Summary
Intapp is a SaaS company providing cloud-based software solutions to financial professional services firms. The company serves over 2,100 clients, including 96 of the Am Law 100 law firms and 7 of the top 8 accounting firms. Intapp generates most of its revenue through subscriptions, with recurring revenue accounting for about 73% of its total revenue. The company has seen consistent revenue growth with a 23% CAGR since 2021, alongside growing margins. It estimates its total addressable market to be $31 billion, opening doors for further growth.
Procore is a cloud-based construction management software company offering comprehensive project management tools for over 16,000 customers. Procore has demonstrated strong financial performance with a $1.2 billion annualized revenue run rate, 13% YoY customer growth and at least 28% YoY revenue growth since its IPO. As a market leader in its niche, Procore is well-positioned to capitalize on the construction industry’s digital transformation, where it estimates its total addressable market to be $10 trillion.
Intapp, Inc. ($INTA)
$59.92- Share price at time of writing
Source: tradingview.com
Summary:
- Share price at the time of writing: $59.92
- Intapp ($INTA) provides cloud-based software solutions to financial and professional services firms to help them streamline operations and integrate data and workflows.
- Intapp boasts over 2,100 clients globally, including 96 of the Am Law 100 law firms and 7 of the top 8 accounting firms.
- The company has experienced consistent revenue growth, averaging 23% year-over-year since 2021. It estimates further growth potential with a total addressable market of $31 billion.
- Although Intapp has yet to achieve profitability, it has improved its gross profit margin from 65% to 71% in the past four years, signaling a growing potential for profitability.
What they do:
Intapp ($INTA) provides cloud-based software solutions designed to help financial and professional services firms – such as law firms, accounting firms and consultancies – digitize and streamline their operations.
Intapp has two main brands in the market. Its “OnePlace” suite provides a unified experience that allows firms to integrate their data and workflows across multiple systems. ”DealCloud” is its deal and relationship management suite that helps investment banks and advisory firms manage and enhance deal processes and customer relationships.
Intapp reports revenues in three primary segments:
- SaaS and Support: The largest portion of Intapp’s revenue (~73% in 2024) comes from the sale of its SaaS offerings and ongoing support services. This includes recurring subscription fees for the use of Intapp’s platforms (initial terms of which are generally 1 to 3 years), as well as the support services that are automatically included with its subscription licenses.
- Subscription License: This segment accounted for ~14% of Intapp’s revenue and consists of revenue generated from licensing its software on a subscription basis.
- Professional Services: Intapp derives the remaining 13% of its revenue from professional services, which include consulting, implementation, and upgrade services provided to clients.
Last year, IntApp’s recurring revenues accounted for 87% of its total revenues.
Founded in 2000 and publicly listed in 2021, Intapp serves over 2,100 clients globally, including 96 of the Am Law 100 law firms, 7 of the top 8 accounting firms and over 1,250 private capital and investment banking firms. It was formerly known as LegalApp.
What the market is saying:
$INTA doesn’t get much discussion on forums, however where it does is often in the r/legaltech subreddit. The majority of the discussion is centered around its business model and whether it could make for a long-term investment.
Source: quiverquant.com
A comment from Reddit:
“I like intapp best because they have solid 98 of 100 law firms and 3 of 4 big four accounting firms. Plus I really like that they bought deal cloud a few years ago and sell ai to private equity firms and banks.”
- UptownTB
Why $INTA could be valuable:
Industry
Intapp operates in the professional services software sector, specializing in providing software and cloud solutions for high-stakes industries like legal, investment banking, private equity and professional services firms. The company has carved out a strategic niche by offering highly specialized software that is easy-to-use and integrated, and built with cloud infrastructure, AI and data architecture in mind.
The broader professional services software market is projected to grow at a massive CAGR of 31% to 2029, driven by the need for advanced workflow management tools. Intapp estimates its total addressable market (TAM) to be ~$31 billion, which has grown from $9.6 billion in 2021. The company believes its serviceable addressable market (SAM) to currently be around $24 billion.
Last year, Intapp took a big step by forming a partnership with Microsoft. This means that Intapp’s software is now integrated into many areas of Microsoft, including Microsoft 365. Intapp is now also present in the Azure marketplace, where Microsoft’s clients can directly buy Intapp’s solutions from. Aside from Microsoft, Intapp’s partner program includes 135 participants that can help drive customer growth.
Financials
Since Intapp’s IPO in 2021, it has posted consistently growing revenues with year-over-year (YoY) revenue growth at an average of 23%. These are driven by two main growth areas: new customer acquisition and increased average spend per customer.
Some of its customer number highlights last quarter include:
- 10% YoY growth in new clients
- 13% YoY growth in clients generating over $100,000 in annual revenue
- 27% YoY growth in cloud-related revenue
- 119% cloud net revenue retention rate, which shows the percentage of YoY cloud revenue that Intapp retains from previous year clients. Being over 100% means that existing clients have spent more year-on-year.
$INTA TTM revenues per quarter from 2020 to October 1, 2024:
Source: macrotrends.com
While Intapp has not yet generated net income, it has grown its gross profit margin from 65% to 71% over the last four years, marking increasing potential for profitability. Additionally, between 20-30% of its gross profits have been consistently reinvested into research and development, allowing the company to continue enhancing its software suite and develop new features to entice both new and existing customers.
On the bright side, the chart below illustrates that Intapp has been getting closer to profitability with every quarter.
$INTA TTM net income per quarter from 2020 to October 1, 2024:
Source: macrotrends.net
Despite not yet achieving profitability, Intapp maintains a solid financial position. Its latest quarterly report showed that the company’s cash ($254m) could nearly cover current liabilities ($273m). Additionally, a significant portion of the latter (74% or $203m) is made up of unearned revenues, representing future contractual obligations that will convert into revenue as services are delivered.
Additionally, the company has been free cash flow positive since 2022, lowering liquidity and solvency concerns.
Price action
$INTA has recorded share price growth of ~63% year-to-date and is currently traded at all-time highs. The consensus analyst price target shows that the current share price may be at around fair value.
What the risks are:
1️⃣ Unprofitable: While Intapp has shown strong revenue growth, larger margins, and lowering losses, the company is still unprofitable.
2️⃣ Large value of intangibles: Intapp has been active in acquiring companies, having acquired at least 10 in its history. Acquisitions however often result in the acquirer to record intangible assets, such as Goodwill, in its balance sheets. The total value of Intapp’s intangible assets in its most recent report showed that it took up over 40% of Intapp’s total assets.
3️⃣ Share dilution: Intapp has issued new shares every year since its IPO to raise capital, resulting in a decrease in ownership percentage for existing shareholders. This dilution can reduce potential future earnings per share and voting power.
Bottom line: Intapp offers cloud-based software solutions to financial professional services firms. Serving over 2,100 clients, including top law and accounting firms, Intapp generates most of its revenue from subscription-based SaaS offerings, which make up 73% of total revenue. The company has achieved an average 23% revenue growth yearly since 2021, driven by new customer acquisition and increased spend from existing clients. Its strong revenue growth coupled by growing margins has seen its losses lessen every quarter, bringing it closer to profitability.
Procore Technologies, Inc. ($PCOR)
$80.21 – Share price at time of writing
Source: tradingview.com
Summary:
- Share price at the time of writing: $80.21
- Procore Technologies is a cloud-based construction management software company providing comprehensive project management solutions for construction professionals.
- The company currently serves over 16,000 customers across 160 countries, with Procore estimating a total addressable market of $10 trillion that it hopes to capture.
- Procore has demonstrated strong financial performance, posting a $1.2 billion annualized revenue run rate and a minimum 28% year-over-year revenue growth since its IPO in 2021.
- $PCOR has seen a 16% year-to-date increase with a significant 27% surge occurring in the last month. Current analyst consensus suggests the stock is trading near its fair market value.
What they do:
Procore Technologies ($PCOR) is a cloud-based construction management software company designed to streamline and connect every aspect of construction project management. Some examples of its products include project management tools, financial management software, quality and safety management systems, and mobile applications that owners, contractors, architects and engineers can all use to collaborate.
Procore reports revenues in one segment, with the bulk of revenues generated through a subscription model. Founded in California in 2002, the company now has offices across the US, Canada, Australia, UAE and Europe. As of last year, Procore recorded over 16,000 customers across 160 countries using its platform.
What the market is saying:
$PCOR gets several mentions on social media. There are several areas of discussion, mainly its business model, competitors and how its prospects are long-term. The general consensus illustrates that Procore’s software has been widely adopted across the construction industry, far more than any other construction software.
Source: quiverquant.com
A recent comment from Reddit:
“Having used several of these systems for two different multi billion dollar GC’s I can say these systems all have their ups and downs. Procore is integrated fairly well across all departments of a major construction firm. That is not a small feat. There is a ton of room for Procore to run in refining their systems. To that end, you’re no longer buying a standalone software package. You’re buying a service that’s continually refining an important element of your business. Times have changed.”
- DITPiranha
“I’m a superintendent for large multi family projects and have used procore for about the last 6 years. I spend the majority of my time in the field with my iPad and it blows my mind that we used to do this work with just blueprints. I have everything I need right at my finger tips . I think it’s a great tool.”
- Dochix69
Why $PCOR could be valuable:
Industry
Procore Technologies operates in the construction management software sector. Unlike many other software suites, Procore has established a strategic niche by offering comprehensive, integrated platforms that work from preconstruction and project execution to workforce and financial management. This means that Procore can target customers from all areas of construction.
Its software and its geographic reach therefore allows Procore the ability to estimate its total addressable market (TAM) to include the majority of the global construction workforce. According to its estimates, the construction workforce is the fourth largest in the world – larger than that of the transportation and financial industries combined. Translating this to numbers, Procore believes that it has a TAM of $10 trillion.
While that may sound like an unimaginable number, the construction industry is undeniably ripe for Procore’s entry. Traditionally resistant to technological change, the industry is now undergoing a digital transformation with firms increasingly embracing digital solutions like Procore to overcome productivity challenges and improve margins. Procore’s full product suite allows it to easily onboard construction professionals, later bringing in opportunities to upsell and cross-sell other parts of its product.
Financials
$PCOR has recorded impressive numbers since its IPO in 2021. Its latest quarterly and annual reports highlighted the following:
- $1.2 billion annualized revenue run rate (Q3 2024)
- 13% YoY growth in customer numbers (FY 2023)
- 27% YoY growth in customers contributing $100,000 in annual recurring revenue (FY 2023)
Since 2021, $PCOR’s has recorded a minimum 28% YoY revenue growth. This financial year, it’s on track to hit $1 billion in revenue for the first time.
$PCOR’s TTM quarterly revenue from 2020 to October 1, 2024:
Source: macrotrends.net
Aside from strong revenue growth, Procore has also improved gross profit margins over the years. It has averaged over 80% every quarter since 2023.
Despite that, Procore has not yet reached profitability. This may be attributed to a rather high level of R&D expenses.$PCOR’s quarterly net income from 2020 to October 1, 2024:
Source: macrotrends.net
However, $PCOR boasts a strong balance sheet, with cash and short-term investments more than able to cover total liabilities as of Q3 2024. Additionally, its total unearned revenue balance made up nearly 70% of its total liabilities.
Price action
$PCOR is over 16% year-to-date, rallying mostly in the last month where it gained over 27%. The consensus analyst price target shows that $PCOR may be at around fair value.
What the risks are:
1️⃣ Lack of profitability: Although Procore has shown impressive revenue and margin growth, its inability to achieve profitability raises doubts about the long-term viability and financial stability of its operations.
2️⃣ High level of intangibles: Procore’s latest balance sheet showed intangibles representing nearly 40% of the company’s total assets.
3️⃣ Cyclical industry: The construction industry is considered a cyclical industry, which means it may be more sensitive to economic downtowns. This can potentially impact Procore’s revenues and income.
Bottom line: Procore ($PCOR) is a construction management software company providing cloud-based solutions for project management across the construction ecosystem. It currently serves over 16,000 customers globally, targeting a $10 trillion addressable market. In Q3 2024, Procore posted a $1.2 billion annualized revenue run rate with 28% year-over-year revenue growth, though the company is still working towards consistent profitability. $PCOR’s stock has shown resilience, reflecting the company’s strong market position in an increasingly digital construction industry.
