Procore Technologies Reports Revenue Growth Amid Challenges

News Summary

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 Sees Revenue Growth Despite Challenges in Q2 2025

Procore Technologies, listed on the NYSE as PCOR, announced its financial results for the second quarter of fiscal year 2025 on July 31, showcasing a significant increase in revenue despite facing challenges in profitability and cash flow. The company reported a GAAP revenue of $323.9 million, marking a 14% increase from $284.6 million in the same quarter of 2024. This result surpassed analyst expectations, which had projected revenue of $312.4 million.

Profitability and Cash Flow Concerns

While revenue figures were encouraging, Procore faced pressures on profitability. The company reported a decrease in its non-GAAP operating margin to 13%, down from 18% in Q2 2024. Furthermore, free cash flow took a noticeable hit, dropping to $10.6 million from $46.6 million in the previous year and falling sharply from $47 million in Q1 2025 to $11 million. The combination of decreasing margins and cash flow raised concerns among investors regarding the company’s financial stability.

Customer Growth and Retention Rates

Despite these financial challenges, Procore demonstrated strong customer retention and growth. The company’s total organic customer count reached 17,501, reflecting a 15% year-over-year increase in customers contributing over $100,000 in annual recurring revenue, totaling 2,517 customers. During the quarter, Procore added 195 net new organic customers, showcasing a stable demand for its services.

Procore maintained a 95% gross revenue retention rate, a clear indication of customer loyalty and satisfaction in a competitive market.

Increased Operating Expenses and Strategic Acquisitions

The company’s operating expenses rose as Procore invested heavily in research and development. R&D expenses increased by 23% to $88.9 million, while capitalized software development costs rose from $10.2 million in Q2 2024 to $17.2 million. These investments are seen as essential for driving future growth, even amidst rising costs.

In an effort to enhance its Building Information Modeling (BIM) capabilities, Procore completed two strategic acquisitions during the quarter: Novorender and Flypaper Technologies. These acquisitions are expected to strengthen Procore’s competitive position in the construction technology sector.

Regulatory Compliance and Future Projections

As part of its commitment to security and compliance, Procore received the Federal Risk and Authorization Management Program (FedRAMP) “In Process” designation. This achievement opens potential sales avenues within government markets, which may provide a new revenue stream.

Looking forward, Procore projected its revenue for Q3 2025 to be between $326 million and $328 million, reflecting a year-over-year growth of 10% to 11%. For the full year of 2025, revenue is anticipated to fall between $1,299 million and $1,302 million, suggesting overall growth of approximately 13%.

However, management remains cautious, citing potential challenges such as slower construction activity and macroeconomic risks. They emphasized the importance of balanced growth and cost discipline while maintaining their targets for the full year 2025.

Investor Considerations

As Procore navigates these challenges, analysts suggest that investors closely monitor key metrics such as margin trends, cash flow stability, the growth of large customer acquisitions, and the company’s international growth strategy. These factors will be crucial in determining Procore’s performance in a fluctuating market.

Deeper Dive: News & Info About This Topic

Additional Resources

• The Globe and Mail: Procore Q2 Revenue Jumps 14%
• Insider Monkey: Procore Technologies Q2 2025 Earnings Call Transcript
• MSN: Procore Raises 2025 Revenue Outlook
• TipRanks: Procore Technologies Reports Strong Q2 2025 Results
• AINVEST: Procore Technologies Q2 2025 Earnings Unpacking
• Wikipedia: Procore Technologies
• Google Search: Procore Technologies Q2 2025
• Google Scholar: Procore Technologies Q2 2025
• Encyclopedia Britannica: Procore Technologies
• Google News: Procore Technologies