Q2 2026 Procore Technologies Inc Earnings Call

July 30, 2026

Operator: 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.

Speaker #1: Thank you for standing by. My name is Kate, and I'll be your conference operator today. At this time, I would like to welcome everyone to the PROCORE TECHNOLOGIES, INC. FY26 Q2 earnings call.

Speaker #1: 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 Start followed by the number 1 on your telephone keypad.

Speaker #1: If you would like to withdraw your question, press Start 1 again. Thank you. I would now like to turn the call over to Matthew Puljiz, as VP of Finance.

Speaker #1: Please go ahead.

Matthew Puljiz: Good morning, and welcome to Procore's 2026 Q2 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, 30 July 2026.

Speaker #2: Good morning, and welcome to PROCORE's 2026 Q2 earnings call. I'm Matthew Puljiz, SVP of Finance. With me today are Ajay Gopal, President and CEO, and Rachel Piles, CFO.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: 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 30, 2026.

Speaker #2: 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.

Matthew Puljiz: 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. A 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 Ajei.

Speaker #2: 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.

Speaker #2: A 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 Ajay.

Speaker #3: 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.

Ajei Gopal: 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 9 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. 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.

Speaker #3: 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.

Speaker #3: 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.

Speaker #3: 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.

Speaker #3: 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.

Ajei Gopal: 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 life cycle, saving our customers time and money. 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. Even as we've pursued our strategy, we have continued to execute, recruit key personnel, and organize ourselves for 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.

Speaker #3: Saving our customers' time, and money. We have taken concrete steps towards that vision, through both organic development and two targeted acquisitions. Including our agreement to acquire drone deploy which we announced yesterday.

Speaker #3: Even as we've pursued our strategy, we have continued to execute. Recruit key personnel, and organize ourselves for success. This quarter's outstanding results and our raised expectations for the year reflect that discipline.

Speaker #3: 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.

Ajei Gopal: 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.

Speaker #3: 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.

Speaker #3: 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.

Speaker #3: Working with strategic delivery partner TSAMA, KSIA will use Procore to have one connected source of project data from design through delivery, with stronger governance and transparency from the earliest stages.

Ajei Gopal: Working with strategic delivery partner, Tisamo, KSIA will use Procore to have one connected source of project data from design through delivery, with stronger governance and transparency from the earliest 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 US 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.

Speaker #3: 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.

Speaker #3: 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.

Speaker #3: 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.

Speaker #3: Today, we are seeing an uneven end market, with weakness in certain sub-sectors, such as manufacturing, and unprecedented strength in data center construction. Driven by ongoing investments in AI, in the U.S.

Ajei Gopal: Today, we are seeing an uneven end market with weakness in certain sub-sectors, such as manufacturing and unprecedented strength in data center construction, driven by ongoing investments in AI. In the US alone, construction spending in the data center sub-sector 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 benefit to Procore. Of course, any acceleration in data center construction would be an additional tailwind for us. Procore is the market leader in data centers, with nine of the 10 largest North American data center sites using our solutions during construction.

Speaker #3: Alone, construction spending in the data center sub-sector 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.

Speaker #3: The enormous magnitude of spending on data center construction will continue to drive top-line benefit to PROCORE, and, of course, any acceleration in data center construction would be an additional tailwind for us.

Speaker #3: 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 on a 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.

Ajei Gopal: 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 in connected commissioning and asset workflows. Through our NVIDIA partnership, we are streaming Omniverse-powered 3D digital twins of data centers directly inside Procore. In Q2, we closed 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 site spreadsheets with a single standardized audit-ready platform integrated into its ERP.

Speaker #3: 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.

Speaker #3: In Q2, we closed our largest contract in EMEA history, a nearly $7 million agreement with the European company that builds hyperscale AI data centers across Europe, the U.S., and APAC.

Speaker #3: 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 site spreadsheets with a single, standardized audit-ready platform integrated into its ERP.

Speaker #3: 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.

Ajei Gopal: 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. 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.

Speaker #3: 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.

Speaker #3: 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.

Ajei Gopal: 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 US 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 Datagrid 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 enables customers to use construction-specific AI natively and with full context within their existing Procore environment.

Speaker #3: 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.

Speaker #3: Specifically, DataGrid, which joined our portfolio in January, and GrownDeploy, our latest announcement yesterday. After closing the DataGrid acquisition, we focused on technical integration and launched Procore AI through a dedicated specialist team working as an overlay alongside our core sales force.

Speaker #3: Our product enables 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.

Ajei Gopal: 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 in 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.

Speaker #3: 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.

Speaker #3: 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 in three test projects to help with common workflows like reviewing submittals, or drafting RFIs.

Speaker #3: 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.

Speaker #3: 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.

Ajei Gopal: 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 DroneDeploy. I will cover the strategy around DroneDeploy while Rachel will discuss the financial details. As a leader in reality capture and robotic automation, what we are calling visual intelligence, DroneDeploy 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.

Speaker #3: This early success gives us further confidence to make another AI-accelerating acquisition in GrownDeploy. I will cover the strategy around GrownDeploy, while Rachel will discuss the financial details.

Speaker #3: As a leader in reality capture and robotic automation, what we are calling visual intelligence, GrownDeploy bridges the physical construction site with the digital world.

Speaker #3: 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.

Speaker #3: 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.

Ajei Gopal: 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 docked 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 longtime 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.

Speaker #3: Their robotic solutions enable robots and docked drones to conduct scheduled, fully autonomous missions, launching, capturing, and uploading data without on-site personnel. GrownDeploy 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.

Speaker #3: It is important to note that Procore and GrownDeploy offer complementary solutions that do not overlap. As long-time partners, we have market-tested integrations that joint customers are using today.

Speaker #3: 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.

Speaker #3: 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, GrownDeploy has recently developed three AI agents to enable customers to track progress, flag safety risks, and monitor asset conditions.

Ajei Gopal: 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.

Speaker #3: 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.

Speaker #3: 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.

Speaker #3: 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.

Speaker #3: 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.

Speaker #3: With GrownDeploy 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.

Ajei Gopal: 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 over-scheduled 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.

Speaker #3: 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.

Speaker #3: 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.

Speaker #3: Such a system will enable us to deliver digital coworkers for 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.

Ajei Gopal: Such a system will enable us to deliver digital coworkers to the field and in the back office to 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. 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 labeled safety issues.

Speaker #3: 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.

Speaker #3: Access to relevant data separates a proof-of-concept from a mission-critical AI offering. GrownDeploy has captured 20 trillion square feet of visual construction data, an area about the combined size of California, Arizona, and New Mexico, Texas, and Louisiana.

Speaker #3: 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.

Speaker #3: 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 GrownDeploy's solutions into our broader customer base and vice versa.

Ajei Gopal: 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 DroneDeploy 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 DroneDeploy across those customers. As I reflect on the quarter, four key points stand out. First, our core business is performing incredibly well.

Speaker #3: 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.

Speaker #3: 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 GrownDeploy across those customers.

Speaker #3: 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.

Ajei Gopal: Second, we have a well-defined strategy to emerge as a leader in the AI era. 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 raised guidance. 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. With that, I'll turn the call over to Rachel. Rachel?

Speaker #3: And I'm excited that GrownDeploy, 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 raised guidance.

Speaker #3: And finally, as I speak with customers, I'm even more confident in our direction, our ability to execute, and the success of our company. Let me end by thanking my fellow PROCOREans for their tireless dedication to our customers.

Speaker #3: And Rachel. Rachel?

Speaker #1: Thanks, Ajay, and thanks everyone for joining us. Before I get into the results, you will notice we are introducing a new supplemental earnings presentation this quarter, which can be found alongside our press release on our investor relations website.

Rachel Pyles: Thanks, Ajei, and thanks everyone for joining us. Before I get into the results, you will notice we are introducing a new supplemental earnings presentation this quarter, which can be found alongside our press release on our investor relations website. We had an excellent Q2, beating the high end of our revenue guidance by approximately 2.5% and delivering our Q1 of GAAP operating profitability. Total revenue in Q2 was $375 million, up 15.8% year over year. Our Q2 international revenue grew 23% year over year or 19% on a constant currency basis. Q2 non-GAAP operating income was $81 million, representing a non-GAAP operating margin of 21.5%, up 800 basis points year over year, and free cash flow was $65 million, up 507% year over year.

Speaker #1: We had an excellent Q2. Beating the high end of our revenue guidance by approximately 2.5%, and delivering our first quarter of gap operating profitability.

Speaker #1: Total revenue in Q2 was $375 million, up 15.8% year over year. Our Q2 international revenue grew 23% year over year, or 19%, on a constant currency basis.

Speaker #1: Q2 non-gap operating income was $81 million, representing a non-gap operating margin of 21.5%, up 800 basis points year over year. And free cash flow was $65 million, up 507% year over year.

Speaker #1: We ended Q2 with broad base momentum, driven by strong operational performance and robust demand across our portfolio. Large deal execution led the way. We are seeing customers increasingly commit to larger, more strategic partnerships with us, which speaks to the critical role we play in their operations.

Rachel Pyles: We ended Q2 with broad-based momentum, driven by strong operational performance and robust demand across our portfolio. Large deal execution led the way. We are seeing customers increasingly commit to larger, more strategic partnerships with us, which speaks to the critical role we play in their operations. When we look under the hood of the large deal performance, the strength was multifaceted. We gained significant traction landing high-profile new logos across both domestic and international markets while rapidly accelerating our momentum in large-scale data center opportunities. This ability to win across multiple vectors gives us confidence as we head into the back half of the year. Our strength in the quarter also contributed to improvement in CRPO, where our year-over-year growth rate accelerated by 100 basis points. The primary driver of this quarter's acceleration was stronger underlying booking performance.

Speaker #1: When we look under the hood of the large deal performance, the strength was multifaceted. We gained significant traction, landing high-profile, new logos, across both domestic and international markets, while rapidly accelerating our momentum in large-scale data center opportunities.

Speaker #1: This ability to win across multiple vectors gives us confidence as we head into the back half of the year. Our strength in the quarter also contributed to improvement in CRPO, where our year-over-year growth rate accelerated by 100 basis points.

Speaker #1: The primary driver of this quarter's acceleration was stronger underlying bookings performance. CRPO also benefited from an increase in our average contract duration. When normalizing CRPO, the year-over-year growth remains highly consistent with both our Q2 revenue growth and ending ARR growth.

Rachel Pyles: CRPO also benefited from an increase in our average contract duration. When normalizing CRPO, the year-over-year growth remains highly consistent with both our Q2 revenue growth and ending ARR growth. As a reminder, once contract duration stabilizes, reported and normalized CRPO growth will eventually converge with revenue growth. Turning to profitability, we are pleased with the margin expansion delivered this quarter, which is reflected in both our non-GAAP and GAAP results. The latter reflecting the company's first quarter of GAAP operating profit. This reflects not only strong execution across our teams, but also the growing inherent operating leverage in our business model. This quarter's performance is an initial step in a broader trajectory of profitable growth. Looking ahead, we are committed to driving sustained efficiency. Specifically, we are initiating FY27 guidance for non-GAAP operating margin at 25%, which would represent nearly 1,100 basis points of improvement versus FY25.

Speaker #1: As a reminder, once contract duration stabilizes reported and normalized CRPO growth will eventually converge with revenue growth. Turning to profitability, we are pleased with the margin expansion delivered this quarter, which is reflected in both our non-gap and gap results.

Speaker #1: The latter reflects the company's first quarter of GAAP operating profit. This reflects not only strong execution across our teams, but also the growing inherent operating leverage in our business model.

Speaker #1: This quarter's performance is an initial step in a broader trajectory of profitable growth, looking ahead we are committed to driving sustained efficiency, specifically we are initiating FY27 guidance for non-gap operating margin at 25%, which would represent nearly $1,100 basis points of improvement versus FY25.

Speaker #1: As we scale further, we will continue to optimize our cost structure which includes tailwinds from AI efficiencies. We intend to build on the significant margin expansion we've delivered over the past few years carrying that same upward momentum into the future.

Rachel Pyles: As we scale further, we will continue to optimize our cost structure, which includes tailwinds from AI efficiencies. We intend to build on the significant margin expansion we've delivered over the past few years, carrying that same upward momentum into the future. Next, I want to discuss our exciting agreement to acquire DroneDeploy for $845 million in cash. We approach M&A with a high bar for both strategic alignment and financial rigor. We selectively evaluate targets that can accelerate our strategy but maintain strict discipline by ensuring every deal is financially accretive to our business over time. That dual focus on strategic acceleration and financial returns remains central to our capital allocation philosophy. As Ajei detailed, this acquisition represents an important component of our AI strategy, and we see significant synergy opportunities across the combined businesses that will directly benefit customers.

Speaker #1: Next, I want to discuss our exciting agreement to acquire GrownDeploy for $845 million in cash. We approach M&A with a high bar for both strategic alignment and financial rigor.

Speaker #1: We selectively evaluate targets that can accelerate our strategy but maintain strict discipline by ensuring every deal is financially accretive to our business over time.

Speaker #1: That dual focus on strategic acceleration and financial returns remains central to our capital allocation philosophy. As Ajay detailed, this acquisition represents an important component of our AI strategy, and we see significant synergy opportunities across the combined businesses that will directly benefit customers.

Speaker #1: To give you a sense of scale, GrownDeploy has generated approximately $78 million in trailing 12-month revenue. We expect this transaction to be accretive to organic revenue growth and importantly we expect to absorb their near-term margin headwind with no changes to the FY26 and FY27 margin outlook we have shared today.

Rachel Pyles: To give you a sense of scale, DroneDeploy has generated approximately $78 million in trailing 12-month revenue. We expect this transaction to be accretive to organic revenue growth, and importantly, we expect to absorb their near-term margin headwind with no changes to the FY26 and FY27 margin outlook we have shared today. We remain confident in our multi-year margin expansion roadmap. In terms of funding, we have arranged committed bridge financing to fund a majority of the purchase price while we evaluate and finalize our long-term capital structure solution in the most EPS-accretive manner. Because we expect the deal to close later this year, we will provide formal financial details along with any relevant capital updates at the appropriate time. With that, let's move on to our outlook. To reiterate, this outlook represents our organic business and does not reflect any contributions from DroneDeploy.

Speaker #1: We remain confident in our multi-year margin expansion roadmap. In terms of funding, we have arranged committed bridge financing to fund a majority of the purchase price while we evaluate and finalize our long-term capital structure solution in the most EPS-accretive manner.

Speaker #1: Because we expect the deal to close later this year, we will provide formal financial details along with any relevant capital updates at the appropriate time.

Speaker #1: With that, let's move on to our outlook. And to reiterate, this outlook represents our organic business and does not reflect any contributions from GrownDeploy.

Speaker #1: For the third quarter of 2026, we expect revenue between $382 million and $384 million representing year-over-year growth of 13.3% at the high end. Q3 non-gap operating margin is expected to be between 19 to 19.5%.

Rachel Pyles: For Q3 2026, we expect revenue between $382 million and $384 million, representing year-over-year growth of 13.3% at the high end. Q3 non-GAAP operating margin is expected to be between 19% to 19.5%. For the full year 2026, we are raising our revenue guide to a range of $1.51 billion to $1.514 billion, representing total year-over-year growth of 14.5% at the high end. We are also raising our non-GAAP operating margin guidance for the year by 50 basis points to be between 18.5% and 19%, which implies year-over-year margin expansion of 440 to 490 basis points. Finally, we are raising our free cash flow margin guidance by 50 basis points to 19.5%, which implies year-over-year free cash flow margin expansion of approximately 310 basis points.

Speaker #1: For the full year 26, we are raising our revenue guide to a range of $1.51 billion to $1.514 billion representing total year-over-year growth of 14.5% at the high end.

Speaker #1: We are also raising our non-gap operating margin guidance for the year by 50 basis points to be between 18.5 and 19%, which implies year-over-year margin expansion of 440 to 490 basis points.

Speaker #1: Finally, we are raising our free cash flow margin guidance by 50 basis points to 19.5%, which implies year-over-year free cash flow margin expansion of approximately 310 basis points.

Speaker #1: It is important to note that we are confident we can maintain our margin guidance post the closing of our acquisition of GrownDeploy. In summary, we delivered an excellent quarter that highlights both our top-line growth and expanding margin profile.

Rachel Pyles: It is important to note, we are confident that we can maintain our margin guidance post the closing of our acquisition of DroneDeploy. In summary, we delivered an excellent quarter that highlights both our top-line growth and expanding margin profile. By pairing our underlying business momentum with the synergistic acquisition of DroneDeploy, which bolsters our AI strategy, we are setting up the business for sustained, profitable growth. We remain focused on relentless execution and building on this momentum to generate compounding free cash flow per share over the long term. With that, let's turn it over to the operator for Q&A.

Speaker #1: By pairing our underlying business momentum with the synergistic acquisition of GrownDeploy, which bolsters our AI strategy, we are setting up the business for sustained, profitable growth.

Speaker #1: We remain focused on relentless execution and building on this momentum to generate compounding free cash flow per share over the long term. With that, let's turn it over to the operator for Q&A.

Speaker #2: At this time, I would like to remind everyone in order to ask a question for us to start then the number one on your telephone keypad.

Operator: At this time, I would like to remind everyone, in order to ask a question, press star then the number one on your telephone keypad. We request to limit yourselves to one question and one follow-up. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of DJ Hynes with Canaccord. Your line is open.

Speaker #2: We request to limit yourselves to one question in one follow-up. We will pause for just a moment to first question comes from the line of Daisy Hines with Canaccord, your line is open.

Speaker #3: Hey, thank you guys. Congrats on the nice quarter and the exciting acquisition. Ajay, maybe we can start with GrownDeploy. I'm just curious what convinced you that that business was an asset PROCOR needed to own rather than continue to partner with.

DJ Hynes: Hey, thank you, guys. Congrats on the nice quarter, and the exciting acquisition.

Rachel Pyles: Thanks a lot.

Ajei Gopal: Thanks a lot.

DJ Hynes: Ajei, maybe we can start with DroneDeploy. I'm just curious what convinced you that that business was an asset Procore needed to own rather than continue to partner with. Was it the pace of AI innovation? Was it what you saw with customer demand? Something else? I'm just curious, kind of the motivation behind the deal.

Speaker #3: I mean, was it the pace of AI innovation? Was it what you saw with customer demand? Something else? I'm just curious kind of the motivation behind the deal.

Speaker #4: Sure. I mean, that's a great question. Look, we are seeing right now—I think it's stating the obvious—we're obviously seeing a profound transformational opportunity in the industry.

Ajei Gopal: Sure. That's a great question. Look, we are seeing right now, I think it's stating the obvious. We're obviously seeing a profound transformational opportunity in the industry. I think AI is making an enormous impact on a number of different industries. Certainly, we see an opportunity for us to be able to create this next generation, AI-centric, AI-first construction application, which we believe will have tremendous impact on our customers. As we start to lay out the strategy of what we needed to do, it became very clear that the perception piece of it was something that needed to be part of our strategy towards delivering digital coworkers. When you think about the concept of a coworker, the whole idea is to be able to collect information, reason about it, and act.

Speaker #4: I think AI is making an enormous impact on a number of different industries and certainly we see an opportunity for us to be able to create this next generation AI-centric, AI-first construction application which we believe will have tremendous impact on our customers.

Speaker #4: And as we start to lay out the strategy of what we needed to do, it became very clear that the perception piece of it was something that needed to be part of our strategy towards delivering digital coworkers.

Speaker #4: I mean, when you think about the concept of a coworker, the whole idea is to be able to collect information, reason about it, and act and one aspect of that collection was something that we that aspect of perception was something that we needed to add into our business.

Ajei Gopal: One aspect of that collection was something that That aspect of perception was something that we needed to add into our business. Obviously, when you look at the technology that DroneDeploy had developed, we are longtime partners. We understand how to work with them. They have a great culture. They have deep technology. They have really great people. We saw that opportunity to be able to integrate them into our organization very seamlessly. We had, as I mentioned in my prepared remarks, we have something like 600 or thereabouts, combined customers. Having seen success at those customers, that gave us confidence, and certainly our diligence work as well gave us confidence that we have an opportunity post-close to be able to introduce DroneDeploy in the short term directly into our customer base.

Speaker #4: And obviously when you look at the technology that GrownDeploy had developed, we a long time partners. We understand how to work with them. They have a great culture.

Speaker #4: They have deep technology. They have really great people. And we saw that opportunity to be able to integrate them into our organization very seamlessly.

Speaker #4: We had, as I mentioned in my prepared remarks, we have something like 600 or thereabouts combined customers. And having seen success at those customers, that gave us confidence and certainly our diligence work as well gave us confidence that we have an opportunity post-close to be able to introduce GrownDeploy in the short term directly into our customer base we have thousands of customers who are not using GrownDeploy today and that represents incremental opportunity.

Ajei Gopal: We have thousands of customers who are not using DroneDeploy today, that represents incremental opportunity. We saw as part of this acquisition, we saw the opportunity to not only drive our long-term strategic direction towards creating digital coworkers with some great technology, we also saw the opportunity in the short term to be able to achieve some of the synergies that I think are relevant in an acquisition and a strategic acquisition of this nature. I'd also make the point about robotics. This is something, certainly we all believe that robotics has a future to play on the construction side. Obviously, DroneDeploy has investments in robotics, and that exposes us to the future of robotics as well. There are a number of areas, where we were very excited about this technology, very excited about the company, great partner.

Speaker #4: So we saw as part of this acquisition, we saw the opportunity to not only drive our long-term strategic direction towards creating digital coworkers, with some great technology, we also saw the opportunity in the short term to be able to achieve some of the synergies that I think are relevant in an acquisition and a strategic acquisition of this nature.

Speaker #4: I'd also make the point about robotics. And this is something certainly we all believe that robotics has a future to play on the construction side.

Speaker #4: And obviously GrownDeploy has investments in robotics and that exposes us to the future of robotics as well. So there are a number of areas where we were very excited about this technology, very excited about the company, great partner, but certainly the opportunity right now to build this AI native application for the future is on us.

Ajei Gopal: Certainly the opportunity right now to build this AI-native application for the future is on us. It is right in front of us. We have a great strategy. We have great momentum, and the ability to execute that is something that we value and we were excited about.

Speaker #4: It's right in front of us. We have a great strategy. We have great momentum. And the ability to execute that is something that we value and we were excited about.

Speaker #3: Yeah, yeah, makes sense. Maybe we could zoom out with like a bigger picture AI question. I'm curious, if you started to see any relationship between platform maturity and kind of readiness for AI adoption.

DJ Hynes: Yeah. Makes sense. Maybe we could zoom out with a bigger picture AI question. I am curious if you started to see any relationship between platform maturity and kind of readiness for AI adoption. For example, are customers with deeper Procore deployments adopting AI more quickly, or is demand kind of consistent across the installed base? I am just curious where you see the most fertile hunting ground in the early days of AI expansion.

Speaker #3: For example, like are customers with deeper PROCOR deployments adopting AI more quickly or is demand kind of consistent across the installed base? I'm just curious kind of where you see the most fertile hunting ground in the early days of AI expansion.

Speaker #4: Well, I think it's pretty clear to say that everyone I mean, you have to be living under a rock to not have heard about AI and the opportunity to impact your organization.

Ajei Gopal: Well, I think it is pretty clear to say that everyone. You have to be living under a rock to not have heard about AI and the opportunity to impact your organization. Certainly, our customers are very sophisticated, and our customers have all tried to understand what the impact of AI could be on their organization. As you dig into it, the path forward becomes very clear. Our customers recognize, as frankly we do in our own IT infrastructure when we think about our own applications, when we are deploying AI, we are relying on people and vendors that we have used in the past. So when we want, for example, AI in our HR systems, we are going to use our HRIS and leverage that vendor. In our case, with respect to Procore, our customers are using Procore as a system of collaboration.

Speaker #4: And certainly our customers are very sophisticated and our customers have all tried to understand what the impact of AI could be on their organization.

Speaker #4: But as you dig into it, it becomes the path forward becomes very clear. Our customers recognize as frankly we do in our own IT infrastructure when we think about our own applications, when we're deploying AI, we're relying on people and vendors that we've used in the past.

Speaker #4: And so when we want, for example, HR AI in our HR systems, we're going to use our HRIS and leverage that vendor. In our case, with respect to PROCOR, our customers are our customers are using PROCOR as a system of collaboration.

Speaker #4: They're using PROCOR as a system within which they operate their business. And so when we talk about digital coworkers and the opportunity to go after a fundamental problem such as saving, for example, labor, that resonates as long as it works in the system within which they're used to working.

Ajei Gopal: They are using Procore as a system within which they operate their business. When we talk about digital coworkers and the opportunity to go after a fundamental problem such as saving, for example, labor, that resonates as long as it works in the system within which they are used to working. That is one of the reasons why we invested in making sure that our AI capabilities are integrated into Procore. That is the work we did, certainly when Datagrid came on board. It was integrating Datagrid into Procore to create this Procore AI capability that we just made available generally to the market. That is really what I think customers are looking for.

Speaker #4: And so that's one of the reasons why we invested in making sure that our AI capabilities are integrated into PROCOR. And that's the work we did certainly when Datagrid came on board.

Speaker #4: It was integrating Datagrid into PROCOR to create this PROCOR AI capability that we just made available generally to the market. So that's what that's really what I think customers are looking for.

Speaker #4: It's can I take advantage of AI, but can I do so in a safe and secure business so I don't have all my employees don't have to become AI experts, but I can get the benefit of that in the context of the work that I'm doing.

Ajei Gopal: It's can I take advantage of AI, but can I do so in a safe and secure way, in a way that's convenient for my business, so I don't have all my employees don't have to become AI experts, but I can get the benefit of that in the context of the work that I'm doing. That's what we're trying to roll out, and make our customers successful.

Speaker #4: And that's what we're trying to roll out and make our customers successful.

Speaker #1: Your next question comes from the line of Adam Werg with Steve Ellier. Line is open.

Operator: Your next question comes from the line of Adam Borg with Stifel. Your line is open.

Speaker #3: Awesome. And thanks so much for taking the question. Maybe just internationally, it was great to hear about this large airport deal in Saudi Arabia.

Adam Borg: Awesome, thanks so much for taking the question. Maybe just internationally, it was great to hear about this large airport deal in Saudi Arabia. Then you talked about the largest EMEA deal ever. Maybe talk a little bit more about a state of the union of what you're seeing in that region, and how you think about the opportunity going forward. Thanks.

Speaker #3: And then you talked about the largest immediate deal ever. Maybe talk a little bit more about like a state of the union of what you're seeing in that region and how you think about the opportunity going forward.

Speaker #3: Thanks.

Speaker #4: Yeah, look, obviously we have a business which is primarily focused on the domestic market and about 85% of our business is domestic and about 15% approximately of our business is international.

Ajei Gopal: Yeah, look, obviously we have a business which is primarily focused on the domestic market, and about 85% of our business is domestic, and about 15% approximately of our business is international. We've seen an opportunity to continue to expand internationally. One of the key things as we think about international. Well, actually, there are two key things. One is product, and one is, do we have the right go-to-market motion? Walt, who recently joined our company, as the CRO, some of you know him. Walt has a great deal of experience in being able to build out international go-to markets, especially in a vertically-enabled software business such as ours. What we're seeing is really a couple of different kinds of international customers or international geographies. Let's take UK, Ireland, for example.

Speaker #4: And we've seen an opportunity to continue to expand internationally. And one of the key things as we think about international, well, actually there are two key things.

Speaker #4: One is product and one is do we have the right do we have the right go-to-market motion? Walt who recently joined our company, as the CRO, some of you know him, Walt has a great deal of experience in being able to build out international go-to-markets.

Speaker #4: Especially in a vertically enabled software business such as ours, what we're seeing is really a couple of different kinds of international customers or international geographies.

Speaker #4: So let's say UK, Ireland, for example. So UK, Ireland, there are some product differences between the North American market and say UK, Ireland and other parts of Europe.

Ajei Gopal: UK, Ireland, there are some product differences between the North American market and, say, UK, Ireland, and other parts of Europe. In Europe, the customers are CDE-led, so they require a common data environment within which they can work. That's an important aspect, and there's some very specific requirements in the market. This year, we launched a CDE specifically for Europe, and we have seen very positive customer feedback as a result of that. That gives me a lot of confidence in our strategy of being able to establish beachheads in geographies and expand. There are other geographies where the US product that we offer is very consistent with the needs of the market. An example of that is in the Middle East.

Speaker #4: Because in Europe, the technology the customers are CDE led. So they require a common data environment within which they can work. And that's an important aspect.

Speaker #4: And there's some very specific requirements in the market. This year we launched a CDE specifically for Europe. And we have seen very positive customer feedback as a result of that.

Speaker #4: And so that gives me a lot of confidence in our strategy of being able to establish beachheads in geographies and expand. There are other geographies where the US product that we offer is very consistent with the needs of the market.

Speaker #4: And an example of that is in the Middle East. And that's so that's been an area where we've made some incremental investments and focus in the recent past resulting in success.

Ajei Gopal: That's been an area where we have made some incremental investments and focus in the recent past, resulting in success. Certainly, I talked about a very important and valued relationship here with KSIA. We're excited about international. We have a path towards expansion. It is still early days, but I think the framework is in place, and we're excited about our opportunities.

Speaker #4: And certainly I talked about a very important and valued relationship here with KSIA. So we're excited about international. We have a path towards expansion.

Speaker #4: It is still early days. But I think the framework is in place and we're excited about our opportunities.

Speaker #3: That's great. And maybe just as a quick follow up for Rachel, great to see the guide for next year and operating margin, a really strong improvement.

David Brown: That's great. Maybe just as a quick follow-up for Rachel, great to see the guide for next year in operating margin, a really strong improvement. Maybe just help go a step deeper on what's giving the confidence, A, six quarters out to give that? What are the levers that you're seeing that obviously, you have to have some top-line framework as you think about that. At least qualitatively, how you're thinking about organic growth next year, acknowledging that we are six quarters out. Thanks again.

Adam Borg: That's great. Maybe just as a quick follow-up for Rachel, great to see the guide for next year in operating margin, a really strong improvement. Maybe just help go a step deeper on what's giving the confidence, A, six quarters out to give that? What are the levers that you're seeing that obviously, you have to have some top-line framework as you think about that. At least qualitatively, how you're thinking about organic growth next year, acknowledging that we are six quarters out. Thanks again.

Speaker #3: Maybe just help go a step deeper on what's giving the confidence, A, six quarters out to give that, what are the levers that you're seeing?

Speaker #3: Then obviously you have to have some top line framework as you think about that. So at least qualitatively how you're thinking about organic growth next year acknowledging that we are six quarters out.

Speaker #3: Thanks again.

Speaker #2: Yeah, absolutely. Happy to unpack that for you. So as I began to talk to investors following our last call, it was really clear that there was a lot of interest in our margin profile.

Rachel Pyles: Yeah, absolutely. Happy to unpack that for you. As I began to talk to investors following our last call, it was really clear that there was a lot of interest in our margin profile, and how do we get to be comparable with our vertical software peers. I've spent the last four months really digging into the cost structure and looking really hard at where those levels are. Now, that gave me a lot of conviction in our ability to improve the margins, so much so that I wanted to be able to share that milestone with you now, rather than wait. That 25% non-GAAP operating margin, that represents almost 1,100 basis points of expansion. While that's really a notable milestone, it's really just the first of many in our long upward trajectory to get to those best-in-class software margins.

Speaker #2: And how do we get to be comparable with our vertical software peers? So I've spent kind of the last four months really digging into the cost structure and looking really hard at where those levels are.

Speaker #2: Now, that gave me a lot of conviction in our ability to improve the margins—so much so that I wanted to be able to share that milestone with you now, rather than wait.

Speaker #2: That 25% non-GAAP operating margin represents almost 1,100 basis points of expansion. That's really a notable milestone, and it's just the first of many in our long upward trajectory to reach those best-in-class software margins.

Speaker #2: You mentioned in a comment about the revenue. And we go through an annual planning process. We are in the process of doing that. We don't have revenue yet to share with you.

Rachel Pyles: You mentioned in a comment about the revenue, we go through an annual planning process. We are in the process of doing that. We don't have revenue yet to share with you. That'll come in the normal timeframe early next year. We were so confident in the cost structure that we wanted to give this metric out now, because there's a number of different ways that we can get there. You should view this as a comment on cost and not a comment on revenue.

Speaker #2: That'll come in the normal timeframe early next year. But we were so confident in the cost structure that we wanted to give this metric out now because there's a number of different ways that we can get there.

Speaker #2: So, you should view this as a comment on cost and not a comment on revenue.

Speaker #1: Your next question comes from the line of Daniel Jester with BNO Capital Markets. Your line is open.

Operator: Your next question comes from the line of Daniel Jester with B. Riley Capital Markets. Your line is open.

Speaker #3: Great. Thanks for taking my question this morning. Appreciate it. Maybe another one on drone deploy. So we were looking over them since you made the announcement last night.

Daniel Jester: Great. Thanks for taking my question this morning. Appreciate it. Maybe another one on DroneDeploy. As we were looking over them, since you made the announcement last night, it looks like they also sell into end markets that aren't necessarily related to construction. It looks like they do site inspections for energy. They do agriculture things. Is there a way to help us think about how much of the DroneDeploy product is directly applicable to your construction customers today, and how much of their product maybe isn't as core to your focus?

Speaker #3: It looks like they also sell into end markets that aren't necessarily related to construction. It looks like they do site inspections for energy. They do agriculture things.

Speaker #3: So is there a way to help us think about how much of the drone deploy product is. Directly applicable to your construction customers today?

Speaker #3: And how much of the product may be isn't as core to your focus?

Speaker #4: The way to think about drone deploy, drone deploy has some very strong capabilities on perception which are certainly being used by sort of more traditional construction companies.

Ajei Gopal: The way to think about DroneDeploy has some very strong capabilities on perception, which are certainly being used by more traditional construction companies, they're also being used by companies that I would classify as being owners in our category. People who are building out infrastructure, managing infrastructure. DroneDeploy is able to sell to both owners as well people who are actually performing the build on the ground. It's very consistent with our end market view of owners and builders. Their technology is essentially, they're rooted in AI and machine learning around visual intelligence. It's about being able to capture images, whether they be from drones or robots or other kind of cameras, being able to capture those images, process them, and evaluate them.

Speaker #4: But they're also being used by companies that I would classify as being owners in our category. So people who are building out infrastructure but managing infrastructure.

Speaker #4: So drone deploy is able to sell to both owners as well as people who are actually performing the build, the build on the ground.

Speaker #4: The technology is tied to, so it's very consistent with our end market view of owners and builders. Their technology is essentially rooted in AI and machine learning around visual intelligence.

Speaker #4: So it's about being able to capture images, whether they be from drones or robots or other kind of cameras, being able to capture those images process them and evaluate them.

Speaker #4: So I'm sure I mean, I'm obviously you can see multiple uses for those images. But the focus clearly for us and for drone deploy has been on that around that construction build out use case, which is all related to the business that we're in.

Ajei Gopal: I'm sure, obviously, you can see multiple uses for those images, but the focus clearly for us and for DroneDeploy has been around that construction build-out use case, which is all related to the business that we're in.

Daniel Jester: Great. That's really helpful context. Thank you. On AI, I think you touched on this in the prepared remarks about the new agents becoming more generally available. Can you just spend a moment around sales enablement? I know Walt is relatively new to the seat, but what are you doing to make sure your sellers have all of the tools available to go and now hit the ground running, that you're going to have a much broader AI product suite, both now and in the near future? Thank you.

Speaker #3: Great. That's really helpful context. Thank you. And then on AI, I think you touched on this in the prepared remarks about sort of the new agents becoming more generally available.

Speaker #3: Can you just spend a moment around sales enablement? I know Walt is relatively new to the seat. But what are you doing to make sure your sellers have all of the tools available to go and now hit the ground running that you're going to have a much broader AI product suite both now and in the near future?

Speaker #3: Thank you.

Speaker #4: Well, you know I think the reality of selling AI and making sure that that's something where the as you say, where the sales organization is enabled, that comes from experience.

Ajei Gopal: Well, I think the reality of selling AI, and making sure that that's something where, as you say, where the sales organization is enabled. That comes from experience. What we've been very deliberate about is not trying to push the technology out to the general sales force, but to go through this limited availability period. If you look at the time from the time of acquisition of Datagrid into our portfolio, we already had our core organic innovation around AI, and we added in Datagrid.

Speaker #4: And what we've been very deliberate about is not trying to push the technology out to the general sales force, but to go through this limited availability period.

Speaker #4: And if you look at the time from the time of acquisition of DataGrid into our portfolio, we already had our core organic innovation around AI and you added we added in DataGrid and rather than just simply push everything out to the market, we took a moment to integrate the technology and create it in the right way.

Ajei Gopal: Rather than just simply push everything out to the market, we took a moment to integrate the technology and create it in the right way and make sure the technology was available through a very small, very targeted team of just a couple of people facing customers who were able to bring in lighthouse accounts, earlier accounts, where we could see how the technology would be positioned, how it could be deployed, what would be the low-friction way to getting started. So that was the idea. It actually worked out really well because as we started to go through that, it became clear to us that there was a issue of packaging that we needed to address in order to be able to be more rapid to market.

Speaker #4: And make sure the technology was available through a very small, very targeted team of just a couple of people facing customers, who were able to bring in sort of lighthouse accounts.

Speaker #4: Earlier accounts where we could see how the technology would be positioned, how it could be deployed. What would be the low friction way to getting started?

Speaker #4: And so that was the idea. And it actually worked out really well. Because as we started to go through that, it became clear to us that there was an issue of packaging that we needed to address in order to be able to be more rapid to market.

Speaker #4: And so we created these starter packs, as you saw in our most recent press release from a few days ago. And the starter packs give teams a low-friction way to get started.

Ajei Gopal: We created these starter packs, as you saw in our most recent press release from a few days ago. The starter packs give teams a low-friction way to get started. They are ready-to-use agents and things like submittals, RFIs, and daily logs. They have restricted usage for a certain number of projects and a certain capability. It is an easy way for a customer to come in and say, "I want to use AI. I am not sure exactly how it is going to get used, but I want to take advantage of it. I am going to use it across these few projects. I am going to use it as this capability." That gives them the ability to come in, that allows them to experience, use the technology, and to move onward.

Speaker #4: They are ready to use agents and things like submittals and RFIs and daily logs. And they have very they have restricted usage for a certain number of projects.

Speaker #4: And a certain capability. So it's an easy way for a customer to come in and say, I want to use this I want to use AI, I'm not sure exactly how it's going to get used, but I want to take advantage of it.

Speaker #4: I'm going to use it across these few projects. I'm going to use it in this capability. That gives them the ability to come in.

Speaker #4: And then that allows them to experience and use the technology, and then to move onward. So that’s the path that we’ve laid out for ourselves based on this very deliberate, limited availability-to-general availability rollout.

Ajei Gopal: That is the path that we have laid out for ourselves, based on this very deliberate, limited availability to general availability rollout. As I said, the product has just gone GA, now it is available to the broader sales force, to position with their customers.

Speaker #4: And as I said, the product has just gone GA. And so the sales so now it's available to the broader sales force to position with that customers.

Speaker #1: Your next question comes from the line of Jason Celino with TBank. Your line is open.

Operator: Your next question comes from the line of Jason Celino with KeyBank. Your line is open.

Jason Celino: Great. Thank you. Ajei, I think you mentioned something kind of interesting. When we think about truly addressing the digitization of construction, robotics has historically not directly addressed the physical opportunities with labor efficiency. With DroneDeploy, how does that bring you closer to that opportunity? Maybe what role do you think robotics has with the broader construction market?

Speaker #3: Great. Thank you. Ajay, I think you mentioned something kind of interesting. When we think about truly addressing the digitization of construction, robotics has historically not directly addressed the physical opportunities with labor efficiency.

Speaker #3: With drone deploy, how does that bring you closer to that opportunity? And maybe what role do you think robotics has with the broader construction market?

Speaker #4: Well, you know it's obviously early days. But if you think about if you think about a robotics in general there's always been an a broad dream that robots are going to be in a position to address labor.

Ajei Gopal: Well, it's obviously early days, but if you think about robotics in general, there's always been a broad dream that robots are going to be in a position to address labor. You see this certainly in industrial settings, which are very constrained, but in a construction environment, it's a much more unconstrained setting, and it becomes a little bit more challenging to imagine exactly the role of robots in conjunction with human beings, and there's concerns about safety and so on and so forth. It's a very complicated problem. There is an enormous amount of advancements that are taking place. I'm not just talking about humanoid robots. I'm talking about special-purpose robots that are working in mixed-use environments, where there are human beings and robots working together. That is work in progress. That's evolved.

Speaker #4: And you see this certainly in industrial settings, which are very constrained. But in the construction environment, it's a much more unconstrained setting. And it becomes a little bit more challenging to imagine exactly the role of robots in conjunction with human beings.

Speaker #4: And there's concerns about safety and so on and so forth. So it's a very complicated problem. But there is an enormous amount of advancements that are taking place and I'm not just talking about humanoid robots.

Speaker #4: I'm talking about special purpose robots that are working in mixed-use environments, where there are human beings and robots working together. And that is work in progress that's evolving.

Speaker #4: What DroneDeploy brings to the table is they understand how to manage robots, and so part of their technology is the management of robots and management of drones and robots in these environments.

Ajei Gopal: What DroneDeploy brings to the table is they understand how to manage robots, part of their technology is the management of robots and management of drones, and robots in these environments. People are using robotic cameras, for example, or drones. Being able to manage them, so that you essentially have autonomous activity on the construction site, is an important aspect. A great example would be, I want to make sure that I get exactly the same, at exactly the same time and exactly the same path. I want to follow, and get a perspective of exactly what's happened on that day. At 5:00 PM every evening, or every afternoon, I'd like to understand what happened. Well, that's a predetermined, prescheduled activity, and DroneDeploy has the technology to be able to do that, as a simple example.

Speaker #4: So people are using robotic cameras, for example, or drones. Being able to manage them so that you essentially have autonomous activity on the construction site is an important aspect.

Speaker #4: So a great example would be I want to make sure that I get exactly the same at the exactly the same time and exactly the same path.

Speaker #4: I want to follow and get a prospective of exactly what's happened on that day. So at 5 o'clock every evening, I'd like or every afternoon, I'd like to understand what happened.

Speaker #4: Well, that's a predetermined, pre-scheduled activity. And drone deploy has the technology to be able to do that as a simple example. So that gives us so we see ourselves from construction management as being able to expand broadly into as and when the industry is ready into the management of robots and robotics.

Ajei Gopal: We see ourselves from construction management as being able to expand broadly into, as and when the industry is ready, into the management of robots and robotics. We don't see ourselves as building robots. That's not our business. We certainly see ourselves as in the management space. Again, this is early days, but we're very excited about the technology and the capabilities that DroneDeploy brings to the company.

Speaker #4: So we don't see ourselves as building robots. That's not our business. But we certainly see ourselves as in the management space. And again, this is early days, but we're very excited about the technology and the capabilities that drone deploy brings to the company.

Speaker #3: Great, thank you. And then maybe just specifically on the second quarter—the revenue beat was bigger than what we've seen over the last couple of quarters.

Jason Celino: Great. Thank you. Then maybe just specifically on Q2. The revenue beat was bigger than what we've seen over the last couple quarters, and it sounds like CRPO did quite well. You mentioned the better underlying bookings as like mainly the primary driver, but maybe can you just elaborate on those strengths and maybe why specifically Q2 was so strong?

Speaker #3: And it sounds like CRPO did quite well. You mentioned the better underlying bookings is like money the primary driver. But maybe can you just elaborate on those strengths and maybe why specifically Q2 is so strong?

Speaker #2: Sure. I'm happy to take that. So as you mentioned, we saw really strong underlying performance. The growth was really broad-based. So it was across multiple geographies.

Rachel Pyles: Sure. I'm happy to take that. As you mentioned, we saw really strong underlying performance. The growth was really broad-based, it was across multiple geographies, it was among multiple stakeholders, and it was also across multiple customer sizes. Specifically, as it relates to CRPO, the majority of that acceleration was driven by the underlying strength in bookings. There was a smaller portion that was related to duration. I mentioned in my comments that we had strength, in particular, with some large customers. Those deals tend to be larger in duration, that did take up duration a little bit. That was only a small portion of the acceleration in CRPO. The majority of it came from the momentum that we saw in the overall booking number.

Speaker #2: It was among multiple stakeholders. And it was also across multiple customer sizes. Specifically, as it relates to CRPO, the majority of that acceleration was driven by the underlying strength in bookings.

Speaker #2: There was a smaller portion that was related to duration. So I mentioned in my comments that we had strength in particular with some large customers.

Speaker #2: Those deals tend to be larger in duration. And so that did tick up duration a little bit. But that was only a small portion of the acceleration in CRPO.

Speaker #2: The majority of it came from the momentum that we saw in the overall booking number.

Speaker #1: Your next question comes from the line of Matthew Martino with Goldman Sachs. Your line is open.

Operator: Your next question comes from the line of Matthew Martino with Goldman Sachs. Your line is open.

Speaker #5: Yeah. Good morning. Thanks for taking my question. Ajay, maybe for you, the construction environment's been uneven for several years now. But at the same time, PROCOR is introducing products that could offer customers a more compelling ROI independent of project volumes.

Matthew Martino: Yeah, good morning. Thanks for taking my question. Ajei, maybe for you, the construction environment's been uneven for several years now, but at the same time, Procore's introducing products that could offer customers a more compelling ROI independent of project volumes. How are those new capabilities influencing customers' willingness to invest, and what are you seeing in the relationship between technology spending and underlying construction activity?

Speaker #5: How are those new capabilities influencing customers' willingness to invest? And what are you seeing in the relationship between technology spending and underlying construction activity?

Speaker #4: Well, it's an interesting question. You can't any good company cannot focus uniquely on one go-to-market motion or one customer base or one just one single customer.

Ajei Gopal: Well, it's an interesting question. Any good company cannot focus uniquely on one go-to-market motion or one customer base, or just one single customer. As you start to expand the organization, you have to start to think more broadly. If you look at the origins of Procore started as a product targeting the larger North American general contractors. We have expanded over the years. If you look at our business from owners and subs, owners and subs represented, I would say, maybe 40% of our business thereabouts today. That came from a standing start, because obviously, initially we were focused on the general contractor space. We've also seen success with larger customers and smaller customers. As part of our go-to-market, or as part of our strategy, we are developing technology and solutions that are appropriate for those stakeholders.

Speaker #4: As you start to expand the organization, you have to think you have to start to think more broadly. And if you look at the origins if you look at the origins of PROCOR, PROCOR started as a product targeting the larger North American general contractors.

Speaker #4: And we have expanded over the years. And if you look at our business from owners and subs, owners and subs represented I would say maybe 40% of our business thereabouts over the last today.

Speaker #4: And that came from almost from a standing start because obviously initially we were focused on we were focused on the general contractor space. We've also seen success with larger customers and smaller customers.

Speaker #4: And as part of our go-to-market or as part of our strategy, we are developing technology and solutions that are appropriate for those stakeholders. So initially, we had a set of capabilities which targeted the needs of general contractors.

Ajei Gopal: Initially, we had a set of capabilities which targeted the needs of general contractors, and then we added in capabilities that would support the owners and the subs. Now we're adding in capabilities that we think are really important to specific stakeholders. For example, I talked about the CDE that we deployed in Europe that was very specifically targeting the European customers. There, that large deal that I talked about in my script, that included the CDE. It pays off. We have a solution which we just recently launched for owners around portfolio management and capital planning, and that's specifically targeting the owners.

Speaker #4: And then we added in capabilities that would support the owners and the subs. But now we're adding in capabilities that we think are really important to specific to specific stakeholders.

Speaker #4: So for example, I talked about the CDE that we deployed in Europe. That was very specifically targeting the European customers. And that large deal that I talked about in my script, that included the CDE.

Speaker #4: So it pays off. We have a solution with which just recently launched for owners around portfolio management and capital planning. And that's specifically targeting the owners.

Speaker #4: And so what we see as our path forward is the ability to create both products that are targeting the stakeholders in a very specific way, as well as, of course, addressing our go-to-market to be able to make sure that we can address those customers.

Ajei Gopal: What we see as our path forward is the ability to create both products that are targeting the stakeholders in a very specific way, as well as, of course, addressing our go-to-market to be able to make sure that we can address those customers. The go-to-market sometimes can be direct, it can be channels. I talked about expanding to channels as an opportunity. In fact, one of the examples I gave earlier on the international with KSIA, that was done in part with a partner. Partnering direct, the combination of the go-to-market, figuring out what the product looks like, making sure you have the right product for the right customer, all of that is part of the alchemy that needs to come together in order to continue to drive growth and success for the organization.

Speaker #4: And the go-to-market sometimes can be direct. It can be channels. I talked about expanding to channels as an opportunity. And in fact, one of the examples I gave earlier on the international with KSIA that was done in part with the channel partner done in part with the partner.

Speaker #4: So, partnering directly—the combination of the go-to-market, figuring out what the product looks like, making sure you have the right product for the right customer—all of that is part of the alchemy that needs to come together in order to continue to drive growth and success for the organization.

Speaker #3: Helpful. Thank you, Ajay. And for you, Rachel, gross margins still hovering around the mid-80s over the last several quarters. As digital coworker adoption and compute consumption start to scale, is that still the appropriate near-term baseline?

Matthew Martino: Helpful. Thank you, Ajei. For you, Rachel, gross margins still hovering around the mid-eighties over the last several quarters. As digital coworker adoption and compute consumption start to scale, is that still the appropriate near-term baseline? What gross margin is embedded in the fiscal 2027 operating margin target? Thank you.

Speaker #3: And what gross margin is embedded in the fiscal '27 operating margin target? Thank you.

Speaker #2: Yeah. So as we kind of look at the components of what makes up our gross margin, we expect that that will be consistent over time.

Rachel Pyles: Yeah. As we look at the components of what makes up our gross margin, we expect that that will be consistent over time. I think that what you're starting to see is that you don't need the most expensive model to do every single task. Our focus is on optimizing how we deliver those digital coworkers to make sure that we can maintain those margins.

Speaker #2: I think that what you're starting to see is that you don't need the most expensive model to do every single task. And so our focus is on optimizing how we deliver those digital coworkers to make sure that we can maintain those margins.

Speaker #1: Your next question comes from the line of Dalen Becker with William Blair. Your line is open.

Operator: Your next question comes from the line of Dylan Becker with William Blair. Your line is open.

Speaker #3: Thanks, everybody. I appreciate it. Maybe Ajay, in the prepared materials I thought there was an interesting one. And you kind of just touched on the stakeholder dynamics.

Dylan Becker: Thanks, everybody. Appreciate it. Maybe, Ajei, in the prepared materials, I thought there was an interesting one, and you kind of just touched on the stakeholder dynamics. The overall stakeholder mix has been pretty stable and consistent over the last several periods. Wondering how this gives supports conviction in the overall durability of the growth profile, particularly in the more mature segments, where the implication is that it's still kind of growing relatively in line with the overall aggregate business. Kind of all of those pillars supporting the overall growth motion, if that makes sense.

Speaker #3: But the overall stakeholder mix has been pretty stable and consistent over the last several periods. So wondering how this gives supports conviction in the overall durability of the growth profile particularly in the more mature segments where the implication is that it's still kind of growing relatively in line with the overall aggregate business.

Speaker #3: So kind of all of those pillars supporting the overall growth motion, if that makes sense.

Ajei Gopal: Just want to make sure I'm understanding your question. Just could you give me another sentence there, please?

Speaker #4: I just want to make sure I'm understanding your question. Could you give me another sentence there, please?

Ajei Gopal: Just want to make sure I'm understanding your question. Just could you give me another sentence there, please?

Speaker #3: Yeah. Yeah. So the mix of stakeholder contribution to growth. How that holding steady helps drive conviction in growth durability.

Dylan Becker: Yeah. The mix of stakeholder contribution to growth, how that holding steady helps drive conviction?

Ajei Gopal: Yeah

Dylan Becker: and growth durability.

Speaker #4: Look, I think that if you look at the mix today at a point in time, it certainly has been relatively stable for the last several quarters.

Ajei Gopal: Look, I think if you look at the mix today at a point in time, it has been relatively stable for the last several quarters. If you look at the mix as to where we were sometime back, you can certainly see expansion in both the owners as well as the specialty contractor segments or stakeholders. With respect to international, again, that's been an area where we see opportunity, where we haven't seen as much expansion capabilities, and I think that there continues to be opportunity there, and it's a question of putting the right go-to-market in place. Some of these expansion opportunities are short-term, some of these expansion opportunities are long-term. This is as far as the sort of the stakeholders are concerned.

Speaker #4: But if you look at the mix as to where we were sometime back, you can certainly see expansion in both the owners as well as the as well as the specialty contractor segments.

Speaker #4: Or stakeholders. And with respect to international, again, that's been an area where we see opportunity where we haven't seen as much expansion capabilities. And I think that there continues to be opportunity there.

Speaker #4: And it's a question of putting the right go-to-market in place. So some of these expansion opportunities are short-term. Some of these expansion opportunities are long-term.

Speaker #4: So this is as far as sort of the stakeholders are concerned. And then in terms of incremental growth opportunities, obviously, we see AI as we're making investments in AI.

Ajei Gopal: In terms of incremental growth opportunities, obviously, we see AI as we are making investments in AI, and we expect our digital coworker strategy to also monetize and to contribute in the future. As we start to look at the aggregate, we see opportunities from our overall growth. We see opportunities with respect to the stakeholders, the go-to-market, AI. Of course, the end markets. We talked about end markets. We are driven in part by ACV. As the annual construction volume, if there is a recovery in that in the aggregate, that translates into tailwinds for us. There's certainly segments like, for example, data centers. If they continue to grow, we get benefit from that. Look, we're growing 15 points plus faster than the end market, and so any upside on that translates into further upside on that.

Speaker #4: And we expect our digital coworker strategy to also monetize and to contribute in the future. So as we start to look at the aggregate, we see opportunities from our overall growth.

Speaker #4: We see opportunities with respect to the stakeholders, the go-to-market, and AI. And then, of course, the end markets. I mean, we talked about end markets.

Speaker #4: We are driven in part by ACV. And so as the annual construction volume if there is a recovery in that and the aggregate, that translates into tailwinds for us.

Speaker #4: And there's certainly segments like for example, like for example, data centers, if they continue to grow, we get benefit from that. So look, we're growing 15 points plus faster than the end market.

Speaker #4: And so any upside on that translates into further upside on that. So we feel very good about—we feel very good about our position.

Ajei Gopal: We feel very good about our position. I think there is perhaps a misunderstanding that our business is really tied to the ENR 400 and GCs only. That's really not the case. We have a very broad set of customers across the different stakeholders, across the different sizes.

Speaker #4: So I think there is a perhaps a misunderstanding that our business is really tied to the E&R 400 and GCs only. That's really not the case.

Speaker #4: We have a very broad set of customers. Across the different stakeholders. Across the different sizes.

Speaker #3: Perfect. Very helpful. Thank you. And then, going back to the agents and packages, I think it's abundantly clear that they're trying to address the labor shortage need.

Dylan Becker: Perfect. Very helpful. Thank you. Going back to kind of the agents and packages, I think it's abundantly clear, right? That they're trying to address the labor shortage need and the ROI of your solutions to help with that. I guess to what extent, and maybe the starter packages are a component of this too, but are you helping with the change management component to where they can actually implement and deploy and ramp those digital coworkers across the entirety of their solution set? Understanding that takes time, how you're thinking of working through kind of the change management component with your customers.

Speaker #3: And the ROI of your solutions to help with that. But I guess to what extent and maybe the starter packages are a component of this too.

Speaker #3: But are you helping with the change management component, to where they can actually implement and deploy and ramp those digital coworkers across the entirety of their solution set?

Speaker #3: Understanding that takes time. But how are you thinking of working through the change management component with your customers?

Ajei Gopal: I think you articulated the answer in your question, which is obviously, when we look at the rollout of innovative technology, it isn't simply a matter of rolling technology out and saying, "Have at it," because of the change management issues. The startup packs have been very well defined and thought through so that they are a bite-sized chunk that can be deployed and understood and incorporated into the way that our customers work. In the spirit of trying to create a long-term sustainable business, we're trying to be thoughtful about how we do this. This is clearly the strategy that we're pursuing, and we feel very good about the onboarding strategy here.

Speaker #4: I think you just you articulated the answer in your question, which is obviously when we look at when we look at the rollout of innovative technology, it isn't simply a matter of rolling technology out and saying, have at it.

Speaker #4: Because of the change management issues. And so the startup packs have been very well defined and thought through so that they are a bite-sized chunk that can be deployed and understood and incorporated into the way that our customers work.

Speaker #4: And so in the spirit of trying to create a long-term sustainable business, we're trying to be thoughtful about how we do this. And this is clearly the strategy that we're pursuing.

Speaker #4: And we feel very good about the onboarding strategy here.

Speaker #1: Your next question comes from the line of Ken Wong with Oppenheimer. Your line is open.

Operator: Your next question comes from the line of Ken Wong with Oppenheimer. Your line is open.

Speaker #3: Hey. Fantastic. Thanks for taking my question. Ajay, since the start of the year, you guys acquired Datagrid. And now drone deploy. Do you feel you guys have sufficiently filled the AI product gap?

Ken Wong: Hey, fantastic. Thanks for taking my question. Ajei, since the start of the year, you guys acquired Datagrid and now DroneDeploy. Do you feel you guys have sufficiently filled the AI product gap, or are these still maybe the first few dominoes to fall following some additional M&A to come? For Rachel, piggybacking off that question, the fiscal 2027 margin targets, fantastic to lay that out there. Just wondering, does that also embed sufficient cushion to account for any potential M&A that you guys might do going forward?

Speaker #3: Or are these still maybe the first few dominoes to fall following some additional M&A to come? And then for Rachel, kind of piggybacking off that question, the fiscal 27 margin targets, a fantastic to lay that out there.

Speaker #3: Just wondering does that also embed sufficient cushions to account for any potential M&A that you guys might do going forward?

Speaker #4: Well, so as I said, as I said earlier, when we as we were building out our strategy for AI, it became very clear that this was an area that we were excited about, perception.

Ajei Gopal: Well, as I said earlier, as we were building out our strategy for AI, it became very clear that this was an area that we were excited about, perception, sort of the eyes and the ears metaphor that I used in the script. We really were excited about that space. We felt that it was important to be integrated into our core platform. That's why we pursued the DroneDeploy acquisition. Now, I've always viewed acquisitions as a way to accelerate our strategy. For us, building out, it's not a strategy unto itself. We're not building out AI by acquisition. We have a well-defined strategy for our AI capabilities. We are determining whether to build, whether to partner, or whether to buy based upon the needs of the moment. Right now, I have tremendous confidence in our team, our capabilities to execute.

Speaker #4: Sort of the eyes in the ears metaphor that I used in the script. We really were excited about that space. We felt that it was important to be integrated into our core platform.

Speaker #4: And so that's why we pursued the drone deploy acquisition. Now, I've always viewed acquisitions as a way to accelerate our strategy. So for us, building out it's not a strategy unto itself.

Speaker #4: So we're not building out AI by acquisition. We have a well-defined strategy for our AI capabilities. And then we are determining whether to build, whether to partner, or whether to buy based upon the needs of the moment.

Speaker #4: And right now, we have I have tremendous confidence in our team, our capabilities to execute. I'm excited to welcome drone deploy into an already vibrant Procore AI environment.

Ajei Gopal: I'm excited to welcome DroneDeploy into an already vibrant Procore AI environment. I'm excited about what we're going to be able to do together.

Speaker #4: I'm excited of what we can be what we're going to be able to do together.

Speaker #1: And then just to answer your question on the margin, as we evaluate acquisition opportunities, we are looking at their strategic fit. And then also making sure that they fit within our financial profile.

Rachel Pyles: Just to answer your question on the margin. As we evaluate acquisition opportunities, we are looking at their strategic fit and also making sure that they fit within our financial profile. As we thought about the margin target, we thought about the impact that future M&A would have. In particular, as I noted in my comment, we see no change to that commitment with the acquisition of DroneDeploy.

Speaker #1: So as we thought about the margin target, we thought about the impact that future M&A would have and in particular, as I noted in my comments, we see no change to that commitment with the acquisition of drone deploy.

Speaker #3: Thank you.

Ken Wong: Thank you.

Speaker #1: Your last question comes from the line of Joe Verwink with Baird. Your line is open.

Operator: Your last question comes from the line of Joe Vruwink with Baird. Your line is open.

Joe Vruwink: Great. Thank you. I'm wondering, does owning Datagrid make it easier to acquire DroneDeploy in terms of the indexing and retrieval you can now apply and how that ultimately feeds the downstream AI workflows? Maybe have you given any thought to how your TAM ends up growing across both traditional and AI workflows by adding the visual elements?

Speaker #3: Great. Thank you. I'm wondering, does owning Datagrid make it easier to acquire drone deploy in terms of the indexing and retrieval? You can now apply and have that ultimately feeds the downstream AI workflows.

Speaker #3: And maybe, have you given any thought to how your TAM ends up growing across both traditional and AI workflows by adding the visual element?

Ajei Gopal: To that first point, look, again, as I said in my previous answer, Joe, for us, it's about the strategy. There is no single element to the strategy. It's about the strategy. It builds on each other. All of the different elements that we've brought in and assembled as part of Procore AI, and that we'll continue to build as part of Procore AI, will facilitate that. Obviously, you're right to point out that there is synergy and there's technical synergy between the Datagrid capabilities and the DroneDeploy capabilities along the lines as you suggested, and that's really exciting to us as well. We have a clearly identified strategy, and we're going to continue to execute that strategy. The second part of the question was what, Joe?

Speaker #4: To that first point, look, again, as I said in my previous answer, Joe, for us, it's about the strategy. And there is no single element to the strategy.

Speaker #4: It's about the strategy. It builds on each other. And so all of the different elements that we have brought in and assembled as part of Procore AI and that we'll continue to build as part of Procore AI will facilitate that.

Speaker #4: But obviously, you're right to point out that there is synergy and there's technical synergy between the Datagrid capabilities and the drone deploy capabilities along the lines that you suggested.

Speaker #4: And that's really exciting to us as well. So but we are we have a clearly identified strategy. And we're going to continue to execute that strategy.

Speaker #4: And the second part of the question was what, Joe?

Speaker #3: How the TAM might grow by adding a visual element in the web Procore can offer.

Joe Vruwink: How the TAM might grow by adding a visual element in the, what Procore can offer.

Speaker #4: So in the short term, I would point to—rather than specifically talk about TAM—I would talk about short-term synergy opportunities. In the short-term synergy opportunities, we have about, slightly shy of, and I think I mentioned in the script, slightly shy of about 600 joint customers who are using both DroneDeploy and Procore.

Ajei Gopal: In the short term, I would point to, rather than specifically talk about TAM, I would talk about short-term synergy opportunities. In the short-term synergy opportunities, we have, slightly shy of, and I think I mentioned this script, slightly shy of 600 joint customers who are using both DroneDeploy and Procore. That means that there are thousands of customers who are not using DroneDeploy today who are Procore customers. We have a cross-sell opportunity. From our perspective, that is an immediate available opportunity. In the long term, as we start talk about digital coworkers, the TAM expansion opportunity is not so much about adding incremental software capabilities. It's really going after a different pool, which is essentially the labor shortage that our customers are facing. They just don't have people.

Speaker #4: But that means there are thousands of customers who are not using DroneDeploy today, who are Procore customers. And we have a cross-sell opportunity.

Speaker #4: So from our perspective, that is an immediate available opportunity. In the long term, as we start talk about digital coworkers, the opportunity the TAM expansion opportunity is not so much about adding incremental software capabilities.

Speaker #4: It's really going after a different pool, which is essentially the labor shortage that our customers are facing. They just don't have people. So they have a budget for people, but they just don't have people set aside or they're able to hire people just for the task at hand.

Ajei Gopal: They have a budget for people, but they just don't have people set aside, or they're able to hire people just for the task at hand. That represents a different pool of money that is accessible to us. From a TAM expansion perspective, the digital coworker strategy exposes to incremental addressable market that goes beyond the traditional TAM that's associated with construction management software.

Speaker #4: And so that represents a different pool of money that is accessible to us. So, from a TAM expansion perspective, the digital coworker strategy exposes us to incremental addressable market that goes beyond the traditional TAM that's associated with construction management software.

Speaker #3: Thank you.

Joe Vruwink: Thank you.

Operator: Ladies and gentlemen, that concludes today's call. Thank you for joining. You may now disconnect.

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