Procore Technologies, Inc.

welcome to the Procore Technologies Inc Q3 2025 earnings call. My name is Alex and I'll be coordinating today's call. If you'd like to ask a question at the end of the presentation, please press star followed by one on your telephone keypad. I'll now hand it over to Alexandra Geller, head of IR to begin. Please go ahead.

Good afternoon and welcome to Procore's 2025 third quarter earnings call. I'm Alexandra Geller, head of investor relations. Before I begin today's call, I wanted to share that Howard Fu, our CFO, is unexpectedly out of the country attending to a sudden family emergency and will not be joining today's earnings call. For that reason, with me today are Thuy Quarmanche, Founder, President, and CEO, and Matthew Pughi, Senior Vice President of Finance, who will be joining in Howard's place on a one-time basis. You will hear from Howard again soon. 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 include forward-looking statements regarding, among other things, our financial outlook, go-to-market model, CEO transition, platform and products, customer demand, operations, stock repurchase program, and macroeconomic and geopolitical conditions. You should not rely on forward-looking statements as predictions 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, November 5th, 2025. 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 viewed 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. 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 our periodic reports filed with the SEC. And with that, let me turn the call over to Thuy.

Thanks, Alex, and thank you, everyone, for joining us today. Let's start with our Q3 performance, which represented another strong quarter. Some highlights include Revenue growth was 14.5% year-over-year, which is consistent with last quarter's growth and reflects our underlying business momentum and performance that we've seen this year. Non-GAAP operating margins increased quarter-over-quarter to 17%, reflecting our commitment to improving our efficiency profile. We had another strong quarter for large deals, with the number of six- and seven-figure deals accelerating to 31% year-over-year growth. And the number of $100,000 plus ARR customers now totals more than 2,600. And our go-to-market model is yielding benefits, positioning Procore for efficient growth. Another very important highlight from the quarter was our announcement that Ajay Gopal would join Procore as our next CEO. Ajay officially steps into the role on November 10th, at which point I will focus exclusively on my role as chair of the board where my commitment to our customers, the industry, and Procore's mission will remain as strong as ever. I've had the privilege of serving as Procore's CEO for nearly 25 years, and it has been the honor of a lifetime. Needless to say, the board and I were incredibly diligent and thoughtful in our search for Procore's next leader. And I can confidently say that we have found the ideal person, both in operational track record and in his sincere quality of character, to guide Procore through this next phase of growth. Ajay has more than 35 years of proven experience, including leading a multi-billion dollar global technology company and driving shareholder value. He has relevant vertical software experience, most recently serving as the CEO at Ansys. During his tenure, Ansys significantly improved its operating performance and more than quadrupled its market value. His prior roles, including serving as operating partner at Silver Lake, has shaped him into a versatile leader who knows how to scale innovation, navigate complexity, and deliver lasting impact. Ajay's track record is clearly impressive, but his deep passion for transforming the physical world through digital innovation is what ultimately convinced me that he was the right choice. He recognizes and values the privilege of leading software companies that help its customers build things that are lasting, tangible, and impactful. In his career, he has been inspired by the pride those creators felt in building something so transformative. And he sees the same pride in construction and in Procore's customers. That shared sense of purpose is why I know he is the right leader to guide us into the future. So you'll hear directly from Ajay later in the quarter once he officially steps into the role as CEO. Since this is my last earnings call at the helm, I want to take a moment and leave you with why I am so optimistic and confident about the future of Procore. First and foremost, let me remind you that construction is one of the largest and most essential global industries, estimated to reach $15 trillion in construction spend by 2030. and yet it remains one of the least digitized. With Procore as the clear category leader, I believe that this market is ours for the taking, offering tremendous opportunity for durable long-term growth. Construction is a massive yet cyclical industry that has been operating in a down cycle for quite some time, which has been a steady headwind to our business. For example, our focus area of US non-residential and multifamily construction has gone from growing 25% year-over-year in Q1 2023 to negative growth of 2% for the last two quarters, as reported by the U.S. Census. That represents a staggering 27-point reduction in growth over two years. And yet in that same two-year period, Procore has continued to grow faster than this end market by approximately 10 to 20 percentage points. During that period, we also increased the annual construction volume committed on our platform by more than 30%, even in the face of this headwind. And I am proud that in Q3, Procore reached another exciting milestone, surpassing $1 trillion in annual construction volume contracted to our platform across all global stakeholders. This clearly demonstrates our team's ability to execute and take market share, even in challenging construction cycles. I want you all to know that when this cycle inevitably turns upward, and it will, we strongly believe this headwind will become a tailwind. My conviction for Procore's future is further reinforced by the strength of our platform. From day one, we've been solely focused on construction and have built the only unified construction platform that supports all types of projects from vertical to horizontal across the entire construction lifecycle. By connecting people, processes, and data in one place, we believe our platform is uniquely positioned to harness the power of AI for our customers. This was a key topic at our annual industry conference, Groundbreak, just a couple of weeks ago. We announced exciting new innovations, including our agentic roadmap that harnesses our comprehensive and unmatched corpus of proprietary construction data to further extend our platform advantage. Our customers were able to interact with our agents on the expo floor, and they shared that they believe that these innovations will be game-changing for the industry. At Groundbreak, I met with our customer advisory board, and during a Q&A session, unprompted, our customers raised their hand one by one, sharing that Procore's partnership and unwavering commitment to our customer success is why they selected us and why they continue to stay with us. It was truly a powerful moment for me. one that reinforced the impact of our true partnership approach. Over our nearly 25-year history, this dedication has earned Procore the trust of the construction industry, which is paramount for a sector defined by high risk and tight margins. So I think this longtime customer quote from Brasfield and Gorey sums it up well. Quote, the Procore platform and the people behind it are enabling our teams to collaborate more effectively operate more efficiently, raise the bar for excellence in project execution, and drive innovation in how we work. We look forward to continuing to build on this partnership in the years ahead." My confidence in Procore's future is further bolstered by our commitment to improving our margin profile. While we have achieved 1,900 basis points of non-GAAP operating margin improvement since the start of 2023, This only scratches the surface of our profitability potential. Our business model offers substantial margin leverage. We're deeply committed to unlocking this potential and view continuous improvement here as a priority for our business. The changes implemented over the past year have positioned us for future leverage, and we currently see no structural hurdles that would prevent us from reaching our profitability milestones and compounding free cash flow per share. I also believe that we are in a stronger position with our go-to-market model yielding positive benefits and improved execution. To share some specifics, we are seeing higher year-over-year pipeline conversion, improved expansion rates, and lower voluntary sales headcount attrition. Our customers continue to share overwhelmingly positive feedback on the increased technical resources now at their disposal, which are making them even more successful, productive, and efficient. Naturally, there are areas where we want to improve and continue to get better. But overall, we are pleased with how our team is executing. And of course, this motion continues to secure new logos and strengthen the existing customer relationships. In Q3, we added new customers across all stakeholders, including one of the largest defense contractors in the world, a top 40 ENR general contractor, Valvoline Incorporated, one of Canada's largest electricity transmission companies, the Department of Transportation for a mid-Atlantic state, and Horowitz Mechanical. This quarter, E2 Optics, a leading technology infrastructure contractor, also became a large new Procore customer. While they initially approached us for help with pre-construction, the conversation quickly shifted from software replacement for a specific pain point to full operational transformation. E2 Optics chose Procore's unified platform to gain visibility and control across the entire project lifecycle, connecting estimating, operations, resource management, and analytics. The key differentiator for them was the power of Procore Analytics and our reporting dashboards. By standardizing their data on our platform, they can now measure performance, fuel continuous improvement, and finally unlock critical project data that's trapped in siloed systems. Moving forward, E2 Optics will use Procore to build hyperscale data centers, healthcare, higher education, and other commercial facility projects. Another new large logo win in the quarter was with the medical facilities arm of one of the largest managed care organizations in the U.S. In Q3, they purchased Procore to replace a host of fragmented solutions that led to inefficient processes and highly manual workflows. The decision to partner with Procore was driven by our proven ability to provide a construction-specific solution that streamlines operations and enhances scalability across their entire organization. They'll use Procore to build hospitals and medical office buildings across the country. We also had strong expansion wins across stakeholders in Q3, including a leading Irish construction company, ENR 23 Brasfield & Gorey, a top five ENR 600 specialty contractor, Goodman Australia, and a Fortune 200 natural gas company. One of our largest expansions in the quarter was a seven-figure win with a leading hyperscale data center campus provider. With major data center projects across the U.S., EMEA, and APAC, they more than doubled their annual construction volume to $10 billion, and they went all in on Procore, spanning the entire construction lifecycle. A key driver in this deal was their interest in leveraging our new resource management products to create a system of record for assets and materials tracking, as well as Procore Pay for lien waiver and compliance tracking. You may recall that resource management is a comprehensive offering of labor, equipment, and materials, the most critical management areas for subcontractors and self-performed GCs. And it's an area that we have made significant investments in over the past years, beginning with labor. then adding equipment last year and closing the loop with materials set to launch next year. Another seven-figure expansion win was with Related Companies, one of the largest privately held real estate development and management firms in the US. Related had been using Procore on a few regional agreements, and in Q3, they displaced a host of incumbent vendors to expand enterprise-wide on Procore, adding volume and new products. With a large and growing pipeline of development, Related needed a scalable, unified platform to connect teams, standardize workflows, and deliver real-time visibility into project performance. Moving forward, Related will use Procore to execute on their expansive pipeline of large-scale commercial real estate developments, as well as data centers and renewable energy projects. As you can see from these wins, our competitive positioning remains as strong as ever. We have a broad market opportunity that encompasses global general contractors, owners, and subcontractors, and the landscape remains largely greenfield. And it's important to note that many of our largest deals are uncontested. In fact, half of our top 10 new logo deals this quarter, which included all stakeholders, involved no other vendor in the prospects evaluation. While investors often assume that large upmarket transactions are competitive in nature, The reality is that our clear category leadership frequently positions us as the only viable platform that can digitize the construction industry. As you can hear from my remarks today, I have deep conviction in Procore's future. As Procore's founder, I am transitioning the company from a position of strength, ensuring that RJ inherits a strong foundation for our next stage of growth. I believe that with Ajay leveraging his proven operational expertise as a CEO and my continued commitment to our mission and our vision as the chair of the board, we have an unbeatable combination. But more than that, and the time that we spent together, Ajay and I have grown close over a shared passion and appreciation for empowering the builders of the world with technology. We already met with several of our largest customers, and I have been impressed at how quickly Ajay has picked up on the nuances of the construction industry and how he's begun to build a rapport with industry leaders. And I am very confident he's going to continue to strengthen those relationships. I'm handing over the reins with complete confidence that Procore is in the right hands and has the opportunity to deliver substantial shareholder value. The road ahead for this company and for our industry has never looked more promising, and I fully intend to remain a shareholder. I just want to say thank you all for your support And thank you, Ajay, and a big thank you to all Procore customers, partners, employees, and shareholders who have helped us get to this point. We never could have done it without you. With that, I'm going to turn it over to Matt to walk you through our financial performance.