Procore targets $1.314B revenue for 2025 as new CEO takes helm amid margin expansion

Earnings Call Insights: Procore Technologies, Inc. (PCOR) Q3 2025

MANAGEMENT VIEW

* CEO Craig Courtemanche stated that Q3 delivered "another strong quarter," highlighting 14.5% year-over-year revenue growth and a quarter-over-quarter increase in non-GAAP operating margin to 17%. Courtemanche announced the appointment of Ajei Gopal as the next CEO, effective November 10, with Courtemanche transitioning to Chair of the Board. He emphasized, "Ajei has more than 35 years of proven experience, including leading a multibillion-dollar global technology company and driving shareholder value."
* Courtemanche cited Procore's ability to "surpass $1 trillion in annual construction volume contracted to our platform across all global stakeholders" as a major milestone, reflecting execution and market share gains even in "challenging construction cycles."
* Product innovation was a focal point, with Courtemanche highlighting the "Agentic road map that harnesses our comprehensive and unmatched corpus of proprietary construction data," and new resource management products, with materials management set to launch next year. He stated, "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."
* Courtemanche described the go-to-market model as yielding "higher year-over-year pipeline conversion, improved expansion rates and lower voluntary sales headcount attrition," which contributes to strong customer feedback and recurring large contract wins.
* Matthew Puljiz, Senior Vice President of Finance, reported, "Total revenue in Q3 was $339 million, up 14.5% year-over-year. Our Q3 international revenue grew 14% year-over-year and was impacted by currency headwinds. Q3 non-GAAP operating income was $59 million, representing a non-GAAP operating margin of 17%."
* Puljiz announced a new $300 million share repurchase program for the next year, following $129 million in repurchases year-to-date.

OUTLOOK

* Puljiz provided Q4 2025 guidance of revenue between $339 million and $341 million, representing year-over-year growth of 12% to 13%. Q4 non-GAAP operating margin is expected to be 14.4%.
* For the full year fiscal 2025, revenue guidance was raised to a range of $1.312 billion to $1.314 billion, representing 14% annual growth. Non-GAAP operating margin guidance for the year was raised to 14%, indicating a 400 basis point year-over-year margin expansion.
* Management stated they are "generally comfortable with the Street's revenue dollar estimate per FactSet" for fiscal 2026 and will provide formal guidance after the new CEO's onboarding.

FINANCIAL RESULTS

* Q3 total revenue was $339 million, up 14.5% year-over-year, with international revenue growth of 14% impacted by currency headwinds. Q3 non-GAAP operating income was $59 million, with a non-GAAP operating margin of 17%.
* Current remaining performance obligations (RPO) grew 23% year-over-year, and current deferred revenue grew 14% year-over-year.
* Puljiz noted, "net new ARR growth that was notably faster than revenue growth," and attributed expansion to "outperformance from our owner and specialty contractor motions, strong growth from our mid-market team and continued execution in North America."
* Share count dilution grew 1% year-over-year.

Q&A

* David Hynes, Canaccord: Asked about owners as indicators of market demand and net new ARR growth. Courtemanche responded that "there really has not been a big change in the macro headwinds," but confirmed owners remain a key signal and that a turn in headwinds would eventually benefit Procore, though with a lag to revenue.
* Matthew Martino, Goldman Sachs: Inquired about the data center opportunity and cRPO trends. Courtemanche described data centers as "a small portion of our business" but noted strong Procore presence. Puljiz described renewals as "very healthy" and cRPO as stable to positive.
* Brent Thill, Jefferies: Asked about cRPO growth and go-to-market improvements. Puljiz cited strong execution and "increasing contract duration," while Courtemanche pointed to "customer intimacy" and improved expansion as key outcomes.
* Saket Kalia, Barclays: Sought insight into new CEO's ideas and net revenue retention. Courtemanche emphasized Gopal's operational excellence. Puljiz described churn as "stable" and expansion as "improving," highlighting financials and resource management as product drivers.
* Jason Celino, KeyBanc: Asked about industry digitization and pricing model pilots. Courtemanche highlighted proprietary data's role in AI-driven productivity, while Puljiz reported positive feedback from customers on the new bundled offerings, focused on simplicity rather than financial impact.
* Joseph Vruwink, Baird: Queried about large deal seasonality and cRPO's relationship to future revenue. Puljiz described the Q4 pipeline as "healthy" and maintained the relationship between cRPO and future revenue.
* Joshua Tilton, Wolfe Research: Asked about the new CEO's impact and margin expansion. Courtemanche cited Gopal's experience scaling businesses. Puljiz reaffirmed commitment to margin expansion while maintaining flexibility for new leadership.
* Hoi-Fung Wong, Oppenheimer: Asked about competitive landscape and contract duration. Courtemanche reported no customer mentions of competitors and highlighted excitement around AI. Puljiz attributed longer contract terms mainly to customer-driven needs for flexibility through pooled models.
* Will Hancock, BMO: Asked about demand environment and Q4 guidance. Courtemanche and Puljiz described the macro as stable but challenging, with guidance philosophy unchanged.

SENTIMENT ANALYSIS

* Analysts' tone was neutral to slightly positive, with multiple congratulations to outgoing CEO Courtemanche and enthusiasm for new leadership. Questions focused on operational execution, product innovation, margin development, and macro trends, with little skepticism or pressing on risk factors.
* Management maintained a confident and optimistic tone, especially in prepared remarks, with Courtemanche stating, "I have deep conviction in Procore's future." Puljiz emphasized, "Our optimism is high. Our confidence is high."
* Compared to the previous quarter, both management and analysts retained a positive and steady tone, with some incremental confidence around the new CEO appointment and product roadmap.

QUARTER-OVER-QUARTER COMPARISON

* Guidance was raised for both revenue and operating margin for the full year, compared to a maintained guidance last quarter.
* Revenue growth rate for Q3 was consistent at 14.5% year-over-year (vs. 14% in Q2), and operating margin increased to 17% from 13% in Q2.
* Large deal activity accelerated, with 31% year-over-year growth in 6- and 7-figure deals (vs. 21% in Q2); number of $100,000-plus ARR customers exceeded 2,600, up from 2,500.
* Management tone remained confident, with additional optimism about the CEO transition and the durability of the operating model.
* Analysts' focus shifted somewhat from product innovation and go-to-market transition in Q2 to leadership transition, margin expansion, and large deal activity in Q3.

RISKS AND CONCERNS

* Management noted "no big change in the macro headwinds that are out there," describing the construction market as in a "down cycle" with continued negative growth in key sectors.
* Puljiz clarified that the improvement in non-GAAP operating margin "did include some onetime benefits in G&A, primarily pertaining to facility and tax reimbursements."
* Currency headwinds impacted international revenue growth, with 1 point of headwind in Q3.
* Longer contract durations and pooled models could impact some metrics, but are attributed to customer-driven needs for flexibility.

FINAL TAKEAWAY

Management highlighted Procore's consistent growth and expanding margin profile, driven by product innovation, strong customer relationships, and a resilient go-to-market model. The CEO transition is positioned as a move from strength, with Ajei Gopal set to lead the company into its next phase. The raised full-year guidance, new share repurchase program, and continued large deal wins underscore confidence in sustaining long-term shareholder value, with management committed to further margin improvement and efficient growth.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/pcor/earnings/transcripts]

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