Good morning. For CFOs, having a growth mindset can include driving a transformation strategy, even in turbulent times. Howard Fu, finance chief at Procore Technologies, Inc., will need to play a vital role in the transformation of a go-to-market operation model—part of a mission to help his firm achieve billions in revenue.
Procore creates software for the construction industry and has found momentum in the sector which has been among the slowest to digitize and innovate. If you visit a construction job site trailer, you’ll very likely still see a whiteboard and people with markers writing schedules, Fu told me. At the very fundamental level, Procore digitizes schedules, project management, or keeping track of labor. But as the customer gets more acclimated with the platform, usage can span into analytics, quality safety, and a financial suite of products.
The company, founded in 2002, trades under the ticker PCOR on the New York Stock Exchange. It reported revenue of $950 million in 2023, an increase of 32% year over year. On Aug. 1, Procore reported that Q2 2024 revenue was $284 million, up 24% year over year, beating Wall Street’s expectations.
Procore has surpassed consensus EPS estimates four times over the last four quarters. And this year, it plans to surpass $1 billion in full-year revenue.
Although Procore is continuing to grow amid macroeconomic conditions, a tough demand environment exists. And as its product portfolio and global footprint increases, leadership is starting to see some strain on speed to service customers and engagement, Fu said. This led to the decision to accelerate the transformation of its go-to-market operating model—sales and customer success services and to some extent marketing—in Q3.
A risk or opportunity? “We made the decision to accelerate this transition and evolution, knowing what it’s going to do to our financials in the short term, but having the conviction that it’s better for Procore over the long term,” Fu said.
This transformation is a reorganization and is considered an investment in the business not resulting in layoffs, according to Procore. It will essentially give a general manager (GM) in a region like Europe, for example, more independence than having to consult with a leader at a global level.
“At a GM level, they now have the autonomy of distributed decision-making to react very quickly to the nuances of the different markets that we are operating in and the nuances of the different customers that we have,” Fu said. “Construction is at the local level; that’s where all decisions happen.”
Those partnerships will allow for better retention and churn metrics, and better cross-sell, he said. It’s more of a hands-on approach to help clients erase the whiteboards, and learn how to use the software.
As the product portfolio broadens, Procore plans to hire more product specialists with deep expertise who can speak with CIOs and CFOs, in addition to adding more technical roles on the customer success side.
Now, Fu, CFO since 2023, has to effectively tell the story about this transformation to investors and stakeholders. You get the best buy-in when there is a cohesive storyline that’s memorable, and supported by accurate information that makes sense, he said. Fu also thinks great communicators have a story arc, which “grabs folks attention, and it actually increases the retention of the message.”
We sat down for our conversation on Monday during the global market meltdown. “When I think about movements in the stock market itself, I don’t let those really influence the operational and the tactical things that we are executing here within Procore,” Fu told me. “I think we have to have our eyes on the prize—the long-term success of the company.”
Sheryl Estrada
sheryl.estrada@fortune.com
The following sections of CFO Daily were curated by Greg McKenna.
Leaderboard
Tiffany Mason was appointed CFO of global tax preparation company H&R Block (NYSE: HRB), effective immediately. She succeeds CFO Tony Bowen, who announced his retirement in February and will remain with the company until September. Mason previously served as CFO at Driven Brands, where she led the automotive services company’s IPO in 2021.
Adrian Ding was promoted to acting CFO of Yum China (NYSE: YUMC), a Fortune 500 fast-food company whose brands include Kentucky Fried Chicken and Pizza Hut, effective Sept. 30. He succeeds current CFO Andy Yeung, who intends to resign for personal reasons after nearly five years in the role, the company said. Ding, who has been at the company since March 2019, currently serves as the company’s chief information officer and general manager of its joint venture with Italian coffee maker Lavazza.
Big Deal
Executives at private companies perceive climate change as a greater risk than market competition, regulatory changes, and inflation over the next 12 months, according to Deloitte’s latest private company governance survey. The survey polled 100 respondents who represented C-suite personnel, presidents, board members, partners and owners at private U.S. companies with annual revenues of $100 million to over $1 billion.
Unsurprisingly, executives cited increasing AI use across the organization (43%) and investing in technology (37%) as their top priorities. Sixty-one percent of respondents, however, said their board should spend more time on hiring and retaining talent.
“Traditional pressures like strategic, reputational, and competitive risks persist, while organizations seek more attention on areas like talent,” Wolfe Tone, Deloitte’s U.S. private leader, said in a statement. “Expanding the experience and knowledge of board members is one step, but dialogue about board capacity and priorities can improve governance on external and enterprise risks today while preparing organizations for transformational changes in the future.”
Going deeper
“How an obscure Japanese yen trade sparked a global market meltdown—and why the worst could be yet to come,” a new Fortune report, looks into the unwinding of the yen-based “carry trade,” which describes profiting off interest rate spreads across different currencies, and how it could drive further losses.
Overheard
“We’ve got to be monitoring the real side of the economy: There’s nothing in the Fed’s mandate that’s about making sure the stock market is comfortable.”
— Austan Goolsbee, president of the Federal Reserve Bank of Chicago, told the New York Times in an interview on Monday afternoon.
