Procore Technologies, Inc.

Good afternoon. Thank you for attending today's Procore Technologies Inc. FY25 Q4 earnings call. My name is Tamia, and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press star 1 on your telephone keypad. I would now like to pass the conference over to your host, Alexandra Geller, head of IR.

Good afternoon, and welcome to Procore's 2025 fourth quarter earnings call. I'm Alexandra Geller, Head of Investor Relations. With me today are Ajay Gopal, President and CEO, and Howard Fu, CFO. 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, platform and products, customer demand, operations, 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 February 12, 2026. 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. These statements should not be relied upon as representing our views as of any subsequent date. We'll also refer to certain non-GAAP financial measures to provide additional information to investors. Reconciliation of non-GAAP to GAAP measures is provided in our press release and our periodic reports filed with the SEC. With that, let me turn the call over to Ajay.

Thank you, Alex, and welcome, everyone. I'm excited to join you today to discuss our Q4 and fiscal year 2025 results. As this is my first earnings call as CEO, I want to start by expressing my strong conviction in Procore's future. During my first few months, I have been spending time with customers and employees and evaluating the business objectively to ensure our strategy is built for long-term value creation and that our operations are scaled for peak efficiency. These initial months have reinforced my belief that Procore possesses the hallmarks of a best in class vertical software leader and is building one of the most mission critical vertical software platforms. As a crucial system of record for the built world, our ability to drive collaboration across all construction stakeholders creates a powerful network effect. Furthermore, I believe Procore is uniquely positioned to lead in the AI era, driving unprecedented efficiency gains across the entire construction lifecycle. I am confident that the scale of our business, the capabilities of our products and platform, and the depth of our customer relationships give us a clear path to drive durable growth, meaningfully expand margins, and compound free cash flow per share over the long term. I am incredibly energized by the opportunity to scale this company to its full potential. My evaluation is happening in lockstep with disciplined execution across the company. As our Q4 and fiscal year 2025 results demonstrate, our operational pace continues to improve as we strengthen our position in the market. Let me shift to business performance. Building on four consecutive quarters of strong business momentum, We ended the year with an exceptional Q4 that exceeded the high end of our guidance. For the full year, we delivered 15 percent revenue growth and 14 percent non-GAAP operating margin, which represents year-over-year expansion of 400 basis points. I am particularly pleased with this result, given the ongoing headwinds from a challenging construction environment, with the U.S. Census reporting negative growth for the combined non-residential and multifamily sectors. Let me take a few minutes to walk you through some of the highlights of our strong quarter. I'd like to start with the largest and most mature part of our business today, U.S. general contractors. I'm encouraged by how much opportunity exists within the segment. From new logos to volume expansion and product cross-sell, I believe this cohort of our business remains a cornerstone of our growth. In Q4, we added three new ENR 400 logos, and expanded our run rate with more than 70 ENR 400 customers. One of our new ENR 400 additions joined Procore as our largest new logo win of the quarter and displaced an incumbent vendor. They partnered with Procore because of our unified enterprise-grade platform and their strong internal demand for our products. They also adopted Procore Pay to automate their manual processes and Procore Resource Management for their growing fleet of capital assets for their self-performed work. With Procore, they expect to achieve a return on their investments in a few key areas. The ability to scale labor efficiently, drive schedule and cost predictability at the portfolio level, and gain new levels of enterprise governance and visibility. We have a track record of displacing incumbent vendors, and we believe this is yet another example of the construction industry realizing that Procore is the gold standard. Of course, our USGC opportunity goes well beyond the ENR 400. To illustrate this market depth, we signed more than 30 100K plus ARR agreements this quarter with contractors outside of the ENR 400. An example of this is with an enterprise general contractor based in Georgia who returned to Procore as a significant win back. After leaving Procore in 2024 for a cheaper solution, they returned to us in Q3. And then in Q4, they deepened their partnership with Procore even further. They adopted a platform enterprise-wide and added Procore pay and resource management, resulting in a high six-figure expansion. With Procore, They expect to enhance efficiency, support growth, and anticipate savings of more than 27,000 labor hours per year, the equivalent of adding roughly 13 full-time employees. While we never want to see a customer leave, this win-back reaffirms a simple truth. The value of Procore creates an advantage that price alone cannot match. These wins illustrate the clear value our GC customers realize from using Procore. Our newer products, including pay, resource management, pre-construction, and analytics, are compelling value drivers. We see these products as notable expansion opportunities for our global GC customers to drive incremental growth. Beyond US GCs, we see substantial opportunity with the other stakeholders we serve, specifically owners and subcontractors. With our demonstrated product market fit, and our continued product innovation, these stakeholders represent extensive white space globally and will serve as significant growth levers for Procore. In the interest of time, let me focus on owners, the most diverse group of customers spanning industries such as technology, energy, utilities, education, healthcare, and real estate. Our owners' business continues to scale, with Q4 marking another quarter of consistent growth in this segment. To meet their evolving needs, we're planning to launch a suite of specialized products later this year, including portfolio management, planning, funding, and asset management. This empowers owners to more effectively manage their project portfolios, mitigate risks, and optimize costs. I'm also proud to report that Procore for Government achieved FedRAMP moderate authorization this quarter and is now available in the FedRAMP marketplace. This milestone validates our commitment to some of the most stringent data security standards and software, which will unlock further opportunities with US federal and state government customers. A primary example of the growing demand for these solutions is in data centers, where AI infrastructure is driving unprecedented investment. Procore is the clear leader for data center construction. While data centers currently represent a modest 2% of total US construction activity, The growth trajectory fueled by the global demand for AI is compelling. Procore is ideally positioned to capture these tailwinds as this sector becomes a more substantial component of total construction spend. For example, our largest international Q4 deal at seven figures annually was a big up-and-coming hyperscaler in the UK data center market. This customer selected Procore in Q4 to establish a single source of truth and ensure consistency across the global projects. And within weeks, they expanded construction volume to meet accelerated data center deadlines. Moving beyond data centers, we also added new owner customers, including the Central Ohio Transit Authority and one of Canada's largest real estate developers. We also expanded with existing owner customers, such as a globally recognized online retailer and a leading semiconductor manufacturer. I would now like to move to a discussion of strategy. There are rare moments in history when a technological shift accelerates industry-wide adoption. At Procore, we last saw this with the ubiquity of broadband and the rise of mobile devices. This was a major catalyst for our business, as Procore was initially built to bring efficiency and collaboration to the job site, unlocking value for the people with mud on their boots. We believe AI stands to be an even more meaningful catalyst than any that we've seen before. Procore's category leadership position did not arrive overnight. We started as a system of record for the built world, and we have evolved into a system of collaboration as we hit scale across the globe. Over time, we earned the right to turn trusted, dynamic data into action. Today, Procore is a digital window into the built world. We are where physical assets and activities are digitized and where actions are taken to change the physical world. This journey is what makes our move into agentic AI feel inevitable rather than opportunistic. And our recent tuck-in acquisition of Data Grid leverages this leadership position to accelerate our AI strategy. We believe that the combination of Procore Helix and Data Grid will generate notable product synergies due to our highly complementary capabilities and roadmaps, bringing premier advanced reasoning and broad third-party integration capabilities into Procore. We call this combined offering Procore AI. To demonstrate the potential of Procore AI, I'd like to share a recent example from a superintendent and a joint Procore and DataGrid Enterprise GC customer that showcases our most recent advanced reasoning capabilities. Like most superintendents, their day consists of walking the job site and taking videos to share with off-site stakeholders. On this particular walk, they noticed a potential issue with a structural column. They took a video and sent the footage to our AI agent with a simple prompt, identify the issues here. Using advanced reasoning, our agent didn't just watch the video. It understood it. By simultaneously analyzing the audio and video cues, the agent identified the exact column and utilized reasoning to know where to go in Procore to pull the drawings, specifications, and documents related to that column. The agent concluded that the column had been incorrectly coded, determined the required rework, automatically created the work order, and notified the relevant stakeholders. the agent also triggered related downstream workflows in Procore, halting further work on that area, and scheduling the rework. Historically, these tasks would have demanded several hours of manual effort and individual expertise to navigate across project specifications. This is not just a hypothetical possibility. This is a real-world example of Procore AI turning a standard job site walkthrough into an autonomous resolution. This illustrates the true power of Procore AI's construction-aware multimodal reasoning. This scenario occurs thousands of times across the job site. This is true special purpose AI built for construction. It has the domain expertise to understand the context, the access to search records, and the authority to trigger actions. And it was built for project teams out in the field delivered through the tool they use every day. This seamless integration of intelligence and utility is a direct result of four foundational points that will enable us to lead in the AI era. First, as construction's mission-critical system of record, with nearly 3 million active users, Procore has a massive proprietary dynamic data set. And the value is not only in the volume of data, it's in the depth of its context. We map the complex dynamic interactions between people, workflows, and the physical job site, capturing and continuously updating every document, annotation, and day-to-day change. This dynamic relevance is exactly what's needed to power high-stakes agentic AI. My second point is trust, a fundamental prerequisite for AI adoption. It's crucial that construction stakeholders trust how the technology provider will use their data. And that's why we've built a scalable enterprise-grade infrastructure to ensure that every AI action is secure, compliant, and contextually relevant. It's only through this combination of contextual data and trust that a platform can provide the industry with needed productivity gains. The third point is our network effect. For AI to automate and complete tasks, it must work where the users work. On a typical project, a customer often connects with dozens of different companies, all collaborating on the platform every day to get their jobs done. Procore serves as a central hub where everyone in construction comes to connect and collaborate, making the platform not just a system of record, but a true system of collaboration, accelerating the flywheel of our network effect. The fourth point is Procore's agentic solutions perform critical actions, not just provide insights. As the critical orchestration layer for every stakeholder in construction, we believe our platform is capable of delivering a true digital coworker to help construction workers get more done with less. This is paramount for an industry facing chronic labor shortages of nearly 350,000 workers in the U.S. alone, according to associated builders and contractors. Today, Procore delivers agentic AI directly to the crews in the field, as well as to the teams in the office, embedding intelligence directly into the natural workflow. By supporting each of our nearly 3 million active users with digital coworkers, we can provide a scalable solution to the industry's labor shortage. Long-time Procore customer Haskell is already benefiting from digital coworkers. By deploying Procore AI on a single project, their initial ROI was immediate, saving superintendents hours per day on mundane tasks. Within just six months, they went from zero AI usage to expanding to several projects with the intent to deploy across their portfolio. Their productivity gains were so impactful that Haskell is now looking to empower every one of their construction teams with digital coworkers from Procore. One way to conceptualize the value of these productivity gains can be seen in comparison to the cost of labor, which is significant within construction. For every dollar of construction volume, a contractor spends a material portion on labor. With digital coworkers from Procore, we believe customers will materially increase their output without corresponding labor growth, leading to meaningful savings. Capturing just a small fraction of that ROI represents an incremental market opportunity for Procore, expanding beyond our traditional solutions. The economic value of our traditional solutions is supported by our construction volume-based pricing model. Because we price on project scale rather than seat count, our traditional revenue remains insulated from headcount fluctuations as AI drives industry efficiency. There is a profound sense of magic when software stops being a tool you manage and starts becoming an expert that manages the project for you, anticipating hurdles and clearing them in the background. The benefits of Procore AI extends far beyond efficiency gains. By reclaiming thousands of labor hours, we are freeing up valuable resources for our customers to deploy on more projects. Procore's path forward is defined by a powerful economic duality of upside opportunity and downside protection. We will monetize the value and ROI of Procore AI agents, even as our volume-based model provides a structural economic foundation for our core business. I believe Procore will unlock unprecedented value as a definitive winner in the agentic AI era. In summary, Q4 was another excellent quarter and closed out a strong year for Procore. My first quarter as CEO exceeded my expectations, and while there is a lot of work ahead, I am incredibly excited about the future of Procore. Procore is a rare company. We have scaled past $1 billion in revenue, defined an entire category, delivered a best-in-class platform, and established a deeply loyal customer base. What Procore has built is truly impressive, and this is just the beginning. I joined because I believe our brightest days are ahead of us. We are well positioned for durable growth and margin expansion. As we continue to innovate for our customers and execute towards our goals, I am confident in our ability to deliver substantial shareholder value. Before I turn the call over to Howard, I want to thank all of the Procore employees. None of the opportunities Procore has would be possible without the incredible culture you've built over the years. Thank you for making me feel welcomed, and thank you for your commitment to our customers and to our company.