Good afternoon, everyone. I would like to welcome you all to the Procore Technologies, Inc. Full Year 2023 Q1 Earnings Call. My name is Rebecca, and I'll be your event specialist for today's call. After the speaker's presentation, we will conduct a question-and-answer session. I would now like to turn the conference over to Matthew Puljiz. Matthew, please go ahead when you're ready.

Thanks. Good afternoon, everyone. Welcome to Procore's 2023 first quarter earnings call. I'm Matthew Puljiz, VP of Finance. With me today are Tooey Courtemanche, Founder, President, and CEO; Paul Lyandres, CFO; and Howard Fu, SVP of Finance. Further disclosure of our results can be found in our press release issued today, which is available on the Investor Relations section of our website, and our periodic reports filed with the SEC. Today’s call is being recorded and a replay will be available following the conclusion of the call. Comments made on this call may include forward-looking statements regarding our financial results, products, customer demand, operations, macroeconomic and geopolitical conditions. You should not rely on forward-looking statements as a prediction of future events. All forward-looking statements are subject to risks, uncertainties, and assumptions and are based on management’s current expectations and views as of today, May 3, 2023. Procore undertakes no obligation to update any forward-looking statements to reflect new information or unanticipated events, except as required by law. If this call is replayed or reviewed after today, the information presented during the call may not contain current or accurate information. Therefore, these statements should not be relied upon as representing our views as of any subsequent date. We will also refer to certain non-GAAP financial measures to provide additional information to investors. A reconciliation of non-GAAP to GAAP measures is provided in our press release. And with that, let me hand it to Tooey.

Hi, thanks, Matt, and welcome everyone, and thank you for joining us today. I'm going to begin by expressing my sincere gratitude for the team's hard work to deliver our Q1 results. So, let me dive straight in and share a few highlights from the quarter. In Q1, we grew revenue 34% year-over-year and we added over 600 net new customers reaching over 15,000 total customers by the end of the quarter. We continue to demonstrate durable growth while improving operating leverage in the business. And for the third year in a row, we were named one of G2's Best Global Software Companies, reaching our highest ever ranking of number 14 out of 100. This is a testament to the value that our platform continues to deliver to the construction industry. Over the past 90 days, I have spent a lot of time on the road, and had the privilege of meeting with our customers and shareholders all around the globe. Investors often asked me about the broader demand environment, and I continue to stay close to our industry owners. Our customers continue to share that their backlogs remain healthy, and that in many cases they're busier now than ever and that the labor shortage is still the biggest challenge in meeting demand. Additionally, in aggregate, third-party external indices that we watch have remained stable. However, we did notice a new dynamic surface in Q1. Specifically, we saw some cautiousness on construction volume commitments, particularly regarding work that hasn't yet been awarded. We observed this within a small portion of our customers that came up for renewal in the quarter. Let me give you a hypothetical example, which I believe illustrates this well. Imagine that you're a construction company here in the U.S. You're hearing in the news about a potential recession and difficulty obtaining financing, but you're also reading about new government spending, record employment, and on top of that, you have a fully committed project backlog, which means that you have secured work for the future and are not necessarily concerned about the future pipeline of jobs. These mixed signals leave you confused and naturally lead you to be more cautious, just in case your business takes a turn for the worse. This scenario illustrates the slight conservatism some of our customers demonstrated in Q1. However, the external uncertainty has not reduced our customers' desire for efficiency or demand for technology. In fact, we've seen demand drive a return in net new customer adds, and the majority of customers are continuing to grow construction volume with Procore. Paul will elaborate further on these points later. They help illustrate why it's important to take each individual data point in context and to look at all of the internal and external indicators in aggregate to gauge the overall health of the industry. Another nuanced topic that investors regularly bring up is the commercial real estate crisis and its impact on office construction. Let me be very clear; we do not believe that this is a notable headwind to our business for two reasons. First, office construction has been muted since 2019 and largely did not contribute to our success over the past two years. Second, office construction represents only a small percentage of the overall industry. Historically, we've described the construction industry as commercial, infrastructure, and residential. This has created some confusion because folks often mistakenly equate office buildings with commercial construction. So, I think it's important for me to take a moment to clarify how we view the overall industry. A good place to start is with the U.S. Census Bureau's definition of construction spending; at the highest level, they break down the construction landscape between residential and non-residential. Within non-residential, there are over 70 subcategories across lodging, commercial, healthcare, education, office buildings, public infrastructure, transportation, and much, much more. To give you some perspective, office buildings comprise less than 5% of the total U.S. construction value put in place in 2022. As I've shared before, when demand in one sector wanes, oftentimes demand in other sectors grows. And while some areas within non-residential like office buildings have been impacted for a long time, more recently, we have seen healthy growth in other areas such as manufacturing, education, and data centers. Longer term, we also anticipate seeing further tailwinds from public infrastructure spending. Ultimately, our customers manage diverse portfolios of work, and they will go to where the demand is. This is why when investors ask me about commercial real estate and office construction, my answer is more holistic. It's the aggregate construction volume and overall demand that matters most. While the broader environment continues to evolve in the near term, what is clear is that in times of uncertainty, customers prioritize efficiencies in the construction process, efficiencies that the Procore platform provides. Our focus remains on delivering powerful ROI to our customers with a mission-critical platform that helps them build better, faster, safer, and more efficiently. Let me share a few examples, starting with a new specialty contractor customer. Tri-City Electric Company of Iowa is one of the oldest and largest electrical contractors in the U.S. They work on a diverse portfolio spanning the industrial, commercial, multifamily, and sports markets. Their legacy solutions lack the functionality that they required, and as a result, their field staff pushed for a change. Upon evaluating Procore, Tri-City Electric estimated that Procore could help them save over 300 hours per week in labor hours through more efficient field-to-office communication, representing a significant value add. Ultimately, they chose Procore to displace their existing systems due to the meaningful ROI we deliver, advanced functionality, and the support from our existing clients. Not only are our customers continuing to join Procore, they're expanding with us. W.A. Richardson is a Las Vegas-based general contractor focused on hospitality and entertainment and has built some of the largest projects in the history of Las Vegas. They originally became a Procore customer because of our advanced platform that enabled collaboration and efficiencies across their teams. Over the course of our partnership, they continued to add new product offerings and expand construction volumes, including billions of dollars in construction value for two major hotel casino resorts this quarter. They plan to leverage our continued partnership to secure additional large-scale projects throughout Las Vegas. In addition to general contractors, we continue to expand with owners. I mentioned earlier that data centers are an area within non-residential construction experiencing continued growth. Vantage Data Centers is a leading provider of hyperscale data center campuses around the world. Over the past five years, they have grown exponentially to become a global operator across North America, EMEA, and Asia Pacific. Having been a Procore customer in each of these regions, this quarter, they committed all of their construction volume to us globally to manage the execution and financials of their projects. Previously, they've been using project management, quality and safety, and analytics globally, and testing out our financials and ERP Connector products in each region. As part of this expansion, they are now using financials globally and are actively evaluating additional Procore products. These customer relationships underscore the value our customers are getting from the Procore platform and our ability to help the industry solve its most pressing challenges. Speaking of which, over the past several quarters, you've heard us talk about our long-term Fintech opportunities and how they tie back to our overarching goal of helping our customers manage risk and accelerate growth. In March, we announced the launch of Procore Risk Advisors, one of our Fintech initiatives aimed at solving one of the construction industry's biggest challenges and largest upfront costs, insurance. As a reminder, insurance and construction are complicated, cumbersome, and expensive. All stakeholders on a project are contractually obligated to have relevant coverage for each individual project they work on. Insurance brokerage processes are still highly manual and time-consuming, and insurance carriers lack visibility into new sources of risk data to properly select and price risk, which means construction holds some of the most expensive insurance costs as a percentage of the industry's revenues typically comprising multiple percentage points of a project's budget across all these stakeholders. This represents a great opportunity for Procore to help solve one of our customers' biggest pain points. Procore Risk Advisors is a modern construction brokerage that offers enhanced insurance and surety solutions. Ultimately, Procore will serve as a broker and in some cases help underwrite a subset of our customers' policies by leveraging our unique risk data. We aim to reward our customers for leveraging our technology and data to mitigate risk by providing them with better insurance pricing and terms. However, I want to be very clear; Procore is not incurring any exposure to insurance claims with this program. We believe that we are uniquely positioned to solve this challenge for several reasons. First, we've developed a trusted brand with over 15,000 customers and millions of users, giving us valuable access to and relationships with the construction industry. Therefore, we have a unique opportunity to expand our platform of solutions, enabling a virtuous cycle of product adoption. What I mean by that is the more product lines and the higher adoption a customer has, the more data they generate that can help them drive insurance savings. Second, our customers generate proprietary data that we can leverage to help them obtain favorable terms as well as enable us to offer proprietary insurance programs. This can also help our customers realize direct and tangible value from adopting Procore in the form of insurance savings. Paul is going to share a bit more color on this later, but I want to emphasize that we are in the very early stages of this opportunity, and while it's a long-term initiative, we do look forward to sharing our progress as we continue to evolve and grow this offering. Finally, many of you know that effective next week, Paul is going to be starting a new role at Procore, as the President of Fintech, and he will be passing the CFO torch onto Howard. Personally, I want to just take a moment to thank Paul for his tremendous leadership and partnership over the past four years as CFO, helping to scale the business to where we are today. I am thrilled to continue to partner with him to help unlock further value for our customers in his new role as President of Fintech. I also want to take a moment to welcome Howard as our new CFO, and I look forward to working more closely with him as we continue to scale. To wrap up, we had another quarter of growth on both the top and the bottom line as we continue our journey of efficient growth. Looking ahead, we remain focused on executing on the long-term opportunities in front of us, and advancing our mission of connecting everyone in construction on a global platform. I believe our close partnership with the industry, the exceptional team we have in place, and our commitment to solving the biggest challenges in construction will create significant value for our customers and shareholders over the long term. With that, let me hand it over to Paul.

Good afternoon, everyone, and thank you, Tooey, for the kind words. As Tooey indicated, today marks my last earnings call as CFO. It has truly been a privilege working with all of you, and I want to thank you for the partnership as I embark on my next chapter at Procore, leading our Fintech organization. Now on to the quarter. Today, I'll quickly recap our results, share some color on our performance, and hand it over to Howard to conclude with our outlook. Revenue in Q1 was $214 million, up 34% year-over-year. Our non-GAAP operating loss was $4 million, representing an operating margin of negative 2%. Our key balance sheet metrics, specifically short-term RPO and short-term deferred revenue continued growing 30% or greater year-over-year. Our Q1 performance was well-rounded, in that we saw growth across multiple facets of the business. I'd like to take a step back and share some additional color on our performance. First, you may recall back in Q4, we noted a sequential drop in net new customer adds from Q3, primarily driven by higher logo churn within our smallest customers. As we shared, this did not have a material impact on our Q4 financial results given dollar churn performed as we expected. That said, we wanted to call out that what we saw in Q4 is not yet proving to be a trend, as we saw net new customer adds return to historical lows. Second, as Tooey mentioned, this quarter, we started to see a small portion of our customers exercise some cautiousness in their construction volume commitments. Although this wasn't apparent in our financial results, in the interest of transparency, we wanted to provide some color on what we saw. We believe this reflects a heightened sense of conservatism within a minority of customers only committing volume for work that has already been awarded. Despite this, we still saw an increase in the share of our customers growing construction volumes within Procore, representing the majority of our customer base. As Howard will explain shortly, our previous and current outlook already factors in the potential for cautious customer sentiment. Third, similar to prior quarters, our Q1 international results were impacted by currency headwinds. On a year-over-year basis, FX contributed approximately eight points of headwinds to international revenue growth and one point of headwind to total revenue growth. Therefore, on a constant currency basis, international revenue grew 35% year-over-year, and total revenue grew 35% year-over-year. Finally, over the past few quarters, you've heard us reference our pursuit of efficient growth and how this is being instilled across the organization as a priority we need to improve upon. This quarter, we saw this mindset manifest in the business. Specifically, our lower expense profile in Q1 was unique, as it was a result of relatively smaller savings across numerous areas that in aggregate resulted in meaningful outperformance compared to our guidance. While this included things like less travel and one-time hosting fees unique to Q1, notably, it did not consist of intentional hiring delays, lower commission expenses, or other reductions that typically relate to sacrificing top-line objectives. In fact, we actually had a lower employee attrition rate in Q1 than anticipated. While we intend to continue making improvements to our efficiency profile, the magnitude of the savings captured in Q1 is not necessarily something investors should expect to repeat in Q2. Before I turn it over to Howard to provide our outlook, I want to spend a few minutes sharing a bit more on Procore Risk Advisors. Procore is uniquely positioned to help alleviate a major pain point for construction in the world of insurance. I want to emphasize that we are in the early stages of this offering and are expecting a long journey ahead in growing the types of coverage we can broker and help underwrite. In terms of monetization, there are currently two avenues. The first is through serving as a broker, by which we sell policies from third-party carriers and earn a brokerage commission, which varies by policy type. The second is through serving as an underwriting agent for select policies whereby Procore partners with the carrier who takes on the claims risk in their evaluation of the policy, providing additional industry expertise and enhanced data in exchange for a share of the premiums. It's important to note that in both cases, we take on zero balance sheet exposure to claims, because to be clear, we are a distribution partner for the insurance carrier who bears the risk of the insurance claims. From a financial perspective, we do not expect material top-line contribution over the next few years related to this effort. I'm incredibly proud of the work our team has done to launch Procore Risk Advisors, and I look forward to nurturing this initiative in my next role as President of Fintech. With that, I'll pass it over to Howard to provide our outlook.

Thanks, Paul, and thank you to everyone on the call. Before I share our outlook, I want to remind folks of our guidance philosophy, which remains unchanged. We set our revenue and margin guidance at a level that we have very high conviction we can deliver on in almost any environment. Specifically, our guidance takes into account the cautious customer sentiment we observed this quarter, but also allows flexibility for it to become further pronounced. With that, here is our guidance for Q2 and full year 2023. For the second quarter of 2023, we expect revenue between $216 million and $218 million, representing year-over-year growth between 25% and 27%. Q2 non-GAAP operating margin is expected to be between negative 7.5% and negative 8.5%. For the full year of fiscal 2023, we expect revenue between $908 million and $912 million, representing total year-over-year growth between 26% and 27%, which is an increase of $12 million from our previous full-year guidance. As Paul noted, given the early stages of our Procore Risk Advisors insurance offering, we are not expecting material revenue contribution from that initiative this year. Non-GAAP operating margin for the year is expected to be between negative 5.5% and negative 6.5%, which represents an improvement of 100 basis points from the guidance we issued last quarter and implies year-over-year margin expansion of 450 basis points. As Tooey and Paul indicated, next week, I will be starting my next chapter with Procore as CFO. Over the last two years, I have had the opportunity to work with Tooey, Paul, and the leadership team. I have developed an appreciation for everything Procore has accomplished over the past two decades and the tremendous potential ahead. I look forward to working closely with all of you in continuing to advance Procore’s mission from my new capacity as CFO. To close, I'd like to thank our customers, partners, employees, shareholders, and the industry as well as the communities we serve for giving us this opportunity. Now let's turn it over to the operator to begin Q&A.

Thank you. We have the first question in the phone line from Sterling Auty of SVB MoffettNathanson.

Yes, thanks. Hi, guys. Paul, what a way to finish as CFO with the mic drop on these results! But maybe for my question, I'll turn to Tooey. You talked about broader indices for construction being stable. What would you say to investors in terms of what should they be looking at in terms of these broader industries to determine whether they should be encouraged or maybe concerned about the performance of Procore as we move through the remainder of the year?

Yes. By the way, Sterling, great to hear from you, and great question. The first thing I would point out to anybody is, don't over-index to any one particular data point. We look at a lot of external factors as well as internal when we come up with our overall sentiment. But I will say when I look at the quarter, the conversations that we've had with customers have all been very largely positive as they have been in the past. Backlogs remain strong; the labor shortage is still the number one challenge. But as I mentioned in the opening remarks, there are some kind of mixed signals. A great example of this is I was talking to a customer the other day, and I asked him about their backlog, and he literally referenced a tsunami of work that he has to deal with. But then in the follow-up call to another customer, as they were talking about their backlog, they said it was all good, except they had one project that was unable to obtain financing after talking to many, many banks, and he was convinced that a year ago this deal would have been financed. So, there are all these different contradicting data points, but we haven't heard anything from our customers that indicate that these challenges are widespread or systematic. But when we come back to thinking about what we are considering, I want you to know that we are confident in our ability to deliver upon what's in our control, but we do, just like all of you do, look at these external data points, but we only try to interpret them in aggregate.

That makes sense for me, just one quick follow-up. So is that concern— you mentioned that example about financing, is it a tighter credit market that's more of the concern or would it be concerns that in a cost savings effort, customers would decide to either delay or cancel projects that are currently in AGC's backlog?

Well, let me zoom out a little bit, Sterling. You say that this is a single example in many, many phone calls that I had. So, I don't know the specifics behind that particular deal. I just know that the sentiment was that this deal might have been financed last year when it wasn't financed today. But again, that's just one small data point, but I'm trying to illustrate the fact that the industry is so big and there are so many different sectors that everyone's experiencing it slightly differently.

Hey, guys. Thanks for having me on the call. Great quarter. Paul, maybe one for you just sticking with some of the headwinds or the pockets of challenge that you're seeing. What are you seeing in terms of duration on new deals? And I guess the reason I'm asking is I'm just trying to triangulate around what we're seeing in RPO growth versus CRPO growth. I mean, the latter is obviously much better. Is it duration playing into it? Is that where there's some of the conservatism?

When you look at the long-term RPO, which I imagine is what you're referencing here. What I would tell you is there's a component of it that comes tied to that conservatism that Tooey was talking about, but I would not over-index status the meaningful driver of it as much as long-term RPO has a lot of moving variables around the timing of multi-year renewals. When those come up, there is traditionally a lag between Q4 and Q1 in general. And so for the most part, what you're seeing in long-term RPO isn't something that drives concern. But there is an element of customers being more cautious to sign up for larger, longer-term commitments.

Yes. Okay. And then maybe a more strategic question. So quality and safety, I think one of your more mature products. So part a, is where are you in terms of attach rates there? And then more interestingly, part b, does the entrance into insurance and kind of potential to deliver these data-driven cost savings in any way accelerate adoption of quality and safety in the base?

Great question. So look, I'd actually bring you back to the Investor Day we had a long time ago where we talked about what the share of our wallet looked like in terms of which products drive which amount of our overall ARR. And if you'll recall, the narrative we've always given is the older a product is, the more penetrated it is in our marketplace among our customer base, and quality and safety is one of our oldest products. So we have a pretty healthy majority penetration there, and we do believe that will not only help us as we think about the data we can provide to carriers and partners as we go about this insurance initiative, but to your point, we do believe that it creates an opportunity to bring the rest of the folks along for that ride with quality and safety because we do believe that the more you adopt these solutions and the more we can prove to carriers that you're adopting best practices, the better rates we will be able to get you. However, keep in mind, it's not unique to quality and safety. There's data in project management, there's data in financials, there's data across multiple different products that we believe will be valuable in time.

Yes, DJ, just to think of it this way, all of our products add to contributing to understanding risk. So there's a benefit for insurance folks to encourage the adoption of all of our product suites.

Okay. Hey, guys. Thanks for taking the questions here. Tooey, maybe just to change it up a little bit from the environment. I'd love to talk a little bit about the competitive landscape. I think you've talked about this a little bit in prior calls. Just maybe some slight shifts in the competitive landscape. Curious if you could just give us an update on that, particularly as maybe there are some changes in the macro backdrop as well.

Yes. So, Saket, good question. Here's the kind of the short answer: there really has been no major updates from last quarter; we haven't seen anything significant change at all. One of the things I pointed out last quarter, which I want to restate, was that in 2022, we saw one of our largest competitors less frequently than we did in 2021, but we won more ARR against them, and maybe that's the change you're referencing that we had seen, which again is a testament to the value I think we provide to the industry. But I want to be very clear. We have not seen any competitive dynamic changes that are meaningful. And remember, 50% of the folks we talk to every day are coming from analog pen and paper greenfield opportunities and it's not a competitive dynamic. So not much to report on that front.

Yes. So look, I would clarify the 5% we're referencing is construction in the industry, not specific to Procore's customers. But along those lines, I would tell you what we've shared with investors over the years remains consistent, right, where we don't have meaningful exposure is kind of single-family residential, that arm of the world. And so as long as you back that mix out of how to think about it, I would tell you looking at the distribution of those 70 categories is the best proxy we can give you for how to think about the distribution of our own business, and it's why we consistently point back to aggregate construction volume as the critical metric to watch.

Good afternoon. I wanted to go back to just the diversification of the model here, just as we think about the strength in RPO that really stood out to us, particularly given an environment where you had, I think residential starts down 29%, overall market down 9%, non-RAS goes up 11%. So walk us through the business model. Is this just more diversified relative to your ability to sell more products into the base? Are you just seeing a shift in where the constructions coming from? Any color to help us pinpoint the kind of strength you're seeing versus what looks like a challenging kind of cyclical industry headwinds.

Yes, I mean, look, you kind of spelled it out when you started to describe the numbers you have seen, right? We saw residential take a pretty meaningful hit while non-residential actually showed strength and resilience. And what we were trying to call out in the previous remarks is when we think about Procore, we certainly have meaningful business within the world of multifamily. So I don't want to say we don't participate in residential. But if you carve out multifamily, its numbers will look very different than the broader residential category. Where we are really playing is in that non-residential world, and that's why I bring it back to say the strength and resilience of Procore's business has to do with the fact that our customers touch all of the categories that make up non-residential, and they themselves manage a very diversified book. And so we have the benefit of really going alongside them in this journey of watching the industry shift, but watching overall construction volume continue to increase. And that is obviously a very healthy contributor for us in terms of that CRPO. But I don't want to diminish that we are continuing to see good success in that cross-sell dynamic and the ability to drive further penetration with more of our products. And so the two of those things certainly combined contributed to that success.

Helpful context. And then just one quick follow-up regarding the transition, Paul, to Howard, who will be stepping into a new role next week. I appreciate the modest expectations you're setting for yourself when discussing contributions from Fintech services. I look forward to our conversation with Howard next quarter about this. But seriously, as you consider the growing portfolio of Fintech services, risk advisors, Procore pay, materials financing, and PCN, how will you spend your time next week? What are you most excited about in terms of the impact you can make by focusing on these areas?

Yes, look, that's the wonderful thing about the transition. I'll answer on my half in the middle and let Howard speak to it as well. I'm going to be spreading my time across those different portfolios. I think for us, the driver of this decision in this transition is, what we had talked about in the previous call, really comes back to this idea that we've got a really deep bench, obviously tremendous confidence in Howard and the finance team. And there is a really big opportunity here to go focus and dedicate that energy to where I can have the biggest impact. So pretty excited to kind of focus, but I might have taken Howard's questions.

No, that's okay. Thanks. So, I and Tooey are continuing to be very excited about where Procore is going. A couple of things I want to make sure I call out is that for better or for worse, I've been joined at the hip over the last two years. So we are very aligned in terms of where the business is going from a strategic operational and financial standpoint. Specifically about where I'm going to focus my time, I typically would break it up into three categories, and there's a lot of different directions to go in those different categories. First, it's around operational excellence, and this ties back to what Tooey has been talking about in terms of efficient growth. The second to your point is around making sure that we have lined up monetization across both the short, the medium-term, and the long-term. Then to connect both those things together, the third category is really about capital allocation in terms of where we deploy our resources by geo by product and across all the different functions within the company. That is actually really a continuation of what we've been already doing and what I've already been focusing on for the last couple of years along with Paul and Tooey and the rest of the leadership team.

Thanks. Tooey going back to some of the headwinds you started to see, can you just give us a sense of the magnitude or are there any commonalities in terms of where you saw that? Did you see it later in the quarter earlier in the quarter? Just any additional color there? And I guess for Paul and Howard, your guidance is above the magnitude of the beat. So many are asking, kind of the confidence of raising above the magnitude of the beat, what's enabling you to do that?

Sure. Well, I'll start with the trends, which I will tell you are—we don't see any at this point. So the commonalities are really hard to tie together. But I think what you're doing is I really sympathize with anybody who is thinking about their business right now because if you read the news, there are a lot of reasons to be a little spooked about the economy. In general, we think it's just coming up in conservatism kind of across the board. But there isn't one segment, there isn't one geo, and there isn't one stakeholder that's standing up.

Yes. And then to touch on the guidance piece, Howard mentioned this, I mentioned this in our overall call. The reason we're bringing up the theme of conservatism here is that we really want to be transparent with you all as to the various different data points we're seeing in our business. But when we set our guide at the beginning of the year, we were very intentional to tell investors that this guide factors in a macro environment that gets notably worse in time and we would still be able to hit against that guide. What we're telling you now is while we've seen some degree of cautiousness out there, we still have a lot of conviction in the guide we put out there, and that you all should feel very comfortable that even in a world where we see this conservatism get worse, we will still deliver on the guide we provided. Howard, anything to add to that?

Yes, just a couple of one small thing to echo that we are highly confident in hitting the guide. Keep in mind that we not only had that philosophy in Q1, but we have that philosophy in Q2 in addition to also continuing to raise our guidance on the top and bottom line. We still feel that way with that raise.

Hey, guys. Nice job here. Maybe Tooey from a high level to the extent that repurposing or retrofitting some of the office dynamics you called out and how that plays into maybe broader sustainability and ESG initiatives. Is that coming up in customer decision-making? I know there's a lot of historical waste in construction. You've got a complex regulatory environment and layering in kind of visibility and transparency. But is that something that customers are prioritizing and kind of maybe driving some of the decision-making process here as well?

That's a great question. We’re seeing a lot more of this outside of the U.S. market, so EMEA in particular, where this is a topic that comes up with conversations with our customers there. But I think you're right, which is Procore has been trying to solve this challenge of the $500 billion worth of waste and rework that happens every year. That is a tremendous impact on both our economy as well as our environment. So we've been heavily focused on it. We had an enterprise customer advisory board meeting recently. I would say that about 5% of the time was spent talking about ESG tracking and management. So it is out there, but it's still relatively muted in the North America market, but I think over time, we're going to see a lot more of this.

Yes, look, I think we've talked about this in the past in terms of how we think about partners internationally. The honest answer is we see it similar to how we approach the U.S. market in the sense that we will meet the customers where they are. Different markets have different motions in leveraging partners, and that's true of resellers, but it's also true of integration partners. It's true of lots of different components of how these industries go about digitizing. As we think about our international markets, we're very thoughtful to understand how the different markets need to be served differently, and we are prepared to meet the customers, as I said, where they are.

Awesome. Thanks, guys for taking the question. Maybe two. First, just on the international business, going back to that, where are we with those operational changes that we've been talking about? And when we think, when could we expect this improvement? And I have a follow-up.

Yes. So we mentioned this last quarter. For this quarter, there are no major updates. We continue to make improvements, which I'm pleased with. But this is not something that's going to be fixed overnight. So as we shared before, we expect to see improvements towards the end of this year. But there's nothing significant right now to call out. But when there is, you'll certainly hear it from us.

Thanks very much, and congrats on the results, guys. So I guess when you spoke about some customers being more cautious to sign up for those larger, longer-term commitments. Just so I'm clear, does that mean the question was coming from larger customers, or am I hearing that correctly?

Yes, no, I would tell you as we shared earlier, there wasn't any particular call-out with respect to which type of customer or which segment of the customer we saw that from. It was more of a reflection of we saw it in a small pocket of our customer base. Now it's worth reminding this was where this mixed signal piece really does come to play because we saw the share of our customers that grew their construction volume grow and represent a majority of our customers. Then we saw the share of customers that are downgrading also grow, which you can imply means the customers that renewed flat went down.

Hey, guys. Thanks for fitting me in. Last question here on kind of that small portion of customers exercising the caution, given kind of the way your model works, if these customers do decide to true up later in the year, hypothetically they would pay more. So I guess, can you just talk about like what the customers are evaluating and the puts and takes?

I mean, you did a great job summarizing it there yourself, Jason. That is the right way to think about it, right? Our pricing is based on overall construction volume of a customer that they're going to run through the platform. We will give customers volume discounts for signing up for additional volume. In an instance where a customer is proving to be more conservative, they're going to sign up for less volume, but they're going to pay a higher take rate. This means that to the extent they burn through that amount of construction volume sooner than their contract, they're going to end up upgrading in the middle of that cycle at higher take rates than they otherwise would have had they committed a larger volume upfront. I think that's the benefit of our model and something that we're mindful of that could be a tailwind to us depending on where the world goes.

Our hiring in Q1 actually performed quite well. The other thing I'll remind you is our broader hiring across the company, not just in sales and marketing, are very— we're being very deliberate about who we hire, how we hire, when we hire, and what we hire for. That has been a trend that we've been focusing on since last year. So it's actually nothing new, and we're actually seeing really good dynamics from a hiring standpoint. In fact, our attrition has performed really well in Q1.

Thank you. I can confirm we have no more questions, and this does conclude today's call. Please have a lovely day, and you may now disconnect your lines.