As Procore looks to nearly double its private valuation, the IPO market shows signs of life

This morning, construction tech unicorn Procore Technologies set a price range for its impending public offering. The news comes after the company initially filed to go public in February of 2020, a move delayed by the pandemic. As TechCrunch reporter Mary Ann Azevedo reported at the time, the hiatus came with a large check to see the company through its public-offering pause.

In March 2021, Procore filed again for a public offering, but its second shot ran into a cooling IPO market. The company filed another S-1/A in April, and then another in early May. Today’s filing is the first that sets a price for the Carpinteria, California-based software upstart.


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Procore’s filing sets a price range of $60 to $65 per share for its equity.

But Procore is not the only company that filed and later put on hold an IPO to get back to work on floating. Kaltura, a software company focused on video distribution, also recently got its IPO back on track. Are we seeing a reacceleration of the IPO market? Perhaps.

This morning, let’s find out what Procore is worth at its new IPO valuation range, calculate some revenue multiples for the firm, noodle on its implied multiples, and then ask ourselves if its movement toward the public markets alongside Kaltura’s actions is really enough to claim that the public-offering market is actually back.

Procore’s IPO price range

While private Procore raised well over a half-billion dollars from a host of investors, including ICONIQ, Dragoneer, Tiger Global and D1 Capital Partners, per Crunchbase data, it most recently raised $150 million last year after its IPO delay at a valuation of just over $5 billion calculated on a post-money basis.

According to its latest S-1/A filing, Procore will sell 9,470,000 shares in its IPO, providing it with a post-IPO share count of 128,134,774. At $60 per share, the company’s simple valuation comes to $7.69 billion. At $65 per share, that figure rises to $8.33 billion.

However, when discussing a quickly growing private company’s IPO valuation, many folks prefer to take a look at its fully diluted valuation, which takes into account shares that have been earned via vested options and the like, even if they have yet to be converted into actual equity. The argument is that as a company does list, it will make those options and restricted stock units (RSUs) potentially liquid, and therefore worth exercising. So, we might as well count them in a company’s IPO valuation.

Regardless of which share count you prefer, Procore’s fully diluted valuation comes to $8.9 billion, per Renaissance Capital.

For the company’s private shareholders, that’s a strong figure, coming in at nearly a doubling of Procore’s final private market price set around a year ago. Bullish? Yep, I think so.

Our next question: How bullish? Per its filings, Procore’s revenues grew from $92.3 million in Q1 2020 to $113.9 million in Q1 2021, or around 23.4%. Over the same period, the company’s net loss fell from $19 million to $13.7 million, while its gross margins grew by 100 basis points to 82%.

Finally, Procore’s cash generation improved from Q1 2020 to Q1 2021, with its operating cash flow rising from $4.6 million to $28.3 million. Summing: Procore’s growth rate is somewhat lackluster, while its profitability improvements appear material.

Procore’s Q1 2021 revenue result provides the company with an annualized run rate of $455.8 million, and a run-rate multiple of 19.5x. That feels generous given the company’s languid growth rate. Or, put in more positive terms, Procore’s IPO valuation range appears bullish compared to its revenue base and growth.

To our question as to whether the IPO market is bouncing back from its recent period of relative coolness, we can say that Procore’s first IPO price range augurs well.

Turning to Kaltura, recall that when the company first filed, we noted that it was going public “on the back of accelerating revenue growth, rising losses.” Is that still true? Kinda. The company posted $37.7 million in Q1 2021 revenue, above its Q1 2020 result of $25.9 million. That works out to a growth rate of 45.6%, which is much faster than the 16.6% that Kaltura managed from Q1 2019 to Q1 2020.

To its credit, while Kaltura did lose more money in the first quarter of 2021 ($15.6 million) than it did in the first quarter of 2020 ($5 million), it more than cut its Q4 2020 loss ($36.3 million) in half. The next question is how public-market investors will value the company.

It’s still early days when it comes to both the Procore and Kaltura IPOs. Procore could price under its first proposed range. Kaltura could price low as well. But with Procore’s range feeling bullish thus far and Kaltura back in the mix, it’s hard to not be at least modestly bullish on today’s IPO market. Is it as hot as it was? I see no reason to think so. But at the same time, it is certainly warmer than it was during its April cooling.

For late-stage startups, that’s great news.