XML 27 R14.htm IDEA: XBRL DOCUMENT
v3.22.4

Business Combinations | 12 Months Ended
--- | ---
Dec. 31, 2022
Business Combinations [Abstract] |
Business Combinations |
7. | BUSINESS COMBINATIONS
Levelset On November 2, 2021, the Company completed the acquisition of all outstanding equity of Levelset, a lien rights management company. The purpose of this acquisition is to add lien rights management to the Procore platform, enabling Procore to manage complex workflows and improve the payment process in construction. The acquisition was accounted for as a business combination. The purchase consideration totaled $484.1 million, which consisted of the following (in thousands):
Cash consideration |  | $ | 426,076 |
Fair value of common stock |  |  | 58,028 |
Total purchase consideration |  | $ | 484,104 |
At closing, the Company issued 610,499 shares of common stock valued at $95.05 per share for aggregate purchase consideration of $58.0 million. The fair value of the common stock of $95.05 per share was determined using the closing stock price of the Company’s common stock on the acquisition date. Of the total purchase consideration, $35.0 million of cash was placed in an escrow account held by a third party for potential breaches of representations and warranties. The escrow amount, net of any claims for such indemnifiable matters, is scheduled to be released from escrow to shareholders of Levelset 18 months after the acquisition date. The purchase consideration was allocated to the following assets and liabilities (in thousands):
|  | Fair value |  |  | Useful life
Assets acquired |  |  |  |  |  |
Cash and cash equivalents |  | $ | 10,951 |  |  |
Accounts receivable |  |  | 1,250 |  |  |
Prepaid expenses and other current assets |  |  | 5,289 |  |  |
Other non-current assets |  |  | 5,740 |  |  |
Developed technology intangible asset |  |  | 105,500 |  |  | 7 years
Customer relationships intangible asset |  |  | 38,800 |  |  | 4 years
Goodwill |  |  | 348,318 |  |  |
Total assets acquired |  | $ | 515,848 |  |  |
Liabilities assumed |  |  |  |  |  |
Accounts payable |  | $ | (1,037 | ) |  |
Accrued expenses |  |  | (1,945 | ) |  |
Deferred revenue, current |  |  | (5,426 | ) |  |
Other current liabilities |  |  | (2,437 | ) |  |
Other non-current liabilities |  |  | (1,639 | ) |  |
Net deferred tax liabilities |  |  | (19,260 | ) |  |
Total liabilities assumed |  | $ | (31,744 | ) |  |
Net assets acquired |  | $ | 484,104 |  |  |
The purchase price accounting for this acquisition is final. Developed technology intangible asset represents the fair value of the Levelset’s technology, which was valued considering both the cost to rebuild and relief from royalty methods. Key assumptions under the cost to rebuild method include the estimated level of effort and related costs of reproducing or replacing the acquired technology. Key assumptions under the relief from royalty method include forecasted revenue to be generated from the developed technology, an estimated royalty rate applicable to the technology, and a discount rate. Developed technology is amortized on a straight-line basis, which approximates the pattern in which the economic benefits of the technology are consumed, over its estimated useful life of seven years. The amortization expense is recorded in cost of revenue in the accompanying consolidated statements of operations and comprehensive loss. Customer relationships represent the fair value of the underlying relationships with Levelset’s existing customers, which were valued using the avoided loss of income method, which quantifies the acquiree’s loss of income if it loses the right to existing customers. Key assumptions under the avoided loss of income method include forecasted revenue to be generated from and expenses to service the customer relationships, customer churn rate, and a discount rate. The customer relationship intangible asset is amortized on a straight-line basis, which approximates the pattern in which the economic benefits of the customer relationships are consumed, over its estimated useful life of four years. The amortization expense is recorded in sales and marketing expenses in the accompanying consolidated statements of operations and comprehensive loss. The $348.3 million goodwill balance is primarily attributable to synergies and expanded market opportunities that are expected to be achieved from the integration of Levelset with the Company’s offerings and assembled workforce. The goodwill balance is not deductible for income taxes purposes. To retain certain Levelset employees, the Company issued 199,670 RSAs which vest based on their continued employment over two years, further discussed in Note 14. The total grant date fair value of shares issued of $19.0 million was excluded from the purchase consideration and is recognized as post-combination expense over the service period on a straight-line basis. In February 2023, the Company recognized $4.8 million stock-based compensation related to early vested RSAs due to the departure of a certain Levelset employee. In addition to issuing the RSAs discussed above, the Company also paid $11.0 million of cash retention payments that vest based on continued employment, at the close of the acquisition. The cash retention payments vest quarterly over a two-year service period and are subject to clawback if the service vesting condition is not met. The related compensation is recognized as post-combination expense over the service period on a straight-line basis. As of December 31, 2022, the remaining unvested amounts of $4.6 million are recorded in prepaid expenses and other current assets on the accompanying consolidated balance sheet, $3.1 million of which vested early in February 2023 due to the departure of a certain Levelset employee. As of December 31, 2021, $10.1 million of cash retention payments were subject to future vesting, of which $5.5 million was recorded in prepaid expenses and other current assets on the accompanying consolidated balance sheet, with the remainder recorded in other assets. The acquisition-related transaction costs incurred by the Company of $5.0 million were expensed as incurred in the consolidated statements of operations and comprehensive loss. Levelset’s results of operations have been included in the Company’s consolidated financial statements from the acquisition date. The Company has not separately presented the revenue and operating losses of Levelset for the period from the acquisition date through December 31, 2021 as the impacts were not material to the consolidated financial statements. The following unaudited pro forma financial information combines the results of operations for Procore and Levelset as if the closing of the acquisition had occurred on January 1, 2020 and adjusts for amortization of acquired intangible assets, transaction costs associated with the acquisition, compensation expense assuming the retention payments discussed above vested, stock-based compensation expense for RSUs granted to continuing employees discussed in Note 14 and the 199,670 shares of RSAs issued to certain key Levelset employees as discussed above, and tax benefits recorded as a result of the acquisition. The unaudited pro forma results do not reflect any cost saving synergies from operating efficiencies or the effect of the incremental costs incurred from integrating these companies. Accordingly, these unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results of operations of the combined company would have been if the acquisitions had occurred at the beginning of 2020, nor are they indicative of future results of operations (in thousands):
|  | Year Ended December 31, |
|  | 2021 |  |  | 2020 |
Revenue |  | $ | 532,690 |  |  | $ | 415,757 |
Net Loss |  | $ | (355,612 | ) |  | $ | (134,133 | )
LaborChart On October 21, 2021, the Company completed the acquisition of all outstanding equity of LaborChart, Inc. (“LaborChart”) for $76.2 million in cash purchase consideration. LaborChart is a labor management solution that facilitates labor scheduling, forecasting, office-to-field communications, certification tracking, data management, and labor analysis. The purpose of this acquisition is to enhance Procore’s existing labor management solution. The acquisition was accounted for as a business combination. The purchase consideration was allocated to the following assets and liabilities (in thousands):
|  | Fair value |  |  | Useful life
Assets acquired |  |  |  |  |  |
Cash and cash equivalents |  | $ | 2,149 |  |  |
Accounts receivable |  |  | 730 |  |  |
Prepaid expenses and other current assets |  |  | 737 |  |  |
Other non-current assets |  |  | 417 |  |  |
Developed technology intangible asset |  |  | 12,800 |  |  | 4 years
Customer relationships intangible asset |  |  | 11,100 |  |  | 10 years
Goodwill |  |  | 55,700 |  |  |
Total assets acquired |  | $ | 83,633 |  |  |
Liabilities assumed |  |  |  |  |  |
Accrued expenses |  | $ | (120 | ) |  |
Deferred revenue, current |  |  | (1,704 | ) |  |
Other current and non-current liabilities |  |  | (690 | ) |  |
Net deferred tax liabilities |  |  | (4,891 | ) |  |
Total liabilities assumed |  | $ | (7,405 | ) |  |
Net assets acquired |  | $ | 76,228 |  |  |
The purchase price accounting for this acquisition is final. Developed technology intangible asset represents the fair value of LaborChart’s technology, which was valued considering both the cost to rebuild and relief from royalty methods. Key assumptions under the cost to rebuild method include the estimated level of effort and related costs of reproducing or replacing the acquired technology. Key assumptions under the relief from royalty method include forecasted revenue to be generated from the developed technology, an estimated royalty rate applicable to the technology, and a discount rate. Developed technology is amortized on a straight-line basis, which approximates the pattern in which the economic benefits of the technology are consumed, over its estimated useful life of four years. The amortization expense is recorded in cost of revenue in the accompanying consolidated statements of operations and comprehensive loss. Customer relationships represent the fair value of the underlying relationships with LaborChart’s existing customers, which were valued using the multi-period excess earnings method. Key assumptions under the multi-period excess earnings method include estimated future revenues, costs, cash flows, and a discount rate. The customer relationship intangible asset is amortized on a straight-line basis, which approximates the pattern in which the economic benefits of the customer relationships are consumed, over its estimated useful life of ten years. The amortization expense is recorded in sales and marketing expenses in the accompanying consolidated statements of operations and comprehensive loss. The Company recorded goodwill, which represents the excess of the purchase consideration over the tangible and intangible assets acquired and liabilities assumed, of $55.7 million relating to the acquisition. The goodwill balance is primarily attributed to the synergies and expanded market opportunities that are expected to be achieved from the integration of LaborChart with the Company’s offerings and assembled workforce. Goodwill is not deductible for income tax purposes. To retain certain LaborChart employees, the Company held back $9.0 million of the cash purchase price, which will vest based on continued employment over a three-year period. The cash holdback amount was excluded from the purchase consideration and is recorded as post-combination expense over the service period on a straight-line basis. During the year ended December 31, 2022, the Company recorded $3.0 million of expense for the portion of the balance which vested in the current year. In February 2023, the Company recorded $2.1 million of expense from the remaining unvested balance due to the departure of a certain LaborChart employee. The Company has not separately presented pro forma results reflecting the acquisition of LaborChart, or revenue and operating losses of LaborChart for the period from the acquisition date through December 31, 2021 as the impacts were not material to the consolidated financial statements. The acquisition-related transaction costs were not material, and were expensed as incurred in the accompanying consolidated statements of operations and comprehensive loss. Indus.ai Inc. On May 3, 2021, the Company completed the acquisition of Indus.ai Inc. (“Indus”), a Canada-based privately held company that offers an artificial intelligence (“AI”)-powered analytics platform to provide actionable insights for the construction industry, by acquiring 100% of the outstanding voting interests in Indus for purchase consideration of $24.3 million in cash. Of the total purchase consideration, $4.1 million was held back to secure certain indemnification obligations (“Holdback Consideration”) in accordance with the stock purchase agreement, which was scheduled to be paid, subject to any indemnification claims, on the 18-month anniversary of the acquisition. The Holdback Consideration was recorded in other current liabilities on the consolidated balance sheet as of December 31, 2021. In November 2022, the Company paid $3.9 million in cash for the Holdback Consideration, net of indemnification claims. The purpose of this acquisition is to accelerate the development of the Company’s AI and machine learning solutions. The purchase consideration was primarily allocated to the developed technology intangible asset with an estimated fair value of $14.8 million at the acquisition date, which was valued using the cost to rebuild method. Key assumptions under the cost to rebuild method include the estimated level of effort and related costs of reproducing or replacing the acquired technology. The fair value of the remaining acquired tangible and intangible net assets was immaterial. The Company also recorded a deferred tax liability of $2.0 million as a result of the acquisition. The Company recorded goodwill, which represents the excess of the purchase consideration over the tangible and intangible assets acquired and liabilities assumed, of $11.5 million relating to the acquisition. The goodwill balance is primarily attributed to the synergies expected and the skilled workforce acquired. Goodwill is not deductible for income tax purposes. The purchase price accounting for this acquisition is final. Developed technology acquired is amortized on a straight-line basis, which approximates the pattern in which the economic benefits of the technology are expected to be consumed, over its estimated useful life of five years. The amortization expense is recorded in research and development in the accompanying consolidated statements of operations and comprehensive loss, as the acquired developed technology will be used to improve the Company’s internal research and development capabilities. The Company has not separately presented pro forma results reflecting the acquisition of Indus, or revenue and operating losses of Indus for the period from the acquisition date through December 31, 2021 as the impacts were not material to the consolidated financial statements. The transaction costs associated with the acquisition were not material, and were expensed as incurred as general and administrative expenses in the accompanying consolidated statements of operations and comprehensive loss. Esticom On October 14, 2020, the Company acquired 100% of the outstanding voting interests of Esticom, Inc. ("Esticom"), a company that provides an estimating solution which enables contractors to determine the quantities of materials needed from project plans and specifications, and to calculate the cost estimates for the labor hours and materials required on a job. The purpose of this acquisition is to accelerate the development of the Company’s preconstruction solutions. The acquisition was accounted for as a business combination. The total purchase consideration is comprised of the following (in thousands):
Cash consideration |  | $ | 11,239 |
Fair value of common stock |  |  | 3,885 |
Total purchase consideration |  | $ | 15,124 |
At closing, the Company issued 96,749 shares of common stock for aggregate purchase consideration of $3.9 million. As the acquisition occurred prior to the Company’s IPO, the fair value of the common stock was determined by the Company’s board of directors (the “Board”), taking into account a contemporaneous independent valuation by a third-party valuation specialist commissioned by the Board. The fair value was estimated based on numerous objective and subjective factors including the Company’s historical performance, financial condition, and prospects, the value of companies that the Company considers peers, recent private stock sale transactions, the economic and competitive environment, the rights, preferences, and privileges of the Company’s redeemable convertible preferred stock, and the likelihood of achieving a liquidity event, such as an IPO. In connection with the acquisition, 58,049 of the 96,749 shares of common stock were held back for potential breaches of representations and warranties, and were assigned to Esticom shareholders 18 months after the closing date. The transaction costs associated with the acquisition were not material and were expensed as incurred as general and administrative expenses in the accompanying consolidated statements of operations and comprehensive loss. The major classes of assets and liabilities to which the Company allocated the purchase price were as follows (in thousands):
|  | Fair value |  |  | Useful life
Assets acquired |  |  |  |  |  |
Cash and cash equivalents |  | $ | 19 |  |  |
Developed technology intangible asset |  |  | 6,500 |  |  | 5 years
Other acquired intangible assets |  |  | 300 |  |  | Less than 12 months
Goodwill |  |  | 9,835 |  |  |
Total assets acquired |  | $ | 16,654 |  |  |
Liabilities assumed |  |  |  |  |  |
Other current liabilities |  | $ | (54 | ) |  |
Deferred revenue |  |  | (100 | ) |  |
Net deferred tax liabilities |  |  | (1,376 | ) |  |
Total liabilities assumed |  | $ | (1,530 | ) |  |
Net assets acquired |  | $ | 15,124 |  |  |
The purchase price accounting for this acquisition is final. Developed technology is amortized on a straight-line basis, which approximates the pattern in which the economic benefits of the technology are consumed, over its estimated useful life of five years. The amortization expense is recorded in cost of revenue in the accompanying consolidated statements of operations and comprehensive loss. The goodwill was primarily attributable to synergies that are expected to be achieved from the integration of Esticom with the Company’s current product offerings and assembled workforce. The goodwill balance is not deductible for income taxes purposes. The Company has not separately presented pro forma results reflecting the acquisition of Esticom, or revenue and operating losses of Esticom for the period from the acquisition date through December 31, 2020 as the impacts are not material to the consolidated financial statements. Avata Intelligence On February 3, 2020, the Company acquired intellectual properties, rights and agreements from Avata Intelligence Inc. (“Avata”) for $3.8 million in cash consideration. As part of the acquisition, the Company also entered into employment agreements with the majority of Avata’s employees. The purpose of this acquisition is to accelerate the development of the Company’s AI and machine learning solutions. The purchase consideration was primarily allocated to developed technology intangible assets with an estimated fair value of $2.2 million. The excess of the purchase consideration over the net assets acquired of $1.6 million was recorded as goodwill. The amount of goodwill that is deductible for income tax purposes as of December 31, 2020 is $1.6 million. The purchase price accounting for this acquisition i s final.

X
- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI https://asc.fasb.org/topic&trid=2303972 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 5 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=128092470&loc=d3e4946-128472 + Details
Name: | us-gaap_BusinessCombinationDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_BusinessCombinationsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration