Procore Technologies, Inc.

Thank you for standing by. My name is Kate and I will be your conference operator today. At this time, I would like to welcome everyone to the Procore Technologies, Inc. FY26 Q2 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Matthew Puljiz, SVP of Finance. Please go ahead.

Good morning, and welcome to Procore's 2026 Second Quarter Earnings Call. I'm Matthew Puljiz, SVP of Finance. With me today are Ajei Gopal, President and CEO, and Rachel Pyles, 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 performance, platform and products, customer demand, business strategies, transactions, and operations. 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. July 30th, 2026. Procore undertakes no obligation to update any forward-looking statements except as required by law. If this call is replayed after today, the information presented may not contain current or accurate information. Therefore, statements made during this call 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. And with that, let me turn the call over to Ajei.

Good morning, and thank you for joining us today. I'm delighted to report that our core business continues to perform very well, as evidenced by our outstanding financial and operational results for the quarter. Nearly nine months into my tenure as CEO, I have a clear view on Procore's go-forward strategy and the operational rigor needed to execute it. And I'm more excited than ever about our prospects for the short and long terms. Procore has built one of the most essential vertical software platforms in the industry, a system of collaboration that creates a powerful network effect across the industry's stakeholders. We sit at the intersection of the physical and the digital world, where the decisions made on paper meet the realities of the job site. I believe we have the opportunity to lead in the AI era by continuing to build a true next-generation AI-native construction management application that delivers meaningful efficiency and safety gains across the construction lifecycle, saving our customers time and money. We have taken concrete steps towards that vision for both organic development and two targeted acquisitions, including our agreement to acquire DroneDeploy, which we announced yesterday. Even as we pursued our strategy, we have continued to execute. Recruit key personnel and organize ourselves in success. This quarter's outstanding results and our raised expectations for the year reflect that discipline. My conversations with customers these past months have only fortified my conviction in our business and in our path to long-term value creation. I'm confident that the strength of our business, our ability to execute, and the depth of our customer relationships give us a clear runway to durable growth meaningful margin expansion and compounding free cash flow per share. Let me start with the quarter. Q2 was an outstanding quarter for Procore, where we delivered 15.8% year-over-year revenue growth and 21.5% non-GAAP operating margin, which represents 800 basis points of year-over-year margin expansion. I'm excited that in Q2 we signed a contract for the King Salman International Airport, or KSIA in the Kingdom of Saudi Arabia. This public investment fund project, which will become one of the largest airports in the world, is implementing Procore for unified digital construction management. Working with strategic delivery partner Kusama, KSIA will use Procore to have one connected source of project data from design through delivery with stronger governance and transparency from the earlier stages. To reflect our momentum in the market, I'm pleased that we have raised our annual guidance just as we did last quarter. I'm also excited about the margin expansion we have delivered over the past few years, the operating leverage we are building, and our commitment to sustained profitability. Rachel will walk through the details in a few minutes. Our core U.S. residential and multifamily construction market has experienced significant growth deceleration over the past two and a half years. leading to negative growth in late 2025. Despite this, Procore has sustained mid-teens top line growth, significantly outperforming the end market and reflecting the critical nature of our products and our ongoing success across stakeholders. Today, we are seeing an uneven end market with weakness in certain subsectors, such as manufacturing and unprecedented strength in data center construction, driven by ongoing investments in AI. In the U.S. alone, construction spending in the data center subsector has tripled over the last three years, according to Goldman Sachs Research. Commercial real estate services company JLL reports that nearly 100 gigawatts of new data centers will be added between 2026 and 2030, doubling global capacity. The enormous magnitude of spending on data center construction will continue to drive top-line benefits to Procore. And, of course, any acceleration in data center construction would be an additional tailwind Procore is the market leader in data centers, with nine of the ten largest North American data center sites using our solutions during construction. Because data centers are highly sophisticated facilities built under tight deadlines, our customers rely on Procore to automate approvals and communication, and to keep every stakeholder collaborating in real time on a single platform. We are expanding our solution set with new product capabilities and connected commissioning and asset workflows. And through our NVIDIA partnership, we're streaming omniverse-powered 3D digital twins of data centers directly inside Procore. In Q2, we close our largest contract in EMEA history, a nearly $7 million agreement with a European company that builds hyperscale AI data centers across Europe, the US, and APAC. This company will use Procore as its system of record for the entire global construction program, including project execution, document control, and cost management. In the process, this customer will replace side spreadsheets with a single, standardized, order-ready platform integrated into its ERP. Moving to our products, Procore was founded with a mission to bring efficiency and collaboration to the job site. Since then, we have expanded our market leadership, evolving from a system of record to a global system of collaboration. We are where physical assets and activities are digitized, and where actions are taken to change the physical world. And our technology strategy is anchored by four key pillars. Our extensive data set and depth of context, fueled by nearly 3 million active users. The trust we have established through a secure and compliant infrastructure. The powerful network effect of having dozens of stakeholders collaborating on every project and our focus on moving work forward in addition to providing insights. Building on this foundation, we are now integrating AI into our platform's core to address the industry's most pressing challenges, including a labor shortage of nearly 350,000 workers in the U.S. alone. Our AI-powered digital coworkers are designed to bridge this gap by delivering purpose-built capabilities for every project stakeholder. To accelerate our ambitious roadmap, we are driving organic innovation alongside strategic acquisitions, specifically DataGrid, which joined our portfolio in January, and DroneDeploy, our latest announcement yesterday. After closing the data grid acquisition, we focused on technical integration and launched Procore AI through a dedicated specialist team working as an overlay alongside our core sales force. Our product enabled customers to use construction-specific AI natively and with full context within their existing Procore environment. In the last week, we have expanded our library of pre-built digital coworkers to 20 AI agents purpose-built for construction. and we expanded sales to include our broader go-to-market organization. Initial customer interest has been very positive with leading companies including Haskell and Level 10 Construction amongst the early adopters. Another great example is Consigli, a top North American general contractor and Procore customer for more than a decade. As part of our early limited availability program, the company moved from an internal AI hackathon to deploying four Procore AI agents and three test projects to help with common workflows like reviewing submittals or drafting RFIs. Searching drawings that once took their project engineers 30 minutes now takes five. Material verifications that took 10 minutes can be accomplished in seconds. With that success, Consigli is now deploying the generally available Procore AI across 50 projects. We are very excited about the speed at which DataGrid has been integrated. The reception by our customers to our Procore AI strategy and the momentum we are building in our AI business. This early success gives us further confidence to make another AI accelerating acquisition in drone deploy. I will cover the strategy around drone deploy while Rachel will discuss the financial details. As a leader in reality capture and robotic automation, what we are calling visual intelligence, drone deploy bridges the physical construction site with the Digital World, delivering critical real-time visibility into job site activity. While its name reflects its origins in drone-based imaging, the company has evolved over the last 13 years into a fully unified platform for three-dimensional ground and aerial imaging, spanning drones to ground-deployed robots, as well as mobile, fixed, and wearable cameras. Their products are based on artificial intelligence and machine learning, with particular focus on computer vision and image recognition. Their robotic solutions enable robots and drones to conduct scheduled, fully autonomous missions, launching, capturing, and uploading data without on-site personnel. DroneDeploy is being used on over 3 million job sites across more than 180 countries, including many of the large data centers that I mentioned earlier. It is important to note that Procore and DroneDeploy offer complementary solutions that do not overlap. As long-time partners, we have market-tested integrations that joint customers are using today. As soon as the transaction closes, we intend to rapidly build on those integrations to deliver AI-enabled, intelligent, multimodal capture via cameras, drones, and robots deeply integrated into the Procore platform. We expect our augmented solutions will address some of the most challenging pain points customers are facing. Building on their strong AI and technology foundation, DroneDeploy has recently developed three AI agents to enable customers to track progress, flag safety risks, and monitor asset conditions. These agents, which are in the early stages of commercialization, are intended to optimize entire workflows, and they help point the way to how Procore AI will transform construction management software. To illustrate, I'll reference the customer scenario I mentioned on our Q4 call. I described how, during a job site inspection, a supervisor manually took videos of a column to share with stakeholders. An early incarnation of a Procore digital coworker analyzed the audio and visual cues and the specifications and determined that the column had been coded incorrectly and ordered remediation. What would have normally demanded several hours of manual effort and specialized expertise to navigate across project specifications was solved by Procore AI in minutes. With DroneDeploy added to the scenario, the manual job site inspection and logging of observations will no longer be the trigger. Instead, a multimodal perception capability driven by a range of cameras, drones, robots, and other devices will regularly evaluate the construction site and automatically initiate any appropriate response securely, compliantly, and in the right context. With the acute shortage of labor faced by the construction industry, even this simple example shows that AI-driven automation is a potential game changer because action can be taken without waiting for a site visit by an overscheduled supervisor. This example demonstrates how Procore in the future will incorporate a seamless integration of several capabilities purpose-built for construction, specifically advanced reasoning, or the brain, perception, or the eyes and ears, and a secure collaborative and auditable platform where actions are taken or the arms and legs. Such a system will enable us to deliver digital coworkers to the field and in the back office that track what's actually happening on a project, make sense of it, and then take action to change the outcome. That's real value for customers. It offsets labor shortages and saves time and money. Now let me talk about the power of data. Data is the lifeblood for AI. Access to relevant data separates a proof of concept from a mission-critical AI offering. DroneDeploy has captured 20 trillion square feet of visual construction data, an area about the combined size of California, Arizona, New Mexico, Texas, and Louisiana. And it goes well beyond raw reality capture. That data includes tens of millions of user-generated annotations. Image Segmentation, Construction Progress Labeling, and well over 100,000 label safety issues. That data will enable us to create smarter AI solutions that solve genuinely meaningful problems in construction. Once the transaction closes, we plan to immediately cross-sell drone-deployed solutions into our broader customer base and vice versa. We already share nearly 600 mutual customers, including enterprise brands like Skanska and Turner, a substantial number that validates both the organic demand and the clear synergy potential. Beyond this overlap, we estimate that there are several thousand existing customers of Procore who could benefit from a combined offering. As a trusted partner, Procore is well positioned to drive adoption of drone deploy across those customers. As I reflect on the quarter, four key points stand out. First, our core business is performing incredibly well. Second, we have a well-defined strategy to emerge as a leader in the AI era, and I'm excited that DroneDeploy, with its strong AI foundation, will make a significant contribution to that strategy. Next, even as we are implementing our strategy, we continue to improve our operational capabilities as evidenced by our exceptional results in the quarter and our RAISE guidance. And finally, as I speak with customers, I am even more confident in our direction, our ability to execute, and the success of our company. Let me end by thanking my fellow Procorians for their tireless dedication to our customers. And with that, I'll turn the call over to Rachel. Rachel?