10-Q: Procore Q3 2025: Revenue Up 15%, Net Loss Narrows

Procore Technologies, Inc. reported a 15% year-over-year revenue increase to $338.85 million for Q3 2025, alongside a reduced net loss, driven by customer expansion and strategic acquisitions.

Summary

• Revenue for the three months ended September 30, 2025, increased by 15% to $338.851 million, compared to $295.885 million in the prior year period.
• Net loss for Q3 2025 improved to $(9.101) million, from $(26.388) million in Q3 2024.
• Non-GAAP income from operations for Q3 2025 more than doubled to $58.645 million, up from $26.329 million in Q3 2024, with non-GAAP operating margin expanding to 17% from 9%.
• For the nine months ended September 30, 2025, revenue grew 15% to $973.402 million, compared to $849.660 million in the same period last year.
• Net loss for the nine months ended September 30, 2025, increased to $(63.179) million, from $(43.665) million in the prior year period.
• The number of customers contributing more than $100,000 in annual recurring revenue (ARR) increased by 15% year-over-year to 2,602 as of September 30, 2025.
• Total customers grew 4% year-over-year to 17,623 as of September 30, 2025.
• Gross Retention Rate (GRR) was 95% as of September 30, 2025, up from 94% in the prior year.
• Current Remaining Performance Obligations (cRPO) increased 23% year-over-year to $911.2 million as of September 30, 2025, with total RPO reaching $1.4 billion, up 31%.
• Acquired Novorender AS, a Norway-based leader in advanced building informational modeling rendering technology, for $44.3 million in cash on January 28, 2025.
• A new stock repurchase program was authorized on November 3, 2025, allowing for repurchases of up to $300.0 million of common stock, expiring November 3, 2026.
• Repurchased and retired 1,903,527 shares of common stock for an aggregate of $128.8 million during the nine months ended September 30, 2025.

Sentiment

Score: 7

Explanation: The company demonstrates strong revenue growth, improved quarterly net loss, and significant non-GAAP operating income expansion, indicating underlying operational strength and effective execution of its business model. High customer retention and RPO growth provide a solid foundation. Strategic acquisitions and a new stock repurchase program are positive signals. However, the increase in the nine-month GAAP net loss, slight gross margin compression, and the acknowledgment of not expecting profitability in the foreseeable future, coupled with ongoing macroeconomic headwinds, temper the overall sentiment to moderately positive.

Positives

• Strong revenue growth of 15% year-over-year for both the three and nine months ended September 30, 2025, driven by existing and new customers.
• Significant improvement in net loss for Q3 2025, narrowing to $(9.101) million from $(26.388) million in Q3 2024.
• Non-GAAP income from operations more than doubled in Q3 2025 to $58.645 million, with non-GAAP operating margin expanding to 17% from 9%, indicating improved operational efficiency.
• Robust growth in high-value customers, with a 15% increase in customers contributing over $100,000 in ARR.
• High Gross Retention Rate (GRR) of 95% demonstrates strong customer loyalty and the essential role of the platform in customer operations.
• Substantial growth in Remaining Performance Obligations (RPO), with total RPO up 31% to $1.4 billion and current RPO up 23% to $911.2 million, providing strong future revenue visibility.
• Generated positive net cash from operating activities of $185.3 million for the nine months ended September 30, 2025.
• Strategic acquisition of Novorender AS enhances capabilities for large-scale construction projects and expands platform offerings.
• Authorization of a new $300 million stock repurchase program signals confidence in financial health and commitment to returning capital to stockholders.

Negatives

• Net loss for the nine months ended September 30, 2025, increased to $(63.179) million from $(43.665) million in the prior year period.
• GAAP gross margin slightly compressed, decreasing to 80% in Q3 2025 from 81% in Q3 2024, and to 79% for the nine months from 82% in the prior year.
• Operating expenses increased across cost of revenue (up 25% in Q3, 35% for 9M), sales and marketing (up 2% in Q3, 9% for 9M), and research and development (up 9% in Q3, 18% for 9M) on an absolute dollar basis.
• Interest income and accretion income decreased due to lower balances and purchases of marketable securities.
• Provision for income taxes increased significantly by $5.0 million for the nine months, primarily due to a foreign tax on intellectual property transfer from Novorender.
• Experienced a net decrease in cash and cash equivalents of $(81.522) million for the nine months ended September 30, 2025.
• The company has an accumulated deficit of $1.3 billion as of September 30, 2025, and states it may not achieve profitability in the foreseeable future.

Risks

• Macroeconomic factors such as elevated inflation, higher interest rates, recession risk, capital market volatility, and geopolitical events may impact customer spending and operating expenses.
• The evolution of the go-to-market (GTM) operating model may cause near-term disruptions and adverse impacts to financial and operating results, and failure to successfully implement it could materially affect the business.
• Increased competition in markets and the ability to compete effectively pose ongoing challenges.
• The ability to develop new products, platform capabilities, services, and features, and ensure customer adoption, is crucial for future growth.
• Successfully incorporating artificial intelligence (AI) into products, services, and platform, and deploying AI in business operations, is a key dependency.
• International expansion requires considerable management attention and resources, and is subject to challenges related to multiple languages, currencies, cultures, customs, and differing legal/tax/regulatory systems, with investments potentially affecting near-term operating results.
• Customer spending is cautious, and pricing sensitivity has increased due to macroeconomic factors, impacting cRPO annual growth rate.
• Future capital requirements may necessitate additional equity or debt financing if the company is unable to raise capital when desired or on acceptable terms.
• The ability to identify, assess, and manage cybersecurity threats and risks is critical.
• Reliance on key personnel and the ability to attract, maintain, and retain management and skilled personnel are important for sustained operations and growth.

Future Outlook

Management expects sales, marketing, research and development, and general and administrative expenses to increase on an absolute dollar basis as the business grows, supports its GTM operating model, and expands internationally. Increased foreign tax expenses are anticipated with international operations. A full valuation allowance for net U.S. deferred tax assets is expected to be maintained for the foreseeable future. Existing cash, cash equivalents, and marketable securities are believed to be sufficient for at least the next 12 months. However, the company may not achieve profitability in the foreseeable future and may require additional capital for strategic initiatives, acquisitions, or investments in complementary businesses and technologies.

Management Comments

• Our mission is to connect everyone in construction on a global platform.
• We are the leading global provider of cloud-based construction management software, and are helping transform one of the oldest, largest, and least digitized industries in the world.
• We believe that these investments [in GTM operating model] will allow us to build stronger and deeper customer relationships, improve our operating efficiency over time and ultimately allow us to better scale our business, all of which, in turn, will result in better customer experiences and provide additional value to our customers, some of whom continue to face macroeconomic and other pressures that have negatively impacted their spending decisions.
• Notwithstanding these risks, we believe that the evolved GTM operating model will improve our long-term operating efficiency, best position us for sustainable long-term growth, and enhance our ability to capture our large market opportunity.
• We believe our high GRR demonstrates that we serve a vital role in our customers operations, as the vast majority of our customers continue to use our products and platform and to renew their subscriptions.
• We see international expansion as a major, and largely greenfield, opportunity for growth as we look to capture a larger part of the worldwide construction market.
• We have a balanced approach to capital allocation based on the following priorities: driving organic and efficient revenue growth; investing in accretive mergers and acquisitions; and returning capital to stockholders through regular evaluation of stock repurchases, as appropriate.

Industry Context

Procore operates in the construction industry, which is characterized as one of the oldest, largest, and least digitized globally, presenting a significant opportunity for digital transformation. The company's cloud-based platform aims to modernize construction management. Macroeconomic factors, including inflation, higher interest rates, and recession risk, are impacting customer spending and increasing pricing sensitivity within the industry. Procore's investments in AI integration and international expansion reflect broader industry trends towards leveraging advanced technology and capturing untapped global market potential for construction management software.

Comparison to Industry Standards

• Procore positions itself as the 'leading global provider of cloud-based construction management software,' indicating a strong market position within its niche.
• A Gross Retention Rate (GRR) of 95% is presented as high, suggesting strong customer loyalty and competitive performance in customer retention within the SaaS industry.
• The construction industry's characterization as 'least digitized' highlights a significant market opportunity for Procore's digital transformation solutions, implying a large addressable market compared to more mature digital industries.

Management Changes

Corporate Governance

Legal Proceedings

• Not aware of any currently pending legal matters or claims that, if determined adversely, would individually or taken together reasonably be expected to have a material adverse effect on the financial position, results of operations, or cash flows.

Stakeholder Impact

• Shareholders: Positive impacts from revenue growth, improved Q3 net loss, strong non-GAAP operating income, high customer retention, and a new stock repurchase program. Negative impacts from increased nine-month GAAP net loss, slight gross margin compression, potential future dilution from equity plans, and macroeconomic risks.
• Employees: Benefits from continued investment in research and development and go-to-market teams (increased headcount), stock-based compensation, and the Employee Stock Purchase Plan. A workforce reduction was completed in Q1 2024.
• Customers: Benefit from continued technology innovation, product development, and strategic acquisitions (Novorender, Intelliwave) that enhance platform capabilities and offerings like Procore Pay. However, they face macroeconomic pressures leading to cautious spending and pricing sensitivity.
• Creditors/Suppliers: The company's stable cash position and belief in sufficient liquidity for the next 12 months suggest a low risk for these stakeholders.

Next Steps

• Continue to invest in technology innovation and product development to enhance platform capabilities and attract a broader set of stakeholders.
• Evaluate strategic acquisitions and investments in businesses and technologies to drive product and market expansion.
• Expand international sales and marketing efforts to capture a larger part of the worldwide construction market.
• Monitor macroeconomic factors and their potential impact on customer spending and operational results.
• Adopt ASU No. 2023-09, 'Improvements to Income Tax Disclosures,' in the Annual Report on Form 10-K for the year ended December 31, 2025.
• Evaluate the impact of ASU No. 2025-06, 'Improvements to Accounting for Internal-Use Software,' on consolidated financial statements and disclosures.
• Opportunistically repurchase shares of common stock under the new $300.0 million stock repurchase program, which expires on November 3, 2026.
• CEO Designate Dr. Ajei S. Gopal's performance-based restricted stock units (PSUs) will vest based on the company's total shareholder return (TSR) performance relative to the S&P Completion Index (CI) Information Technology over three-year and four-year periods beginning September 22, 2025.
• The CEO's 2025 PSUs will vest based on the achievement of certain financial performance goals for fiscal year 2025, with one-third vesting on February 20, 2026, and the remainder quarterly over the subsequent two years.

Key Dates

Recommendation

Procore demonstrates solid revenue growth and strong customer retention, indicating a robust core business and market position in a large, under-digitized industry. The significant improvement in Q3 non-GAAP operating income suggests increasing operational efficiency. Strategic acquisitions and a new stock repurchase program are positive signals for future growth and shareholder value. However, the increase in the nine-month GAAP net loss and slight gross margin compression, coupled with ongoing macroeconomic headwinds and the company's own statement about not expecting profitability in the foreseeable future, warrant a 'Hold' rather than a 'Buy.' Investors should monitor the successful integration of acquisitions, the impact of the GTM model evolution, and progress towards GAAP profitability amidst continued investments.

Keywords

Construction management software, Cloud-based platform, SaaS, Fintech, Building Information Modeling, Project management, Construction technology, Software development, SEC filing, 10-Q, Financial results, Earnings, Stock repurchase, Corporate governance, Risk factors, Novorender, Intelliwave, Artificial Intelligence, International expansion