What Management Said
Read the full Q2 2026 transcript ↗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. 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 have taken concrete steps towards that vision through both organic development and two targeted acquisitions, including our agreement to acquire DroneDeploy, which we announced yesterday. This quarter's outstanding results and our raised expectations for the year reflect that discipline.
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. 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. 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. This company will use Procore as its system of record for the entire global construction program, including project execution, document control, and cost management. Since then, we have expanded our market leadership, evolving from a system of record to a global system of collaboration. To accelerate our ambitious roadmap, we are driving organic innovation alongside strategic acquisitions.
What went well
- Procore delivered an outstanding quarter with 15.8% year-over-year revenue growth to $375 million, beating the high end of guidance by ~2.5%, and reached its first-ever quarter of GAAP operating profitability.
- Non-GAAP operating margin expanded 800 basis points year over year to 21.5% ($81 million operating income), and free cash flow rose 507% to $65 million, demonstrating the model's growing operating leverage.
- Large-deal execution was strong and multifaceted — high-profile new logos domestically and internationally plus accelerating data-center wins — including a contract for the King Salman International Airport in Saudi Arabia and Procore's largest-ever EMEA deal (~$7 million with a European hyperscale AI data-center builder).
- International revenue grew 23% year over year (19% constant currency), and CRPO year-over-year growth accelerated 100 basis points, driven primarily by stronger underlying bookings.
- Procore AI momentum built quickly: Datagrid was integrated and Procore AI reached general availability with a library of 20 purpose-built construction agents, early adopters including Haskell and Level 10, and Consigli scaling from three test projects to 50 after cutting a 30-minute drawing search to five minutes.
- The company raised full-year guidance for the second straight quarter (revenue, margin and free cash flow) and initiated a FY2027 non-GAAP operating-margin target of 25% — nearly 1,100 basis points of improvement versus FY2025.
What went wrong
- The core U.S. residential and multifamily construction market has decelerated for over two and a half years and turned negative in late 2025, and the end market remains uneven with weakness in sub-sectors like manufacturing (Procore still grew mid-teens, well ahead of the market).
- GAAP operating margin was just 1.2% and GAAP diluted EPS $0.11 — profitability is only in its early innings despite the non-GAAP strength.
- The $845 million all-cash DroneDeploy acquisition carries a near-term margin headwind that Procore must absorb, and is being funded partly with committed bridge financing while a long-term capital structure is finalized.
- Full-year guidance and the FY2027 margin target exclude any DroneDeploy contribution, leaving the combined-company financial picture to be detailed after the deal closes later this year.
- Q3 revenue guidance implies growth decelerating to about 13.3% at the high end (from 15.8% in Q2), and gross margin is holding in the mid-80s as digital-coworker compute scales.
Guidance Changes
| Metric | Period | Current guidance |
|---|---|---|
| Revenue | Q3 2026 | $382M-$384M (13.3% YoY growth at the high end) |
| Non-GAAP operating margin | Q3 2026 | 19%-19.5% |
| Revenue | FY2026 | $1.510B-$1.514B (raised; 14.5% YoY at the high end) |
| Non-GAAP operating margin | FY2026 | 18.5%-19% (raised 50 bps; 440-490 bps YoY expansion) |
| Free cash flow margin | FY2026 | 19.5% (raised 50 bps; ~310 bps YoY expansion) |
| Non-GAAP operating margin | FY2027 | 25% initiated (~1,100 bps improvement vs FY2025); a cost-based, not revenue-based, commitment |
| DroneDeploy acquisition | close later in 2026 | $845M cash (~$78M TTM revenue); accretive to organic revenue growth, no change to FY2026/FY2027 margin outlook |
Performance Breakdown
| Metric | YoY | Note |
|---|---|---|
| Revenue | +15.8% to $375M | Broad-based strength across geographies, stakeholders and customer sizes, led by large-deal execution and data-center wins. |
| GAAP diluted EPS | $0.11 | First quarter of GAAP operating profit (1.2% GAAP operating margin); profitability early in a longer trajectory. |
| Non-GAAP operating margin | 21.5% (+800 bps) | Strong execution and growing inherent operating leverage in the business model. |
| Free cash flow | $65M (+507%) | Revenue growth plus margin expansion and disciplined cost structure. |
| International revenue | +23% (+19% constant currency) | Beachhead expansion (Europe CDE launch, Middle East investment) and large deals like KSIA in Saudi Arabia. |
| CRPO growth | +100 bps acceleration | Primarily stronger underlying bookings, with a smaller benefit from longer average contract duration on large deals. |
| Gross margin | mid-80s% | Expected to stay consistent as Procore optimizes model selection so not every task needs the most expensive AI model. |
Earnings Call Themes & Trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| AI-native construction platform | System of record to system of collaboration | Procore is embedding AI into the platform core to build 'digital coworkers' addressing a ~350,000-worker U.S. labor shortage; the strategy centers on perception (eyes and ears), reasoning and action, anchored by ~3 million active users, secure infrastructure, network effects and a focus on moving work forward. | — |
| DroneDeploy acquisition | Longtime partner | The $845M deal adds 'visual intelligence' (drones, ground robots, fixed/mobile/wearable cameras) used on 3M+ job sites across 180+ countries, complementary with no overlap, ~600 joint customers (a large cross-sell opportunity), plus three early AI agents and robotics management exposure — the 'perception' layer for digital coworkers. | — |
| Data-center construction tailwind | Emerging strength | Procore is the data-center market leader (nine of the 10 largest North American sites), with U.S. data-center construction spending tripling over three years and ~100 GW to be added 2026-2030; new connected-commissioning/asset workflows and NVIDIA Omniverse 3D digital twins deepen the offering. | — |
| Margin expansion / profitability | Focus on growth | First GAAP operating profit, 800 bps of non-GAAP margin expansion, raised FY2026 guidance and a new 25% FY2027 non-GAAP operating-margin target (~1,100 bps vs FY2025) — framed as a cost-structure commitment with AI efficiency tailwinds and multiple paths to get there. | — |
| International expansion | ~15% of business | Growing via product localization (a Europe-specific common data environment launched this year, well received) and go-to-market build-out under new CRO Walt, with U.S.-consistent product working in the Middle East (KSIA) and CDE-led markets like the U.K./Ireland requiring tailored product. | — |
| Stakeholder and product breadth | GC-centric origins | Owners and specialty contractors now ~40% of business (from a standing start), with stakeholder-specific products (European CDE, owner portfolio/capital-planning) and direct-plus-channel go-to-market countering the perception that Procore is tied only to ENR-400 general contractors. | — |
| Deliberate AI go-to-market | Datagrid integration | A staged limited-availability-to-GA rollout with a small specialist overlay team surfaced a packaging need, answered with low-friction 'starter packs' (ready-to-use submittal/RFI/daily-log agents on a few projects) that ease change management before broadening to the full sales force. | — |
Q&A Summary
DJ Hynes (Canaccord) asked what convinced Procore to own DroneDeploy rather than continue partnering.
Gopal said the transformational AI opportunity requires a 'perception' layer for digital coworkers (collect, reason, act); DroneDeploy brings deep computer-vision technology, a strong culture, ~600 joint customers for immediate cross-sell into thousands of Procore-only accounts, robotics exposure and seamless integration given the longtime partnership.
DJ Hynes (Canaccord) asked whether deeper Procore deployments adopt AI faster and where the most fertile ground is.
Gopal said customers want AI delivered safely within the system they already work in; because they use Procore as their system of collaboration, they adopt Procore AI (built by integrating Datagrid) to tackle problems like labor without every employee becoming an AI expert.
Adam Borg (Stifel) asked for a state of the union internationally and the confidence behind the FY2027 margin target.
Gopal said ~85% of business is domestic and ~15% international, with product localization (Europe CDE) and go-to-market under new CRO Walt driving beachhead expansion (KSIA in the Middle East); Pyles said four months digging into the cost structure gave conviction on the 25% target (a cost, not revenue, comment), with revenue guidance to come early next year.
Daniel Jester (BMO) asked how much of DroneDeploy's product applies to construction versus other verticals, and about AI sales enablement.
Gopal said DroneDeploy sells to both owners and builders, consistent with Procore's end-market view, with technology rooted in visual intelligence focused on the construction build-out use case; on enablement, the deliberate limited-availability rollout and low-friction starter packs prepare the now-broadened sales force to sell AI.
Jason Celino (KeyBanc) asked how DroneDeploy brings Procore closer to the robotics/labor opportunity and why Q2 revenue was so strong.
Gopal said DroneDeploy manages autonomous drones/robots (e.g., scheduled daily site capture) so Procore can expand into robot management (not building robots) as the industry matures; Pyles said the revenue beat and CRPO acceleration came mostly from broad-based bookings strength, with a smaller duration benefit from large deals.
Matthew Martino (Goldman Sachs) asked how new ROI-driven products influence customer willingness to invest amid uneven construction, and about gross margins in the FY2027 target.
Gopal said Procore builds stakeholder-specific products (European CDE, owner portfolio/capital planning) and direct-plus-channel go-to-market across GCs, owners and subs; Pyles said gross-margin components stay consistent over time as Procore optimizes which AI model serves each task.
Dylan Becker (William Blair) asked how stable stakeholder mix supports growth durability and about change management for AI agents.
Gopal said mix has been stable recently but expanded over time (owners/specialty contractors, international upside, AI monetization), giving conviction in durable growth 15+ points above the end market; starter packs provide bite-sized, well-defined deployment that eases change management.
Ken Wong (Oppenheimer) asked whether the AI product gap is now filled after Datagrid and DroneDeploy, and whether the FY2027 margin target leaves room for future M&A.
Gopal said acquisitions accelerate a well-defined AI strategy (build/partner/buy as needed) rather than being the strategy itself, expressing confidence in the team; Pyles said future M&A is screened for strategic and financial fit and the margin target already contemplates that, unchanged by DroneDeploy.
Joe Vruwink (Baird) asked whether owning Datagrid eases the DroneDeploy integration and how visual capabilities grow the TAM.
Gopal cited technical synergy between Datagrid and DroneDeploy; near-term the ~600 joint customers offer immediate cross-sell, while long-term the digital-coworker strategy accesses a different pool of spend (the customer labor budget), expanding TAM beyond traditional construction-management software.
More on Procore Technologies, Inc.
Reported 2026-07-30 · figures from the Procore Technologies, Inc. Q2 2026 earnings call.
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