Covering IPOs, Healthcare and Technology Stocks

Andrei Zakharov

A highly collaborative investment professional and research analyst with 10+ years of international experience in equity research, treasury operations, and trading positions across multiple asset classes at leading multinational banks Citibank and Morgan Stanley, UHNWI-backed family office and European independent equity research firm. A respectable background in equity capital markets, corporate treasury, investment banking operations, equity research analysis and portfolio management.

Procore Technologies IPO: Valuation Update. Shifting Focus to $2T Infrastructure Plan

Algosun Global

Equity Capital Markets

Procore Technologies  / Equity Capital Markets

Due to emerging COVID-19 crisis market leader and high-growth vertical SaaS company Procore Technologies postponed its IPO in April and raised $150M at a valuation of ~$5B instead. The venture round was led by investment firm D1 Capital Partners, that deploys capital in both public and private markets on behalf of institutional investors worldwide. The Company has a fundamental investment strategy with a focus on medium to long-term returns across the consumer, business and financial services, healthcare, industrials, real estate and technology, media and telecom sectors, according to Bloomberg. 
Procore was backed by American venture capital firms ICONIQ Strategic Partners, Bessemer Venture Partners and other investors, including Lead Edge Capital, Lumia Capital, Tiger Global Management and Dragoneer Investment Group. It raised ~$650M of venture capital since inception and we forecast PCOR shares still have ~80% upside potential to last round valuation of ~$5B in the private markets. Construction tech unicorn reported $289M in Revenue in CY 2019, 55% YoY growth rate and GAAP Net Loss of $83M while accumulated deficit jumped to ~$300M as of Dec-19. However, Procore ended Dec-19 with 8,506 total customers, 655 of which are paying $100K+ in ARR, and rapidly grown its product offering from 4 products in 2017 to 13 products today.
We like acquisition strategy, which boosted product suite and capabilities of existing products. In 2019 Procore acquired leading provider of project management software for owners and developers Honest Buildings for ~$51M in cash and ~$110M in stock deal. Other acquisition targets were BIManywhere, Construction B1 and Avata Inteliigence. Global construction industry is entering the digital age and the availability of Wi-Fi, mobile 4G and LTE networks have allowed users to access the internet on mobile devices and tablets with fast speed and flexibility. Procore is a market leader in construction project management software and forecasts growing total addressable market for its products to exceed $10B in 2020. 
As Renaissance IPO ETF (NYSE: IPO) and Nasdaq Composite Index hit all-time highs and keeping in mind recent successful SaaS/Cloud IPOs of tech unicorns Zoominfo, Ncino, BigCommerce we expect Procore may go public in the second half of the year. Tech IPO market looks strong, valuations of US-based money-losing SaaS companies are rich and SaaS/Cloud stocks trade at very high forward EV/Revenue multiples.

Due to emerging COVID-19 crisis market leader and high-growth vertical SaaS company Procore Technologies postponed its IPO in April and raised $150M at a valuation of ~$5B instead. The venture round was led by investment firm D1 Capital Partners, that deploys capital in both public and private markets on behalf of institutional investors worldwide. The Company has a fundamental investment strategy with a focus on medium to long-term returns across the consumer, business and financial services, healthcare, industrials, real estate and technology, media and telecom sectors, according to Bloomberg. 
Procore was backed by American venture capital firms ICONIQ Strategic Partners, Bessemer Venture Partners and other investors, including Lead Edge Capital, Lumia Capital, Tiger Global Management and Dragoneer Investment Group. It raised ~$650M of venture capital since inception and we forecast PCOR shares still have ~80% upside potential to last round valuation of ~$5B in the private markets. Construction tech unicorn reported $289M in Revenue in CY 2019, 55% YoY growth rate and GAAP Net Loss of $83M while accumulated deficit jumped to ~$300M as of Dec-19. However, Procore ended Dec-19 with 8,506 total customers, 655 of which are paying $100K+ in ARR, and rapidly grown its product offering from 4 products in 2017 to 13 products today.
We like acquisition strategy, which boosted product suite and capabilities of existing products. In 2019 Procore acquired leading provider of project management software for owners and developers Honest Buildings for ~$51M in cash and ~$110M in stock deal. Other acquisition targets were BIManywhere, Construction B1 and Avata Inteliigence. Global construction industry is entering the digital age and the availability of Wi-Fi, mobile 4G and LTE networks have allowed users to access the internet on mobile devices and tablets with fast speed and flexibility. Procore is a market leader in construction project management software and forecasts growing total addressable market for its products to exceed $10B in 2020. 
As Renaissance IPO ETF (NYSE: IPO) and Nasdaq Composite Index hit all-time highs and keeping in mind recent successful SaaS/Cloud IPOs of tech unicorns Zoominfo, Ncino, BigCommerce we expect Procore may go public in the second half of the year. Tech IPO market looks strong, valuations of US-based money-losing SaaS companies are rich and SaaS/Cloud stocks trade at very high forward EV/Revenue multiples.   

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