the length of the recession matters just about as much as the depth. Also another point because I get asked this all the time about how construction is going to respond during a recession? Well, we've done the analysis and construction responds differently to every recession. And as you can see, construction has continued to grow and expand pretty quickly after each recession. So let me talk to you a little bit about why this matters. When you just zoom in on this slide, this is the U.S. So the last slide was the -- was international. But remember, construction is not a monolith. So when the questions get asked of how -- what's going to happen to construction during the downturn? It's a hard question to answer. The last slide actually was a global slide. So it showed a much more even path. But this is a much more detailed path broken down by sector. And so I want to give you an example of how different sectors respond differently in different recessions. The first, a lot of the people that I talked to asked me about construction through the lens of residential because it's what's in the news and it's basically what everybody knows, right? But residential, which is the orange here, it has many subsectors. So there are parts that are much less durable. So think about that as like -- and by the way, an area where we do not play. So that's like single-family homes and remodeling. That portion of the sector is very volatile during economic downturns. But again, it's an area where we don't play. There's a more durable portion of residential, which is like multifamily and mixed use. And it makes perfect sense because if you get priced out of the ability to buy a home, where are you going to go? You're going to go to a condo, you're going to go to an apartment, right? So that's a mixed-use in multifamily. And that is an area where we do play. Also, we got to remember that the infrastructure projects create a mass tailwind when the government deploys capital for that. the $1.2 trillion infrastructure bill. Just to put that in perspective, that's about the same size as the U.S. spends on every construction dollar in one single year. That added construction is going to massively impact the industry. And then also, you have to remember that as much as the economy goes up and down, there is a steady state of construction that has to happen. So you think about the health care and education and energy, all of those things are going to happen regardless of if the economy is on the way up or on the way down. The other thing I want to point out is not every recession is the same. Each sector respond differently in each recession. So for example, during the global financial crisis, residential went down massively, as everyone knows. And commercial had a modest decline, but infrastructure went up. But then when you look at COVID, infrastructure and commercial dipped, while residential spiked to buoy the overall spend. So each recession, each sector responds currently. Plus, our exposure to the overall different segments is that we are very diversified. So as you all know, we saw the owners and GCs and specialty contractors. And those folks in enterprise mid-market and SMB, those folks have diversified portfolios themselves. We call that diversified square to Procore, which is our customer base is diversified and their portfolios are diversified. So why do our customers run diversified portfolios? Well, simple. One is they need to be able to respond to opportunities as they arise. So think about warehousing, how important warehousing became during COVID. A lot of our customers pivoted and started taking on a lot of warehouse construction because it was so important. And then think about infrastructure now. It's absolutely critical, and there's a lot of it coming online. Also, our customers need to both recession and future-proof their businesses. I think we all know this, but construction is a very low-margin business. And so they have got to diversify their portfolio because if once -- if they're all in one sector, and that sector goes out, they're in trouble. And that's how contractors go out of business. So I'm going to walk you through an example. So this is a active portfolio of a major electrical contractor in British Columbia, one of our customers. So they're working on a new large residential development. They're working on a multilevel commercial office tower and a major port expansion and much, much more. But you can see that none of these make any logical sense, other than the fact that they have this diversified portfolio because that's where the business is. And our customer base spans most every industry on the planet because our customers are in the industries and serve the industries. And what's really interesting is when I talk to our customers, and I'm like, tell me about your mix of business. It's generally different than it was last year, and it will be different next year based on economic conditions and where opportunity lies. which is why we believe that the aggregate amount of work is much more important to focus on than the type of work. Look, I was obviously talking to lots of customers this week, and every single one of them said their biggest problem is the labor shortage. And their biggest challenge is not finding the next project to build. The biggest challenge is finding the next person to build the project they have under contract to build. This is really important because the demand is so high in the industry, the labor shortage is really bringing it down. Also in a downturn, construction volume has rebounded faster than employment. So what that means is that this actually widens the gap between demand and supply, which exacerbates the labor problem even more. Hopefully, you all know this, the Procore helps bridge this gap. We drive efficiency into our customers enabling them to take on more work. All right. So on top of the labor shortage, the industry is also complex and fragmented. Look, construction is a prototype business, your home, the office that you used to go to every day that nobody goes to anymore is a unique prototype. That building will never get built again, which adds complexity. Also, the workforce that builds it is mobile and decentralized. So when you're talking to your other companies that are in manufacturing or health care or finance, those people are working in an office pretty much. But in construction, the office is the job site. So it makes it even more complicated. There's also very difficult and complex stakeholder dynamics. Every project has an owner, a general contractor and a bunch of subcontractors. These folks have likely come together on your project to run a project never having worked together as a team and they have conflicting interest. One person's win is another person's loss. And what's even more interesting is that not one of them can succeed in isolation in order for you to succeed on a job, everybody has to perform. And then you throw on top of that, the challenges with working capital and slow payments and the cost of insurance, driving up the overall cost of insurance. It's just -- or just of construction, it's just overwhelming. And then finally, Anybody who's ever built anything knows this, that change is constant. What you plan to build is rarely what actually gets built and that alone drives complexity. By the way, according to McKinsey, construction is one of the least digitized industries on the planet. If you've been around Procore for a while, you've seen this slide. But construction is behind the government for goodness sakes, and we're only second from the bottom ahead of agriculture and hunting, which I always joke is probably the next business I'm going to start because that thing needs to be digitized. Look, construction spend is less than 2% of revenue on IT when the industry average is 4%. And productivity increases are next to nothing. It's less than 1%, and that's because of the lack of digitization when the industry average is 3%. So this lack of digitization has contributed to massive inefficiencies. This number is the number everybody seems to remember because it's just so [ obscene ] $500 billion is wasted every single year for rework. That means that -- and by the way, most of that comes from data and miscommunication on the job. I was talking last night to one of our civil contractor customers, and they were saying, there is nothing more harmful to his company than having to pull out perfectly good material from a job site and take it to a landfill. And he said, Procore pays for itself, well, many times over because we help prevent that. McKinsey said that a typical non-residential project can run 20 months over schedule and 80% over budget. Let that sink in. By the way, that's non-residential, so don't panic if you're building the house right now. Yours is probably going to be worse actually. But the industry, I mean if anything shows the dynamic of inefficiency, 20 months behind schedule, and 80% over budget is on average is just ridiculous. Also, I just want to point out the legacy on-prem solutions are simply not up to the game, and I'm going to walk you through some complex workflows, which will really help illustrate that. So clearly, there's a massive opportunity ahead. So why is now the right time for Procore to bring the construction industry into the digital age. So I'm going to walk you through some of the catalysts that are driving that. 91% of folks on a job site have a smartphone in their back pocket. They have all the tools that they need to be able to collaborate and share the most recent information. So there is no technology barrier there and demand massively exceeds supply. If you talk to customers, you'll hear them say this time and time again. The problem is not the demand. The problem is labor shortage. There's plenty of work to go around. So speaking of labor shortage, the association of building contractors report that this year alone, we have to add 650,000 more jobs than the 375,000 job openings that already exist not so good at math, that seems like around 1 million, right? So that is a huge number in a deficit for labor. So the one thing that we all know is that clearly, the days of throwing labor and bodies at the problem of productivity are long over. Also, regulations have increased eleven-fold in my lifetime. I was talking to a customer on the floor yesterday, and he said Tooey, if you thought construction was complicated like 10 years ago, you should try building today. Regulations cycles our ability to grow, and it just adds a ton of complexity. Also data is severely underutilized in construction. FMI, which is an industry association says that 96% -- this is set. 96% of all data goes unused in construction. And then McKinsey follows up with a study that says, if the industry would just use a small amount of the data available to them, the industry would become 50, 5-0, percent more productive, right? So obviously, those who are using data are ones that are going to win the game as opposed to those who are not. And I should say it's not only data, it's technology, it's enabling your teams to get their job done. And finally, we believe that COVID is a tailwind. So McKinsey also did a study, 2/3 of construction executives believe that COVID is a catalyst for digital transformation. So now it's clear more now than ever that the industry needs technology that's purpose-built for the complex dynamics of construction. You probably heard me say this in the keynote yesterday, if you're paying attention, but we pride ourselves on being 100% focused on construction. And one of the things that I'm really happy about is I've had three customers come up and say thank you to me during this conference, saying thank you for only focusing on construction. Our problems are really challenging. And the fact that all you think about every single day is us means something. That's why we have this enduring vision and mission, right? To improve the lives of everybody in construction by connecting them on a global platform. And we have a business model that's built for how the industry works. So we intentionally designed our business model around how the industry buys through volume-based pricing and how interconnected the industry really is. Again, you're going to hear me more -- talk more about the interconnectivity challenges. And then also I want to explain our pricing. We have both annual and multiyear agreement and is based on the annual construction volume and the mix of products that a customer runs. But the one thing that fuels this whole thing is, our business model is built with the unlimited user model, right? And that actually is key to our growth. And I'll tell you this, anybody who sells seat-based licensing into this industry does not get it. All of the complex workflows I'm going to talk to you about today break when somebody doesn't have a seat because it costs them $1,200 a year. And so therefore, you cannot complete construction processes if everybody is not on the platform. It also facilitates our flywheel. So our flywheel is powered by our unlimited user model. So our customers can bring on not only their employees, but all the people that they work with that don't work in their company. 60% of the folks on our platform today are what we call collaborators. They're not paying customers. And these folks are converted into being customers. They bring on their employees and their collaborators, which just massively increased the number of people on the platform and the byproduct of that is the massive amount of data that gets generated. So to truly achieve this mission, we need to be able to connect people, systems and data on a single platform. And our platform does connect the entire project life cycle, from preconstruction all the way through closeout. With closeout goes out of the day that you get handed the keys from the contractor. So we manage that entire process. We also manage and facilitate the field-to-field communication and collaboration and the field-to-office, which is critical in the construction industry. And our limited user model gives our customers a single source of truth. So they have the access that they need to all the project information to run better businesses. But I'll tell you what, the real value of Procore comes when we connect the owners to the GCs and the subs across these complex workflows that happen in construction every single day. And so I'm going to walk you through an example of this. We brought this back for those of you who have been around for a while because I think it really helps demonstrate. This is a change order workflow. By the way, the #1 most feared 2 -- or the #1 most feared 2 words in construction, change order, right? Owners freak out. But I'll tell you, it happens every single day, and it happens because of the uncertainty in construction. So what you're looking at here is a workflow for one single change order. Again, this is one change order, one project, and they happen every day. If you look at it, there's multiple stakeholders involved and I counted, I think there's 13 steps in this workflow process across all four of those stakeholders. So -- and all those four stakeholders don't work for the same company to point out the obvious. Each approval in that workflow can take days. And when that when a project is waiting for an approval of 1 of those steps, oftentimes, the project work around that -- where that change order occurs, completely stops. And the other thing that's even interesting I think is the right adjective here is that this workflow does not only flow forward. Oftentimes, it reverses direction and goes backwards. And that causes a tremendous amount of challenges and leads to a lot of litigation on the job. And this is just 1 example of the complex workflows that happen on jobs every single day. And by the way, there is just simply no way to manage this level of complexity and an isolated solution. It also -- that change order workflow crosses many of the products that we offer, from estimating to project management to design coordination, financials, workforce management, all those products are required in order to complete those complex workflows, which illustrates why connectivity of all different stakeholders is so important for the industry. Okay. So now I just listed a handful of our products. But I'm going to walk you through the suite of products that we have and the problems that we solve. So Procore started as a project management tool. As Matt said, we were a single product for many, many years. And that's -- think of that tool as the water cooler on the job site. It's where people would go to share the most relevant up-to-date information and ensure that they are coordinated across the project. So today, we offer a preconstruction product line, which helps deliver predictable outcome. The industry has changed. 5 to 10 years ago, preconstruction was an afterthought. Today, because of the complexity of construction, everyone has wised up that you need cross-party stakeholder collaboration early on before a shovel hits the ground, in order to work out the details because every small mistake that happens in preconstruction gets amplified through time and everyone loses. So preconstruction is huge. We also have project execution, which connects all the project teams together across the course of construction, again, [ precounter ] closeout. It empowers everyone to have up-to-date information. So they have the accurate information to build safely and on time and on budget. And it really does help avoid risk to stay ahead of the project. Years ago, if somebody told me that Procore wasn't in the project management business. We're in the risk management business, and it's something that stuck with me ever since because I truly believe we are. Okay. Workforce management is another product line we have. It helps our customers get the most out of their most important asset, their labor and their people. And with the labor shortage, it is more critical now than ever. Remember, if you've not heard this before, half of the dollars that go into a construction project roughly, go into labor. So getting the labor right is critical. And what happens is if you don't get the right people do the right job at the right time with the right material and the right equipment, you, as the employer, are paying the salary, and you're not getting any value out of that. So that's a cost that's coming out of your bottom line. And we have financial management, which is an amazing product line, provides the ability to have a holistic view of just of your projects and your portfolio's financial performance. And it gives you really, really good insights into where you sit at any given time. So on top of these products, we also apply construction intelligence to this massive amount of data that gets generated on the platform. We reflect it back to our customers in the form of actionable insights. So look, we -- our focus is solving the foundational problems of construction, but there is no way that we could solve all of them. And our vast ecosystem of partners, which we really believe is a truly competitive advantage of our integration partners, our tremendous asset and drive a ton of value to the industry. So we like to think of our marketplace as the Salesforce app exchange for construction. We have over 400 partners. And if you're here and you have a chance, please go to the partner pavilion. I think we have like 210 of them here, and we had to say no to a bunch because we just ran out of space. Our customer engagement is actually growing, too. So today, 95% of our users use one or more integration, when 81% used two or more. And by the way, that was 60% only 2 years ago. This drives a tremendous amount of stickiness with Procore and with our customer base, and it drives higher gross and net retention rates, which we're really proud of. By the way, these integrations add a tremendous amount of value to our customers. And so I want to give you an example. Our financials product suite comes alive for all of our users. When you connect our financial products with their back office accounting ERP solutions, with our ERP connectors. It not only shows the field in the office, what was planned, but it actually brings the actuals from the financial system into a single point of view, so you can actually know in real time where you stand. In the construction industry, a lot of companies have gone out of business because the owner goes to bed at night looking at their financial system and everything looks good on the project. But what happens is in construction, a potential change order that's unfunded could be sitting on the desk, or in this case, on the computer of the project manager and the owner of the company doesn't know. And so they're going -- they're looking at the budget live, and they're like, wow, we're going to make a lot of money on this. Well, once that thing becomes an approved change order and it's unfunded, that company is probably out of business. So having all of that information connected together on a single platform solves a massive problem for the industry. So clearly, not one software company can solve all the needs of the industry. I wish we could show you all 400 of what our partners do. But I want to let you know that we're not going to be able to solve all of them and then. Just also want to let you know that we're not going to be overly acquisitive because we really know how to do the determination between when to buy, when to build and when to partner and mostly it's partner, but our platform is a massive advantage for Procore and it's truly sets us apart. But we know that being a great industry partner to the industry means that we have to do more than just deliver software. We have to be a great partner. But don't get me wrong, we do have amazing software. But what you have probably learned and hopefully, you've heard from our customers is that a lot of what they want to talk about is how we partner with them, right? They start with partnership and then they move to product. And our Procore.org team is doing a lot to help solve the labor shortage. So yesterday, I'll say it again. We're helping to attract talent into the industry. We're helping to expose the construction industry to future workers, we're working with our customers to upskill their current workforce. And we're helping our customers retain their current workforce because as we all know, people are our biggest asset and in a labor shortage, it's absolutely critical. So I want to do a couple of things to highlight. By the way, I should also say what's cool about all of the work that we do through Procore.org that not only does it help the industry and serve the needs of the industry, but it also helps serve the needs of Procore as a business. So it's one of those virtuous circles that I'm really proud of. So a couple of things to highlight. We donate our software to over 800 non-profit builders, trade associations and educational institutions. In fact, we offer our software to 97% of accredited construction management university programs in the U.S. alone, which means that if you go through a program, a construction management program, you are likely to become very well versed in Procore to enter the workforce. In fact, last night, when I was at the civil engineering cocktail party, I met a guy who runs a civil engineering firm, and he said, you know what my secret is for talent and labor, and I said, no, He said I actually teach a course at the local university on Construction Management, and I teach Procore. And at the end of each semester, I hire all of the brightest students to join my company, and he goes, that's my hack, for the labor shortage, and I thanked him of course, for being a great customer and a great advocate for the next generation. So we also [indiscernible] construction to continuing education. In the world of construction it's really important that folks stay accredited and get their certificates up to date. Prior to Procore, you would have to pay a lot of dollars out of your own pocket in a lot of cases to take these accreditations. We decided long ago that we were going to offer a whole bunch of courses, and we were going to do this for free. Today, we have over 100,000 course completions, and the industry is really grateful for it because they don't have to pay for it. This generates a ton of goodwill with our customers, and it really does help with the labor shortage. So our partnership is really -- it's a big reason why they choose us, but trust me, it's not the only one. So they choose us, again, because this is all we do. They really value the fact that we only work on construction. And by the way, we would not be where we are today if we were not building intuitive powerful tools for the folks with mud on their boots to get their job done because ultimately, the person that does the work needs the information and needs to be enabled. So we've done very, very well on that front. We also complete these complex workflows across our entire platform and when a person with mud on their boots needs support because they're stuck in their job. We are one click away, one phone call away, which drives a really amazing customer satisfaction score consistently over 90%. So not only does our products and our partnership build trust and intimacy with the entire industry, it delivers significant value to our customers. So I want to remind you this number is the eye-popper that the industry is really inefficient, $500 billion of waste and rework. This means stuff gets put into a job site and similarly ripped out and take it to a landfill generally, but Procore does drive efficiency and it actually helps reduce rework. I'll tell you another quick customer story. Customers was talking about last night. They do a lot of prefab manufacturing for large civil jobs that they do on rail projects. They said that if they don't get this right upfront, the -- because all the tolerances are so tight. When they build -- when they submit a request for all of the different pieces that come together that they will end up having to tear out really expensive equipment and take it to the landfill. They said rework was their #1 cost and it was the #1 thing that Procore was helping them reduce. Our customers also report that they can finish jobs 2 weeks ahead of schedule. That means something, right? If you're building a manufacturing facility, that means that, that manufacturer can actually deliver widgets two weeks early, and that's really important to the owner. It also means that there's the ability for the subcontractors to go out and take on more work because it's 2 weeks early. And then, of course, if anybody in today's world is financing a project or financing materials, being out of your interest obligations, 2 weeks early is a great thing. But what I want you all to really think about is, if you're going to think about -- and remember one thing, which I know it's early and not all of us had all the coffee we need, I want you to remember this one stack because I think it really is the stack that drives the value of Procore home. Our customers report that they can manage 48% more construction volume per person when they run the Procore platform. So doesn't take a genius to understand that in the industry where labor is your biggest challenge, if you can do more with less that's a really good thing. So really I want you to let that sink in and take that number away because it really does talk about the value that Procore offers. So out partnership with the industry and the value that we deliver continues to be recognized. So we had awards for our support, our technology, our partnership and the company that we run. So I just want to say that I'm very proud, may be most proud about being [indiscernible] 1 of the top 100 construction software companies on the planet by the software report which is really, really remarkable. So before we go to break I just want to say that I'm so proud of the team and all that they have accomplished and I'm also very proud just this week at Procore pulling together a conference of this scale and doing such a great job. And I'll tell you, it's been an amazing journey for me over the last 20 years. We are now a comprehensive, complete construction management platform built for the industry, serving owners, GCs and subs and the enterprise, mid-market and SMB in the U.S. and a handful of foreign countries. And just over the last several years, Procore has really grown and evolved. So I want to just tell you all one thing that this is us just getting started and I can't wait to talk about the future. Now I've been told it's time for a break. So everyone could fuel up and then we will -- okay. Somebody lied to me. All right. Well, and your name is? I'm just kidding. I'm just kidding. Welcome, Paul.

Thank you, Craig.

Yes. There you go. Thank you.

I tried to negotiate going before Tooey because I feel like he gets the pumped the energy up, I get to bring it back down. But no, I'm kidding. I'm very excited to get to be here. Really grateful for everyone who made the trip, everyone who's out there on the digital version of this. Just welcome. For those of you I haven't had the chance to meet, I'm Paul Lyandres. I'm Procore's CFO. I'm really excited to talk about what this journey that last slide, Tooey just shared has been like over the last few years. For those who don't know, I joined this business about 8 years ago. And I had the privilege of having a seat on the bus as we went through this massive transformation. And it was expensive, it was difficult, and I will tell you that it has been transformational for who we are. I'm going to spend today talking through this journey. Each of these different vectors that we've gone through from becoming a single platform -- or sorry, a single solution, serving a single stakeholder in the mid-market in the U.S. to a global platform with multiple stakeholders in multiple segments. I'm going to start our journey with the product and technology evolution. The comprehensive platform that Tooey talked about was not where this business began. When I joined, we were a project management solution. We had one product, and we were doing quite well selling it to the mid-market. However, we knew that we would never meet our mission and vision. We could not connect everyone on this global platform if we didn't go out and build more and more solutions that brought these workflows together and help solve these problems. So what you'll see here is in 2015, 2016, we started building solutions around the edges of project management, inspections, a budget tool, but it wasn't until 2017 that we launched quality and safety and project financials. And remember those names because as I dive into our actual ARR by product, one of the things I've told you all many times is that the longer our product has been in market, the more penetration we've seen with it. But this product evolution was not easy. And as I said, it did not come without quite a bit of investment. I challenge you all to find another construction technology company that has spent $500-plus million on R&D since 2017 alone. That doesn't count the acquisitions. I think you could probably find some construction companies that have done 8 acquisitions. But the reality for us has been that every acquisition, everything we've done is about bringing these solutions together on a single platform, a connected ecosystem that talks to one another that helps these customers actually solve their problem. But what I want you to see on the left side here, we're nowhere near done. And I think a lot of you would be surprised to find out that while we're still investing heavily in project management, that's actually not where the bulk of our dollars are going today. What this chart is meant to represent is a reflection of directionally, where are we putting our R&D dollars today? And what you'll see is preconstruction, financial management, these bookends of that workflow are huge investment areas for us and something that we think are going to continue to make meaningful strides both in terms of functionality, but also in terms of adoption. And of course, we couldn't sit here and tell you we are this connected platform that brings people together that is flexible, that is able to truly provide data insights without putting our money where [indiscernible]. And you can see that the Procore platform is a huge area of investment for us. And what's so great is that while we're early -- we're only in the super early days of this, we're already seeing the results. As I told you before, project management -- or sorry, financial management, quality and safety. First 2 products, they make up 30-plus percent of our ARR today. Project management, just over half. And what's even more exciting is that these newer products, the 17%, these are very new products. These are things that are really in the early stage. They've taken a lot of work, a lot of investment, but we're seeing the growth. And the reality is -- the thing is project management isn't slowing down. It's not like our market opportunity there, it's any less great than it's been. But this additional products, the things we've built for our customers is truly showing that we listen and we solve their problems. And despite this, we're already seeing -- despite the fact these are new, despite the fact that many of these newer products still make up a small share of our ARR. We are seeing traction. So today, 44% of our customers use 4 or more products. Keep in mind, when I joined 8 years ago, we didn't even have four products. Now 70% of the ARR comes from those customers. What I think is so exciting for us is that this proves our customers want what we build. They are out there and they are buying, they are adopting what we sell, but it's still early days. So we try to figure out, what's the best way to quantify this market potential just within the installed base? So again, this 50%, no additional volume, no new logos, no new countries. This is about saying, if I can take my customers who are 1 to 5 products and bring them up to the price point that my customers who have 6 plus. And keep in mind, 6 plus is closer to 6, 7, 8. We have customers that are greater than that. But directionally, this is saying, if I can take the customers in the 1 to 5 category to what I've already proven. I don't have to tell you guys that these are things on the [indiscernible] that people haven't bought or used, that people aren't paying for today. If I can get them there, I have 50-plus percent potential just in my installed base. And we think this is quite conservative. And as I said, doesn't include new customers, new logos, new products, changes to pricing. This is just what we have today. But not only have we had this massive product expansion, but we also believe we're in the early days. When we think about the GC, this is just one of the stakeholders we serve today. Similarly to the conversation around the product evolution, we've done a lot of work, blood, sweat, tears, my hair. These things all came with the launch of multiple stakeholders. And you can see here, similar products 2018, 2019. This is when we really made that foray into multiple stakeholders. But you have to understand that foray didn't happen overnight. The idea of building a brand, a team, a dedicated go-to market, it took time. And not only did that take time, it took time to get the right products to the right stakeholders. So what I really want you to take from this chart is that project management. The thing we started selling to subcontractors and owners when we launch these markets, it's actually not the biggest [indiscernible]. It's certainly one of their biggest [indiscernible]. And the fact that they bought it from us when we could install their biggest [indiscernible] is a testament to how valuable project management truly is. But what you'll see here is the work we've gone through in the last handful of years. And why we believe that today, we can solve each of these stakeholders biggest problems, and we can have really great conversations that we've never been able to have before. And it's why that journey of building the go-to-market, which I'll talk about here in a moment, is not enough, making sure that you can leave together the right workflow, the right solutions. That has been a big part of this investment in our stakeholders. But of course, the go-to-market matters too. And I [indiscernible] one of the things that isn't always clear when we talk about our business is that we built dedicated go-to-market motions here. We're talking about marketing, customer success, obviously product, sales. These are folks who are tailored to go after these different stakeholders because the conversation you have with them, how you relate the language they use is different. They might be building on the same project, but their perspective is not the same and their biggest problems that I just talked about are not the same. What you should expect over time is that these will continue to converge to being closer to 1/3, 1/3, 1/3. Because as we'll talk about a little bit later, the market opportunity across these stakeholders is massive. Each of them is almost the same size and has so much potential left ahead of it. And we're already seeing the return. Today, I talked about GCs, 1/2 to 2/3 to actually 60%. What I think might surprise some of you is actually the size of the owner's business. And part of the reason that the owner's business is so strong if you can go back to that chart I just showed in the hierarchy of problems, we got to the owner's biggest problems first. And we were able to build great credibility with some massive needs, Fortune 100 cities, states, you name it, these are these customers. Subcontractors just getting started for us. We'll have Will up later to talk about why subcontractors are such a valuable stakeholder for us, but we believe now that we have workforce management, estimating some of these other offerings that subcontractors are going to continue to take off and we're so excited about that opportunity. When we think about the logo, challenge in construction is I imagine many of you all don't keep track of the best general contractors out there, the best specialty contractors out there I don't blame you. You probably don't go to sleep thinking about [indiscernible] like I do. You probably sleep better than I do. But what's important to take from this is these logos, they represent some of the best builders out there from small to big, whether it's commercial, whether it's civil infrastructure, hospitals, schools, you name it, these are the people who build it. When you think about the specialty contractors, what's important to understand is this isn't just a type of specialty contractor. This is concrete. This is mechanical. This is electrical. This is everything it takes to get a job done. Now the owners, hopefully, some of these names make more sense. But what I want you to see on that list, there's not a lot of real estate developers. It's not that we don't sell the real estate developers. When we go back to that 22%, we talk about that market opportunity, folks like Starbucks, building retail buildings, Boston Children, building hospitals. Tyson Foods, building processing plants for chicken. These are the assets that these companies have to have in order to run their own business. Those are the owners that we have tremendous traction with and again, are just getting started. Similar to the go-to-market motion, when we talked about stakeholders, segment is another area that we spent a lot of time and energy building out dedicated motion, ensuring that we are able to have the right communication, the right top track. And so today, what you'll see is where we started in the mid-market, that $20 million to $100 million, that now represents just about 40% of our overall go-to-market motion. The remainder of it goes pretty evenly split here between enterprise and SMB. This construction volume, remember, we don't charge by consumption, but we break up our customers based on their own size. And so if you're an enterprise, even if you're going to buy a small deal from us at first, we're going to treat you like an enterprise because we understand the journey we go through, to build these customers and get them bigger and bigger. And the fun reveal on this one, our business is pretty diversified. You look at the break of ARR, and you'll find today that the enterprise actually makes up over 50% of that ARR. Mid-market, healthy 30%. And the SMB is an area that we continue to invest. We continue to believe we'll become a bigger, bigger piece of this pie. But as I've talked about with some of you, the efforts around product-led growth, e-commerce, premium, fintech, monetizing the collaborator via PCN. These are all initiatives that are super early days for us will have a huge impact on the SMB. But what probably gives me the most excitement from this is those growth rates. What you'll see is all of these segments are growing really nicely. This is a diversified business where we are seeing the benefits of the investments we're making across all of our stakeholders and across all of our segments. And we're starting to see particular success in that enterprise. This is a metric we've disclosed in the past, 100,000-plus customers, 1 million-plus customers. Two big takeaways I want you to see growing. These continue to grow meaningfully quickly. This is a segment that hits the pains first. They have the biggest job, the most complexity whether or not they tend to actually have an IT department, and they're able to implement software and Procore has become the standard. The other thing I want you to take from this is the diversity of this mix, similar to the diversity and stakeholders in general. What you'll find here is we have customers across GCs, subs, owners that are all really big. And that we've proven at this point that we can sell to the smallest to these customers, and we can sell to the largest of these customers. And we're still super early days in the penetration of the enterprise and the SMB and remain incredibly excited about all the opportunities we have with our stakeholders and with our segments. Now I'm going to go on to the fourth factor, geography. Similarly, it seems like I've got the similar story to keep coming back to here, 2016, 2017, when I joined, we were only in the United States. We were getting inbound. We had interest in international markets, but we had spent 15 years or so really making sure that we have built the platform that we understood the product vision that we could connect and service these different stakeholders, as Tooey likes to say, we can take the show on the road. And that's exactly what we did. If you remember my comment at the beginning of this around the longer product has been in market, the bigger that segment is geography will follow that same premise. So what you'll see here is we started in Australia and Canada. It's where we had the biggest pull and it was an area that we felt customers were ready for what we had to offer. So we went to Australia and Canada, and then we focused on a deliberate strategy going forward. Let's start with a beachhead in Europe, that was the U.K. Then let's build around. Today, we've got presences in the Middle East. Southeast Asia, several parts of Europe and Latin America. We are ready for what is to come. Now what's interesting from this slide and something that I don't know you all know is just how much of our revenue -- or sorry, how much of our sales and marketing we put in international today. Now this has been deliberate and this has been focused. So I talked about that journey of going to multiple countries in these regions to being in a place where we could build out and serve the broader spectrum, some of the biggest economies in the world. It was expensive. And it takes years for these things to start showing that production. This is building out a leadership team, a go-to-market motion, a marketing presence, a pipeline, getting those early reference customers, as I said, years. Now what's exciting for us, when we talk about operations margin improvement, this is an area you will start to see it because our success in international will mean these two buying continue to converge. And that's why we believe strongly that the market opportunity ahead of us is massive, and it's something I'll touch on it a little bit. Before we go there, let's dive into how our ARR sits internationally. What is that mix? Imagine again for some of you, you would have thought Europe is the biggest piece of this pie. And the reality of it, it's not. It's Australia and New Zealand, it's Canada. Why Australia and New Zealand and Canada? Because that's where we started. Europe, it's a lot of the United Kingdom. And it's because that was that focus. That's where we had the years to truly build up that business. So as we start to look forward, not only should you expect that 85% shrink, but you should expect that pie to continue to be more and more diversified because we built the teams. We've stood up the go-to-market motion. Now we just got to go through the journey of actually building that revenue base. And we couldn't feel better about that medium- and long-term opportunity. We all know we've got some growing pains to do. We are working on those, and we feel good that we understand the challenge ahead of us and that the opportunity is no less exciting than it's ever been. So now that I have walked through these four diffferent vectors. Now I'll take step back, talk about why we made these investments? Why did we spend these dollars? Why did I lose my hairline for it? It's because it's such a massive market opportunity. What this slide you should take from is when you look at the different regions we serve, the primary countries we sell and we say primary because we get a lot of inbound, we see a lot of deals, but those aren't the markets that we directly go after. So we'll take those deals, but we won't count them in this $9 trillion [indiscernible]. And the other thing I want you to take is this concept we've talked about, this triple TAM. What it really means is, while Tooey talked about that $11 trillion industry, that doesn't actually account for the fact that we sell our product to the owner the general contractor and the subcontractor that we effectively get to monetize that dollar of construction. We say 3x. Everyone's got to margin, 2.5x. And what that means is we are looking at an opportunity that it's over $9 trillion in annual construction volume, of which the U.S. is actually a smaller piece today than international, and international doesn't account for so many different regions that we're not in today. And so we're in the early innings. And we've got a lot of market penetration ahead of us. So we've talked about this. We think that, in general, we're still in the early innings. We've gotten a lot of questions over the years. How tapped are we in general contractors? Is that not the market that makes up most of your revenue? Hopefully, you've seen along this journey, but we've already made meaningful strides in diversifying away from the general contractor being our primary driver. But what it means is, in the U.S., less than 2% logo capture, less than 14% of the volume. And when we just zoom-in to the GC, it's less than 25%. And this is in a vertical where we believe strongly that 50%, 75%, maybe even 85% to 90% of this market is attainable by a winner take most market. So we think the GC is just getting started. And let me always remind you, this is just construction volume. This doesn't account for that 50% I talked about in terms of the ability to expand the products and sell more and get more wallet share. Internationally, it's even more compelling, less than 1% of logos, less than 2% of the volume. This is why we've invested so much in these regions? This is why we believe so strongly in the ability for Procore to continue to be a consistent, durable grower. And this growth is going to come from both expansion and new logo. I swear we ran this number like 5 times. We did not believe that it was truly 50-50. It is probably not going to be 50-50 in perfectness forever, but it should be close. Because as we've talked about throughout this journey, tons of new logos, tons of new markets, but also a lot of products, a lot of demand from the existing customers. And a lot of growth with those existing customers just on their own business. And so this is, for us, an indication of the health, not only our existing book, but in the demand that continues to exist out there in the market. And as we think about that expansion profile, I wanted to do is go through a couple of stories here. I think you all believe that we can make GCs into bigger customers. But I don't know if all of you understand exactly what that journey looks like. This is a customer that's been with us for several years, and they started low single-digit 6 figures. In that journey, they more than doubled the number of products they bought, adding BIM, adding analytics, and also growing with us from a volume perspective. But today, this customer pays us nearly $3 million a year in ARR. And the reality is, there are many, many more GCs that look like this customer in years 1 and 2. And we're just starting on that journey. What we can do with owners, we can do it with all of our stakeholders, frankly. This example is another one. These folks [ still ] data centers. They started with us with project management in a very low sub 6-figure contract. Over the course of several years, we not only took them to 9 products, really getting them to appreciate the broad breadth of everything we have built, but we also were able to grow and take more and more of their book of business. But today, this customer pays us $2 million. And similar to the GC, we have many of the owners, many of the subs that look like this customer in year 1. And we're just getting started. It's why we believe so much in that potential to continue to expand. So with that, let's talk about the metrics that I get questions pretty much every quarter, net retention. As we've shown you, expansions continue to do really well. And what that's yielded is at the number you all saw on the IPO, guess what? It's the lowest net retention w've ever had. Since then, we've seen it come back to a really healthy 160, something we're really proud of. And the reality of it is still not a key metric for us, and I'll talk a little bit more about these pooled model ideas in our upcoming slide. But this number is understated. This number actually doesn't reflect the full expansion we see from our customers because our industry is unique in how they consume and our flexibility in partnership has led us to a model pool volume that actually means we don't get to capture in this metric, the full value of our expansion. I won't spend too much time on the gross retention, except to say what I hope you take from this is we are mission-critical to our customers because this number hasn't really moved in the 5 years we're showing here, and there was a global pandemic in the middle of it. This is the way of saying that our customers need Procore. It's the last thing they can shut off before they shut off their own business. So as we talked out a bit retention, I want to take a step back and do a little work on our business model on why we talk a lot about the RPO and the value of RPO as it comes to thinking through how our business model works. So there's a couple of examples on this slide. And what you'll see on the front or at the top is a representative example of a 1-year contract. And what you'll see is over the course of that year, they actually don't deploy their construction volume consistently. In fact, they spent about, in this example, 85% of their overall volume in the back half of the year. But from a revenue recognition standpoint, we recognize it equally across every quarter. In fact, we recognize revenue ratably daily across the course of the contract. We do not recognize revenue based on consumption. And this is even more evident when you start thinking about multiyears. Regardless of which of these customers you look at, the way they consume their volume, it doesn't change the durability of our revenue model. It doesn't change how we consume or how we recognize revenue. Now I do want to call out, as I just said, that pooled model and how it impacts our business. Think about that middle example. For a large enterprise customer, that's actually not an atypical ramp. They come on, bring maybe 1/10 of the book of their business on to start, and then they ramp from there. But what we lose in that is that, that 10% to 70%, it's a 7x growth in terms of consumption or the actual use of construction volume. We see none of that in that expansion. And that's why these pool models are really valuable for our customer because it lets them ramp in an appropriate manner. It lets them have flexibility in really long projects that might span years. And for us, it's important we partner with that customer that we meet them where they are. And that's why net retention will always be understated, but it doesn't mean expansion is not a huge driver of our business. It's also why, when you think about how we recognize that revenue but RPO truly is your best product. It is the net check that is going to consistently show you what the predictor of revenue will look like. And so to hit on that a little bit further, the other way we get asked this question is what external indicators do we look at? Like how should you all think about the potential for our future revenue growth? And these are five of the biggest. We look at all of them. These things are all important. They tell you different things about the health of the industry at different stages along the way. But they're pretty lumpy. And frankly, they're not nearly as good of a correlation as RPO is. So when you ask us, hey, how should we think about your guide? How should we think about your future revenue potential? And we tell you that RPO is going to be the best metric. This is our proof. This is the best way we could reflect it back to you to say that these industry indicators matter, but our actual RPO guide -- or sorry, not guide, but report is more accurate. So with that, let's talk a little bit about unit economics. What you see here at that 9x is the overall LTV to CAC of Procore. We're quite proud of it. But what you also see here is remember how I talked about that big ramp-up in investment in international and the fact that it takes years for that spend to really start to produce the revenue that we expect to come with it. That means over time, we think that international is going to continue to look more and more like the U.S. And that is going to be a huge driver for us in terms of the potential of showing improving efficiency and economics. But what's not captured on this slide is that, that 11x is something we also think has a ton of potential and to some degree, some understatement because that 11x doesn't take into account that we are able to really lean in on that SMB motion. To think about product-led growth, e-commerce, fintech, these are all things that will take the lowest part of the CAC in our business. That brings that 11x down and elevate it further and further. This 11x also doesn't account for net expansion, growing with our customers, all of the things we talked about where we're going to be able to get more and more wallet share from our customer. So we think there's just tremendous potential in that overall 9x across both of these spectrums and will be one of the drivers of why we think sales and marketing efficiency is only going to get better. But we're not here to just talk about sales and marketing efficiency. We think we've got opportunity across the entire profile of the business. And what's important from this slide is we've talked a lot over the years and particularly for those of you who haven't been following us as long that since we went public, we've been playing catch-up from an investment perspective. That's because if you look at this slide and its [indiscernible] what you'll see is that in 2019, the business is growing quickly, but we had a negative 21% operating margin and then COVID hit. And what's actually helpful to know here is that when COVID hit, we knew what we needed to do. We were able to manage our spend and bring 20 points of efficiency in a year. What you also see from this is the business model is incredibly resilient. If we need to show massive gains. We can, and we've shown you we can. But what you should also take from this is over the course of this time, even as we made all of those investments we talked about, even as we did acquisitions, we've been able to show a consistent 350 basis points across the time. Now it's not consistent year-over-year, but the idea is over the course of time, you should expect that we're able to drive 300 to 400 basis points of operating efficiency year-over-year. And that, that will start going for. So it might not happen every year in a consistent fashion, but that's the right trend line. And what's even more exciting for us is that trend line gets mirrored when we think about free cash flow. So you should expect from a free cash flow perspective, a similar, if not actually slightly better improvement over the coming years from this trend line. What that means for us, it's free cash flow per share is only going to keep getting better. And it's something that we believe we can drive this in multiple environments whether it's strong or weak. What you should know from us is that when we look at our margin profile, we're mindful of those unit economics, and we're mindful of growth. And if the environment does change on us, you should expect us to behave in a way that drives increasing operating efficiency like we've done in COVID because we believe that this business has so much potential, that as Tooey pointed in our last earnings call, we've got efficient growth on our minds. And so if I take a step back, and I try to summarize this all together. We're in the early days of building value creation. We've built an amazing business with general contractors, and it's still early, product life, logo life, everything we talked about, it's huge. But then we added specialty contractors. We built on this opportunity. We added owners, another vector of just amazing TAM and growth potential for us. We did all this walking in the show and road. And as we look at these vectors, these building blocks, what we believe is all of them. Our TAM multiplier. There's tremendous level of potential. We can expand volume, we can drive more products, we can generate network effects all; while improving unit economics along the way. And by doing this, by entering these markets by building brand, this customer base, this network, it's given us the right to play in a whole new [indiscernible] fintech. This is something that's very early days for us, but it's something that we believe core to our mission is critical to improving the lives with everyone in construction. And if we do this right, our customers will not only love us for it, but we'll be able to drive meaningful growth from a shareholder perspective. So as we look at this, we think these building blocks not only drive more and more customer value, but we hope you all agree with us, they will drive more and more shareholder value along the way. So with that, I'm going to hand it back to Tooey to talk about the next chapter.

I'll just talk about -- there we go. So I think, Paul -- by the way, great job, Paul. That was awesome. Paul has done an amazing job of talking about the journey that brings us to today. But I want to start talking to you about where we're going in the future, which is, as you all know, that know me, this is where my head space is. I want to remind you all, I think we've said it, but that we cover a very broad surface area owners, GCs, subs, enterprise, mid-market SMB, U.S. multiple international markets. And that while some of these areas are still need some optimization more than others, we are going to continue to improve on those to deliver efficient growth, which is my new buzzword, obviously. All of this work that Paul shared has laid the foundation to where we're going to go in the future. So first, I'm going to talk a little bit about the broad surface area and why it's so important. And then that will drive our mission of connecting everybody in construction on a global platform, which feeds our flywheel. So flywheel explanation yet again. Our limited user model allows our customers to bring on everybody onto the platform, not only their employees, those folks become potential -- the collaborators become potential customers, bring on more folks. All of those folks are generating a tremendous amount of data and data is the key word here. This data is valuable to our customers. We reflected back to them in the form of insights, but it also opens up unique opportunities for Procore that I want to walk you through today. So I'm going to start with payments. The problem in the industry is this, slow payments create significant stress for general contractors and specialty contractors on their balance sheet. It's a highly complex world when it gets -- when it comes to payments. And so the industry itself is very analog in this process. So you're thinking about it, it's 120 days from the time -- the work is done to the time an invoice gets paid and you're moving big dollars, right? So all of this is complicated. And since it's done in an analog way, it's slow. So solving the problem means that we can speed up the payment process, which really does help our customers relieve the stress on their balance sheet. And also will help them take on more work. It's important to understand that construction volume that's run through businesses is how they make money. So taking on more work matters. And I think we're in a very unique position to solve for this because we do have a huge audience on our platform today who have a high level of trust in us and who need to be paid faster. Plus, I've talked to you about this before, we have been solving these very complex workflows around financials for years from Estimating and bidding in contracts and change orders and invoices and lean waivers and all of the things that we've been investing in, is really important, but it gets us to this last step, which is payments. So I'm sure if you all saw the keynote, you heard me announce Procore Pay, obviously, something I'm very excited about, something we've been talking about for some time. To be clear, what that means actually is that this is actually monetizing the GC to subcontractor payment flow. So we think there's a huge opportunity here to monetize this, but what we think is even more exciting, and I really do want to uplevel this, is that it opens up the possibilities for other opportunities for Procore around monetizing things like early pay or creating risk profiles that we can use in other forms of the business. So I want to let you know that Procore Pay is coming in 2023, it will be the later half of the year. It will not drive material revenue to Procore in 2023 but it will be launched and we'll be learning. So another way that we can help with our cash -- our customers' cash strap balance sheet is through material financing. So if you had listened to our Q2 earnings call, you heard us talk a lot about this new program that we're launching. It's one of the subcontractors' biggest challenges. Let me tell you why? I always use this example of the Salesforce Tower in San Francisco. But I always say to people like, who do you think financed that building? And everyone is like, well, I don't know maybe JPMorgan or I don't know somebody like that. And I'm like, no, the subcontractor. The plumber who shows up on day 1 with 800 toilets is actually using their balance sheet to buy those toilets, and they're not going to get paid for 120 days. So the ability for our subcontractors to be able to help their balance sheet through material financing is huge. The other challenge that subcontractors face is they can only take on as much work as their balance sheet will allow them to be bonded for. So if we can help them bolster their balance sheet, they can take on more work. And again, that's where they make all their money. But -- so we are really uniquely positioned for this because we have a very large audience of cash strap subcontractors on our platform today, not only our customers, but also our collaborators. We also have a deep domain knowledge around lean rights. And if anybody ever wants to get really, really over in the weeds with lean rights, I'd love to talk to you about it. It is very esoteric, very, very complicated, and we have the expertise on staff that knows how this process works and how to optimize it. We also have access to all this proprietary data on not only how the companies perform, but their payment history. And so we think that we're able to put together favorable rates for subs because we know how they perform. We know how they show up. We know what their quality score is. We know what their safety score is. We know how they change order. We know how they show up on the schedule. We know more about these subcontractors than anyone else. And I'll tell you that so far, I am really excited the feedback has been really, really positive from the subcontractors who participated in our early program. So another huge cost for construction is insurance. So biggest problem that customers have with insurance is that it's super cumbersome and it's complicated and it's expensive and it's analog, right? So customers are overburdened by insurance. The way I explain it is this, if you're running a regular business, you may buy business insurance. But in construction, not only do you have to have business insurance, every project you have to have one or more, in a lot of cases more, insurance policies for that project, and that has to be renewed annually, okay? And so remember, contractors and subcontractors run lots of projects. This is a huge overhead. And by the way, because everyone is financially obligated to purchase all these policies. They spend a ton of time just filling out the application process. It's all done by hand. It's the insurance industry. It's very much in the dark ages. And the other thing that's really interesting is that insurers don't have access to the risk data that Procore does. Insurers have no idea where risk lies. And so ultimately, what happens is everybody who buys insurance... [Technical Difficulty] All right. Thank you. By the way, I feel really bad. But we had somebody doing a live demo yesterday and the Internet went out. So anyway. Should we back up a little bit? So on material finance, I was mentioning -- sorry, hold on, that we have a ton of cash strap subs on our platform today, and we have so many not only paying customers that are cash strap, but collaborators on the platform. We also have this deep domain knowledge around lean waivers. Lean waivers is very esoteric. It's very hard to understand, very, very complicated, but we have all this deep domain knowledge around it, and so we can leverage that. Plus we know how subcontractors perform and the payment history that they've had on previous jobs. So we know more about them than anybody else. So we believe that we can provide favorable rates to them. So we've been getting feedback from our customers so far, and this is the part I'm excited about. It has been very positive. Our customers are saying, this is really helping them with their biggest challenge, which is -- or one of their biggest challenges, which is their cash strapped balance sheets. But another area where they're really struggling, which is an area where we believe we can help them, is the cost of insurance and the ability for them to procure insurance is really, really complicated, it's cumbersome, it's intensive. They have people that are dedicated to doing this. So customers are not only overburdened by the overly expensive cost of insurance, but on top of that, they already are cash strapped. So this is a really big issue for them. And by the way, insurance is measured in percentage points on construction jobs, not on basis points. We have -- you've heard 2 to 3 to 5. In some cases, 10% of a construction project will go just to insurance. And what's interesting about that is when insurance is -- it's not just regular insurance, like you and I would buy for a regular business, they have to buy that, but they also have to buy project-specific insurance. Everybody on the job is going to have one, and in most cases, multiple policies per project. It's really important to understand that most general contractors run a ton of projects and specialty contractors even more. So this is a really, really cumbersome process that is done by hand, extremely analog today. The other thing is that insurers have no idea where risk lies. So it doesn't matter if you're the highest risk or the lowest risk profile, they have no idea. But we have access to data that allows us to know and how to put these risk profiles together. And the cost of insurance just makes everything worse because it adds to the problem on their balance sheet as well as just driving up the cost of overall construction. So we believe that this represents a massive opportunity to provide the construction industry with an alternative and so we are uniquely positioned on the insurance front to leverage our proprietary data on how they perform on the quality and safety and all of the things that we know about them to enable them to be put into a risk profile and offer them better rates. Plus the concept of -- the time that's spent to apply for all of these individual policies, its analog takes a ton of time. When they're on the Procore platform, we can automate the filling out of those applications because the data is already in our platform. And when we tell this to our customers, they're like, wow, that is going to change the way we work. Also, we can capture them at their time of need. So in our bidding tool, when a subcontractor gets awarded a bid, they can be caught at that moment in a pop-up in Procore that says, hey, I'm pretty certain you're going to need some workers' comp insurance for this job or you're going to need some other form of insurance during this job. We capture them at the time of need, which is a huge advantage for us. It also drives product adoption. So it's a virtuous circle. If our customers are going to participate in the insurance program, they need to be running the Procore platform in order to us to have the data to be able to provide them with their better rates as well as filling out their applications faster. All right. So let me remind you that none of this would be made possible without our connected platform. We're able to provide an amazing connection point between owners, specialty -- owners, GCs and specialty contractors. And I'll tell you that this connected strategy makes -- it creates a huge opportunity for Procore. Clearly, I'm fired up about this. This is really an exciting feature of Procore. I also want to point out that the original slide I came into is, what we do for a living every single day, which is building our platform and servicing that large surface area, that fuels all of this. So we are not going to let up on that because our mission is to connect everyone in construction on a global platform. So you want to come up and say something, Matt? Okay. And then I promise you there's a break.

All right. A couple of things. So we'll have the WiFi information for those of you that came in late to the room, so we'll get you taken care of there. And then slides that you've seen today as well as the ones you have not seen yet, they will be on the website at 1 p.m. Central Time. And yes, you all have permission to use it in your research notes this evening, all right? We'll be back in about 10 minutes. So help yourself to some coffee and bathroom outside. [Break]

All right. Let's get back to our seats. If we can, please. This is the last call for the WiFi because we're going to change the slides. All right. Wyatt, you good to go?

Check, check? Can everybody hear me?

All right.

Hey, everybody. My name is Wyatt. I'm the Head of Product here at Procore. Maybe just a quick intro for those of you that I haven't had a chance to meet yet. I've been here almost 3 years. I came right at the beginning of the pandemic. I feel really thankful to Tooey and Paul and everyone who invited me along this journey, it's really, really awesome. My -- a quick background on me, my family business growing up was construction. My dad was a general contractor who built cell phone towers in the '80s and '90s. And so a lot of my youth was out on a job site, building a cellphone tower back in the day. Now of course, after doing that as a young person, I ran away from that industry completely, and I've now spent about 22 years in tech. Cool. That's good. That's helpful. Now I can go through the slides. Sorry. Cool. Moving. Got it. So yes, after doing construction as a child -- mostly high school college age, I spent a lot of years in technology. I was a head of product at a couple of companies you might know of Shutterstock, Optimizely, Patreon. And one of the things that attracted me so much to Procore was the fact that was this multisided marketplace, that's something that I was really, really interested in. So when I met Tooey and Paul I looked at this, Oh my Gosh, this is so cool. There's always different stakeholders that have to interact. so what I want to do here today as a head of Products is, explain to all of you how important Procore Connected is to this entire strategy. And I want to get into the weeds of how Connected works. So Procore spent years attracting owners, specialty and general contractors onto the platform. A couple of stats that I like to keep in the back of my head. One that's really interesting for every project that's launched on Procore dozens and dozens of collaborators are invited and today we have over a million projects and growing fast. The average of how many people are invited per project is not that interesting because at the high end, you can have a really complex hospital or a bridge and have hundreds of hundreds of collaborators or at the low end, you could have a small construction project that only has 10 or 15 collaborators. But the point is every single project on Procore keeps inviting what are effectively going to be net new customers at some point in the journey. So when we talk about having 14,000 paying customers, that's great, but we have hundreds of thousands of potential paying customers already in Procore today who have a Procore account, who have experienced the brand at one point when we were -- when there was a construction project going on. So what it's really about is -- and one other point that's really interesting, a lot of our net new customers were former collaborators, which is another really interesting point. So one of the ways we add value to all these people who have a Procore count is we give them this free public-facing profile that helps them market themselves. That's the addition of this Procore Construction Network. This network already exists inside of Procore. People have accounts in Procore, and they have to collaborate with one another. What the Procore Construction Network is, it's the public facing version of that. You can think about this like a LinkedIn for construction. This is where we want to help people find a great project team. We want to help folks, we want to help subcontractors get more work and we want to help owners and general contractors build a great project team. So that's some of the impetus behind this Procore Construction Network that's about a year old now and still in beta. What am I doing wrong here, sorry team. This thing might be [indiscernible]. Apologies. It's just backwards now, yes. Okay. Cool. Okay. So the next thing I want to explain, I want to use this slide that Tooey did to talk about how each project is really complex. Sorry, folks, all the text is wrong and here, too, Apologies for this. Okay. So there, great. We're back on. Okay. This is matching this. Thanks for your patience. So each construction project that runs through Procore, these are unique relationships. These relationships are contractual. So I want to differentiate between the Connected platform that we're building and something like a Facebook or a Slack, it's not that. In that relationship right there, the owner can't talk to that mechanical contractor. If the owner were to talk to the mechanical contractor directly, they would be taking on all the risk of whatever it is that they told that mechanical contractor to go do. The owner in this example talks to the general contractor. And if the general contractor agrees, then they will then relay that message to somebody else. So when we talk about how Procore works as a connected platform, our technology is super hard to copy because we have to understand at any given moment in a project what the contractual relationships are between each member of the project so that we can figure out who can communicate with who. This is why RFIs and submittals work the way they do. We're basing this entire Connected platform on all of these complex relationships. Another way to think about the opportunity of this Connected platform that we're building. Today, we have, again, about 1 million projects growing on Procore. 5% of those projects have both the owner and the general contractor paying for something from Procore. And about 10% of those projects have the specialty contractor and the general contractor paying for Procore. So you can think about the more and more projects we get into the system, the more and more opportunities we have to sell unique value to each one of these stakeholder groups. By the way, this is also how our efficiency play works. So Paul is up here showing you our cost to acquire metrics. While the more and more we get folks into their own account and the more we show them value very quickly to higher propensity they're going to have to buy one of our products further down the road. I also want to talk about how our platform is designed to capture this. So this is the construction value chain. In each construction project, there is a single set of document specifications and all different stakeholders on that project need to access those documents. Now each people have their -- each stakeholder here has their own unique value, though, right? So I'll give you a really good example. Everybody here has to access these drawings on a construction project. But guess what, everybody has their own budget, and they're not really interested in sharing that budget with the other stakeholders. And so for example, you can get everyone to collaborate around a drawing, but you could sell each stakeholder construction financials because construction financials is going to represent their own private budgets for their own business. That's one example of how there's collaborative moments in construction and then there's unique value you create for each stakeholder. So we spent time building products that provide that value. So if you go back to what Paul showed a little bit earlier, okay, for an owner, they're going to care most about project financials, bidding analytics dashboards to see how things are going in construction. Here, general contractors obviously are going to care a lot about project management, quality and safety, invoicing. And then specialty and Will is going to come up here in a minute, specialty contractors, it's that workforce, it's planning it's estimating and all of those products. So there are parts at Procore that are connected where everyone needs to collaborate and be on the same page. And there are parts of Procore that are unique and create unique value for each different shareholder. There's a bit more nuance I want to share with all of you to help you understand how our product works. There are actually a lot of products inside of Procore that both create value for one party, and then there's a separate value in that same product for another, for example, a drawing. There's a master set of drawings that might be for the entire project, but then a subcontractor might take that drawing and do their own markup on it that they're not going to share back with the general contractor. They're going to create their own version of that drawing with their own markup and share it with their team. Similar to schedule, there can be a master schedule for the entire project, but then different folks on that project might have their own schedule for their body of work. These are examples where we can take one of these products we've built and we can sell it to multiple stakeholders. So my single source of truth as a general contractor might not be the single source of truth for a specialty contractor in that example. Cool. That's a little bit about how Connected works and how our product platform leverages Connected. Now I want to define for you what our construction flywheel is at a lower elevation. The definition of a network effect is an interaction between two or more parties where value is created on both sides. Construction has a bunch of natural network effects that just exist in it. And we have products for each of these. So I'm going to go through those four network effects that we all understand them. Number 1, we just explained how collaborators are invited into construction to work together. We actually can see construction get more efficient as more collaborators are invited to a project. It's one of my favorite things to talk to customers about. There is a correlation between the time to close an RFI and the number of collaborators you've invited into the product. What that means is our customers are incentivized to save money on their construction project to invite others into the project. There's a positive correlation there. their construction project gets more efficient, they invite more people into the platform. That's one really interesting network effect. Number 2, invoice stage. we continue to innovate on behalf of general contractors, who are going to be paying subcontractors. And now with Procore Pay, we're going to create value on both sides of that interaction. So it's going to be easier to get paid for subcontractors, it's going to be easier to pay for general contractors. Again, here's a two-sided network effect where value is created on both sides. Another product that we've had for a very long time, and we continue to innovate on it. We just launched Bidding 2.0, and we talked about it in the keynote today. This is our bidding tool. This is another really important network effect that lives organically in construction. GCs and owners want to find a great project team during the bid process. And those subcontractors and general contractors who want to find new work, they're also getting value from that. So there's another interaction within construction that drives value on both sides. The last one I want to talk about is how people collaborate and design. When a number of stakeholders are collaborating around a set of drawings or specifications, they're going to get their questions answered more quickly. So they're incentivized to come into the project. So these are two of the very organic network effects that just exist inside of the world of construction. And these are products that we have inside of the Procore platform that are designed to enhance these. Okay. I'm going to go away from technical diagrams about network effects. And I'm just going to tell you a story, so I can bring it to life. And I'm using one stakeholder, but I can tell you a lot of different stories for different stakeholders. Today, we're just going to choose the subcontractor. The reason we chose this story is because we think the cost to acquire in this segment should get a lot better over time. we see get a lot more efficient. But this story is about John. John is a -- he works at a concrete subcontractor. The beginning of this story with John, starts with losing a bid. John probably bids 30, 40 projects a month. And so you lose some with wins, he probably wins 30%, 40% of them. So pretty normal human curiosity, right? You lost a bid and you start to do a Google searching like who the hell was that bid to? I want you to keep in mind that John probably spends a lot of time creating all these bids. So it's a heavy lift. He doesn't win them any. Also, John probably knows most of the people that he's going to get a bid from because he chases the work down himself. And this is the life of a specialty contractor. So in this case, John does this Google search to figure out who he lost to and its Industrial Concrete and like who is this? What does this network thing? So John's never heard of Procore, never heard of any of this, and John sees this page and goes, this is pretty cool. I bet if I had one of these pages I would get more work, too. So John is going to click this button up here and sign up for this Procore Construction Network. This is a really important moment when John starts to sign up for the Procore Construction Network. In this moment, we're going to start to prequalify this specialty contractor. And this is really valuable for John and it's really valuable for Procore and the connected business model. Now what's valuable about it for John? Well, today, remember, John is doing 30, 40 bids a month. And every single time he does those bids, he's got to fill out a new prequalification questionnaire. These things can be like 200, 250 questions. There are a lot of work. And each company has their own special sauce as they ask them slightly different questions. So what we do in Procore with the Procore Construction Network is we get all the basics. In this way, every single time John responds to a bid, all that prequalification data is already filled out. So that saves them a ton of time on those 30 to 40 bids a month. So this is also really exciting for Procore, obviously, too, because what we get from John, we get a lot of information about John's business. We go to understand projects John has worked on, trades that John certified for. This gives us all this rich interesting information that we could later use for material financing or we could use to show John other offers that we have at Procore. So it's a win-win. Also we can give John some kind of badge on this profile right like there's a general sense of Procore prequalified here, and this is something we're working on right now in our product strategy. Cool. First thing John noticed is after he signs up, prequalifies, there's free bid board. This bid board is really cool. So today, John is managing all those new bids and spreadsheets. But when John signs up for the Procore Construction Network, it gets this cool bid board like, oh, this is sweet. It's free. I can upload all my bids in here. I can import them from other tools. This is a really exciting, it's free value that John gets for signing up. But Procore, we get to understand the entire book of business that John is looking at. So we see a bunch of projects, some of which might be in Procore, some of which might not be in Procore, which is really rich, interesting information to help drive this flywheel inside of our connected platform. Cool. This is a magic moment for John. This is really cool. John gets a bid from a stranger. Most of John queries has been chasing down bids from companies he knows. If you've ever been on a job site, you'll see specialty contractor like go to the trailer and be like, hey, what are you doing? What's your next project? What they're doing is hunting down leads. But from this Procore Construction Network, John, in this case, gets a highly targeted lead that's really specific to what John's great at and the trades John is great at. You can see how cool this is. I think at this point, John is like this thing works. I get new work from this network. And so we've proven some value there. And we've got that flywheel going. The first thing you got to do after you get a bid is you need to do a takeoff. That's another piece of free value. We're going to try premium free trial. But today, we actually have a Takeoff that you can try out. If net you've seen it Takeoff, it's pretty tedious. And we've done something really exciting. We started to automate Takeoff, computer vision. Two, I forgot my map wheel. But if you've ever seen it Takeoff, you take a buying and you put it on the table, use a map wheel, you count all the cubic feet of everything, especially if you're a concrete subcontractor like this. So instead of spending hours and hours counting cubic feet on a drawing then maybe using a pencil and writing on the bottom right-hand corner of the drawing before you then go try to copy that into Excel. We use computer vision here for John. And we just look at the drawing and we count up all the square feet, and we give them something in just a few minutes. So in just a few minutes, it gets the first draft of a Takeoff. This is really powerful. You can imagine how exciting this is for a future customer. And all this so far, I haven't had to do anything. But what happens right after you Takeoff, it's time to do an estimate. And a lot of people do takeoff from one area and then uploaded their Estimating software, a lot of human error in that process. And when there's human error in your Takeoff, well, your bid is going to be way off and you might lose a lot of margin on that project. So in this moment now, John was a free customer who didn't know about us before, signed up -- didn't know about Procore, signed up for the Procore Construction Network, became a free customer, one of our free accounts got a bid. Now we've got a paying customer. So we've just taken John from someone who didn't know about the brand at all to a paying customer. It's really exciting. You can see how much more efficient Procore is going to get in this market as we bring these things to life. Cool. So another thing that's really exciting. John here, won a major bid with Procore. That's what we know right in this moment of need. This is the moment where material financing gets really exciting. So at this moment, John got $3 million of concrete that John needs to go buy, because he won the bid. It's really exciting. So what we can do is we get to say, hey, John, do you want to put all that capital upfront for that? Or would you like to try out material financing, right in the moment of need? This is that point that you can really vile a customer, and there's so much more that John could do with that capital and reinvest it in scaling the business. It wasn't putting it out for all this concrete right now. So this is another magic moment that we show John that gets him excited and we reach out to our partners at Levelset and we send this e-mail that's handcrafted to the exact amount of materials for that bid that was just one. You can -- we're already doing this a little bit today. By the way, we're experimenting with this via e-mail campaigns. And It's getting good reactions. Okay. John won the work. John got material financing from Procore. Now John, starting on the project. So John goes on to the job site, he opens up mobile phone. He looks at this account. As soon as he walks on at the job site, Procore connect. This is another way we connect everybody at single platform, automatically shares the drawing into John's account. Now John can see the work that he has to do and see the drawing. And what we're going to do is you can get the drawing for free as a viewer inside of this account that John has the same one has been using for a while, but if John wants to do -- just use this for shop drawings and mark it up and share it with team, that's another great opportunity to go from a free product to something that John is paying for. So here's another great upsell moment. John gets the drawing for free in a viewer, but then if John wants to do his own markup and share this with his own team, that's the upsell moment. So now we've got John to buy both Estimating and John is also buying his own version of drawings, which were called shop drawings. That's the version of drawings that we use in subcontracting. Cool. Guess what happens next? A few months later, time to get paid for that job. That same account that we started at the beginning of that journey that's also the account where John gets paid from. So this is why we did that work with Goldman to make sure that we could back these accounts. And this same account becomes the place where John is going to get new work and bids. He's going to do estimates. He's going to get shared drawings. And now it's the account where John gets paid for them as well. And you can see us experimenting here with early pay in this rendition. All right. We, from that bid board, remember that bid board a few chapters ago in the story, we know how much work John's taken on because of the volume of bids, which means we can also figure out the size of the workforce, which means we can also target really well for labor, one of our new products. And so we're able to send a nice warm lead over the sales team and say, hey, we figured out that John probably has about 75 labors, really good market fit for our workforce management product, and we're able to get John into the next product, which is managing the workforce for this concrete tree. All right. I love this story because there's so much -- there's so many opportunities here to unlock this. This is the power of Connected. This is the power of getting everybody on a single platform. And so what we've done is we took somebody who was -- didn't even know about Procore. We got them to sign up for a free account, we got them to try out, Takeoff, purchase Estimating, get material financing, win a bid. Now they get paid in this account. So you can see how central to the lives of specialty contractors, these accounts become as we unlock all this value. With that, I want to invite Will up just to talk about specialty contractors and that unique audience.

All right. My mic on? Perfect. Everybody, to summarize why I'm so excited about Specialty Contractors, Wyatt, just did it. They get me fired up every time I hear that story. It's so exciting. So to quickly introduce myself. My name is Will Lehrmann. I'm a head of Product for Specialty Contractors, and my job is to help lead our Specialty Contractor business at Procore. This is actually now I'm entering my 10th year at Procore. So I've been around for a really long time, and I'm more optimistic than ever. And one of the reasons is because of the opportunity with specialty contractors. And so I actually spent many, many years focused on building out our general contract business, building out the product for general contractors. It was incredible. But about 3 years ago, I started to see this opportunity with specialty contractors. And I made the pivot to focus on this market, and there's a lot of reasons why I'm going to share some of those today. And the first thing I'll say is that specialty contractors. We're working in construction, one of the most complex industries in the world and especially contractors have the most complex job within the construction industry. And on top of that, what we're starting to see is the tech adoption and the trends of that tech adoption with specialty contractors is now mirroring what we saw with general contractors. And all that got me really, really excited about the problems that we can solve for them. And so what I'm going to do today is I'm really going to share a little bit about the specialty contractor market, what some of their top priorities are? Why I think Procore is so well positioned to go and help specialty contractors? And why it's so important to our mission and vision? So let's get started. So specialty contractor market. Specialty contractors are the backbone of the construction industry. And I really want that to sink in. These are the electricians, the plumbers, the folks pouring concrete, HVAC. Any bit of work that's happening on these job sites to build these buildings, it's happening because of the specialty contractors that are out there doing the work. And that is where so much of the risk lies and so much of the execution lies to actually get these buildings, these facilities, these roads built. And another thing I want to share is that they are the majority of the construction companies in the industry. And they're also the majority of the workforce in the industry. So when you actually think about the construction industry, you really can't think about it without thinking about specialty contractors. And they're responsible for so much. And just to name a few of those things. One, the labor. We talked about how important labor is in construction. It's so much of the spend. Well, who is actually out there getting that labor, getting in the job site, making sure they're trained, making sure they can nail their craft? Those are specialty contractors. The equipment. They're bringing the equipment to the job site. They have to be certified in that equipment. They're doing really, really hard work. And they're also the ones out there procuring the materials. And in a world where we have supply chain shortages and price escalations, a lot of that burden is falling right there on the specialty contractor. So their job is very, very hard and increasingly hard as we're seeing some of these market dynamics take place. And then when it comes to the actual project execution. Well, the most important thing to me anyway is safety. And so when you think about a really, really dangerous industry, specialty contractors is the one out there dealing with those safety concerns, and they have to help manage that safety. They have to manage the quality of the work, right? The quality of the work is so important, not only to make sure these buildings are safe and well-constructed, but also when you do good quality work for your client, the general contractor, you're going to be able to work with them again. So it's so important to the business to do high-quality work so they can win that work again. And then, of course, staying on schedule. We talked earlier about how far past the planned schedule some of these projects are going. And a lot of that reliance is on specialty contractors to go execute on schedule. So a really, really important job. And so I'll summarize this with specialty contractors carry immense amounts of risk, and they have to do all that while trying to make a profit and trying to grow their business. And it's really, really difficult. And so before I get into some of the day-to-day challenges and priorities of the specialty contractor market, I want to remind everybody about the backdrop of the industry and what we're seeing more recently, right? So number one, supply chain disruption, higher material costs, schedule delays. And all this is leading to a lot more collaboration required, a lot more work, a lot more oversight to make sure that they can manage the supply chain disruptions. And that's falling in the specialty contractors. Labor shortage, right? And what's happening with the labor shortage, whether it's decreased productivity, it's harder for them to forecast new work because if they don't know if they're going to get the labor within their team, they can't take on that next job confidently. And so being able to have that foresight, being able to forecast the labor they can bring into their business is absolutely critical, especially today with the labor shortage. And then project complexity. What we're seeing is bigger facilities, bigger buildings, more complex buildings, more high-tech buildings. And all of that makes the job more difficult. More integrated project delivery, more importance going into preconstruction to get the job right early, but all that is making more complexity for the specialty contractor. And it's making them also need to focus more on collaboration, working with their partners, working with their teams to make sure they can execute on these really complex jobs. And the last one I want to share is digital transformation. The market knows they need to make this transition to a digital world. There are so many efficiencies they can gain, so many problems they can solve by making this jump. But it's really scary. It's hard, right? These are things they haven't done in 20, 30, 40 years, family-run businesses that have to turn around and now adopt a bunch of technologies that they know is going to transform their business, but that means more training. They're going to have to figure out how to manage all these systems. What do they do with all this data? And that's a real challenge for them. And all of these things are areas that we know Procore can help, and they're coming to Procore and coming to our platform because they know we can help with these challenges. And so all of this is opportunity, but it's really, really hard, and we've got to help them through it, and I'm really excited about how we're going to do that. So now I'm going to walk through a number of different priorities for specialty contractors. I can't cover them all, but I'm going to hit some of the top ones that I believe are really, really critical to their business, super important to getting their jobs done and how Procore helps them along that journey. So I'll start in preconstruction. We talked a lot about that already. But these projects can often be won or lost before you ever break ground, right? So it's going to be a 2-year long project. You might actually lose that job and lose your profit on that job before you even started because you didn't do a good job in preconstruction, estimating your work and making sure that you have the right budget to go execute that work and the way it works for your business. That's really, really important. But there's so many other things they have to deal with. First, building and managing those client relationships, right? They have to go out there and find new work, find few general contractors to work with. And why I mentioned a lot of times, they're in the job site trailer, trying to find new work. Well, our Procore Construction Network is an awesome way for them to grow their business. The next thing is forecasting how much work they can even take on, right? Do you have enough labor? Are you going to be able to get the materials you need? Do you have the cash flow that you need to actually go out and take on more work? And they're trying to build their business and forecast their business 1, 2, 3 years in the future. You need to have the insights and the information to go do that and the tools to go do that. The next one is estimating the work. So, so important. If you can estimate your work effectively, accurately, then you're going to know the profit and the margins you're going to make on those jobs. Super, super important in preconstruction. And then the last one I'll say is that once you do all this work in preconstruction, all this data, all these decisions you've made and say, okay, this is going to be a great job. We're going to make a lot of money on this job. Well, all that data has to seamlessly transition to the project team so they can execute against the plan that you put together during preconstruction. Really, really important. And when using disconnected systems or no systems at all for some of these contractors out there in the market today, that becomes really, really hard. Lots of risks, lots of errors and that can break the job. And so there's a quote up here from Allan of DMI Technologies and one of the things that's so exciting is the efficiency that they're getting and estimating, it's saving them money. And more importantly, helping them win more work because they can estimate better, they can estimate faster, they get better margins, make more profit that is helping them grow their business. Awesome. So the next thing we'll talk about is project execution, right? So you went out there. You found a great client you want to work with. You bid the job. You won the job. You estimated the work. You're feeling really good about it. But now you got a long arduous road ahead you'd actually execute on that project. And so, so much goes into that. First, getting the right information to the field. There are thousands of documents, drawings and specifications and details and decisions that got made in preconstruction that you now have to consume and get out to a massive workforce in the field and make sure they have the right information at the right time to go execute on the work. And on top of that, these plans are changing, not just in preconstruction, but during the course of the job. As you're out there on the job and the owner's making changes to what they want the building to look like, as you're uncovering unknown things that are on the job site and you have to make changes in real time, that's going to actually change that information that the team needs to go execute. And making sure that your field team has the most up-to-date accurate information is absolutely critical for them. The next is ensuring quality construction. I spoke about this earlier. Very, very important because doing great quality work one, make sure you don't have to do rework. And rework is a huge waste in our industry, a huge cost in our industry. And then number two, if you're not doing high-quality work, that client is not going to want to work with you again, and that can really, really hurt your business. The next one is tracking job site data. We talked about all this data in the industry and that we're barely tapping into all of it, right? Where is that data coming from? A lot of it's coming from the job site, right? That's the actual execution data that you need to feed back into your business so that you can make better decisions and better planning in preconstruction for the next job. And all that's being collected in the field. But it's really, really difficult to collect all that data and make sure that it's collected in a sensible way and fed back appropriately so that you can make those decisions later and can drive those insights later. And then productivity, right? When you plan the job, you estimated and you planned for a certain level of execution, a certain efficiency. Well, you now got to go make sure you achieve that. And on a 2-year long project, you might go, well, there's a lot of chances to get off-schedule, to get off-course and to not be as productive as we need it to be to hit our profit. And so if you wait until the end of the job to find out that you weren't as productive as you needed to be, well, it's too late. But if you can get real-time day-to-day insights to make sure that you can course-correct quickly, that's how you can make sure that you reduce that risk and make sure that you're profitable in that job. And so another great quote here from Justin at Auburn Mechanical. They were able to take thousands of sheets of paper that they were dealing with on every single project, it can -- it runs it down to one application, pull it right up on their phone, on the job site, get anything that they need, knowing that it's the most up-to-date accurate information, and that fundamentally changed their business. So the next thing I want to talk about is the people. I think this is one of the most important things in construction for so, so many reasons. But it's really, really hard to deal with, right? I'm not even talking about equipment management and the material and all the logistics. Because people are the highest cost, the most variable part of the business. They create a ton of risk but a ton of opportunity as well. And I can't talk about people without first talking about safety and making sure these folks are safe. And so one of the really important things of managing a workforce is making sure that your workforce is safe. But you also got to communicate with these people. And we're talking about folks -- some job sites with thousands of people working on them, hard to reach them. And so making sure you have the right technology and the right techniques to reach those people is absolutely critical. The next is workforce scheduling. So you need to make sure you have the right person at the right place at the right time. And if every single day and every single project when exactly as planned, maybe it wouldn't be too hard. But that's not how construction works. When there's some supply chain disruptions and the material that you needed to install that day doesn't arrive, well what do you do with those people who are there on the job site to install that material? Well, you got to allocate them somewhere else, you can make sure that you're getting the most out of your workforce. And so being able to understand what's happening on the job site and then very quickly react and reallocate and reschedule those people is really, really critical. And then you got to track that work and make sure those people get paid. I don't think any of us would show up to work if we weren't getting paid. And so making sure you're tracking accurate hours for your team and then turning around and making sure that they're getting their paycheck on time to the right amount is really, really critical. And when we're dealing with the world where there's a labor shortage, making sure you're treating our people right, paying them on time, paying them accurately is absolutely critical. And I think this is a great quote here from Brandon of ABLe Communications. And a couple of things you're getting out of managing your workforce better. One is the efficiency that he's getting. And being able to get more efficiency out of his workforce is really, really important. Obviously, it's going to save you money because as labor is your most expensive cost for a lot of the specialty contractors, that's important, but also the risk. Because if you're not getting the people to the right place at the right time and maximizing that workforce, your schedule is going to start to drift and you're going to start to miss the targets that you set and that's when your budget is going to start to miss the profits that you aimed for. And for the last category here I want to talk about is financial oversight and ensuring profit. At the end of the day, these are businesses, they need to make money or they're going to go out of business. So first, real-time visibility into their budget. And on a construction project, changes are happening every single day that impact your budget. And if you're waiting a week, a month to get those insights, it's way, way, way too late. You need real-time daily insight and visibility into your construction budget. And what does that help you do? What helps you realize those insights? Find the risk, find the opportunity that you can course-correct quickly and make sure that you can salvage any of those challenges that you're seeing on that particular job or opportunity and take advantage of that opportunity to help you grow your business. The next is ensuring that project profitability. So every single one of those projects, you believe you're going to make a profit on. You estimated and you planned at preconstruction to make a profit on that job. And so you need to make sure that you're managing against that job to get profit. By at the end of the day, every single one of these projects that they're running is flowing back up to the business. And you're looking at this portfolio of all your projects and making sure that when all the numbers add up, your business is going to grow the way you need it to, that you're going to be able to have the cash flow that you need, that you can stay afloat. And all that feedback and your ability to take on more work and sometimes you even keep your business alive. All of that is super critical, and that flow of data is super critical. And so this quote from Wes at Green Mechanical is awesome. When they were able to use Procore, one of the most valuable things they got out of it was the insight that they gained from that financial visibility. They felt they were making better decisions because of those insights. And at the end of the day, driving more profit for their business. That's a change, right? That is impact. And those are things I love to hear from our customers. So why should Procore care about specialty contractors? I think we've shared a lot about why. But I always like to go back to our mission and vision, right, why we exist, why I wake up every single morning as a Procore employee? Well, specialty contractors are core to our mission and vision. You can't improve the lives of everyone in construction without the trade. They're the majority of the people and the businesses in this industry, they're the backbone of the industry. And without solving the problems with these folks, we cannot improve the lives of everyone in construction. And why it did an awesome job showing you how we can't connect everyone in construction without the trade. And so our ability to go out there and support and work with and partner with specialty contractors, it's critical to Procore's mission, it's critical to our vision. And I believe that they are the backbone of the industry. And as we support them, we will help make the industry stronger and better and it's a massive opportunity to transform the construction industry by helping the trade. And so I won't go through this slide in too much depth. Why did a great job? But I do want to share a few things that I'm really, really excited about, why Procore specifically is best positioned to help specialty contractors and take advantage of this opportunity? First is we have 20 years of general contractors that have been coming into Procore's customers. And as Wyatt mentioned, each one of those general contractors are inviting specialty contractors into our platform. And every time they come in, they're getting more and more familiarity and confidence in Procore because they're using it every single day as a collaborator with their digital contractor, right? And that confidence in our platform is really important because then when they start to see all the problems that we solve for their business, it's very easy decision for them to go yes, I trust Procore, I know Procore, I'm familiar with Procore, it's a great platform, and they solved my most important need. This is awesome. I definitely want to become a customer. The bidding network, right? So how you actually go out and find new folks to work with, win that work and get paid, right? How do you actually go out and find customers and take on new work? Well, we have a network that brings them into Procore for that really, really critical aspect of their business, and that's a huge network, in fact, for Procore and a great way to bring specialty contractors into our platform. And as we're seeing more and more reliance on preconstruction, with more design-build contracts and more collaboration happening in preconstruction, we're now catching specialty contractors early in the construction phase. Before they've even broken ground on the project, they're getting pulled into Procore. As Wyatt showed, they're starting to see value in real time that they can tap into to win more work, to estimate better and then drive right into our course of construction and workforce management solutions to solve a lot more problems. And the last one is Procore will be the platform where specialty contractors get paid. Pretty important, right? If this is the platform where specialty contractors are getting paid, they're going to want to come here, they're going to want to log in and they're going to want to get paid. And that's a great chance for us to connect with them and then show them the offerings that we have. So I'll close out here with something I'm super excited about, something we're working so hard on it, and the company has been working so hard on it. Procore is the leading platform for specialty contractors. They come here to collaborate with their customers, their clients. And then when they come in to collaborate with their clients, we offer best-in-class solutions that solve their top needs from our Procore Construction Network to our preconstruction and estimating solutions. We help them with project execution, managing job site quality, the safety of their people, workforce management and managing those people, financial management, having insights into the financial management, material financing and just so much more. And the other thing I want to share is that we specialize in specialty contractors, right? So not just our products, but the way we implement them to our products, the folks that actually help them get implemented and onboarded to our products, how we support them throughout their life with Procore. That's so important. We speak their language. We have folks coming from the construction industry to work at Procore that were specialty contractors, speak their language, know the challenges of that digital transformation and help shepherd them through those challenges so they can find the value of a platform like Procore. And the last one is our partner ecosystem. So we offer these amazing products. We're also out there finding best-in-class solutions that solve a whole litany of other problems for specialty contractors, bringing that into our network, integrating those solutions to Procore so that these specialty contractors who are not familiar with going out and acquiring many, many different applications can come to one platform and find everything that they need to run their business. So the last thing I'll share is when I think about value and impact, I want to hear from our customers. And so I'm going to very quickly share 3 quick stories from 3 of our customers and the impact that Procore has had on them. First, Monterey Mechanical. They're a steel mechanical subcontractor. And one of the things they love about Procore is the consolidation. All of those priorities that we just talked about, all supported in one platform. And the other impact that they have is they believe that each one of their employees saves 1 day a week. I would give anything, if I could get 1 day a week extra. I haven't figured out how to do it yet, maybe they'll come up with a platform for us in product management. But it's just incredible to hear the value and the impact that we're having on those workers to save 1 day a week, and that's how much more they can now do. The next, DCO, they're a commercial flooring contractor. And one of the things they loved about Procore is that we have a product that is user-friendly and mobile-first. So many of their people are out on the job site, on the go, they don't have a trailer, they don't have an office, they have a truck. And so being able to have mobile is so important to them on their phone, on the go, having all the information that they need. All the tools that they need to get their job done is very, very important for them and helps them to their digital transformation. The other impact that we had with them is that they believe that their critical tasks for their teams were cut in half. So when we talk about driving efficiency in the construction industry, imagine if every single critical task is cut in half. That's how you drive efficiency, and that's how you double the output of the construction industry. And the other thing is that they almost doubled their revenue since adopting Procore, that's the impact we'd like to have on our customers, helping them grow their business, being more successful and really, really impressive. The last one, I'll share, Humphrey & Associates, a mechanical, electrical and plumbing specialty contractor. One of the things I loved about Procore, 100% data ownership. They now own all their data. They have access to all their data. And that is driving insights and performance so they can find that efficiency because they have access to all that data. And they have more control of their financial profitability. And then one other thing, this is a really specific staff for them, but they believe that their project managers can take on more work. They used to manage $3.5 million a year in construction projects per project manager, they were able to grow that to $5 million. So when we're dealing with a labor shortage, these folks can now take on more work without having to grow their staff. That's huge. They can do more with less. So needless to say, I'm extremely impressed by the specialty contractors out there in the world. They are doing the most complex job in one of the most complex industries. And I'm really grateful that Procore gets to be the platform to help support them as they grow and deal with these challenges. So now I'm going to pass it to Geoff to talk about owners. Thank you.

Thank you. All right. They gave me 2 of these mics, so hopefully, it works. All right. Hey, guys, I'm Geoff Lewis, I'm our Head of Product, actually for our Financials product line here at Procore. So I think folks may have seen me from Procore Pay announcement yesterday. But I also oversee our Owners effort and actually came from a company called Honest Buildings, that was a company Procore acquired about 3 years ago, and we were entirely focused on serving owners. So imagine owners like Brookfield, Hines, WeWork, back when that was a very marquee name for us in 2019. Obviously, things have changed since then. but I spent a lot of time with owners and super excited to talk about kind of how Procore thinks about owners and why they're so important and impactful to our business. All right. Cool. So I think you guys have seen this slide pretty similar to what Wyatt was showing earlier. But I sort of zoomed in on the owner to make it a little bit bigger because at the end of the day, there is literally no project without an owner, right? So at the end of the day, owners are so important and impactful for the construction industry. They are the ones who come up with these ideas in the first place, right? So if I'm Whole Foods, and I want to build a new Whole Foods, well, until the Whole Foods development team picks their site, comes up with the funding for that new store, comes up with their financing, comes up with a business plan, there's no architect working on that, there's no general contractor working on that. There's definitely no specialty contractors working on that. So the owner basically brings all this to life because they want to go build a construction project. So our ability to sell into that owner is so important for creating this network effect and being sort of upstream of all the work that will ultimately flow down to general contractors and subcontractors. And in fact, owners also have a really big ability to influence the software that other folks on the project use, right? So if the owner has a project, no general contractors yet attached to the project. What the owner says about what technology will be used on that project is very important. And it's a really interesting moment for the owner to often even mandate Procore. I was sitting with an owner last night, and they say they only work with general contractors who use Procore. And so imagine you're a general contractor who does not use Procore, you want to work with that owner. That's a really interesting way that we sort of spin these flywheels that we've talked about before. So owner, a very important part of just the stakeholder map in general. Owners have a lot of problems when it comes to construction. So the first thing I will say is that finishing a project on budget is of critical importance for the owner. So for example, going back to that Whole Foods example. Let's say Whole Foods is going to cost $20 million, and it ends up costing $25 million. Who's on the hook for that extra $5 million? Whole Foods, right? So they either have to increase their CapEx budget for that year, do less store openings, somehow come up with the extra $5 million for that store. The general contractor who's building that honestly probably makes more money in that case because it went over budget, because they're often getting a percentage of the construction budget. But the owner is very, very, very focused on ensuring their projects don't go over budget. Same thing with time, right? Going back to this Whole Foods example. Imagine Whole Foods opens 1, 2, 3 months late. Well, nobody is going to be going in there to buy groceries that day, that is lost revenue that Whole Foods doesn't have, similar for really any type of construction project you think of. Similarly, quality, right? If the -- I guess, they have burnish concrete floors in the Whole Foods, right? If those aren't done at high quality, you have to come back in 2 years and fix them or refloor them. Who's on the hook for that? Not the general contractor, Whole Foods has to go do that. So that's some really important things the owner has to think about. They also are mostly dependent on these folks. I think Wyatt did a good job of talking about why the owner can't just go down to the mechanical contractor and give them instructions. You have to route that through the general contractor. The owner is very dependent on all these folks they're hiring to actually collect that information and even figure out where they stand. And then last thing I'll say is that all the owners we serve aren't just doing this at a single location. They're doing this across multiple states, across multiple countries, even they're doing it at this gigantic scale where they're not just dealing with one general contractor, right? Construction is, at the end of the day, a local business. So I am Whole Foods, Brookfield, ENGIE, any of these companies that use Procore today, you're dealing with many, many, many general contractors across many, many different regions. And so that's obviously a very difficult thing for them to roll up all that money and look at that and figure out where they are on budget, schedule, quality, et cetera. So this is a picture we took in a real-life owner's office of a gigantic stack of paper because historically, this is how they've managed tech and how they manage their construction projects. They don't have a lot of tech, this hasn't been an industry rich with technological innovation. So when you go talk to owners today about what they're doing, you're going to find finders, spreadsheets, accounting solutions, none of which are purpose-built for managing this stuff. The other thing I'll say is -- and I sort of referenced this before. But there's a lot of different kinds of owners, right? There's the one-off owner, maybe I'm -- somebody who just has a single construction project, you're probably going to hire an owner's rep or a general contractor who's going to help you with that. You likely don't need to purchase Procore to manage your construction projects because you just have one. It's probably good enough to collect that information from the GC on that project. But as you think about scaling the number of projects you're operating, your need to have a system in place to manage all that stuff goes up exponentially. And when we look at the TAM for owners, that's kind of where the majority of the owner TAM is, upmarket. Folks who are managing lots and lots and lots of construction projects. And for them to just be logging into their GC's Procore on all these different projects to try to go to the CFO of Whole Foods and show them where we are in our construction budget doesn't make any sense at all, right? They need to be able to have their own system. And so that's really where Procore plays today with owners. And it's working well. I think Paul mentioned earlier, we definitely do work with real estate developers as you can see on the left side. Obviously, some of the biggest and best real estate developers in the U.S. and globally use our product for all different types of properties, right? Commercial office, hospitality, residential, especially multifamily residential. So there -- even within that segment, there does happen to be a lot of diversification. But most of our owners business is not real estate today, it's corporation. Obviously, I referenced Whole Foods. But take a look at some of the logos on there, right? We've got Equinox opening gyms, Walmart opening stores, Boston Children's Hospital creating new wings and new facilities to actually serve their customers. We have industrial and energy folks, right? So think about all the wind farms, all the solar farms that are being built throughout the U.S. Think about refurbishments of existing natural gas power plants. People are leveraging Procore to do that today at a massive scale. And then importantly, also public sector. So we have made really strong inroads with city and especially state governments over the past few years and we have a really nice set of projects. And so I think what this does is that -- and so we talked about this a lot, this creates a lot of sort of diversification in the different types of owners we deal with, but they all have the same fundamental needs, right? Is my project on budget, is my project on schedule, is my project being done in high quality? They're all thinking about these problems in a similar way. And so we can build 1 tool for owners that works really well across all of these different owner types. The other thing that's exciting is that -- and this is probably the, I don't know, 20th flywheel we've shown you all today, but it's exciting because Procore has all these different ways to create flywheel effects. But as I was talking about before, there is this very big owner mandate effect, right, where an owner before the GCs have a job, can say, you are going to be using Procore on this project. And in a lot of cases, that's great. The GC already uses Procore, everything is good. But we've seen time and time again, the GC doesn't yet leverage Procore. They're not going to not do that job because they don't have Procore, they're going to go get Procore for that specific job, so that's the way we sort of get inroads into some of our larger GCs. Owner mandate grows and grows and grows. Eventually, the GC says, well, this doesn't make a whole lot of sense, I should just be using Procore. And so that's one way we get leads for GCs. The other thing is most owners hear about Procore because they get invited in by their GC, right? So their GC is using Procore, they're probably using it as a selling point to that owner of, hey, we manage your project very efficiently, we use Procore, you can log in and see where your project is at. The owner goes in there, sees that and says, you know what, I should probably be doing this in all my projects and sort of create this other end of the flywheel where more owners now come into Procore. So really cool way to see that flywheel spinning, and we've seen really good traction in spinning that in both ways. And it also creates this really cool advantage for Procore, right? One of the biggest reasons that a G -- that an owner, excuse me, would buy Procore is they say, Procore sounds great because all my GCs already know how to use it, right? So as I was talking about before, one of the issues that an owner has understanding where they are against budget, understanding where they are against schedule is they have to actually go collect that information from people, right? And so if they're using a platform that most GCs aren't used to, most GCs aren't leveraging today, much harder to get that group of folks to log into that system. If you're using Procore, all the GCs already know it, much easier to get them over that curve to actually come in and submit the information to you through Procore. So a really huge sticking point -- selling point, excuse me, that gets them excited. So it creates a competitive moat, right, because we have the largest collection of GCs using our product. Nobody else has that, really interesting inroads to get owners. And it also creates a very sticky platform because at the end of the day, it's very hard for an owner to switch away from Procore onto a different system if their GCs aren't there, right? So we think this just creates both -- value on both sides, but also a very sticky dynamic with a strong competitive moat. So I think that at the end of the day, this has worked really, really well, right? So the owner's business has grown substantially over the past 3, 4 years. And here are some of the examples of owners who are using this successfully today. So Boston Children's Hospital is a good example of this. What they're -- I have spent a lot of time talking with BCH folks. What they're really trying to get out of Procore is what is that one central place where I can log in and see all the projects that I have going on across all my different buildings and instantly understand where they are on budget, and so they use Procore heavily for the financial management components. I will also point out that Boston Children's Hospital in many cases does work with GCs who use Procore. In fact, I see one of them in the audience here, but they still found that it was so important for them to be able to see all the projects they're working on across all their general contractors, but then investing in their own Procore and it's made a ton of sense. Obviously, I mentioned there's multiple different kinds of projects that are being done here. ENGIE is a good example of a customer who's leveraging Procore to build wind farms, to build renewable power plants all over the country. And so they've seen really strong reduction in change orders due to using Procore to be able to better track and capture all the change orders. Ultimately, what this allows them to do is finish their projects tighter to their original budget. That allows them to use the annualized CapEx budget on creating more -- bringing more new kilowatts online, which obviously, at the end of the day, is how they drive revenue. And we talked about this a little bit before, but Whole Foods, also use Procore very successfully across our budget management tools, across our quality tools, across our core project management tools to ultimately deliver their projects more on budget, more quickly at a higher quality level and importantly, have visibility into issues that may arise as they're going through that. So again, a lot of diverse examples of different owners leveraging this. But at the end of the day, they're all really trying to solve that same core problem of I have many projects, which ones of them am I at risk, which ones are behind schedule, which ones are off track from a budget perspective. If there are some that are off track from a budget perspective, which ones are going well and how can I reallocate some of the budget from those to the projects that are falling behind? How do I make sure that as I'm doing more and more and more projects every year that I'm learning lessons from the projects I did last year and implementing new quality checks before the projects are delivered? And really just at the end of the day, the owner being able to have their own Procore where they log in, they see all the stuff, they can manage their teams. So all this stuff creates a huge amount of value for them, which, at the end of the day, is what's helped us drive such substantial growth with owners over the past few years. And I think Paul showed it before, but we're really just scratching the surface with owners. It's a very new business for us, and we're really excited about the growth potential here and feel really bullish on where this can go for us over time. So that's what we got on the owner side. So with that, I will transition it back to Tooey, Paul, Howard, to do Q&A. Thank you.

While the team is getting set up here for the firing squad, we will -- a couple of things. It will be Tooey and Paul, and there will be a third executive, I think some of you know him. I don't know if everybody does. So his name is Howard Fu. He's the Senior Vice President of Finance. He is a very handsome muscular gentleman right here next to Tooey. So Howard is a very senior leader at Procore. He's deeply immersed with our go-to-market leadership as well. So he's very intimate with our operations. Prior to Procore, Howard was part of the team at DocuSign to help them scale and go public. Prior to that, he's at LinkedIn. And prior to that, Howard and I worked together at Salesforce way back in the Old Testament days. So the format for Q&A, there's a couple of mics here on the 2 aisles here. So for you guys in-person, if you guys can walk up, grab a mic, ask questions. And then online, we'll be taking questions as well. And so Vivian is going to be monitoring that portal, and she's actually going to kick us off right now with a couple for Paul that are coming in online.

All right. So why don't we start with one on margin trajectory. Is the trend line of the 350 basis points per year for operating margin a formal target going forward? And what's the expected time frame for that to play out? And if you can also kind of talk about how to think about free cash flow margin as well, that would be great.

Yes. So our formal guide that we issued in earnings here just recently is negative 11%. I think for those of you who are trying to think through the coming years and how to think about that, you should take that 350 basis points and assume that to be kind of the average trajectory of margin progression over the coming years. Now we did say we're not telling you it's going to be consistently 350 basis points every quarter -- or every year and that we do believe there will be years where that's greater and years where it might be lower. But in general, for modeling purposes, I think that's the best way to think about how to carry forward that number. As I have mentioned in the presentation on the free cash flow front, you should assume it to be essentially similar, if not actually slightly better in terms of how that margin progression will follow.

Okay. Let's do one more from Vivian, and then we'll go to DJ here on the right.

Great. This is a two-parter on the payments announcement. Can you talk more about the economics that we should expect to see from Procore Pay? How much of an uplift should we think about? And will Procore primarily benefit indirectly, so through increased engagement or will we charge a transaction fee? And the second part is from an organizational perspective with Procore Pay, materials financing and potential further insurance products down the line, are we building out a separate financial organization to help manage these kinds of products?

Sure. Why don't I hit on the latter one first, and then I'll go back to the former? So in terms of the organization, we have and we've already built out that separation. Obviously, there is a different level of competency, a different level of background context and information that goes with thinking about financial products. How do you make sure you're really thoughtful to how you manage that, how you ensure you're thoughtful and actually the relationship on your capital partners in the world of insurance, all the folks in capacity? So this is something that we're mindful. We'll take a little bit of a different muscle, and we're building out that team that is focused on this that comes with a different level of expertise. If I go back to the payment question and think about the flow there. We haven't yet disclosed pricing. It is something that we're still working through. I think the narrative we've put out to customers is the same one I will share here, which is that there are some players out in the market, and we believe that we can not only deliver a much better experience, but we can do that from a competitive pricing standpoint as well. And so there will be more to come as we really launch that data, get into those conversations with customers. But right now, I think the thing to remember is that what we announced is not a transaction business. It is a workflow business really aimed at solving a problem for the general contractor who brings those subs into that ecosystem. By entering that flow of funds, there's a lot of really interesting thing that we believe we can do over the course of time. But that is not what we announced, and that is not something that we are at this point ready to really talk about on how it may actually impact the model. So when you all think about payments, think about it as a B2B SAP offering.

All right, DJ?

DJ Hynes from Canaccord. So I'm actually going to ask a question that kind of bridges those 2, which is margins and payments. As we think of kind of the ramping of the financials portfolio, I'm most curious in gross margin impacts and then incremental sales and marketing dollars kind of tied to these initiatives. I mean it feels like it should be kind of a natural pull-through, but curious how you're thinking about it.

Yes. From a sales and marketing perspective, it is very much, as you said, a natural pull-through. In many cases, as we think about the customers that are going to be buying this product, they are the same customers that already exist in our installed base. These are folks who use financials, who use invoice management, and this is just that natural next extension of what they need to do to complete and finalize that workflow. So we actually feel from an efficiency standpoint on a sales and marketing front, this should be a positive contributor on that front. From a gross margin standpoint, I would tell you there's nothing you need to call out there. There are certainly some COGS associated with how we process and transact that money flow. But in general, we feel good that the long-term target we put out there from a gross margin standpoint is still the right one to think about.

Yes, don't make any changes to gross margin in your model. All right, Ken.

Ken Wong from Oppenheimer. Just a question on international. One, you were talking about fee income leverage as you scale international. I think on the last call, you also talked about potentially needing to kind of reevaluate how you guys go-to-market international. How should we think about kind of that time line to leverage and scale on the international side?

Well, let me -- I'll tell you about what we're doing and Paul can talk about the impact of that. So we look at our international business much like we look at our newer businesses, which is we are learning as we go, right? And so we're taking the best practices from the last experience and pulling them forward. So -- and we are very interested in looking at what dynamics work best in which markets. And so we're basically lifting the hood on that kind of order design and operating model to make sure that we are going to be able to grow efficiently. What we know is just like in the U.S. market, right, we experienced 20 years ago, construction is slow to adopt technology, not because they aren't -- they don't love technology. It's because they, first of all, never had any technology at their fingertips. And secondly, the technology that was provided to them has been just junk and it actually slows them down. So going into a new market where the brand awareness is very minimal takes time to build that brand awareness, get those reference customers, get our salesforce up and running and productive. So that's where we're focusing most of our energy right now. But I'll tell you all, any of the kind of the stumbles that we've seen have all been internal learnings and executions and they've not been external macro for the most part. So we remain incredibly hopeful. I want to let Fu...

Talk about timing, yes. So when I think about the evolution of international, you saw from some of the content that Matt put up and Paul put up that we've accelerated our -- the magnitude of our investments in recent years in international, and with that with some of the growing pains. But I think what we started to learn is that we had a lot of breadth in terms of the markets that we were going into. And when you start off in some markets, I think Paul like to use the term bear hunt. When you start in some markets, you have an individual that can play an AE, an SDR, an office manager or a public relations person. As you start to get to scale, you do need some specialization in order to take advantage of the opportunities that are there. And I think we're hitting some of those points in the markets that we're in. And so what Tooey is mentioning is as we think about org structure operating model and so forth, it's really about coordinating and getting the sequencing right and the timing right for the specific markets that we're in to be able to take advantage of those opportunities.

I don't think I have anything to add.

Maybe a quick follow-up on international, and I'll throw it over to Brent over there. On the LTV to CAC metric, it looks like there's some headroom to get to 11 if you're trying to line it up with what you're seeing domestically. Is that more of a kind of a numerator problem -- or not a problem, a numerator dynamic or a denominator dynamic in terms of what closes the gap?

It's numerator. That's where you go back to the share of revenue versus the share of spend, the horizon of time it takes to stand up a leadership team, a brand, a pipeline, get those reference customers and get those flywheels spinning. So that's where we continue to believe that the product market fit the strategy, the region, the need, like those things have not changed. And it's just a function of being in those markets for that horizon of time and executing on the org structures that we believe we'll scale with.

Mr. Bracelin?

Thank you so much for the additional disclosures today around the different segments. As analysts, we appreciate more not less. But I wanted to drill into one area that felt a little different. It felt like it's getting a little more focused, and that's the specialty contractor area. This is an area that's only 14% of ARR. I look at the total customer base, I think you have 13,000 paying customers. There's 60,000 on the Procore community network. So big gap there to monetize that space. At the session yesterday, Workforce Management booth was packed, Procore Pay booth was packed. So walk us through how are these things manifest? Is there an opportunity to accelerate some of the monetization things around specialty contractors with the now greater focus and that looks greater investment around sales capacity as well? So really a question around can you monetize specialty contractor and can you do that maybe a little bit faster in '23 and '24 then maybe we appreciate it.

Absolutely. It kind of goes back to the old mantra, which is our -- the bigger the business is, the longer it's been in market. Specialty contractors is a relatively new business but we're not -- I mean that's fairly not super new. But our go-to-market strategy around specialty contractors was very much similar to our go-to-market with general contractors. And we believe that changing that dynamic through Procore Construction Network, through catching another time of need inside the application is really going to be the area where we can get access to all the folks that have us and meet us at that time of need. So the kind of the mantra is that you aren't seen nothing yet because we have -- all of this stuff is new. All of the things that we're doing in this product-led growth strategy. And then we also have a lot of work to do ahead to provide e-commerce and premium and all the other things you've heard about. So yes, I think we will not be able to meet our mission if we don't have all subs, all GCs and all owners working together on the same platform. So it's just a matter of time. Also, we -- I noticed at the show this year, we have a ton of specialty contractors there, and they're helping us get there.

Yes. I mean maybe the only thing I'd add, Brent, you've been around the story for some time. I would challenge you all to go back to your customer call notes from years ago, and you probably heard this narrative that Procore's cool, but it's a GC tool, right? That is something that has been a reality for many years in the past. And that's where that slide where I tried to prioritized kind of the hierarchy of needs of these different stakeholders is really important because what Will talked about is that the opportunity we see today is something unlike we've ever seen with this particular stakeholder. And it is this combination of streamlining that go-to-market, but building up the product, set the functionality, meeting that stakeholder where they're needed. And probably the one other nuance I'd call out is you'll see -- you saw in that $100,000-plus customers and $1 million plus itself is the smallest share of that. That's because we deliberately started in that mid-market with the subcontractor and we're seeing some really interesting traction as we've made investments and invested in a platform and these products going upmarket with that audience. And we think that will also help drive that 14%.

And just to be clear, as we think about the pricing methodology around subcontractors, there are some examples there, some add-ons, some upsells. Is it going to be a little more nuanced than a fixed rate fee that has traditionally been the pricing functionality in GCs? Are there opportunities to do smaller lands with more subscription-orientated things? Just trying to think through how you're thinking about pricing philosophy in the subcontractor.

All of the above. That's where your comment of [ 30,000 ], the 60,000. The 60,000 doesn't match to the $2 million number. We talk about like there are so many collaborators out there, and I think the reality that we all know as folks in the world of business and operations is getting that first dollar is the hardest and then finding the path to grow from there. And that's why we're really excited about all these different toeholds that we find ourselves in with this particular audience.

And a great mental model to think about when you think about our fintech businesses. These fintech businesses are built around some of the highest pain points a subcontractor has. And these aren't really application purchases or subscription. Map probably is a huge part of their challenge. So these are just new businesses that create opportunities to monetize those relationships.

All right. Brent?

Tooey, payments, I know you said it's not going be material to numbers in '23. But where do you expect it to take off first half? How do you expect the ramp to go? And can you just walk us through that lift off? And many of us cover Intuit, if you ask Intuit what their biggest probably disappointment has been, has been payments it's just taken forever. They've had a lot of friction. What's different in your market than maybe Intuit again for SMBs they face? What -- how do you get through that friction? And can you elaborate on that? And I have a quick follow-up for Paul.

Yes. So I think the first thing to think about is the process now is fully analog and it's most cases, you know that there's a player in there. And it's really slow, labor-intensive and cumbersome. So frankly, just adding a single source of truth, a mechanism for people to have in place to go for our GCs to go to pay their subs is a huge relief for them. It reduces all of the headache. If you think about how payments work in construction today, on a monthly basis, people show up in the job site trailer and they drop a bunch of invoices on the -- all the subs on the project manager's desk. That poor guy has got to key all that stuff into some sort of a spreadsheet, staple it all together and then courier it back to the office so the office can actually put together this transaction, then you get into lean waivers. So our process is they're already going to be in Procore completing these complex workflows, lean waivers is that final last step before payment. So it's just a natural progression for them to adopt it. And we're starting with the GC to sub paying process because as I think it was Will said, when you have -- or Wyatt, when you have 2 sides of the equation where both are benefiting, the GC benefits because you're actually improving the process of paying people, which is a huge headache. But the specialty contractor has cash flow problem. If they can take their 120-day collection down to 35 days, imagine what that would mean for them. So there's a lot of value on both sides of that equation. And then eventually, hopefully, we'll be able to have owners paying the GCs and GCs invoice the owners, but we're starting with the GCs, as I said.

Great. Paul, in the 10-Q, there was a 51% increase in sales and marketing. I think it's your fastest ramp in terms of expenditures or headcount. I believe it was embedded in the filing. If I'm mistaken, let me know. But it's a big ramp. No one else in tech seems to be hiring at that rate right now. What's going on? Where are you putting these people? Can you talk through where that's going?

Yes. I mean I think as you -- we tried to show in the presentation kind of how we think about the distribution of that go-to-market spend. Realistically, it is going towards all of those different vectors, size, stakeholder, geo. And when we think about how we really want to staff sales and marketing for us, that is candidly the most mathematic of the equations, right? You're able to look and understand what's the demand, what are you seeing in your market, what are you seeing in your pipeline. So what you should expect from us is that we're going to meet that demand. So we're going to be thoughtful to hiring where we see that opportunity. And where it's not there, we, as we've talked about, have an opportunity to drive that margin efficiency. And so for us, it's a reflection of the macro comments you continue to hear us talk about. That high end demand remains really strong and resilient, and we need to be there to meet the customers where they are.

And just there's a quick add-on to that, if you think back the last several years when we were going through COVID, where we pulled back was on the sales and marketing side, but where we continue to invest was on the product side of things. And if you think about coming out of that, we made a discernible push, a deliberate push and invest in the go-to-market piece. I think what you're seeing now is a lot of the product pieces coming to fruition, and it's converging with that subsequent investment in go-to-market. We're putting those 2 pieces is what's converging together now and going forward is where we're going to be able to realize both of those coming together for efficient growth.

Thank you for reading the queue, a lot of people worked hard on that. Bill, our controller somewhere in the audience is really grateful. All right, Jason?

So Procore got a lot of expertise in construction. It's where you started. Fintech, really interesting opportunities, can be its own animal. What type of -- or can you speak to the internal leadership you have in place, the expertise and you attract some talent to kind of build out this knowledge?

Can I start? This is one area we're incredibly proud. I don't know -- I didn't know much about insurance 2 years ago. I know a lot about it now. I didn't know a lot about material since financing. The folks that we've been able to attract are the folks that come from that actually understands how this actually happens and how this works. And they also have the entrepreneurial mindset, which is they want to get out of this dodgy world of finance or insurance, and they want to go change the world. So we have these folks that have, in some cases, decades of experience in those fields that are just luminaries that have this like -- this driving force to change the industry because they believe in our mission. And so yes, the quality of the talent is super high.

Yes. Unfortunately, on top of our ability to go attract talent, what we found is the industry relationships out there are really important. In this case by industry, I mean the financial institutions, the insurance companies. These are relationships we've been building for years. And frankly, I think we have -- I've been fortunate to find that they aren't as excited about what we are envisioning and the opportunity we see as we are. And so as we think about building these teams to Tooey's point, not only have we found this really great balance of folks who are specialized in construction, right? You have to understand how materials and purchasing insurance in construction works, not just insurance, but also to be able to then go out there and find partners, consultants, folks around the table. So that all of these different levels of nuances because I think what we, at Procore, are really mindful of, we're students of the world around us is that there's been a lot of names out there that have gone in kind of charged with a degree of confidence that felt a little misstated at times. And we're trying to understand much more how we bring these partners along, how we make sure that we've got the right group of people who understand all the nuances. And that's why we're also pretty thoughtful and being conservative with you all because we know that it takes time to prove this. It takes time to see the results, to validate the relationship. And I will tell you that we're not going to be a bank, we're not going to be an insurance company anytime soon, which means you have to convince those partners. And if you can't walk the walk and talk the talk, half the people, your reinsurers are not going to put up billions of dollars to help you right projects.

Okay. And then when we think about the competitive landscape, some of your other construction software management competitors aren't as vocal about the Fintech opportunity. I guess what is unique about the Procore platform, which could enable that strategy?

I love that you asked that question, Jason. Look, we're a platform. I don't want to speak for the others, but we're not a bunch of acquisitions that we're trying to lead together into some cogent sort of story. We were built as a platform from day 1. And so all of the data is on our platform. I'd like to think that we have more information where project risk lies than anybody else because of this maximum amount -- this corpus of data that we have. And I can't, again, speak for them, but I certainly believe when you pivot away from looking at the competitors and you look to what the industry needs. These are the things that they're asking us to do, and you can't be wrong when your customers telling you what they need and that they're willing to pay for it.

All right. Saket?

Great. All right. Thanks guys for holding this session, really helpful. I know one of the most interesting slides that was up there earlier was the chart that you had in construction spending. I think the 3 or 4 different kind of segments, infrastructure, single-family, multifamily and commercial. Maybe a 2-part question on this, right? So the first one is understanding it's hard. The GC doesn't just do infrastructure, it doesn't just do commercial. It's hard to break that off. But if you had to, right? Like what would...

I knew you had to go there.

I mean where like -- if you've ever done that exercise in a point in time, what does that sort of look like? Even anecdotally, are you more weighted to commercial, are you more weighted to infrastructure? I think that would just be really helpful. That's the first part of the question. The second part of the question is, I think so many of us look at the growth in construction is such a big part of the formula, which it is. But the other part of the formula is the take rate. And I know we don't want to talk about take rates necessarily. But if you had to think about the growth formula here, anecdotally, how much of the growth has come from growth in construction spending versus growth in take rate?

So if I look at the latter question maybe first, the reality of it is that's where that expansion line item that we had shared, that 50%. It's coming from a healthy mixture both. And so when you think about take rates going up, a lot of that for us is about cross-selling more and more products and getting the overall wallet share higher. Another thing though that we have talked about in the past is a number you all -- the way we think about releasing software is that we will go out there with a product that is what I believe I heard from a Microsoft executive, a minimal loveable product. And that is to really say that this is something that's also a customer's problem and something that they can adopt today, but it's not done. It's not fully featured. And therefore, we are at a stage of a lot of our offerings where we believe they are amazing products. But the ability to actually capture more basis points take rate from it is still early days just because of the amount of investment we're going to continue to make. We have proof points with that, places like financials, quality and safety, some of these older products. And so it will really be a healthy mixture of both on the take rate side. To your former question, sorry, remind me one more time?

Let me help on this one. This is the breaking out by sector. I say it's incredibly difficult. So the way you would have to -- well, by the way, the British Columbia specialty contractor I laid out which is residential high-rise, commercial high-rise and a port, right? Like you would have -- we would have to be able to take the pulse of all of our customers at any given point in time. But the problem is we also have to talk to the business development teams because now they may be shifting for infrastructure based on the $1.2 trillion infrastructure. And we just don't know. And so it's just really not practical to do so. And if there was, we would definitely be looking at it, but it's just not practical.

It was worth a shot.

One more thing on the take rate number mechanically, right, the more volume a customer puts on Procore, that actually brings down their take rate because they get a better price per unit. And then the more we cross-sell products, that brings the take rate back up. So historically, the company has expanded primarily through more volume when they didn't have the products they have now. So that's also why layering take rate on that chart was part.

Sterling?

Sterling Auty, MoffettNathanson Silicon Valley Bank, which is a mouthful. So I have an RPO question, just for Tooey.

In constant currency or in nominal?

So one question on material financing and one follow-up on payments. On material financing, you kind of pointed to the cash from investment section of the cash flow statement for the impact. But can you maybe give us a little bit more detail in terms of what is the economic structure? Is there anything that shows up on the balance sheet? Is there any loans or any capital commitment that's there? Or is it that quick that you're paying and delivering and getting paid that it's just kind of a flow-through?

You can actually call out on the balance sheet, there is a line item for a total balance outstanding. So we do show that. The reality is this tend to be about 120-day sales cycle. So they sit on the balance sheet for some period of time, but that's where we go back to that commitment we made 2 earnings calls ago, I believe, around our intent to use this as a learning experience to make sure we fully appreciate the different ins and outs, but the types of projects, the ability to enforce our leans in different ways, the economics and how we can play with those. And so you shouldn't expect over the long run that to be your case, and you should expect this to really get to a place where it's greater than give or take, $50 million, which is kind of that 10% we called out. I think it was like low 8 figures last quarter -- or last week.

That makes sense. And then Tooey, what's all up on payments. You kind of alluded a lot to the workflow aspect of it. But is there anything here that's going to be an actual financial transaction? Are you actually going to do the money transfer between a GC and a subcontractor? And do you have either the money transfer licenses or partnerships? So in other words, people want to know like whose rails will it run across?

Yes. So if you had asked me this question 2 years ago, we would have answered this differently. Fortunately, now we have great partners on the back end that are actually going to do all of the lifting. Our relationship with Goldman Sachs and Modern Treasury allows us to push all that off. So we're essentially just facilitating a transaction and stepping out of it at that point.

I mean, short of it we're moving the money where it's not carrying the MTL license nor the float or any of those dynamics, but what we do think is super exciting is to Tooey's point, years ago, you would have had to build all this technology, now it just comes out of the gate, the ability to do all of these unique asterisks around moving money. And so it's another area where we're fortunate to be doing this in this era and being able to add a whole different degree of value and some names that's a long time ago.

Gal?

I just wanted to focus a little bit on the drivers of growth specifically within existing customers, what you see coming from 1, 2 products, like I said, 4 or 6 as a driver. And then the other one also, thinking about the usage and intensity of the usage that you see within a customer, they might start on 1 project, 2 projects out of 10, let's say, and then how that moves on. How would you kind of think about the growth as a driver today in each of those segments? And what do you think how this changes in the future? Do you think they can increase the spend effectively? What is your ideal customer look like using all the projects -- using Procore and all their projects versus a few?

So I think when we think about that opportunity of cross-sell, this goes back to like longer it's been in market, more likely you should expect that those are going to be the earlier drivers as we continue to grow and push some of the newer products further and further in the market. But it is something that that's why we shared that kind of breakdown of new logo versus expansion. We expect that to be reasonably consistent. And so if you think about the existing customer base, it will continue to make up a really meaningful share of that overall net new bookings trend, and that's a function of these customers keep growing to your second comment around projects, right? In some cases, it does multiple years to bring on their entire book of business. In some cases, you're actually winning regions, divisions and then expanding countries and then expanding. All of these factors will continue to drive that expansion metric to be in a really meaningful share of the overall growth. And it's something that when we think about modeling it out the durability, it's why we have such conviction in kind of sustainable growth for our business because there's not one path. There's multiple different paths, it's how we really continue to drive that growth. And that's why we're so excited about the position we're in today relative to what the world looks like 5, 6 years ago.

I'd also add that we have a very specialized motion now that is not the standard motion of just selling to a GC. We have specialized teams that sell to owners and to specialty contractors. And the more we can know who our collaborators are and who our prospects are, the more refine the pitch can be in terms of which products they should adopt first, second, third and fourth. And that is a motion that's maturing at this very moment. I know Joy Durling, our Chief Data Officer, is really helping us get to the point where we can really know our customer. And then what you know them and you know the progression of products that they should be taking on, you can hit them at the time of [ lean ] based off of the analytics that you can look at. So again, this is a newer motion for Procore but will be very effective.

That's interesting. Just a follow-up on that point on the volume and the intensity of the usage. Have you ever looked at -- did you look at what's the total transacted volume for your customers versus how much it actually goes through the Procore proportion of the projects today? Is that something you look at?

Just to clarify that, how much volume they're running in their business versus how much they have of Procore?

Yes.

Yes, we look at that very closely. That was -- that directly led to that penetration slide that you'll see on how much is out there and then how much that we have that all kind of set into the numerator and denominator,

And then Tooey, maybe just on international. When you look at Europe, some of the construction conglomerates that are very vertically integrated. How do you think adjusting go-to-market approach for them, where you have [indiscernible] of the world or someone who has everything from architecture subcontractor within on the books? Do you think you could be, I don't know, introducing flexible pricing or more enterprise-type deals with those customers? Would that make sense rather than just looking at one?

Well, you're right. Especially in Europe, there are some very, very large construction companies, like Ferrovial is a great example. And -- but when we -- our relationship with them is -- yes, they could buy all of the kind of out-of-the-box solution. But their fundamental problems are still the problems that Procore solves, which is bringing the project teams together and giving them a single-source execution and collaborative platform. So in a lot of cases, they don't see us as being an or decision. They will use design software and they'll use other forms of available software, but they're looking at Procore's being the core foundation for communication collaboration across the organization. And what's interesting about those large multinationals is they're doing work in every part of -- every corner of the world they're doing work and they're bringing this with them, which is great because it actually builds a lot of awareness.

Yes. The only thing I'd add to that is it's actually not that different in the U.S. It may not be as clear, but if you go look at some of the largest general contractors in the United States, they all have self-perform decisions, they go off and do a subset of the work. And in many cases, they have to treat them as separate businesses because they have to separate the liability, they have to be very diligent in their handoffs. They tend to not do every trade. And that's where I think it's actually pretty similar to what we've seen in the U.S. The owner tends to be a different institution, right? Sometimes you've got a real estate developer that will try. But in general, we feel like we know this playbook and we're ready for it when we think about the international markets, too.

It's just what we learned about the enterprise in the U.S. To Paul's point, which is at the end of the day, it doesn't matter if you're Ferrovial or my friend at [indiscernible] in the back of the room right now, building custom homes. Everyone's in the business is delivering projects. And every project has a certain like dynamic about it that Procore can solve for from the smallest residential build to the largest nuclear power plant retrofit. And so that is -- that's how we sell into them, which is we will help you manage your projects, and that's the business that they're in.

Dylan?

Maybe as we think about the stakeholder mix, how do you guys think about prioritizing investment in focused areas within those, right? So is there a greater value proposition from the owners who, again, I think Will said, can obviously mandate adoption across the project, the benefits of subcontractors adding more users, flowing more data through the system, that title speaks to future innovation for the platform. Is there one of those kind of components that may be more valuable than another? And then how the penetration you guys have seen within GCs can maybe give you confidence in the ability to go ahead and capture those 2 because they serve as the central repository between those 2?

One area that we look at very closely is what Wyatt was explaining that 2-sided equation of value. So it's less about while we're going to go heavily into specialty contractors over owners, it's more about what business process connection point is the highest value to get to stakeholders to connect because that connection is what actually drives more revenue for Procore. That's the primary lens I believe we look at through.

Yes. I think it was Geoff who talked. We can show you a flywheel for any of these examples in any of these stakeholders. The reality of it is they're so interdependent on one another that where you bring more and more connectivity across that platform, we see value across that spectrum. And what we did have to do in previous years was go back to that chart of highest priority need and make sure we could solve those. Now it's about tying all of those things together to bring more and more compelling value to all of these different stakeholders.

And I'll point out that, that's one of the reasons why I'm so incredibly excited about payments. People -- subcontractors actually have people that their full-time job is to call the general contractor and try to figure out where the invoice is in the process so they can try to forecast when that revenue is going to come in the door, so they can make payroll. It's a full-time job to people. And it's a black box they don't know. But in the Procore life cycle of that -- of all of our contract management and the invoicing, we can tell the specialty contractor where they are in the process and how soon is going to be until they get paid. So the value that we had is just tremendous, and we're just eliminating a bunch of overhead because that connection point is really important. You can imagine if you want pay -- you're on a payroll every 2 weeks, right? But you're not going to get paid for 120 days. That you're begging somebody to tell you where that payments can be from, so you can make payroll, and that's what we're going to do.

Yes, that's helpful. And then as well, maybe just quickly on the partner side, too. You talked about potential adjacent areas in insurance, material financing. As that ecosystem obviously continues to see kind of the gravitational pull of other stakeholders, how do you think about that from a monetization perspective as well as driving incremental adoption? I think there was a quality partnership, state farm subsidized some component for their customers as well. How do you think about the puts and takes there?

Look, this is where I think we want to be really mindful that banks, insurance companies, they haven't survived hundreds of years and they lost money because they're bad at business, that they are great partners to bring in that journey and that they play a real role in that. I think when we think about like our stakeholders, it becomes really interesting because if you ask a GC, one of the biggest risks on the job is the subcontractor to the peers. And the biggest risk for a subcontractor is they mistime their cash flow. Not that they don't have a great business. Same thing when you start getting your insurance. Like there are so many customers out there. We talk about them wanting to grow. And we talk about hiring, totally fair. What we don't talk about is what Tooey mentioned earlier in the presentation. They have an amount they can bond to. They can do this amount of work. If the insurance company will not increase that bond, it does not matter if it can win, they're the higher. They cannot grow their business. That constrains the owner because they can't get more competitive work out there. And so it really is the incestuous virtuous cycle where everything is interconnected, and every party is dependent on one another and risk and timing of working capital impacts all of them.

[indiscernible].

Today was really awesome and I think showcases how you're such a different software company than other software companies. I have 3 questions along that line. Maybe number one, if you can help us understand how inflation in the post-COVID period is going to work its way, if at all, through the Procore P&L.

Ask one at a time. Well, why don't you...

Yes, I'll take that. The interesting thing for Procore is we are sort of, in many ways, inflation attached, right? If you think about the fact that if inflation grows, that means the cost of construction goes up, and that's a construction quality metric, which is how we price our business. It also means that to some extent, we are a lagging indicator of how inflation impacts our business because customers will go out there, they may sign up to, say, $50 million of construction volume because that was the expectation when they went into the year, frankly, for enterprises over a multiyear journey and they end up earning through that construction volume sooner because of the sheer fact that they ended up spending more money on those projects or charging more for those projects. And I think the third part of the inflation dynamic here that's even less prevalent when you look at some of the metrics we share is that because inflation went up, because the cost of construction went up, it actually means the throughput of construction, the actual number of assets that got built, went down. And the sheer fact that, that means we didn't build as many hospitals, schools, multifamily complexes, means that we've only further built that backlog of the need for infrastructure and construction. And so inflation definitely makes life harder for everyone. And I don't want to tell you there's all roses and benefits, particularly a lot to our business where we actually see the benefits of inflation later.

Yes. It takes time to flow through, and I don't think we've seen it yet. I think it's coming.

That is very interesting and exciting. It actually all tees up my next question, actually, which is, as you guys know, I'm a very simple-minded person. And so one of the things that struck me on the slide is how balanced your growth was and how robust it was even across what is perceived to be penetrated segments. As you look out, how long can you sustain this level of growth? Because I'm just trying to bridge like the TAM, the digital [indiscernible] and the fact that you have really solid growth across everything and just get a sense of how long that can run for.

Remember the penetration piece, and we talk about triple TAM, right? That penetration piece that you saw on the screen is one part of that -- one dimension or one layer of that triple TAM. So that in and out itself in terms of where we sit today and structurally where we are today means that there's quite a bit of runway left, both in terms of the actual growth in volume, but also even just monetizing the products that we have already today in terms of growth.

Yes. I think the thing that we are always thinking about how do we ensure we have the right focus and the right execution, we don't really lay out at night thinking about the TAM in the sense that it is just so early days. It's sub 2% penetrated in just the market we're in. It doesn't count all the cross-sell from a product as I talk about fintech, it doesn't talk about any new products that we see around the horizon. So I think for us, the ability to sustain is something we've talked about kind of that high 20s, low 30s growth for the foreseeable future is something we continue to feel really good about. It's just a function of all the different dimensions at play when we think about that TAM.

And then finally, I know the margin, both guide and history period, bunch of puts and takes because you're investing in certain businesses, you have new geographies and products. But as you think about what your ultimate aspirations could look like for the noninvestment piece of what the margin structure looks like. Do you have any models that you gravitate towards?

Yes. So many of you probably know this because I've talked about it in the past. When I took on the role, I went out and looked for peers that I look up to. And the person that was way too gracious with their time with me, and it continues to be gracious with their time is the former BofA CFO and in a lot of ways one of the things we spent a lot of energy trying to make sure I understood was where do our models differ? Where is it a go-to-market motion or price.

Ashish?

Great event. Ashish Bhandari from Ashler Capital. I actually just wanted to ask on the partner -- or your partner ecosystem and potentially building that out, less so from the fintech and insurance perspective, but more as you're thinking about kind of go-to-market leverage and expanding into international, specifically where resellers have more of a role to play. I'm just curious how you think about kind of the role of resellers, consulting partners, system integrators, especially as you scale? And then I just had a couple of follow-ups.

Well, when we look at a new market that we're going to go into, we look at the way that the market actually buy software. Like, for instance, in Mexico, they love to buy through their resellers. They do not -- they're not comfortable in general, buying from a software company. So we know based on the market conditions what the right go-to-market is. And our mantra is always like, let's make it as easy as possible for people to buy our products. So it's very intentional when we do that. But yes, you want to -- I'm you have...

Yes. I mean, as Will said, we'll meet the customer where they are. I think the unique thing about construction that might be a little bit different than some of these other markets that folks talk about is that when we think about partners, when we think about the folks we can market with, there are certainly, as Tooey said, markets where the reseller has an established relationship. But I think what we found more interesting is that the playbook we've seen in the U.S. is actually something that we believe we can take internationally. And that's about these integration partners. So your ERPs and your scheduling tools, like these folks want to work with us. It's your trade associations, the union, these different parties that have tremendous value gains through their own members or through their own ecosystem by working with us but aren't necessarily your bread and butter. We're going to take your software. We're going to implement it for you, we're going to support it for you. Like we will absolutely do that where it makes sense, but we are always mindful that retention is the lifeblood of a SaaS company and ensuring that you are incredibly thoughtful with the experience the customer goes through is something I don't think we'll ever be willing to give up.

That makes sense. And then just 1 follow-up on Procore Pay. Been able to talk to a number of customers this week, which has been great. A lot of them have mentioned that Textura and GC Pay just are kind of legacy tools that don't quite work. But I guess as you kind of canvas some of your larger customers and thought about launching Procore Pay into next year, what's kind of the biggest pain points that they're dealing with as you think about that kind of displacement opportunity of market?

Well, first, I appreciate you're talking to the customers because this is what's so exciting for us is that when we went out early on, and we were doing the market research, we really thought that this -- the payment was going to be a really -- like we should start in the mid-market like we do with a lot of things. When we talk to our enterprise customers and they found out that they could eliminate the need for those legacy solutions, they got really excited. And so their world is highly complicated and they're moving big dollar amounts. If they get anything wrong, it's really bad. And so they've been asking for a long time now that we come to market with something that meets their needs. So it's really exciting that it's -- the demand is high up market. Do you want to...

Completing the workflow, sir, right? The reality is the names that exist out there, the ones you brought up, the other people involved in this journey, you will go and you will upload an invoice. You will upload your compliance documents and you will process that payment. Somebody has to build that in place. Somebody has to actually track all of the information that goes to it. And historically, they have not had a single place to have that complete visibility. And to Tooey's point, we didn't build it because we thought it was a good idea, we built it because our customers were asking us. And those are the same customers that use these other offerings today.

I'll also say that our -- these are the products you're talking about, one in particular, their business model is really disliked by subcontractors because as a subcontractor sent to me yesterday, they spend tens of thousand dollars or tens of thousands of dollars a year just so they could get paid. And it's really, really the brand damage that, that company has done to the people that get paid is pretty big.

All right. Let's take a couple online.

Yes. I'm going to hit a couple more from the webcast. The first is on competition. Clearly, the market is super underpenetrated. We're still in the early innings. And what we've said in the past is we compete most of the time with analog solution and paper Excel. But that also means our software competitors have ability to grow as well. Autodesk have a lot of capital, and they're prioritizing their construction cloud. So how do you see Procore winning over competitors like Autodesk and Trimble?

Well, I'll tell you one thing. This has nothing to do with Autodesk. This has to do with Procore. I think the reason we win against pen and paper or Autodesk, any one of the other competitors out there is because of how this company is structured. It's because we partner with the industry better than anyone else, and we have a higher level of trust, I believe, than anybody out there. And we understand that and we hold that sacred at Procore. And I really do think that we win because we are the best partner. At the end of the day, an RFI is an RFI. And so what we need to do is we need to make sure that we win through that partnership. And then the beauty is once you gain that trust, they are willing to take a flyer on, even try your other products and your other services because they do trust you.

Great. And Paul, maybe one for you on unit economics. How does that LTV to CAC look like across the end markets by stakeholders, so subs, owners, GCs? Is it fair to say that subs have a lower ratio given greater fragmentation in that cohort, so therefore CAC? Just help us understand that.

Yes, great question. I think the thing that we have been particularly excited about as we've made these investments, as we've thought about doubling down at these different stakeholder categories is that when you look at that LTV to CAC, when you look at those unit economics, actually they don't really vary by stakeholders. These are really compelling opportunities and high ROI sales for our different customers. I think what you'll note is similar to other companies where there's bigger differentiation is by size. And so obviously, our enterprise is incredibly efficient at this point, and we've talked about with you all that the journey to bring that 11x of higher and higher. Yes, cross-sell is a big part that they stated in there, but actually the ability to do what Wyatt showed in his presentation to really drive all these different mechanisms of monetizing that long tail, well, I think take what is today still a direct sales motion with a customer success rep and a sales rep closing those SMBs to a much higher velocity motion that has real potential to drive further upsell 11x that we showed in the U.S.

Great. And one more on that margin trajectory. What kind of gives you the conviction that we can sustain that 350 bps year-over-year. Where do you see that coming?

This is a good one for Howard.

Look, one of the -- there's 2 themes that hopefully you all heard today. One is diversification and the other one is deliberateness in terms of how we deploy our resources and our capital. One of the things about the diversification across that top line is there's also diversification in terms of our ability to deploy our resources across a number of those areas as well. And as we look at what happens in the demand environment, as we look at what we're doing internally in terms of how we operate, we have a lot of levers across a lot of different areas where we can increase investment or decrease investment and manage that trajectory for that efficient growth. And to pinpoint today that we can monetize immediately to improve that CAC, and that's just what's the most immediately in front of us, but there's a lot of levers that you can pull.

Chris?

I'm wondering if that was not a goal, and you were not to do that. How much faster you'd be growing in those coming years?

I really wish you'd ask that question to Tooey right here.

I'm going to keep my mouth shut.

Look, I think it's a thought exercise that we've played through a couple of different ways, but it's hard to truly know the answer to that question. I think what we care a lot more about when we think about the equation is that LTV to CAC, the efficiency, the retention, like how do you make sure that you are putting a dollar at a place where you will in the arc of time, get back well more than $1. And so for us, this idea of like, well, hey, if you didn't give back that margin, couldn't you grow faster? Sure. But the reality of it is not an era of gross sales cost. It really is for us about making sure that when we think about the deploying of that capital, we've spent the most amount of investment that still yields the best overall outcome in terms of that efficiency in those economics, and that's how we get to our growth targets and our spend profile.

The other thing that I'll add is that we talked a lot about CAC and we had showed a lot of numbers today around go-to-market. We also have internally in terms of how we operate areas for improvement in terms of operational efficiency across G&A and other parts of the organization as well. So I don't want forget that part of equation as we go through the next several years and beyond. The other piece that is associated with that is we -- when we look back to fiscal '20, we have gone and made sure that we reacted appropriately to make sure that our margin profile and profitability profile is appropriate for the situation that we are in. It's not that we have done it, but we will do it if we see circumstances where we need to do that.

I want to add to this. We have -- the finance team have done a great job of educating the entire populous of Procore on the value of efficient growth and the value of it all. I ran into a sales development rep manager the other day, and he said that his entire stand at meeting that day was about driving efficiency into their little organization inside of Procore because they know that efficient growth is going to drive the stock price up and also be better for everyone. So it's the kind of the mindset of Procore is really bought into this.

I mean it's earnestly and just likely, but it's interesting to see such a well-loved product in such a large market with relatively minimal competition based on my conversations with people who worked in the company not grow in a more efficient way on a relative basis, but there are opportunities [indiscernible] and the way they kind of grow more methodically. I think just understand the discipline of you guys because when you build exceptional [indiscernible] just to be candid and respectful. And then two, I'm wondering you guys have ever given the dilution targets, you don't see if you often corporate America but occasionally you see it here or there. You had last wonderful business everyone, of course, knows [indiscernible] of course, in the past we talked about you want to target 1% or 2% dilution. It's been high earlier in the company's life cycles. Is that what you guys do a lot? And is it also something that you share?

I will probably take both of those. So look, I think when we think about why is it that we look at a competitive landscape in an underpenetrated market and to your comment we haven't grown more efficiently along that journey. And that is to say that if you kind of think through the presentation we just walked through, if we wanted to sit here and double down on general contractors and project management and just a handful of peripheral products, those businesses already have phenomenal unit economics. And the idea for us goes back to this mission, this vision and our time horizon that we are building this business for decades. We are looking at all of the different permutations of what it takes to build those network effects to build those flywheels and to support the industry along the way because one of the things you've probably heard me say before, it's one of my loved analogies is that this is an oil tanker, it's not a speed boat. It takes a lot of work to get these folks to understand the power to change how they do business. And those were not simple or easy costs along the way. But we made these investments because the horizon of what is to come. And if we were purely optimizing for a 2, 3-year window, you would have the economics you think you could have. On the dilution, we don't put out formal targets. What we do talk about is that we've been pretty disciplined in this in the past. We intend to stay disciplined here. This is a market where we need to be thoughtful to how we compete. But this isn't an area where we try to be outside of the norms. We actually focus pretty healthily to being in that 40% to 60% range of stock-based comp in terms of what we pay our employees. And frankly, when we think about dilution, like that is largely the biggest driver. We have done a healthy amount of M&A. We feel good about the portfolio today, and that's not something you should expect from us. I don't want to promise you because things change. But in general, on the horizon today, we're pretty thoughtful about ensuring that we keep that solution as minimal as possible because we appreciate it's another angle by which you're able to kind of drive inefficiency into the business. And that's why I kind of deliberately made that comment when we talked about the margin trajectory that it's not only margin, it's not only free cash flow, but it's free cash flow per share that we want to be thoughtful to as we through the coming years.

And just to clarify, that 40% to 60% is the percentile, not the SBC revenue?

Triple on that one, but last point, we do look at per share metrics quite a bit internally.

Yes, last question, thinking of the time, really exceptional businesses with these kind of long runway that you guys occasionally will show investors just like a gut check. [indiscernible] profitable in the U.S. different ways. Maybe do that today with breaking out by geography. Obviously, [indiscernible] companies on a quarterly basis, they provide the disclosures they said, "Hey, just wait. I know we're showing GAAP losses or non-GAAP losses and so forth. I look at it, and they give a detail just how properly the underlying business really is. And then they go back to investing [indiscernible] ahead of that. But those occasional checkups provide investors, outsiders and investors who do have the luxury of understanding the nuances you do, of course just how healthy business really is. Is that something that we're thinking about maybe today, right? Just love your thoughts there that communication?

Yes. No, look, I think we are always trying to think through the best way to educate investors to bring them along for the journey and make sure that we're able to articulate why we are so excited in what we're doing and why we are so convicted in the investment we are doing. So we definitely believe that we took a big step towards that today, but that is something that as we think about the future, we will continue to try to figure out the best ways to show that information to continue to get those folks who may be more passive to truly appreciate just the magnitude of where the business can go.

Bill?

Just a quick question. A lot of the future opportunities around things like benchmarking and insurance really are about data. And it's -- when you talk to the customers, they think they own the data. Is that true? And secondly, are you working on pooling the data? How are you going to get them to share the data to unlock a lot of these opportunities?

Yes. To be perfectly clear, the customers own their data. We have access to the anonymized version of data that we can then run analytics on and make these decisions off of. That's the distinction.

So you own anonymized data. So as long as the data is anonymized, you can use it?

Yes, as long as you can't trace it back to the source, it's ours.

Got it. So things like you could create benchmarks for losses or performance for insurance purposes and then you compare that on a subcontracting basis?

Yes. I mean there's so much we can do. By the way, if you go get to Joy Durling, our Chief Data Officer, probably should be answering the question, not me. But I can tell you right now what a yard of concrete cost in Miami-Dade County, like this month because we get so much of that data in the system, it's not attributable to 1 customer because they're all buying concrete. But yes, I mean, that's just 1 example of what we can do at there's -- it's endless. I really do think one of the biggest assets Procore has is this data set.

And then in terms of like sharing it for insurance, you have to get them to opt into it with their permission?

Yes. And they are going to love it because we're going to automate the system for them, and they're going to be able to get better rates because we can show what their quality scores and their safety scores are. So they are very incentivized to have this access of their data.

Yes. I think the analogy we often use is consumer credit. Think about it at the end of the day, I can't go get a loan if I'm not willing to release that credit score. And so it's a relationship that makes sense that exist. And so there are ways to create all the benchmarks and all of the data around the anonymized version, and then there are incentives each side of the equation has to release and share more specific personalized data, but today doesn't exist and which means that everyone gets the lowest common denominator.

So I'm getting some very important messages that Tooey have to leave to a customer session in 2 minutes, so [ Cameron ], no pressure, you're the last one, make it a good one.

Tooey, Paul, you've done a phenomenal job disclosing and giving us a lot more information. It's super useful. It shows how you are performing with the different stakeholders, what are the key problems to be solved. And it was just super informative. So thank you, you've done incredibly well. A quick question tough. In terms of international and growing pains in that you're experiencing at the moment. It would be very helpful if you could reflect back on your journey in various markets and provide some context in terms of what are the lessons learned, make it a little more relatable for us from outside, it's not clear like what has been a journey like and where you see areas for improvement?

I mean, I could start. So as an example, one dimension is having a little more conviction in terms of directly and more forcefully executing against the operational strategy for specific markets. As an example, we talked a little bit about the Tooey mentioned in Mexico -- or mentioned LATAM in terms of making a call and going deeper and more aggressively in terms of their operating model from a reseller partner standpoint. The other one that I think we have come to realize as individual markets have reached scale is that there is an amount of supporting infrastructure around those markets that we frankly haven't really thought as diligently about. And as those markets start to get larger, making sure that we look at the holistic ecosystem inclusive of that supporting infrastructure as these markets get bigger and we build those alongside as the top line and the opportunities continue to grow.

Yes. I mean I think Howard's examples are spot on. And in general, it is really -- like I know we keep the commentary somewhat high level, but it is because it's truly a reflection of the way we think about it and that the operating model, the way we divide our roles and responsibilities. The structure that worked when you are servicing all of Europe from the United Kingdom versus now having multiple regions and then a Middle East segment that have all roll-up into an EMEA region meant that the way you allocated resources, the sets of people who are dedicated to markets and their expertise of those markets, how you share roles and responsibilities back to kind of the U.S. central side of it. All of those things are areas where we just need to iterate, right? That's why, hopefully, you appreciate our candidness in saying, this is our own internal operations, and it's not product markets, it's not a strategy, it's not demand, it's not competition, it's not the thing that at least would keep me up at night and sense of it being a structural challenge that is incredibly difficult to overcome. It is a function of, as we've invested as we've grown there. We didn't pivot that stuff in certain areas and we see that. And so note taken that I think we can spend more time really getting deeper into some of those areas, but it is something that we remain very convicted.

Yes, to Paul's point, too, there is a market readiness spectrum that we have come to realize that you will create a much more centralized command and control on a small market as you go in. Like the shared services will come a lot from headquarters before we can actually put somebody on the ground to do the marketing and the G&A function. But as that market matures, then you want to start decentralizing control of the support functions. And so just getting that mix right, it's a little bit of an art as well as a science, and we're learning that as we go.

So before we break, a few other announcements. So as I said, the deck will be on the website in about 15-or-so minutes, okay? Lunch is over there. The IR team will be hanging around to answer any final questions for your notes. And then I'd like to actually ask [ Ivy ] to stand up real quick because managing the street is a full-time job and there's always somebody special behind the scenes and I think many of you know her, but I thank her for everything she's done, she's a star.

Can I just say on behalf of Procore, how much I appreciate you all making the time to come down and visit us here in New Orleans and getting to know us better and getting to know our customers, it means a lot. We have a lot of work ahead of us, but I think together, there's really nothing we can't achieve. So I see it from the partnership, and I will say thank you.

All right. Actually they only talk about to you, but I have to do the same thing. Thank you, everyone.