Procore Technologies, Inc. (PCOR) | The Buildout — AI Infrastructure
The Verdict
Procore sells subscription construction management software. General contractors, specialty contractors, and project owners use it to run work — estimating and bidding, project management, quality and safety, workforce and equipment, financials, and payments — through one connected platform. Because pricing is tied to each customer's annual construction volume, Procore grows as its customers build more. The AI buildout reaches the company mostly as customer mix: data center and AI-factory projects run through the same modules everyone buys, and a partnership with NVIDIA aims to extend that. Procore is also trying to sell agentic AI for construction itself, but that layer is early.
| Market Cap | — |
| Revenue (TTM) | $1.4B |
| Revenue Growth | +15.4% |
| EBITDA Margin (TTM) | 4.2% |
| Net Cash | $597M |
| Earnings Beats | 5 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Pricing is tied to each customer's annual construction volume, so revenue tracks how much they build. Trinity Group, a long-time customer, expanded its volume commitment to $1.1B, a 6x increase.
- Large-customer momentum: 6-plus figure ARR wins grew 24% y/y, which management described as “a meaningful shift towards larger-scale engagements.”
- Profitability is improving: Q1 FY2026 non-GAAP operating margin was 17%, up 650 bps y/y, and FY2026 is guided to 18%–18.5%.
- Backlog is solid: total remaining performance obligations were $1.56B at 2026-03-31, up 21% y/y, with 65% expected to be recognized within 12 months.
- The balance sheet carries net cash — $494.4M of cash plus $161.5M of short-term investments against $58.8M of total debt at 2026-06-30, before an $825M convertible priced in August 2026.
What We’re Watching
- AI revenue is not separately disclosed. Datagrid was “immaterial” in Q1, and Procore AI ran on a “very small and intentionally so” overlay sales team; the broader rollout is targeted for Q3 FY2026.
- Reported current RPO grew 21% y/y but was flattered by longer average contract duration; normalized growth matched revenue and ARR. Management expects convergence about 3–4 quarters after duration stabilizes.
- The CFO guided to “modest headwinds to gross margin given the increased compute expenses,” with an offset from internal AI efficiency expected in 2027 and beyond; the magnitude is not disclosed.
- Competition: the source's neighbor read-through describes Autodesk's construction business as growing “north of 20%,” above Procore's 15%–16% organic rate.
The core business is intact: revenue is steady in the mid-teens, margins are expanding, and large-customer commitments are rising. The AI thesis is not yet in the numbers — Datagrid was immaterial, Procore AI runs on a deliberately small overlay team, and no AI revenue is disclosed. Two post-quarter decisions, a roughly $845M cash acquisition of DroneDeploy and an $825M 0.00% convertible due 2031, show management is willing to spend on the roadmap, but neither was telegraphed and no use of proceeds was given. The open question is whether the Q3 FY2026 sales rollout turns agentic AI into a measurable revenue line, or the narrative keeps outrunning the numbers.
Earnings Beat
Procore's Q2 FY2026 revenue was $375.2M, up from $323.9M a year earlier — about 15.8% growth. Gross margin was 79.9%. Net income turned positive at $16.9M, against a $21.1M net loss in the year-ago quarter.
| Metric | Q2 FY2026 | Q1 FY2026 | Q2 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $375M | $359M | $324M | +15.8% |
| Gross margin | 79.9% | 80.1% | 79.1% | +80bps |
| EBITDA | $35M | $24M | −$3M | −1270.0% |
| EPS | $0.11 | $-0.06 | $-0.14 | −178.4% |
Datagrid was really immaterial to the overall results. Our organic business continues to grow 15% to 16%.— Rachel Pyles, CFO, 2026-05-05
Management tone: On the most recent earnings call in the source material, Q1 FY2026 (2026-05-05), prepared remarks were confident and AI-forward — the CEO called Procore “the definitive winner in the Agentic AI era” — while the Q&A stayed measured and process-oriented. The CFO volunteered normalization caveats: that current RPO was flattered by longer contract duration, that Datagrid was immaterial, and that compute would bring “modest” gross-margin headwinds. Management defended the guidance shape as “really mechanical.”
Management Guidance
For FY2026, management guided revenue to $1.499B–$1.503B (13.6% growth at the high end), a non-GAAP operating margin of 18%–18.5% (390–440 bps of year-over-year expansion), and a free cash flow margin of 19% (about 280 bps of expansion). Q2 FY2026 guidance, initiated on the same call, was revenue of $364M–$366M and a non-GAAP operating margin of 17.5%–18.5%. Management described the implied second-half weighting as “really mechanical” and said there was “no subliminal message” in the guide, while reiterating a beat-and-raise approach.
Trajectory
Revenue has advanced each quarter — $339M in Q3 FY2025, $349M in Q4, $359M in Q1 FY2026, and $375M in Q2 FY2026 — holding a mid-teens year-over-year rate (15.7% in Q1, 15.8% in Q2). Growth is steady rather than accelerating. Margins are the improving part: gross margin sits near 80% and is roughly flat, while operating margin expanded about 550 bps and EBITDA margin about 520 bps on a trailing basis. Management's FY2026 guidance implies 13.6% revenue growth at the high end.
The Model
The model projects FY+1 revenue of $1,521M and EBITDA of $143M, a 9.4% margin, and FY+2 revenue of $1,770M and EBITDA of $278M, a 15.7% margin. The near-term figure rests on the mid-teens revenue base and management's FY2026 guidance; the FY+2 step-up in margin depends on AI monetization, the Q3 FY2026 sales rollout, and internal AI efficiency, none of which is measured yet.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $1.3B | $1.5B | $1.8B |
| YoY Growth | — | +15.0% | +16.4% |
| EBITDA | −$11M | $143M | $278M |
| EBITDA Margin | -0.9% | 9.4% | 15.7% |
Projections are the median of 5 independent model runs. The model’s revenue sits 4.1% above analyst consensus.
For FY2026, management guided revenue to $1.499B–$1.503B (13.6% growth at the high end), a non-GAAP operating margin of 18%–18.5% (390–440 bps of year-over-year expansion), and a free cash flow margin of 19% (about 280 bps of expansion). Q2 FY2026 guidance, initiated on the same call, was revenue of $364M–$366M and a non-GAAP operating margin of 17.5%–18.5%. Management described the implied second-half weighting as “really mechanical” and said there was “no subliminal message” in the guide, while reiterating a beat-and-raise approach.
What Could Go Right — and Wrong
- Procore AI converts from pilot to paying product after the Q3 FY2026 sales rollout, adding a consumption-based revenue stream.
- Large-customer momentum continues — 6-plus figure ARR wins grew 24% y/y.
- Construction demand stays stable and volume commitments keep expanding, as with Trinity Group's 6x move to $1.1B.
- DroneDeploy integrates cleanly and adds a visual-intelligence layer across more than 3 million jobsites in 180+ countries.
- Internal AI efficiency delivers the expected opex leverage in 2027 and beyond, offsetting compute costs.
- AI revenue stays immaterial — the Q3 sales enablement slips, or customers resist consumption-based pricing.
- Compute costs compress gross margin more than the “modest” headwind the CFO guided to.
- Normalized CRPO converges below revenue growth, implying weaker underlying momentum than the reported figures suggest.
- Competition intensifies and pressures growth or pricing — Autodesk's construction business is described as growing “north of 20%.”
- DroneDeploy integration creates friction or accounting dilution, and the $825M convertible's use of proceeds stays undisclosed.
Looking Ahead
The next twelve months turn on whether Procore's AI products start appearing in revenue. Management has committed to having much of its sales organization selling Procore AI in Q3 FY2026, and to moving agentic solutions to capacity-based, consumption-based pricing, with no date given for that pricing rollout. The DroneDeploy integration roadmap, government contracts following FedRAMP Moderate authorization, and European upmarket wins for the CDE product are all undated. Management places the internal-AI efficiency benefit in 2027 and beyond.
- Q3 FY2026Procore AI sales rollout — Much of the sales org selling Procore AI; tests monetization.
- 3–4 quarters after duration stabilizesCRPO/revenue convergence — Normalized CRPO expected to meet revenue growth, per the CFO.
- 2027 and beyondInternal AI leverage — R&D-led efficiency expected to help the financial model.
- Longer termFedRAMP government channel — Authorization obtained; management cites contract latency.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $1.2B | $1.3B | $1.4B | +14.8% |
| Gross Margin | 82.2% | 79.3% | 79.8% | 285bps |
| EBITDA | −$47M | −$11M | $60M | +75.8% |
| EBITDA Margin | -4.1% | -0.9% | 4.2% | +320bps |
| Net Income | −$106M | −$101M | −$39M | +4.9% |
| Free Cash Flow | $127M | $263M | $294M | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)79.8%
- EBITDA Margin (TTM)4.2%
- Net Margin (TTM)-2.7%
- ROIC-6.6%
- FCF Conversion489.5%
- SBC / Revenue17.5%
The Company
Procore sells construction management software as a subscription platform; its 10-K describes it as “the leading global provider of construction management software.” The platform is organized into four product groups — Preconstruction, Project Execution, Resource Management, and Financial Management — covering estimating and bidding, project management, quality and safety, workforce and equipment, project financials, and payments. Pricing is based on each customer's annual construction volume and product mix, so revenue rises as customers build more.
Procore runs a cloud platform, not a factory. The 10-K says it hosts its platform and serves customers “primarily using AWS.” Its physical footprint is leased offices: a roughly 97,000-square-foot headquarters in Carpinteria, California, plus offices in Austin, Tampa, New Orleans, Sydney, Edmonton, Toronto, Heredia, Cairo, London, Bangalore, Pune, Dublin, and Dubai. The company reports nearly 3 million active users and operates as a single reporting segment.
Business Segments
Competitive Landscape
Procore competes with established construction and design software vendors. The source's competitor set, from its wiring map, includes Autodesk, Bentley Systems, Oracle (including Aconex), Trimble, and Roper. Autodesk's own 10-K names Procore as a competitor. The clearest competitive datapoint is growth: the neighbor read-through describes Autodesk's construction business as growing “north of 20%,” above Procore's 15%–16% organic rate. The source notes competition in construction software is intensifying.
- Autodesk (ADSK)The source tags it as documented and spider; Autodesk's own 10-K names Procore as a competitor. Neighbor read-through: construction business growing “north of 20%.”
- Bentley Systems (BSY)Tagged in the source's competitor map; not discussed by Procore.
- Oracle (ORCL)Tagged in the source's competitor map, including Aconex construction project management; not discussed by Procore.
- Trimble (TRMB)Tagged in the source's competitor map as a construction ERP and software-hardware ecosystem; not discussed by Procore.
- Roper (ROP)Tagged in the source's competitor map for construction bidding and project intelligence. Not discussed.
Supply Chain
Procore is a software layer, so its supply chain is hosting and data rather than parts. The 10-K says it hosts its platform and serves customers “primarily using AWS.” No neighbor in the source's supply-chain intelligence names Procore directly.
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