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Date
Nov. 5, 2025, at 5 p.m. ET
Call participants
Chair of the Board and Former Chief Executive Officer — Craig "Tooey" Courtemanche
Interim Chief Financial Officer — Matthew Puljiz
Head of Investor Relations — Alexandra Geller
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Takeaways
Total Revenue -- $339 million in total revenue for Q3 2025, representing 14.5% year-over-year growth.
International Revenue -- Grew 14% year over year, with a currency headwind of approximately 1 percentage point; constant currency growth was 15%.
Non-GAAP Operating Margin -- Increased sequentially to 17%, Non-GAAP operating margin increased 380 basis points quarter over quarter.
Non-GAAP Operating Income -- Non-GAAP operating income reached $59 million.
Large Deals -- Number of six- and seven-figure transactions accelerated, up 31% year over year.
$100,000+ ARR Customers -- Now total over 2,600.
Current RPO -- Current RPO grew 23% year over year, primarily benefiting from increased contract lengths.
Current Deferred Revenue -- Increased 14% year over year.
Net New ARR Growth -- Outpaced revenue growth in the quarter, with particular strength in owner and specialty contractor segments, as well as mid-market and North America.
Stock Repurchases -- $129 million repurchased year to date, totaling 1.9 million shares year to date; new $300 million authorization announced for the upcoming year.
Diluted Share Count -- Diluted share count grew 1% year over year.
Annual Construction Volume on Platform -- Surpassed $1 trillion across all global stakeholders.
Go-to-Market Model -- Delivered higher pipeline conversion, improved expansion rates, and lower voluntary sales attrition.
Product Innovation -- AgenTic AI roadmap and analytics solutions highlighted as competitive differentiators driving new business and expansions.
Customer Expansion -- Cited large expansions and new wins across defense, healthcare, data centers, utilities, and real estate sectors.
Fiscal 2025 Guidance -- Updated revenue outlook raised to $1.312 billion-$1.314 billion, representing 14% annual revenue growth; non-GAAP operating margin guide raised to 14%, implying a year-over-year margin expansion of 400 basis points.
Q4 2025 Guidance -- Revenue expected between $339 million and $341 million, with a non-GAAP operating margin of 14.4%.
CEO Transition -- Ajay Gopal named as incoming Chief Executive Officer starting November 10; Courtemanche to remain as Chair of the Board.
Contract Duration -- Longer average contract terms incrementally benefited RPO metrics.
Pricing Model Pilots -- Good-better-best packaging pilot underway, with positive initial customer feedback on simplicity, but not expected to materially alter financial trajectory.
Summary
Procore Technologies (PCOR +11.53%) reported revenue growth and non-GAAP operating margin expansion in Q3 2025 while highlighting momentum across large deals and ARR growth, with platform adoption growing rapidly even against external sector headwinds. Procore Technologies emphasized its execution of go-to-market initiatives, resulting in increased customer conversions and strong expansion metrics, while announcing a seamless CEO transition and new capital return authorization for shareholders. The continued trend toward longer-term contracts both reflects and amplifies customer commitment to the platform, directly influencing key backlog metrics and forward visibility.
Management stated, "Our business model offers substantial margin leverage. We are deeply committed to unlocking this potential and view continuous improvement here as a priority for our business."
Chair of the Board Courtemanche said, "I am handing over the reins with complete confidence that Procore Technologies is in the right hands and has the opportunity to deliver substantial shareholder value."
Matthew Puljiz confirmed, "we are pleased to announce that we have implemented a new repurchase program for another one-year period for an additional $300 million."
Procore Technologies achieved 1,900 basis points of non-GAAP operating margin improvement since the start of 2023.
New customer wins included a top 40 ENR general contractor, major data center provider, and large managed care organization, as well as significant expansions with existing customers.
Management noted innovation at Groundbreak, emphasizing proprietary construction data as a catalyst for AI-enabled productivity improvements.
Industry glossary
ARR (Annual Recurring Revenue): The annualized value of subscription-based contracts, used to measure recurring revenue streams in software-as-a-service businesses.
RPO (Remaining Performance Obligations): The sum of invoiced and non-invoiced contracted revenue that has not yet been recognized; a backlog metric indicating future revenue visibility.
ENR: “Engineering News-Record,” an industry publication ranking and defining top construction and contracting firms worldwide.
CRPO (Current Remaining Performance Obligations): The subset of RPO expected to be recognized as revenue within the next twelve months.
Pooled Contract Models: Contractual structures allowing customers to allocate aggregate volumes across different projects and timelines for greater flexibility.
Full Conference Call Transcript
Operator: Hello, and welcome to the Procore Technologies, Inc. Q3 2025 Earnings Call. My name is Alex, and I will be coordinating today's call. I will now hand it over to Alexandra Geller, Head of Investor Relations, to begin. Please go ahead.
Alexandra Geller: Good afternoon, and welcome to Procore Technologies, Inc.'s 2025 third quarter earnings call. I am Alexandra Geller, Head of Investor Relations. Before I begin today's call, I wanted to share that Howard Fu, our CFO, is unexpectedly out of the country. You will hear from Howard again soon. Further disclosure of our results can be found in our press release issued today. It 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 outlook, go-to-market model, CEO transition, platform and products, customer demand, operations, stock repurchase program, and macroeconomic and geopolitical conditions. 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, November 5, 2025. Procore undertakes no obligation to update any forward-looking statements to reflect new information or unanticipated events except as required by law. If this call is replayed or viewed after today, the information presented during the call may not contain current or accurate information.
Therefore, these statements should not be relied upon as representing our views as of any subsequent date. We will 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 Tilly.
Tooey Courtemanche: Thanks, Alex, and thank you, everyone, for joining us today. Let's start with our Q3 performance, which represented another strong quarter. Some highlights include revenue growth was 14.5% year over year, which is consistent with last quarter's growth and reflects our underlying business momentum and performance we have seen this year. Non-GAAP operating margins increased quarter over quarter to 17%, reflecting our commitment to improving our efficiency profile. We had another strong quarter for large deals, with the number of six and seven-figure deals accelerating to 31% year-over-year growth. The number of $100,000 plus ARR customers now totals more than 2,600, and our go-to-market model is yielding benefits, positioning Procore Technologies, Inc. for efficient growth.
Another very important highlight from the quarter was our announcement that Ajay Gopal would join Procore Technologies, Inc. as our next CEO. Ajay officially steps into the role on November 10, at which point I will focus exclusively on my role as chair of the board, where my commitment to our customers, the industry, and Procore Technologies, Inc.'s mission will remain as strong as ever. I have had the privilege of serving as Procore Technologies, Inc.'s CEO for nearly 25 years, and it has been the honor of a lifetime.
Needless to say, the board and I were incredibly diligent and thoughtful in our search for Procore Technologies, Inc.'s next leader, and I can confidently say that we have found the ideal person both in operational track record and in his sincere quality of character to guide Procore Technologies, Inc. through this next phase of growth. Ajay has more than 35 years of proven experience, including leading a multibillion-dollar global technology company and driving shareholder value. He has relevant vertical software experience, most recently serving as the CEO at ANSYS. During his tenure, ANSYS significantly improved its operating performance and more than quadrupled its market value.
His prior roles, including serving as operating partner at Silver Lake, have shaped him into a versatile leader who knows how to scale innovation, navigate complexity, and deliver lasting impact. Ajay's track record is clearly impressive, but his deep passion for transforming the physical world through digital innovation is what ultimately convinced me that he was the right choice. He recognizes and values the privilege of leading software companies that help its customers build things that are lasting, tangible, and impactful. In his career, he has been inspired by the pride those creators felt in building something so transformative, and he sees the same pride in construction and in Procore Technologies, Inc.'s customers.
That shared sense of purpose is why I know he is the right leader to guide us into the future. So you will hear directly from Ajay later in the quarter once he officially steps into the role as CEO. Since this is my last earnings call at the helm, I want to take a moment and leave you with why I am so optimistic and confident about the future of Procore Technologies, Inc. First and foremost, let me remind you that construction is one of the largest and most essential global industries, estimated to reach $15 trillion in construction spend by 2030. And yet it remains one of the least digitized.
With Procore Technologies, Inc. as the clear category leader, I believe that this market is ours for the taking, offering tremendous opportunity for durable long-term growth. Construction is a massive yet cyclical industry that has been operating in a down cycle for quite some time, which has been a steady headwind to our business. For example, our focus area of US nonresidential and multifamily construction has gone from growing 25% year over year in Q1 2023 to negative growth of 2% for the last two quarters, as reported by a 27% reduction in growth over two years.
And yet in that same two-year period, Procore Technologies, Inc. has continued to grow faster than this end market by approximately 10 to 20 percentage points. During that period, we also increased the annual construction volume committed on our platform by more than 30% even in the face of this headwind. I am proud that in Q3, Procore Technologies, Inc. reached another exciting milestone, surpassing $1 trillion in annual construction volume contracted to our platform across all global stakeholders. This clearly demonstrates our team's ability to take market share even in challenging construction cycles. I want you all to know that when this cycle inevitably turns upward, and it will, we strongly believe this headwind will become a tailwind.
My conviction for Procore Technologies, Inc.'s future is further reinforced by the strength of our platform. From day one, we have been solely focused on construction and have built the only unified construction platform that supports all types of projects from vertical to horizontal across the entire construction life cycle. By connecting people, processes, and data in one place, we believe our platform is uniquely positioned to harness the power of AI for our customers. This was a key topic at our annual industry conference, Groundbreak, just a couple of weeks ago. We announced exciting new innovations, including our AgenTic roadmap, that harnesses our comprehensive and unmatched corpus of proprietary construction data to further extend our platform advantage.
Our customers were able to interact with our agents on the expo floor, and they shared that they believe that these innovations will be game-changing for the industry. At Groundbreak, I met with our customer advisory board, and during a Q&A session, unprompted, our customers raised their hands one by one, sharing that Procore Technologies, Inc.'s partnership and unwavering commitment to our customer success is why they selected us and why they continue to stay with us. It was truly a powerful moment for me, one that reinforced the impact of our true partnership approach.
Over our nearly 25-year history, this dedication has earned Procore Technologies, Inc. the trust of the construction industry, which is paramount for a sector defined by high risk and tight margins. So I think this longtime customer quote for Brasfield and Gory sums it up well: "The Procore Technologies, Inc. platform and the people behind it are enabling our teams to collaborate more effectively, operate more efficiently, raise the bar for excellence in project execution, and drive innovation in how we work. We look forward to continuing to build on this partnership in the years ahead." My confidence in Procore Technologies, Inc.'s future is further bolstered by our commitment to improving our margin profile.
While we have achieved 1,900 basis points of non-GAAP operating margin improvement since the start of 2023, this only scratches the surface of our profitability potential. Our business model offers substantial margin leverage. We are deeply committed to unlocking this potential and view continuous improvement here as a priority for our business. The changes implemented over the past year have positioned us for future leverage, and we currently see no structural hurdles that would prevent us from reaching our profitability milestones and compounding free cash flow per share. I also believe that we are in a stronger position with our go-to-market model yielding positive benefits and improved execution.
To share some specifics, we are seeing higher year-over-year pipeline conversion, improved expansion rates, and lower voluntary sales headcount attrition. Our customers continue to share overwhelmingly positive feedback on the increased technical resources now at their disposal, which are making them even more successful, productive, and efficient. Naturally, there are areas where we want to improve and continue to get better, but overall, we are pleased with how our team is executing. And, of course, this motion continues to secure new logos and strengthen existing customer relationships.
In Q3, we added new customers across all stakeholders, including one of the largest defense contractors in the world, a top 40 ENR general contractor, Valvoline Incorporated, one of Canada's largest electricity transmission companies, the Department of Transportation for a Mid-Atlantic State, and Horowitz Mechanical. This quarter, E2 Optics, a leading technology contractor, also became a large new Procore Technologies, Inc. customer. While they initially approached us for help with preconstruction, the conversation quickly shifted from software replacement for a specific pain point to full operational transformation. E2 Optics chose Procore Technologies, Inc.'s unified platform to gain visibility and control across the entire project life cycle, connecting estimating, operations, resource management, and analytics.
The key differentiator for them was the power of Procore Technologies, Inc. analytics and our reporting dashboards. By standardizing their data on our platform, they can now measure performance, fuel continuous improvement, and finally, unlock critical project data that was trapped in siloed systems. Moving forward, E2 Optics will use Procore Technologies, Inc. to build hyperscale data centers, healthcare, higher education, and other commercial facility projects. Another new large logo win in the quarter was with the medical facilities arm of one of the largest managed care organizations in the US. In Q3, they purchased Procore Technologies, Inc. to replace a host of fragmented solutions that led to inefficient processes and highly manual workflows.
The decision to partner with Procore Technologies, Inc. was driven by our proven ability to provide a construction-specific solution that streamlines operations and enhances scalability across their entire organization. They will use Procore Technologies, Inc. to build hospitals and medical office buildings across the country. We also had strong expansion wins across stakeholders in Q3, including a leading Irish construction company, ENR 23 Brasfield and Gori, a top five ENR 600 specialty contractor, Goodman Australia, and a Fortune 200 natural gas company. One of our largest expansions in the quarter was a seven-figure win with a leading hyperscale data center campus provider.
With major data center projects across the US, EMEA, and APAC, they more than doubled their annual construction volume to $10 billion, and they went all in on Procore Technologies, Inc., spanning the entire construction life cycle. A key driver in this deal was their interest in leveraging our new management products to create a system of record for assets and materials tracking, as well as Procore Technologies, Inc. pay for lien waiver and compliance tracking. You may recall that resource management is a comprehensive offering of labor, equipment, and materials, the most critical management areas for subcontractors and self-perform GCs.
It is an area that we have made significant investments in over the past years, beginning with labor, then adding equipment last year, and closing the loop with materials set to launch next year. Another seven-figure expansion win was with Related Companies, one of the largest privately held real estate development and management firms in the US. Related had been using Procore Technologies, Inc. on a few regional agreements, and in Q3, they displaced a host of incumbent vendors to expand enterprise-wide on Procore Technologies, Inc., adding volume and new products. With a large and growing pipeline of development, Related needed a scalable unified platform to connect teams, standardize workflows, and deliver real-time visibility into project performance.
Moving forward, Related will use Procore Technologies, Inc. to execute on their expansive pipeline of large-scale commercial real estate developments, as well as data centers and renewable energy projects. As you can see from these wins, our competitive positioning remains as strong as ever. We have a broad market opportunity that encompasses global general contractors, owners, and subcontractors, and the landscape remains largely greenfield. It is important to note that many of our largest deals are uncontested. In fact, half of our top 10 new logo deals this quarter, which included all stakeholders, involved no other vendor in the prospects' evaluation.
While investors often assume that large upmarket transactions are competitive in nature, the reality is that our clear category leadership frequently positions us as the only viable platform that can digitize the construction industry. As you can hear from my remarks today, I have deep conviction in Procore Technologies, Inc.'s future. As Procore Technologies, Inc.'s founder, I am transitioning the company from a position of strength, ensuring that Ajay inherits a strong foundation for our next stage of growth. I believe that with Ajay leveraging his proven operational expertise as the CEO, and my continued commitment to our mission and our vision as the chair of the board, we have an unbeatable combination.
But more than that, the time that we spent together, Ajay and I have grown close over a shared passion and appreciation for empowering the builders of the world with technology. We already met with several of our largest customers, and I have been impressed at how quickly Ajay has picked up on the nuances of the construction industry and how he has begun to build a rapport with industry leaders. I am very confident he is going to continue to strengthen those relationships. I am handing over the reins with complete confidence that Procore Technologies, Inc. is in the right hands and has the opportunity to deliver substantial shareholder value.
The road ahead for this company and for our industry has never looked more promising, and I fully intend to remain a shareholder. I just want to say thank you all for your support. Thank you, Ajay, and a big thank you to all Procore Technologies, Inc. customers, partners, employees, and shareholders who have helped us get to this point. I never could have done it without you. With that, I am going to turn it over to Matt to walk you through our financial performance.
Matthew Puljiz: Thanks, Tooey, and hello, everyone. Today, I would like to cover how our Q3 performance is emblematic of our commitment to free cash flow per share improvement. You have heard us reference free cash flow per share as our North Star metric, and the three ways in which Q3 specifically improved this are: one, durable growth; two, margin expansion; and three, modest share count growth. But first, let's cover our financial results for the quarter. Total revenue in Q3 was $339 million, up 14.5% year over year. Our Q3 international revenue grew 14% year over year and was impacted by currency headwinds. On a year-over-year basis, FX contributed approximately one point of headwind to international revenue growth.
Therefore, on a constant currency basis, international revenue grew 15% year over year. Q3 non-GAAP operating income was $59 million, representing a non-GAAP operating margin of 17%. As for our key backlog metrics, current RPO grew 23% year over year, and current deferred revenue grew 14% year over year. Now let me share some additional color on our performance. Beginning with the top line, we delivered another quarter of net new ARR growth that was notably faster than revenue growth. This strength came from multiple areas, with outperformance from our owner and specialty contractor motions, strong growth from our mid-market team, and continued execution in North America. Expansion was also strong within many of these dimensions.
We continue to see cross-sell improve its contribution to expansion bookings, which we largely attribute to our go-to-market operating model. We are very pleased with these results, particularly given this execution took place in a construction macro where the combined U.S. non-residential and multifamily sectors had negative 2% growth. Procore Technologies, Inc.'s 14.5% growth is a premium of 16.5 percentage points compared to these sectors. We believe that continuing to execute the way we have will extend our category leadership and increase our market share. Our strength in the quarter also contributed to strength in CRPO.
Keep in mind that this metric has been benefiting primarily from longer average contract duration, and we saw this dynamic increase further in Q3, which incrementally benefited CRPO. When normalizing CRPO for this dynamic, the year-over-year growth is consistent with both Q3 revenue growth and ending ARR growth. We expect this disparity could shrink as early as we begin to anniversary the longer contract duration impact. Taking a step back, the decision by our customers to lengthen their contract terms is a powerful reflection of their long-term commitment to Procore Technologies, Inc.'s platform. In addition to durable growth, we also delivered another quarter of improvement in our non-GAAP operating margin, which increased 380 basis points quarter on quarter.
We are proud of this progression, which did include some one-time benefits in G&A, primarily pertaining to facility and tax reimbursements. The entire management team remains aligned and committed to continued profitability improvement, and we believe we are well-positioned for margin expansion in the years to come. From a share count perspective, our Q3 loss of diluted share count grew 1% year over year. Our lower dilution was driven by two factors: one, we continue to be disciplined in how we deploy equity compensation, and two, year to date, we have repurchased approximately $129 million in stock, representing 1.9 million shares.
While our previously authorized repurchase program expired in October, we are pleased to announce that we have implemented a new repurchase program for another one-year period for an additional $300 million. This new program maintains our flexibility to opportunistically deploy a lever in our capital allocation strategy to optimize long-term shareholder value. Our strong Q3 results reinforce the compounding power of our free cash flow per share algorithm, which can be summarized as: one, durable top-line growth. We feel very good about our ability to execute and take share even in a challenging construction cycle. Two, continued margin improvement. We have demonstrated leverage in our model and are positioned for further margin expansion in the future.
And three, we expect our diluted share count to grow modestly each year before repurchasing any shares. The combination of these levers is how we intend to compound free cash flow per share and drive shareholder value. With that, let's move on to our outlook. For 2025, we expect revenue between $339 million and $341 million, representing year-over-year growth of 12% to 13%. Q4 non-GAAP operating margin is expected to be 14.4%. For the full year fiscal '25, we are raising our revenue guide to a range of $1.312 billion to $1.314 billion, representing total year-over-year growth of 14%.
We are also raising our non-GAAP operating guidance for the year to be 14%, which implies year-over-year margin expansion of 400 basis points. Regarding fiscal 2026, we are generally comfortable with The Street's revenue dollar estimate per FactSet and do not feel the need to update estimates at this time. Given Ajay is starting as CEO next week, we want to provide him sufficient time to onboard and ramp before providing formal guidance. Before I close, on behalf of Howard and the entire Procore Technologies, Inc. team, I want to say to Tilly, thank you. We are all grateful to have had this opportunity to work for you.
Your authentic leadership has influenced us tremendously, and I know I am not alone when I say that you have truly made this world a better place. Not just because of the success of Procore Technologies, Inc., but also because of the success of our customers and the success of all the individuals you have impacted by your life's work. So for myself, on behalf of our leadership team, employees, customers, and shareholders, we are thrilled that your mission continues here at Procore Technologies, Inc., and we look forward to supporting you in your next chapter as chair of the board. With that, let's turn it over to the operator for Q&A.
Operator: Thank you. Our first question for today comes from DJ Hynes of Canaccord. Your line is now open. Please go ahead.
DJ Hynes: Hey, thank you, guys. First, Tooey, congrats on all that you have accomplished. I know this is goodbye, but wishing you the best of luck in the new role. You can start, Tooey. Yeah, of course. I think you have said in the past that perhaps the signal of a turning point in end market demand would start with the owners. So I guess the question is, is that still a reasonable way to think about things? And what are you seeing in that segment of the business?
Tooey Courtemanche: Well, let me start with what I am seeing, and then I will talk about the owners in particular. The headline is that what we are seeing in the macro environment is pretty much what we saw last quarter and the quarter before that and the quarter before that. So there really has not been a big change in the macro headwinds that are out there. But as I have told you in the past, I do believe that owners are, you know, that is where projects begin. Right? And so the more owners get excited about building projects, the better it is for Procore Technologies, Inc. because we sell to owners, GCs, and subs.
So in general, it is a good place to look for it. And as I said in my opening remarks, we do believe that this headwind will eventually turn, and we will have a tailwind. But I do want to also caution you that when that happens, it takes time for projects to get greenlit and to get permitted and to get put into construction volume before it hits Procore Technologies, Inc.'s revenue. But it will turn, and we are excited about that.
DJ Hynes: Perfect. Thank you. And then, Matt, maybe a follow-up for you. I mean, the comment that stood out in your prepared remarks is that net new ARR growth came in notably faster than revenue growth. And I just want to unpack what you are trying to convey there, and does that portend revenue growth acceleration here in the future?
Matthew Puljiz: Sure. And so I will just reiterate this was a very common question we got 90 days ago as well when we reported Q2. We had another strong quarter. We are on pace for a strong year. And all of our commentary we made 90 days ago around our base case of growth, I would reiterate that today. If anything, the third quarter just increased our confidence in this topic. You know, obviously, there is an upside case. There is a downside case. We can talk about those if you are interested. But right now, we are operating well within the base case, and we feel really good about that. Our optimism is high. Our confidence is high.
And, yeah, we are looking forward to delivering a Q4 when we report in February.
DJ Hynes: Okay. Sounds good. Thank you, guys.
Tooey Courtemanche: Thanks, DJ. Thank you.
Operator: Our next question comes from Matthew Martino of Goldman Sachs. Your line is now open. Please go ahead.
Matthew Martino: Yes. Thanks for taking my questions, guys. Yes. First of all, Tooey, I would echo the congratulations on your last earnings call on retirement. Excited to see your impact as you continue to work behind the scenes with customers. The first question I have here for Tooey, you know, Tooey, I would love to hear your perspective on how you think about the data center opportunity. Appreciate that this is kind of 23% share of non-res historically, but there has been a flurry of major announcements in the past three months. Procore Technologies, Inc. itself signed a large expansion in the quarter.
Wondering if your thinking here has evolved on how impactful the data center build-out can be for Procore Technologies, Inc., especially with a few of your larger customers directly tied to the theme? Then I have a follow-up.
Tooey Courtemanche: Yeah. So, Matt, first and foremost, I would have corrected you, but you said it for me, which is data centers, exciting as they are, do not make up a very large portion of the overall construction economy. But I think that being said, first, I also want to say, Procore Technologies, Inc. has done very, very well in the data center world. You know, we are everywhere. It is something that we are very proud of. And it is a strength. But, as you know, the construction economy is made up of many different sectors. And when one wanes, one waxes.
And so we have a, that is one example of an area in the market which is doing particularly well. But you can also look at things like multifamily, which have been struggling for the last few years as a downward trend. So, centers are exciting. Everybody is talking about it. But it is a small portion of our business.
Matthew Martino: Got it. Thanks a lot. And then, Matt, for you, nice to see CRPO hanging in there in the mid-teens. Could you maybe peel that back a little bit and give us a sense of how renewals trended in the quarter, whether you are seeing a higher proportion of stable or growing ACV commitments relative to the past few quarters? Thanks.
Matthew Puljiz: Yeah. The two dynamics influencing the reported number were all of the strengths that we talked about in the strong quarter, and I would include renewals in that category. It was very healthy in that regard. The other dynamic, obviously, is what we also called out in my prepared remarks around the contract duration ticking up. But the underlying health of the business, I would describe as stable to positive, trending in the right direction. So we feel pretty good about that.
Tooey Courtemanche: Yeah. Matt, one thing that just jumped out at me, and that is why I put it in the prepared remarks, the fact that Procore Technologies, Inc. now has $1 trillion of committed construction volume annually on our platform. And when I set out to start this business, many, many years ago, I could have never imagined having that amount of impact on the industry, and it is just a testament to how we are doing with the new acquisition of customers as well as our expansion of our existing.
Matthew Puljiz: And, Matt, you might remember last November at the Investor Day, that number was roughly $900 billion. So it gives you another sense of how customers are feeling about their renewal activity with us.
Matthew Martino: Yeah. Great. Thanks for all the additional context. Thanks, guys.
Tooey Courtemanche: Thanks, Matt. Thank you.
Operator: Our next question comes from Brent Thill of Jefferies. Your line is now open. Please go ahead.
Brent Thill: Thanks. Tooey, CRPO, I think, is the highest growth you have seen in seven quarters. And I am just curious if there is anything to consider. Is that just a sign of, hey, ongoing continued good execution, macro maybe opening up a bit better, any other factors on that side? And I had a quick follow-up.
Matthew Puljiz: I am going to let Matt start, and I am going to come in over the top.
Matthew Puljiz: Yeah. Hey, Brent. So the two drivers of the CRPO performance are, one, a strong quarter. We can talk about our category leadership. I will let Tooey cover that. And then, obviously, the second dynamic is the increasing contract duration that we have been having. When you normalize for all of that, the underlying CRPO growth rate is very consistent with the revenue growth rate in the quarter. But I will let Tooey explain thematically what has been happening in the business.
Tooey Courtemanche: Well, so yeah. As you hear me say all the time, Brent, that first and foremost, the TAM is just so large. The TAM is so big. And also the fact that we are the system of choice for the industry when it comes to construction management. Primarily because we are the best platform that is out there. And I think the other contributing factor is our go-to-market motion has been very strong. And it is driven by an extremely good brand presence in the markets that we serve. So all of that just reflects the strength of us and how our customers feel about us.
Brent Thill: Okay. And just on the go-to-market too, you mentioned it is yielding benefits. I know many of the changes are in the rearview mirror, but where have you started to see kind of the biggest improvements in the field? What has been maybe your and Larry's proudest moment of what the changes have been? Is there one or two areas that you can point to and highlight that this has been a great outcome?
Tooey Courtemanche: Yeah. So, I would say, primarily, the customer intimacy that we have generated through providing additional resources to our customers to make them more successful is something that really is driving a lot of goodwill, which leads to both revenue expansion on dollars committed as well as additional products being sold. So that has that downstream impact, which is really, really powerful. And so we have been kind of excited about that, and I do not know if you want to add anything.
Matthew Puljiz: Yeah. So I would talk about there are some pretty tangible benefits we have seen. Overall, improved execution, which is great. We have now had a few quarters in a row, really began in Q4 of last year and has continued in Q3 of this year. We have got higher pipe conversion, which is a great sign. Improving expansion rates. We have actually had lower voluntary headcount attrition in sales and go-to-market, which is great. That keeps productivity online for a longer period of time. And then, you know, clearly, the big one is when you hear directly from customers themselves, and Tooey touched upon that. So in aggregate, we feel like we are operating quite well.
We think we are where we thought we would be. You know, at the same time, there is no mission accomplished banner being hung up in the Procore Technologies, Inc. offices here. We want to get better. We see opportunities to get better, and we will. But we are pleased where we are right now.
Brent Thill: Great. Thank you.
Tooey Courtemanche: Thank you.
Operator: Our next question comes from Saket Kalia of Barclays. Your line is now open. Please go ahead.
Saket Kalia: Okay, great. Hey, Tooey. Hey, Matt. Thanks for taking my questions here. And Tooey, really nice way to cap your term as CEO, so kudos.
Tooey Courtemanche: Thanks, Saket.
Saket Kalia: Absolutely. Actually, Tooey, maybe on that topic for you. I do not know if it has been said yet, but just congrats on hiring Ajay. I mean, he did a great job at ANSYS. So great to see. Understanding that he has not started yet, what are some of his ideas about the business that maybe intrigued you during the search process? I am curious. And I do not want to preannounce anything that he is planning, but I am just kind of curious what was intriguing about some of his thoughts on the business?
Tooey Courtemanche: Yeah. Well, so it was remarkable because early on in the conversations that Ajay and I were having, we kept honing in on our passions around serving the people who build the world around us. And his experience prior to his new role at Procore Technologies, Inc. really is a good analog to what we are trying to do here. So first and foremost, that was kind of the moment where I think we both saw, like, wow. This is something that could be great. And I have had the great privilege of getting to know Ajay over the last couple of months and even more in the last just few weeks.
But, yeah, it just turned out that he is not only a great operator, but he is also a great person. And I was driving into work this morning thinking to myself, like, I am more confident now than I have ever been because I have so much faith in him, and he is such an inspirational leader. So you know, that is a comforting place to be in this moment in my life.
Saket Kalia: Yeah. That is great. Matt, maybe for you for my follow-up. I know we do not talk about net revenue retention rates expressly, but it sounds like they are trending up. I was wondering if you could confirm that. And maybe more specifically, what products specifically are sort of driving what sounds like an improving NRR and whether we can think it can continue into next year?
Matthew Puljiz: Sure. So there are some puts and takes. We disclose that metric every Q4. And when we report in February, we will definitely quantify it. So I will keep my answer qualitative to your point. But there are puts and takes going on in there. I would describe churn year to date as stable, which is good. I would describe expansion as improving. So those two things would be the tailwind going into NRR. The headwind would actually be the same dynamic that is happening in CRPO with the longer contract duration. One of the reasons why customers are electing to take longer-term contracts is the option to pool your construction volume.
You may have heard us talk about this before, pooled models. Pooled models are a great option for customers. It is a win-win. We get a longer commitment. They get a lot more flexibility. We are quite happy about that. But those contracts do come with an NRR of 1% throughout that contract term, so that is the headwind. So I would not be surprised if we end up in a very similar place where we were last Q4. This is why it is not the best metric for us. You can see the financials may look good, but NRR may look unchanged for all the reasons I described.
And then on the product front, if I had to single one, I would probably pick financials. As you may have recalled, what we talked about at Groundbreak, pretty optimistic about what is going on in resource management. And there are other things there that are going to be quite beneficial to us in the long term.
Tooey Courtemanche: I would drill in analytics as well. Our customers love our analytics product.
Saket Kalia: Super helpful, guys. Thank you.
Tooey Courtemanche: Thanks, Saket. Thank you.
Operator: Our next question comes from Jason Celino of KeyBanc Capital Markets. Your line is now open. Please go ahead.
Jason Celino: Hey, Jason. You there? Oh, jeez, Chase. Whoops. Sorry. On mute. You know, anyways, I have been, I will do the best for it. It has been a pleasure. Yeah. You would think after, you know, five years, we would figure out the mute button. I guess not. No, Tooey, it has been a pleasure, and I will still see you at Groundbreak. So, you know, you are not, you will not disappear from our lives completely. But, like, taking a step back a little bit, I think when you guys went public, you know, four years ago, you had that chart showing that construction was, was it, the second under-digitized industry.
You know, the industry has made a lot of progress over the last few years.
Tooey Courtemanche: Yes.
Jason Celino: Yes. Yes. Good memory. When we think about what the next five years might look like, like, where do you think the industry digitizes the most? You know, open-ended question, but thought I would ask.
Tooey Courtemanche: Yeah. By the way, this is one of the things that I just am so grateful for because we do have this corpus of proprietary construction data that is unprecedented. In this era of AI, I believe that we are extremely well-positioned to drive tremendous productivity into the entire industry. From the owners to the GCs all the way to the subs. And it is because we have this data that we can share with the industry. So they do not have to make the same mistakes over and over again, and they can optimize their business. And you know, the industry has been plagued for decades with a labor shortage.
The more we can do to drive productivity into the organizations that we are serving, the better they perform as companies, and the more grateful they are, and the more they want to buy Procore Technologies, Inc. So I am really excited about our opportunity to leverage the data on the platform to enable this industry to get off the bottom of that list and move up.
Jason Celino: Okay. Great. And then, I think you are still beta testing some different pricing and packaging adjustments. Just curious how that testing is going and when we might hear more concrete details of when these changes will be out across the board?
Matthew Puljiz: Sure. I can take that one. So what Jason is referring to, if you do not know, is historically, our products have been sold a la carte. And we are in a pilot right now with a cohort of current customers and new logo prospects where we are offering our solutions in kind of a good, better, best bundles and packages that are tailored to the stakeholder. So far, Jason, it is going quite well. I would say the feedback from customers has been positive in terms of simplicity of the menu of options. If you want to land with a modest amount of solutions, you can, and you have a very clear graduation path to adopting a bit more.
And that was the downside to our prior, or I should say our current model right now. Not really expecting this offering to really change the financial trajectory of the business. It is really just more about simplicity and having something very digestible for customers to kind of consume. So we can digitize them on their own journey path.
Tooey Courtemanche: Jason, we have been hearing this for years from our customers that there is a certain subset of our prospects that would much prefer a simpler pricing model so they do not have to go through the a la carte process. So this is just another example of Procore Technologies, Inc. meeting our customers where they want us to meet them. And I am very excited that it is showing such positive results.
Jason Celino: Perfect. Thank you.
Tooey Courtemanche: Thank you.
Operator: Our next question comes from Joe Vruwink of Baird. Your line is now open. Please go ahead.
Joe Vruwink: Great. Thanks for taking my questions and congrats to you, Tooey. You know, the large deal activity is good to see. There is nothing that strikes me about the seasonality in Q2 and Q3 that is naturally conducive to large deals or surfacing large deals. I would think that Q4 is probably when more large deals tend to happen. So I just wanted to confirm that point that, you know, you are not pulling any out of the pipeline early, that sort of thing.
But, more specifically, just asking about how the Q4 large deal opportunity is shaping up and if the conversion rates you noted earlier, you know, stay at pretty good levels, could that maybe be an upside driver as you think about how you are going to exit this year?
Matthew Puljiz: Yeah. It is a great question. I will start, and Tooey can kind of come in over the top. So you are right. Typically, in software and certainly in Procore Technologies, Inc.'s history, you do not see the large deal activity in the middle of the year. You typically see it in Q4. It is difficult for us to discern if this is a new pattern given it is a small sample size. But I do think the one large change from our past to today is we are in a little bit of a different operating model. So we are giving the team credit for that. I would say our Q4 pipe looks healthy.
I like the breadth of it. We have a large number of different stakeholders, different geos, different deal sizes, frankly. So whether the large deal activity continues in Q4 or not remains to be seen. But our optimism is quite positive in Q4.
Tooey Courtemanche: I guess the only thing I will add is, I said this in the opening remarks, Matt just alluded to it. But, yeah, the success in the quarter was based on a broad set of stakeholders. Right? So we are no longer a company that relies so super heavily on GCs. We have a very strong owners business and a subcontractor business as well. And so going into Q4, it is nice to see that mix across all stakeholders.
Joe Vruwink: Okay. That is great. And then I wanted to ask, and I know you kind of addressed 2026 with where street estimates are. I guess, leaving that aside for a moment, I think in the past, another way you have typically addressed forward revenue potential is to steer folks back to your CRPO growth. And so if that is growing very near revenue today, would normally think about that type of growth rate as maybe a starting point for what next year's revenue can be. Without getting super explicit on the exact number. Is that relationship still applicable here, or has something changed about CRPO where it is not going to have that relationship anymore?
Matthew Puljiz: I would say that relationship would still exist, but I do think we have to remember we are getting a new boss on Monday. And, you know, when we want to provide our formal guide for next year, we will do that in February. And then, you know, I think that is probably the best point in time to talk about next year more specifically than we have done this year. But we can speak about Q3. We can talk a little bit about our confidence level in this current quarter. That remains. And I would use that information as you wish.
Joe Vruwink: Great. Thank you very much.
Tooey Courtemanche: Thank you, Joe.
Operator: Our next question comes from Joshua Tilton of Wolfe Research. Your line is now open. Please go ahead.
Joshua Tilton: Hey, guys, thanks for sneaking me in here. Congrats, Tooey, on a great run, and congrats, Matt, on tonight. You did a great job. Two questions for me. Maybe the first one, kind of a follow-up to Saket's question, but a little bit more direct. Tooey, your messaging, how you feel you are leaving the company from a position of strength. As you transition the leadership role from a position of strength to, you know, somebody who we also agree with you is going to be a great leader, where do you just see the place that Ajay can maybe make the biggest positive improvement to the business over the next few years?
Tooey Courtemanche: Well, as I mentioned, Josh, when I was searching for the next leader of Procore Technologies, Inc., the primary driver I was looking for was somebody who has actually seen this before. They have taken a business from a billion to 3 to 5. And that they actually know and have the pattern recognition to do so. And to do so successfully. The other piece was the fact that, you know, Ajay has so much experience building a global business, building that partner ecosystem, all the things that are kind of the next phase needed for Procore Technologies, Inc.
So I think he brings a toolbox with him that is filled with the tools that are required to build the future of Procore Technologies, Inc.
Joshua Tilton: Helpful. And then maybe just to follow-up for Matt. Also, maybe I acknowledge it is a little too early here. But I guess when we think about, you know, Ajay's ability to make all those changes that you just mentioned five seconds ago, you are very clear on the call that you guys are committed to expanding margins going forward. Do you feel like you can remain committed to that margin expansion while also giving Ajay the room that he needs to improve the growth profile of the business if he believes that is the right path for Procore Technologies, Inc. going forward?
Matthew Puljiz: Short answer is yes. I think the range of magnitude and the exact quantification of that needs to be determined, which I think your question is very spot on and fair. And quite frankly, something we will be talking about a lot internally over the quarter before we lock this plan. But, you know, we have been spending some time with him already before his formal start date. And, you know, I just echo the comments Tooey made. This is a very credible operator.
He has really asked a lot of excellent questions to us, and, you know, I am speaking, I am filling in for Howard tonight, but I think it is very safe to speak on his behalf by saying, you know, our job is to give him as many options and 400 bps of non-GAAP paths and flexibility as possible, and we are guiding EBIT expansion this year. I think that is a very doable number this year. And I think it is likely we go a little bit higher than that. But beyond that, I think it is appropriate for him to get into the seat, and then we can actually deliver something next year.
Joshua Tilton: Super helpful. Congrats again, and we are very excited to see what Ajay can do. We agree on everything you said about him.
Tooey Courtemanche: Thank you, Josh.
Operator: Our next question comes from Ken Wong of Oppenheimer. Your line is now open. Please go ahead.
Ken Wong: Fantastic. Thanks for taking my question. Since we are coming off of Groundbreak, Tooey, I would love to get some feedback from you in terms of how customers were talking about the competitive landscape. What were you hearing in terms of your product versus one of your larger peers out there? Any kind of changes out there that you were picking up on?
Tooey Courtemanche: Great question, Ken. I have to be totally honest with you. I talked to one customer who brought up a competitor once at Groundbreak. So, that did not happen. But let me focus on the feedback that we got. The feedback is that our customers and our prospects that attended Groundbreak were yet again blown away by the achievements we have done over the last twelve months since the last one. And we are just getting very, very positive feedback. I want to tell you too, they are very excited about AI. Right? And as you know, this is going to change the world, and we are really bullish on it.
I received an email yesterday from the CEO and the chairman of the board of one of the largest construction companies in America talking about wanting to partner with me and partner with Procore Technologies, Inc. on an AI initiative, to get, like, a front-row seat to Procore Technologies, Inc.'s AI, as well as getting access early to our tools. So there is a lot of excitement around the things that Procore Technologies, Inc. can do. And yeah. So that was it. No real talk about competition at all.
Matthew Puljiz: But, Ken, hey. It is Matt. I would add, as far as actually what the internal data shows, I will just reiterate what Tooey had said in his prepared remarks. We feel like this dynamic is quite favorable to Procore Technologies, Inc. And we stand behind our past disclosures on this front. That has been very consistent, very positive. So we feel quite good about it. We respect our competitors quite a bit, but we are very confident in ourselves to continue our category leadership.
Ken Wong: Got it. Thanks, Matt. And then maybe just quickly, I know you have touched a lot on the kind of the longer duration. I guess when you are looking at that data, any sense how much of that is maybe product-driven in terms of kind of customers wanting to commit more because of product and therefore it makes sense to maybe stretch things out? How much of that is the go-to-market? Obviously, pushing up enterprise, you will naturally see longer-term deals. Any context you can give us in terms of kind of some of the key components you think might be kind of pushing customers in this direction?
Matthew Puljiz: I think all the things you bring up are fair and are contributing. You know, a couple of things to note. Our go-to-market folks, they are not incentivized to sell a three-year contract over a two-year contract. So the duration or the term is very much determined by the customers themselves. Now some may want a longer period of time to ramp into a greater amount of products, you know, you are bringing up. But if I had to pinpoint one specific cause or one specific driver, it is probably half to do with these pooled contract models. And it is really about having more flexibility to deploy volume given there might be uncertainty into their project schedules.
That would probably be the single biggest driver. But, yes, as we move more upmarket, as we establish more strategic relationships with these customers, all of that is going to come with longer duration.
Tooey Courtemanche: Well, I would also point out that I firmly believe that we are so mission-critical to the customers that we serve, that it only makes sense for them to make a longer-term investment in us. It is very difficult to rip and replace all of the things that Procore Technologies, Inc. does. So, when you make a commitment to Procore Technologies, Inc., you are making a commitment, and that is, I think, a testament to how mission-critical we are.
Ken Wong: Perfect. Thanks a lot, guys.
Operator: Our next question comes from Daniel Jester of BMO Capital Markets. Your line is now open. Please go ahead.
Will Hancock: Hi. This is Will Hancock on for Dan Jester. Thank you so much for taking our question. So you guys touched a bit on the macro environment, but just wondering if you would be able to share any additional color on the current demand environment if you are seeing traction in international geos given your guys' sales changes to give regions that added layer of support. Thank you.
Tooey Courtemanche: Maybe I should just start by saying, I am going to reiterate no change notably at all in the macro environment. Still a challenging macro environment both in the US and abroad. And so not a lot to say there. Do not know if you want to...
Matthew Puljiz: No. I concur. It has been very consistent, not getting worse. Not getting better. It has been quite stable. But it has been a steady headwind for us.
Tooey Courtemanche: But I will say we are very, very optimistic about our performance facing these headwinds. And it is something that we are proud of.
Matthew Puljiz: That is right. Yeah. And when it does turn, we expect it will be a tailwind to the business. It is just difficult to determine when that will occur.
Will Hancock: Great. That is helpful. And then a quick one here on the Q4 guide. How should we think about hitting that top end of the range? And what kind of assumptions did you guys factor in on the lower bound?
Matthew Puljiz: I would say regarding our guidance, the philosophy has not changed. And so you can kind of trace that back to what we have done in the past and what we have delivered. We have applied that same mentality to the fourth quarter. So we continue to be confident and stand behind that guide.
Will Hancock: Great. Thank you. And congrats, Tooey.
Tooey Courtemanche: Thanks, Will. Appreciate you.
Operator: At this time, we will take no further questions for today.