Procore Technologies exemplifies innovation and growth in the construction industry.
Procore Technologies announced a significant increase in Q2 revenue, reaching $323.9 million, a 14% rise from the previous year. Despite concerns over profitability and cash flow, customer growth remains strong with a 95% gross revenue retention rate. The company’s operating expenses rose due to increased investments in research and development. Two strategic acquisitions aimed at enhancing Building Information Modeling capabilities were completed during this quarter. Procore projects continued revenue growth for Q3 and full-year 2025, while remaining cautious about industry challenges.
Procore Technologies, a leading provider of construction management software, announced solid financial results for the second quarter of fiscal year 2025 on July 31, 2025. The company achieved a GAAP revenue of $323.9 million, which marks a significant 14% increase from $284.6 million in the same quarter last year. This revenue figure also surpassed analyst expectations, which estimated it at $312.4 million.
Despite the positive revenue performance, Procore experienced a decline in its non-GAAP operating margin, which fell to 13% from 18% in Q2 2024. This decline indicates some challenges in maintaining profitability amidst rising costs. Meanwhile, free cash flow took a notable hit, dropping to $10.6 million as compared to $46.6 million a year earlier. The free cash flow also declined from $47 million in Q1 2025 to $11 million in the current quarter.
Procore reported a total organic customer count of 17,501, illustrating a healthy growth of 15% year-over-year in customers generating over $100,000 in annual recurring revenue, amounting to 2,517 customers. The company added 195 net new organic customers during the quarter, reinforcing the notion of sustained demand in its sector.
The company’s operating expenses saw an increase due to ongoing investments in research and development (R&D). R&D expenditures rose by 23% to $88.9 million, showing Procore’s commitment to innovation and enhancing its product offerings. Additionally, capitalized software development costs increased from $10.2 million in Q2 2024 to $17.2 million.
Procore also made strategic moves by completing two acquisitions in the quarter, namely Novorender and Flypaper Technologies, aimed at strengthening its Building Information Modeling (BIM) capabilities. Furthermore, the company received the Federal Risk and Authorization Management Program (FedRAMP) “In Process” designation, which addresses cloud security compliance and opens doors for potential sales in government markets.
Customer retention remains strong, with a 95% gross revenue retention rate, signifying the loyalty and satisfaction among its client base. However, the company reported a decrease in the GAAP gross margin, which decreased by four percentage points this quarter, pointing to profitability pressures due to elevated operating expenses.
Remaining performance obligations (RPO) demonstrated positive indicators of the company’s sales momentum, growing by double digits and indicating long-term customer engagement. Looking ahead, Procore forecasts third-quarter 2025 revenue between $326 million and $328 million, marking an estimated year-over-year growth of 10% to 11%. Additionally, for the full year 2025, revenue expectations range from $1,299 million to $1,302 million, reflecting an overall projected revenue growth of approximately 13%.
Despite the positive outlook on revenue growth, management has expressed a cautious stance in the near term, citing potential slowdowns in construction activity and broader macroeconomic challenges as areas of concern. The company continues to emphasize a balanced approach to growth and cost discipline, reassuring investors that it will strive to meet its full-year financial targets amidst uncertain market conditions. Stakeholders are encouraged to closely monitor trends in profit margins, stability in cash flow, large customer acquisition rates, and Procore’s international growth strategy moving forward.
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