PCOR

Business Context and Reporting Period

Company: Procore Technologies, Inc. (PCOR)
Filing Type: Form 10-K (Annual Report)
Reporting Period: Fiscal year ended December 31, 2025
Business Overview: Procore is the leading global provider of construction management software, connecting owners, general contractors, and specialty contractors on a cloud-based platform. The company generates revenue primarily through subscriptions based on annual construction volume. In February 2026, the company began offering products in bundled packages and launched agentic AI capabilities.

Key Financial Metrics

Material Changes vs. Prior Period

• Revenue Growth: Revenue increased 15% year-over-year (YoY) to $1.32 billion, driven by a mix of 49% from existing customers and 51% from new customers.
• Profitability: While GAAP net loss narrowed slightly to $100.8 million, Non-GAAP operating income improved significantly to $186.6 million (14% margin), up from $111.0 million (10% margin) in 2024.
• Customer Metrics:
  • Customers contributing >$100k ARR grew 16% to 2,710.
  • Customers contributing >$1M ARR grew 34% to 115.
  • Gross Retention Rate (GRR) was 95% and Net Retention Rate (NRR) was 106%.
• Acquisitions: Completed the acquisition of Novorender (BIM rendering) in January 2025 for $44.3 million. Subsequently acquired Datagrid (AI) in January 2026 for approximately $190 million.
• Leadership Change: Founder and former CEO Craig Courtemanche resigned in November 2025; Dr. Ajei S. Gopal was appointed President and CEO.

Guidance, Outlook, and Risks

Outlook and Strategy:

• AI Integration: The company is heavily investing in agentic AI to automate workflows, highlighted by the acquisition of Datagrid.
• Go-To-Market (GTM): Evolved GTM model to a general manager structure to deepen customer relationships, though this may cause near-term disruptions.
• Capital Allocation: Authorized a new $300 million stock repurchase program in November 2025. Repurchased $128.8 million of stock in 2025 and an additional $100 million between December 2025 and February 2026.
• Workforce Reduction: Executed a ~4% global workforce reduction in January 2026, expecting $6.6 million in charges in Q1 2026.

Risks and Contingencies:

• Profitability: The company has a history of losses and an accumulated deficit of $1.3 billion; future profitability is not guaranteed.
• Macroeconomic Factors: Construction industry sentiment is uncertain due to inflation, interest rates, and geopolitical events, which could reduce customer spending.
• Regulatory & Legal: Risks include data privacy laws (GDPR, CCPA), AI regulations (EU AI Act), and potential litigation regarding trade secrets (Oracle lawsuit) and unauthorized practice of law (Levelset acquisition).
• Cybersecurity: High exposure to cyber threats, including ransomware and nation-state actors, given the critical nature of construction data.

Investor Verification Checklist

• Non-GAAP Adjustments: Verify the magnitude of stock-based compensation ($250.3 million in 2025) and amortization of acquired intangibles ($44.2 million) to understand the gap between GAAP loss and Non-GAAP income.
• Stock Repurchase Impact: Assess the impact of the $300 million repurchase authorization and recent $100 million post-year-end buyback on liquidity and future cash flow.
• Acquisition Integration: Monitor the integration and financial impact of the Datagrid acquisition ($190M) and Novorender ($44.3M) on future revenue and margins.
• Customer Concentration: Confirm that no single customer represents >10% of revenue, but note the heavy reliance on Enterprise/Mid-Market customers for the majority of ARR.
• Workforce Reduction Costs: Track the $6.6 million in severance charges expected in Q1 2026 and the resulting impact on operating expenses.