프로코어(PCOR) 2026 회계연도 3분기 실적 발표 콘퍼런스 콜: 성장 가속화에 따라 가이던스 상향

프로코어 테크놀로지스(Procore Technologies, NYSE: PCOR)는 대형 전략적 계약 수주, 영업 실행력 개선, 종합건설업체·전문건설업체·발주처 전반의 광범위한 수요에 힘입어 2026 회계연도 3분기 견조한 자체 성장(organic growth)과 마진 확대를 기록했다고 발표했습니다. 또한 회사는 8억 4,500만 달러 규모의 드론디플로이(DroneDeploy) 인수를 완료했으며 연간 매출 및 영업이익률 가이던스를 상향 조정했습니다.

핵심 요약

• 공시 매출은 전년 동기 대비 18.7% 증가한 4억 200만 달러를 기록했습니다. 드론디플로이를 제외한 매출은 3억 9,700만 달러로 17.1% 증가하여 2분기 성장률(15.8%)보다 가속화되었습니다.
• 비GAAP 영업이익률은 23.5%를 기록해 전년 동기 대비 약 620bp 개선되었으며, 경영진 가이던스 상단을 400bp 상회했습니다.
• 드론디플로이를 제외한 수주잔고(cRPO)는 22.6% 증가했습니다. 인수를 포함한 cRPO는 28.9% 증가했으며, 드론디플로이가 약 6%포인트를 기여했습니다.
• 해외 매출은 전년 동기 대비 30%(고정 환율 기준 26%) 증가했습니다. 경영진은 이번 분기의 성장 모멘텀이 단일 동력이 아닌 다양한 고객군과 지역 전반에 걸친 광범위한 강세에 기인한다고 설명했습니다.
• 프로코어는 2026 회계연도 공시 매출 가이던스를 15억 5,700만~15억 5,900만 달러로, 비GAAP 영업이익률 전망치를 19%~19.5%로 상향 조정했습니다.
• 경영진은 드론디플로이 인수로 인한 예상 희석 효과를 포함해 2027 회계연도 예비 비GAAP 영업이익률 목표치 25%를 재확인했습니다.

핵심 재무 데이터

비즈니스 및 영업 성과

성장세는 프로코어의 3대 핵심 고객군인 종합건설업체, 전문건설업체, 발주처 전반에 걸쳐 균형 있게 나타났습니다. 종합건설업체는 전체 비즈니스의 약 60%를 차지합니다. 경영진은 대형 계약의 실행력 강화가 수주 호조를 이끈 가장 큰 요인이라고 강조했습니다.

신규 및 확대된 고객 관계에는 서포크(Suffolk), 슈나이더 일렉트릭 시큐어 파워(Schneider Electric Secure Power) 및 미국 정부 기관이 포함됩니다. 연방 정부 계약은 Procore for Government의 FedRAMP Moderate 인증을 바탕으로 체결되었으며, 경쟁사 제품과 스프레드시트 기반의 프로젝트 추적 방식을 모두 대체했습니다.

해외 사업은 여전히 주요 성장 기여 요인으로 남았습니다. 경영진은 매출 30% 증가의 원인 중 일부를 영국, 아일랜드 및 유럽 시장에 맞춰 개발한 공통 데이터 환경(CDE) 등 지역별 맞춤형 제품 덕분이라고 밝혔습니다.

평균 계약 기간은 2분기보다는 적지만 다시 증가했습니다. 경영진은 정상화된 cRPO 성장률이 매출 및 기말 연간 반복 매출(ARR) 성장률과 일치하는 수준을 유지했다고 언급했습니다.

드론디플로이 인수

프로코어는 9월 9일 8억 4,500만 달러의 현금으로 드론디플로이 인수를 완료했습니다. 이번 인수 자금은 보유 현금과 2031년 만기 0% 전환사채 9억 5,000만 달러 발행을 통해 조달했습니다. 프로코어는 전환사채 발행과 함께 약 1억 7,500만 달러 규모의 자사주를 매입했으며, 이사회는 이후 3억 달러 규모의 신규 자사주 매입을 승인했습니다.

드론디플로이는 3분기 약 3주 동안 500만 달러의 매출을 기여했습니다. 경영진은 4분기에 약 1,900만 달러, 2026 회계연도 전체로는 2,400만 달러의 비유기적 매출 기여를 예상하고 있습니다. 9월 기준 드론디플로이의 최근 12개월(TTM) 매출은 약 8,300만 달러였습니다.

이번 인수로 드론, 지상 로봇, 모바일 기기 및 카메라를 활용한 시각적 지능(visual intelligence)이 프로코어의 건설 플랫폼에 추가됩니다. 초기 통합 작업에는 데이터 세트 연동, 두 제품군 간 링크 확대, 드론디플로이의 AI 에이전트를 Procore AI에 통합하는 작업이 포함됩니다. 양사는 인수 전 약 600개의 공통 고객사를 보유하고 있어 양쪽 고객 기반 모두에서 교차 판매 기회가 발생할 것입니다.

AI 및 제품 개발

프로코어는 '보고, 이해하고, 행동하라(see, understand and act)' 전략을 중심으로 플랫폼의 입지를 구축하고 있습니다. 드론디플로이는 현장 시각 데이터를 제공하고, 프로코어의 소프트웨어는 프로젝트 정보, 의사결정 및 워크플로를 연결합니다.

프로코어의 디지털 코워커(Digital Coworkers)는 3분기 중에 정식 출시되었습니다. 회사는 제출물을 시방서 및 계약서와 비교 검토하고 이탈 사항을 표시하며 응답 초안을 작성하는 제출 검토 에이전트를 강조했습니다. 음성 기반 모바일 애플리케이션인 Procore AI Go는 베타 단계에 진입했으며 메타 AI 글래스를 통한 핸즈프리 이용도 지원합니다.

또한 회사는 건설 특화 추론 엔진인 맥파이(Magpie)의 3.0 버전을 선보였습니다. 경영진은 이 시스템이 복잡한 질문을 하위 작업으로 분할하고 전문 도구나 모델에 할당한 뒤 프로젝트 증거를 인용하여 답변을 제시한다고 밝혔습니다.

지난 12개월 동안 500개 이상의 제품 기능이 출시되었습니다. 또한 경영진은 프로코어 코드의 80% 이상이 현재 AI에 의해 작성되어 효율성 향상 계획을 뒷받침하고 있다고 설명했습니다.

경영진 가이던스

경영진은 상향 조정된 2026 회계연도 매출 전망이 3분기 모멘텀과 4분기에 대한 자신감을 반영한다고 밝혔습니다. 연간 전망치 상단은 드론디플로이의 비유기적 기여 예상액 2,400만 달러를 포함해 4,500만 달러 증가했습니다.

리스크 및 주시 영역

• 드론디플로이는 단기 마진을 희석시킬 것으로 예상되나, 경영진은 인수가 매출 성장과 현금흐름 손익분기 관점에서 여전히 가치 증대(accretive) 효과가 있다고 밝혔습니다.
• 계약 기간이 지속적으로 늘어나고 아직 안정화되지 않아 공시 cRPO 성장률에 영향을 미칠 수 있습니다.
• 건설 고객사들은 숙련 노동력 부족에 지속적으로 직면해 있습니다. 경영진은 상당한 수주 잔고를 보유한 대형 건설업체의 핵심 제약 요인이 수요가 아닌 노동력 확보 가능성이라고 설명했습니다.
• 프로코어의 AI 에이전트는 추가적인 컴퓨팅 비용을 발생시킵니다. 회사는 사용량 기반 요금제, 모델 선정 및 고객 소비 제어를 통해 이를 관리하고자 합니다.
• 경영진은 거시경제 환경이 전분기와 유사한 수준이었으며, 3분기의 성장 가속화가 건설 경기 여건의 근본적인 개선 때문은 아니라고 설명했습니다.

애널리스트 Q&A 주요 내용

자체 성장의 지속 가능성: 경영진은 성장 가속화의 원인을 향상된 제품 역량과 특히 대형 전략적 계약에서의 뛰어난 영업 실행력 덕분으로 돌렸습니다. 장기 성장률은 제시하지 않았습니다.

대형 건설업체 대상 기회: 프로코어는 대형 건설업체 고객군에서 신규 계약을 수주하고 기존 고객 내 점유율을 확대할 여지가 있다고 보고 있습니다. 경영진은 이들 고객이 전반적으로 건전한 수주 잔고를 보유하고 있으나 노동력 확보에 제약을 받고 있어 자동화 및 AI 도구에 대한 관심이 높아지고 있다고 밝혔습니다.

AI 수익화 및 마진 영향: 상위 등급 제품 패키지에는 더 많은 내장형 AI 기능이 포함되어 있으며, 에이전트 제품은 사용량에 따라 요금이 부과됩니다. 경영진은 AI를 구조적인 마진 리스크로 보지 않으며 규모의 효율성이 마진 확대와 함께 투자를 지원할 것으로 기대하고 있습니다.

데이터센터 시장 노출도: 경영진은 프로코어가 복잡한 데이터센터 건설에 적합하다고 언급하면서도, 연간 건설 시공액 기반 요금제를 통해 데이터센터뿐만 아니라 비주거용 및 다가구 주택 건설 전반에 걸친 노출도를 제공한다는 점을 강조했습니다.

공공 부문 기회: FedRAMP Moderate 인증은 새롭게 공개된 미국 정부 기관과의 신규 계약 수주를 지원했습니다. 경영진은 또한 이 보안 인증이 연방 및 비연방 프로젝트를 모두 수행하는 건설업체 수주에도 긍정적인 영향을 미칠 것으로 기대하고 있습니다.

성장 대 수익성: 경영진은 투자와 수익성 사이에서 하나를 선택할 필요가 없다고 설명했습니다. 비즈니스 규모가 확장됨에 따라 영업비용이 매출 증가에 비례해 늘어날 필요가 없으므로 제품 및 AI 투자를 지속하면서도 더 높은 한계 마진을 달성할 수 있다고 밝혔습니다.

실적발표 컨퍼런스 콜 전문

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전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

Operator

Hello, everyone. Thank you for joining us, and welcome to the Procore Technologies Fiscal Year 2026 Third Quarter Earnings Conference Call. [Operator Instructions]

I will now hand the conference over to Gal Munda, Investor Relations Gal, please go ahead.

Unknown Executive

Good morning, and welcome to Proker's 2026 Third Quarter Earnings Call. I'm Gagan Munda, VP of Investor Relations. With me today are Ajei Gopal, President and CEO and and Rachel Pyles, CFO.

Further disclosure of our results can be found in our press release issued last night, which 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 performance, our platform, products, our partnerships, customer demand, AI, drone deploy and our business strategies and operations. 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 4, 2026. Procore undertakes no obligation to update any forward-looking statements, except as required by law. If this call is replayed after today, the information presented may not contain current or accurate information. Therefore, statements made during this call should not be relied upon as representing our views as of any subsequent date.

We'll 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.

And with that, let me turn the call over to Ajei.

Ajei Gopal

Good morning, and thank you for joining us. I'm excited to report that our business continues to perform exceptionally well with outstanding financial and operational results for the quarter. Procore has built one of the most essential vertical software platforms. We are at the center of the construction industry. capturing information, automating workflows and enabling collaboration among every stakeholder on a project.

We operate with a physical and digital worlds meet, driving designs and decisions into the field and turning jobsite realities into actionable intelligence. We believe we are well on our way to becoming a next-generation AI native construction management platform and a true system of intelligence for construction. One that automatically sees what happens in the job side understands what it means and act on it. Such a system will deliver meaningful efficiency and safety gains across the construction life cycle, saving our customers time and money.

This quarter, we completed our acquisition of drone deploy, which adds visual intelligence to our platform and accelerates our transformation. I'm also delighted that the executive changes we made earlier this year are already making a difference.

Procore now has a veteran team with deep vertical software experience that is working well together and driving outstanding results. At ground break, our customer conference, we hosted more than 5,000 attendees, and what I heard from customers there strengthened my belief in our portfolio and the value it delivers.

I'm more confident than ever that the strength of our business, our ability to execute and the depth of our customer relationships gives us a clear runway to durable growth meaningful margin expansion and compounding free cash flow per share. Q3 picked up where Q2 left off, and both revenue and margins came in above the high end of our guidance.

Revenue for the quarter grew 18.7% year-over-year or 17.1% year-over-year, excluding grown deploy, and non-GAAP operating margins was 23.5%. Given this momentum, we are raising full year guidance beyond our Q3 beat.

Rachel will share the details shortly. Growth this quarter came from all 3 of our customer stakeholders, general contractors, specialty contractors and owners. GCs are our largest segment at about 60% of our business, and we see opportunity in both new logos and expansion. For example, in Q3, we signed a new contract with Suffolk a top 25 ENR contractor and long-time customer to leverage Procore to standardize their project and financial management workflows into more of their many projects.

The company uses Procore to consolidate field to office workflows and improve project team performance and efficiency. One of our largest contracts this quarter was with Schneider Electric Secure Power, a specialty contractor that designs, builds and manufactures data center infrastructure. As the company ramps up production to meet hyperscale AI demand, it is expanding Procore usage across the Secure Power organization and broadening the solution scope to include project execution and resource management to connect engineering, program and project management, and construction field operations, with the goal to unify the customer execution and experience from deployment through handover.

Owners are another important part of our business. And in Q3, we added a notable new one, a U.S. government agency. This contract was won in part, thanks to Procore for government's FedRAMP Moderate authorization. The agency is replacing both a competing solution and spreadsheet-based project tracking.

By standardizing growing distribution and version control on Procore, the agency aims to eliminate manual revision management, enable real-time reporting and meet federal security requirements.

During Q3, we completed our acquisition of Jon deploy. As a software offering, grown deploy works across various hardware environments, including drones, ground robots, mobile devices and cameras, connecting what Procore already knows about a project with what drone deploy sees on site is how we build the system of intelligence I described earlier. Product integration is underway, and our early focus is on expanding the pre-acquisition connectivity between the 2 product suites, connecting data sets and bringing drone deploys AI agents into Procore AI.

Moving to go to market. I'm excited about the revenue synergy opportunities ahead of us. At the time of the acquisition, Procore and drone deploy shared approximately 600 customers, which shows clear demand for the 2 product suites working together. Beyond expanding within those customers, we see significant near-term cross-sell opportunities in both directions.

Procore customers can add visual intelligence that works natively with the Procore tools they already rely upon. And many drone deployed customers are owners to whom we can introduce the full set of Procore's owner solutions.

Rachel will discuss the combined financial outlook shortly. Procor shift to an AI native company builds on 4 advantages, which are hard to replicate.

First, users data in context. More than 3 million active users this year more than 20 years of project data and activity history, and now drone deploys approximately 20 trillion square feet of visual data.

Second, security and trust. Customers already run their most important projects on Procore's platform, which is designed to be secure and compliant.

Third, our network effect. Dozens of companies work together and Procore in every project and each new project can bring more of them onto the platform.

Fourth, action. Procore is where decisions turn in to work on the job site. We believe these 4 advantages empower us to use AI more effectively to both augment our flagship products and to create new offerings. We are using AI to make our flagship products more powerful and easier to use. This helps us attract new accounts and expand usage within existing customers.

Takes the middles, one of construction's most labor-intensive schedule critical workflows. A submittal shows the GC and design team exactly what a subcontractor plans to install, and nothing gets ordered or installed until it's approved. The GC runs both ends. It builds a log of every submittal the spec requires, sends it to subcontractors and then approves or rejects each response.

Our submittal builder, part of our flagship project management offering builds that log. It cut days of coming through spec books down to minutes, but it only read the submittal section of the spec book. Our recent AI upgrade reads every section in full. It catches requirements buried elsewhere like warranty and closeout items and fills in each submittals type and title.

Teams start from a far more complete log and finish in a fraction of the time. We're also building products that weren't possible before generative and agentic AI, including Procore AI Go and our digital coworkers, which became generally available in Q3. One of them, the submittal review agent handles the GC's review at the other end of the workflow, a problem software hadn't previously solved.

It checks each submittal against the specs and contract flags deviations and unapproved submissions and drafts a response. Macao and Gordon, the Kansas City GC shows how the pieces fit. It is already standardized on the upgraded submittal builder, and they recently signed on for Procore's digital coworkers using the submittal review agent to check subcontractors responses.

In one case, the agent caught 10 door openings missing from a submittal before the error reached the field. avoiding costly rework. Procore AI Go, introduced a ground break is a voice-first mobile app now in beta. Cruise asked questions about the drawings, specs, RFIs and submittals and here are the answers without stopping work. Through a new collaboration with Meda, workers can use Procore AI Go hands free on Meta's AI glasses.

On the construction project, one question is rarely a single task. Answering it can mean pulling dozens of records from multiple tools and checking each against the current borings and specs. Version 3.0 of MAG Buy, the reasoning engine behind Procore AI breaks questions like these into parts, sending specialized sub agents across the project and return answers with cited evidence. Based on our internal testing, we believe Mac by outperforms the leading frontier models and construction tasks.

At ground break, we also reaffirmed our commitments to improving the core products our customers rely on every day and we are delivering. Beyond our new AI offerings, we shipped more than 500 new capabilities in the last 12 months. We have delivered every major product that we announced at last year's groundbreak in GA or beta. That track record is what earns us the right to introduce customers to new technology. And as we saw at groundbreak, customers are excited about our new AI offerings. Procore AI Go and Procore's digital coworkers enable customers to see what's actually happening on a project, understand the impact of decisions and then take action to change the outcome. That's real value for customers. It offsets labor shortages and saves time and money.

We believe that the opportunity is large and that AI will help us unlock labor budgets that sit outside traditional software spend. At ground break, we introduced new and expanded partnerships. NVIDIA's CEO, Jensen Huang, joined us virtually to announce that we are extending our digital twin capabilities beyond AI data centers to other mega projects, including health care facilities and critical public infrastructure. The solution now in closed beta lets teams see a project in realistic 3D and understand how disruptions would ripple through the schedule, so they find problems earlier and avoid costly rework.

Switch, a joint Procore and NVIDIA customer designs, builds and operates advanced data centers. Switch uses 3D visualization to gain greater clarity into construction progress. make better informed decisions earlier and keep complex projects on schedule. We also announced a partnership with IBM that creates a continuous flow of acid data from the job site into IBM Maximo, IBM's enterprise asset management software.

For many owners, asset handover is still slow, manual and error-prone with turnover packages assembled from spreadsheets and untagged photos. Partnering with leaders like IBM, lets us focus on our strengths while reaching a broader customer base.

To summarize, Q3 was another excellent quarter for Procore. We exceeded the high end of our guidance on every key metric and raised our outlook for the year. We delivered new capabilities across our flagship products, made Procore AI's Digital Coworkers generally available. and closed and began integrating grown deploy.

All of this serves our vision and mission of improving the lives of everyone in construction. With a platform that connects those stakeholders a growing AI portfolio and an experienced leadership team, we are well positioned for durable growth, meaningful margin expansion and compounding free cash flow per share. I'm excited about what's ahead.

I want to thank my colleagues around the world. Their hard work drives our success and our customer success. And with that, I'll turn the call over to Rachel. Rachel?

Rachel Pyles

Thanks, Ajei, and thanks, everyone, for joining us. Before I get into the numbers, a note on Hai will present them. With the drone to Play acquisition closing on September 9, I will review our Q3 results, excluding drone deploy consistent with the guidance we gave in July, and I will also give you the consolidated figures.

For the outlook, I will provide the total revenue, including the inorganic contribution of drone deploy. The supplemental presentation on our website shows the bridge between the two. As Ajei highlighted, we had an excellent Q3. Excluding drone deploy revenue was $397 million, up 17.1% year-over-year an acceleration from 15.8% in Q2.

That was $13 million above the high end of our guidance range, our largest dollar beat since 2023. Revenue outperformance was driven primarily by stronger bookings and the consistency with which they landed throughout the quarter, including $5 million from drone deploy reported revenue was $402 million, up 18.7% year-over-year. Our non-GAAP operating margin, including drone deploy of 23.5% and was 400 basis points above the high end of our range.

Free cash flow was $73 million, an 18.1% margin, including approximately $19 million of onetime cash costs at the closing of drone to play, primarily the accelerated vesting of certain drone to play equity awards. Excluding these onetime costs, free cash flow was $92 million a 23% margin, up 36% year-over-year.

Our Q3 international revenue grew 30% year-over-year or 26% on a constant currency basis. We ended Q3 with broad-based momentum and strong execution across our portfolio. The improvement in large deal execution that we highlighted in Q2 continued this quarter and was the single biggest contributor to our bookings strength.

Our new go-to-market leadership team has improved our execution, and we are now seeing the success of that work. We are seeing customers continue to commit to larger, more strategic partnerships with us which speaks to the critical role we play in their operations.

The quarter was well balanced among our stakeholders, and that balance gives us confidence as we head into the final quarter of the year. Our booking strength in the quarter is also reflected in CRPO, which grew 22.6% year-over-year, excluding drone deploy, an acceleration of approximately 70 basis points from Q2. Most of that growth came from the strength of our underlying bookings, particularly the large strategic expansions we signed in the quarter. Average contract duration increased again, but by less spend in Q2, including drone deploy, CRPO grew 28.9% year-over-year with drone to play contributing approximately 6 points.

Turning to profitability. Non-GAAP operating income was $94.4 million and our consolidated non-GAAP operating margin reached 23.5%, a year-over-year improvement of approximately 620 basis points. That improvement reflects the operating leverage in our business model and disciplined spend. and it comfortably absorbs the modest dilution from closing drone to play in the quarter. Most importantly, this quarter is a further step along the trajectory of profitable growth we outlined last quarter.

Next, a brief update on drone deploy, which we closed on September 9. As a reminder, we acquired Drone Deploy for $845 million in cash. We financed the transaction with cash on hand and the proceeds of our $950 million 0 coupon convertible notes due in 2031, which we issued in August. Concurrent with the convertible note offering, we repurchased approximately $175 million of our shares. We believe that the demand for that offering was a strong signal of support for our strategy as we continue to invest in best-in-class solutions to deliver on our vision of improving the lives of everyone in construction. Our financial view of the transaction is unchanged, and drone to play's early performance is in line with our expectations, with revenue tracking slightly ahead.

Drone deploy contributed $5 million of revenue and for the approximately 3 weeks since close, and our guidance includes approximately $19 million of inorganic contribution in Q4 or approximately $24 million for the full year.

The acquisition is accretive to our revenue growth, and we are absorbing its near-term margin headwind while still raising our FY '26 margin guidance and reiterating our FY '27 outlook. We will continue to disclose its inorganic contribution separately through Q4 and then provide a view of the expected inorganic contribution for FY '27.

We ended the quarter with $614 million in cash and investments. Separately, our Board has adopted a new share repurchase authorization for $300 million, consistent with our prior program.

With that, let's move to our outlook. Our approach to guidance is unchanged from prior quarters. I will give you Q4 and full year guidance on a reported basis, including drone deploys inorganic contribution. The bridge is included in the supplemental materials on our website. For the fourth quarter, we expect reported revenue between $420 million and $422 million representing year-over-year growth of 20.9% at the high end.

That includes approximately $19 million of inorganic contribution from Demdeplay. Excluding drone deploy, the range is $401 million to $403 million or 15.4% growth at the high end. Q4 non-GAAP operating margin is expected to be between 15.5% and 16% on a reported basis, which includes dilution from drone to play.

For the full year we now expect reported revenue of $1.557 billion to $1.559 billion, representing year-over-year growth of approximately 17.9% at the high end which includes approximately $24 million of inorganic contribution from DroneDeploy. Excluding drone deploy, that is a raise of approximately $21 million at the high end. We are also raising our non-GAAP operating margin guidance for the year by 50 basis points to 19% at the low end and 19.5% at the high end on a reported basis, including the dilutive impact of drone deploy, which implies year-over-year margin expansion of 540 basis points versus 14.1% in FY '25. I

Finally, free cash flow. We are maintaining our FY '26 free cash flow margin guidance of 19.5%, excluding the onetime drone deploy closing costs I described earlier. For the year, these costs total approximately $23 million or 150 basis points. After accounting for those impacts on a reported basis, we expect free cash flow margin of 18%.

Looking ahead, we remain committed to driving sustained efficiency, and we are reiterating our FY '27 guidance for non-GAAP operating margin of 25%. As a reminder, our preliminary FY '27 operating margin target does not depend on the revenue growth outlook for next year, which we will introduce with our Q4 results.

As we scale further, we will continue to optimize our cost structure including tailwinds from AI efficiencies. In that context, we disclosed at ground break that more than 80% of our code is now written by AI. In summary, we delivered an excellent quarter that showcases the strength of our financial model with organic growth above our expectations and a significant step-up in our operating margin profile. Our execution over the last few quarters has been consistent, and we are taking that focus into the final quarter of the year.

With that, let's turn it over to the operator for Q&A.

Operator

[Operator Instructions] Your first question comes from the line of Saket Kalia from Barclays.

질의응답

Saket Kalia

Sure. Ajei, maybe for you. First of all, it's great to see the business accelerate organically. Maybe the question is, can you just give us a state of the union on how Procore push to sort of gain more wallet share in the ENR400 is going? And maybe specifically, how much is that sort of helping with this better growth versus maybe what seems like underlying improvement in the construction market overall?

Ajei Gopal

Great. So Saket, thanks for the question. The overall macro from this quarter to last quarter is pretty consistent. And so there hasn't been any fundamental change in the overall macro. And you asked specifically about large contractors Look, they have -- when I talk to them, they're oversubscribed, they have really healthy businesses.

They've got significant backlogs. And their constraint is really not having enough people to get the work done. So when I think about our relationship with them, there's a couple of things. There's a product and the go-to market. So let me just briefly talk about product. We have more product capabilities than we've ever had. And you heard me in my prepared remarks, I talked about the capabilities that we announced at ground break and that we have through the year.

I talked about enhancements to the flagship products, how we are adding AI to the flagship products. And then, of course, all of this, the AI activity that we've put in place around the C understand a loop and the new products that we've built. It's generated a tremendous amount of excitement in the market, and you certainly saw that a ground break.

And this is exciting to both existing as well as potentially new customers. And customers are thinking about how we can help them address some of these challenges. I mentioned this is a ground break for Ovel, an incredibly large contractor. They are looking at redoing some of their fundamental processes rebuilding them because they have a profound shortage of skilled labor.

And they're working -- we're working with them around AI and using Procor Digital coworkers who try to see if we can help them optimize their performance and drive some of these really large projects. So there's a lot of activity that I'm excited about from a product perspective.

On the go-to-market perspective, Walt is a proven operator and I say that having worked with him for many years, and he's been personally involved in some of our largest deals. He's built -- he's bringing deep experience in building relationships at the most senior levels in our customers. And so those relationships are deepening and broadening. So we continue to see a lot of opportunity in large deals and with large customers.

Saket Kalia

Got it. That's great to hear. Rachel, maybe for out for you. First of all, thanks, Tom, for the clear disclosure on DroneDeploy. My question is around. -- your customers continue to partner with you for longer durations. How do you think about the impact on CRPO? And do we still expect this growth to eventually moderate organically?

Rachel Pyles

Sure. So as you noted, CRPO did go up this quarter, and we signed a lot of large strategic deals. If we take out drone deploy from the increase in CRPO, it was up 22.6%, so about 70 basis points faster than we saw last quarter. Now most of that was underlying bookings. The contract duration did go up a little bit, but it went up actually less than it did last quarter. When we look at CRPO on a normalized basis, it's growing in line with revenue and ending ARR growth. And so I think we have not yet seen that duration stabilize. It is accelerating at a slower rate but not yet stabilized.

Operator

Your next question comes from the line of Josh Tilton with Wolfe Research.

Joshua Tilton

Maybe my first one Ajei, your message has and continues to be that of durable growth. However, today, you're obviously accelerating growth. It sounds like the improvements in execution are driving better underlying booking trends. You also have new AI offerings. And I'll say everyone that I spoke to at groundbreak about DroneDeploy was pretty bold up. Ao my question is, should we view this as the new baseline of durable growth for Procore?

Firstly, thanks for the question. I'm glad you enjoyed groundbreak Look, we're not giving any kind of long-term view of the business at this point, where specifically, I think, talking about kind of where we are I think the -- I think what you're seeing in our results is a reflection of both the product capability and our ability to execute. And I also think that the acquisition of DroneDeploy, as you pointed out, I think that's really very consistent, very consistent with our strategy on being able to see, understand and act.

And when you put all of that together, customers are seeing the innovation that's coming out of Procore. And customers are also seeing the relationship in terms of both customer success as well as the sales relationship moving in a really positive direction. So taken together, we're excited about our business, and we believe we bring real value to the market.

Saket Kalia

Super helpful. Maybe just for a quick follow-up. Any clarification you can give us on the acquired deferred revenue from DroneDeploy,maybe just what the organic deferred revenue growth was in the quarter?

Rachel Pyles

SP1 Sure. So you'll see this in our 10-Q, but the opening balance sheet contribution from DroneDeploy is about $37 million on deferred revenue.

Operator

Your next question comes from the line of Brent Thill with Jefferies.

Brent Thill

Ajay, you're 1 week away from, I think, your 1-year anniversary. I'm just curious if you kind of look back and say what has surprised you the most? And then maybe if you could just talk about the international business. good acceleration. What -- what are next steps there to unlock what is your biggest opportunity?

Ajei Gopal

Look, I think coming on board as a new CEO, you obviously have to spend time on strategy you have to look at the operational capabilities of the business and make sure that you have the right people to deliver against it. It's sort of the strategy, operations and people. Those are the kind of loops that are on a company.

And what I would say is I am delighted with the people that we have at Procore. We have people up and down the chain who provide incredible value to customers every day. Obviously, we've made some changes to the executive team. But we have experts who collaborate exceptionally well, and that's fantastic.

As far as the operations go, obviously, we've made some changes, but that -- the results of the last few quarters should speak for themselves. And I'm really excited about the rate of innovation, the success that we're driving to the customers. And the depth of the relationships with our customers, I think, is something that is unique hallmark of Procore.

And you certainly saw this reflected at groundbreak. Strategically, we had to deal with a -- obviously, a very rapid change in the AI environment. And I think that I'm really excited about how the company has responded -- we've talked about the C understand strategic paradigm that has been the basis of driving some of the decisions that we've done, the acquisition of DroneDeploy the new AI products, including things like Procore AI Go -- all of those, I believe, are spot on.

And we -- I feel like we're really -- I feel very excited because the capabilities that we're providing are resonating with customers. So it's been a really interesting year. And what I've particularly found gratifying is the relationship that we have, the depth of the relationship that we have with our customers, and frankly, the dedication of Procorions around the world to our success.

As far as -- you asked about international as well. So international, I think Rachel said this has -- we've had another strong quarter revenue was up 30% year-over-year. I think it was 26% in constant currency. And that's not an accident. If you look at some of our international success -- it's been pivoted upon having both the right product as well as the right go-to-market. And so what I talked about in the last call, I think was the one before, I talked about how we're investing in a product that is specifically purpose-built for the U.K., Ireland and European market, a common data environment.

We focused on building that product. We concluded that product. We released it, and that's been a real step forward that's resonating with customers. And of course, we have a good market around it. Each local market has its own requirements. And so as we enter these international markets, it's about understanding the product market fit and making sure we have the right capabilities and then, of course, building the go-to-market around that.

Operator

Your next question comes from the line of Taylor McGinnis with UBS.

Taylor McGinnis

Congrats on a really strong quarter. So first, you mentioned the strength was largely driven by your own execution, but hoping you could just give a bit more color on the areas that exceeded your expectations? When I look at the numbers, it looks like international was a big one and large deal activity. But when you think about the biggest unlock for the growth algo, I'm just curious if there's anything you'd highlight more specifically?

Rachel Pyles

Sure. I'll start, and then Ajei can jump in here. For us, the growth was really broad-based. So it didn't come from any one particular place. We saw strength across our stakeholders, that's GCs, subcontractors, owners. And then we also saw success both internationally and domestically. So really, the growth was broad-based.

Taylor McGinnis

Perfect. And then, Rachel, maybe just building off of that. If I look at the organic revenue growth guide for 4Q, stronger than what we've seen in past guides. So one, is that indicative of the organic inflection you expect to continue to see in the business, and maybe secondly, I know you mentioned in your prepared remarks that the guidance philosophy remains unchanged. But just given the various levels of outperformance we've seen so far, could you just unpack the assumptions embedded in the guide?

Rachel Pyles

Sure. So for the full year, we did raise the guidance by $45 million at the high end. Now that included $24 million of inorganic contribution from DroneDeploy. If you set that aside, the underlying business is performing really well. we beat the guide by $13 million this quarter. We flowed that through to the full year and then we're also raising the Q4 guide as well. So what you're really seeing is the momentum that we had in Q3, giving us confidence as we go into Q4. But nothing about our guidance philosophy has changed.

Operator

Your next question comes from the line of Joe Vruwink with Baird.

Joseph Vruwink

Ajei, something that really stands out in your remarks today and also I hear Ambra is wanting to see if the job sites, and it does seem like Procore has taken the most aggressive stance around capturing the visual elements of construction I'm just wondering about all the strategic implications of this and whether the end outcome might actually be your ability to bring faster automation to customers if agents don't have to work through, maybe established workflows or document heavy workflows.

If the path is faster -- if you're overseeing kind of the visual side of the site.

Ajei Gopal

Joe, thanks for the question. I think at the end of the day, -- what -- the C understand Act paradigm, we put that in place because -- if you anthropomorphize AI and you put it in the complex situation like a construction site, that's what you have to deal with. You have to be in a position to bring the physical into the -- you have to bring the physical into the digital. You have to understand what's taking place based -- and it has to be based on what's actually taking place, not some theoretical view that someone built months ago. You need to know exactly what's happening. So that's the -- the immediacy of the physical meeting the digital. That's why we needed to see.

And then, of course, they understand and act, I think, are failure obvious. So the C understand Alok is really part of the way that we've been thinking about it and that's influenced a lot of the activities. On the Act piece of it, Construction is kind of a unique vertical because you've got multiple stakeholders and working together and they are real financial consequences to decisions and decisions, you need to be able to log and understand those decisions. That's 1 of the reasons why we've -- that's one of the reasons why Procore has been successful as we brought all of these stakeholders together in this rigorous environment secure environment.

And certainly, from our ability to act its being able to tag information so that we -- people understand what drove decision-making. And so that's really an important aspect. So this whole loop drives drives the way that we've been thinking about our AI strategy. Now as you extrapolate, you can take it in multiple directions. And certainly, you can -- I think you're referring to, can you see an extension that moves into robotics? Or can you see an extension in other areas? And those are all things for the future. But I think the -- obviously, we support robot cameras and things of that nature, but if you're thinking about full-fledged robotic construction, that's something for the future. But the reality is that this paradigm, the strategic paradigm gives us -- if you forgive upon lots of legs as we start to build our -- as we build our business going forward.

Joseph Vruwink

That's great. Thanks. If I can follow up, any stats to share on the adoption of the digital coworkers. I think this was the first full quarter of their broad commercial launch and -- it might just be too early still, but when you mentioned maybe capturing labor budgets, what that looks like in practice?

Ajei Gopal

I think it's -- look, I feel really good about where we are. We're 3 months into general availability there's a lot of demand. But as you know, we're early in the adoption cycle, and I think we're exactly where we need to be. I think the technology is resonating. I'm really excited about MAG 3.0, which is the reasoning engine we showed a groundbreak, and I would direct you guys, there's a blog on MAG that we just got published today, and I would direct you to that. that shows it performs really well.

And in a cost-efficient manner, we're really excited about May -- and even though it's early days commercially, I gave you a couple of examples on the script, I talked about Mccowan Gordon and earlier I talked about Perovial. These are sophisticated customers, and they are seeing value in the technology, and they are using the technology to solve real and fundamental problems, the one of their big challenges being how do I deal with the labor shortage supporting my industry.

So we are excited about this about what we've done, and we feel like we're in a really good place given how early the release has been.

Operator

Your next question comes from the line of Matt Martino with Goldman Sachs.

Matthew Martino

Maybe just taking a step back on Magpie. A lot of software companies are building their own layer between the model and the work their customers do. So as those underlying models get better, what does the company like Procore actually need to own to keep its advantage? And how does owning that piece change what customers will pay you for?

Ajei Gopal

I think it's worthwhile -- maybe in response to your question, if you indulge me, perhaps it's worthwhile by stepping back and trying to take a top-down view on that question. So I'll talk about the application kind of what we have and what we built. The first thing to recognize is our customers build buildings they'll obviously, they'll run IT information technology. They'll use implementation technology. They're not in the business of building information technology, they build buildings. And construction is really unlike any kind of horizontal application or vertical application.

And there are a few reasons I mentioned them already, and let me quickly go through them. One is scale. In construction, you've got hundreds of thousands of documents. You've got gigabytes of data including multimedia data, that's spread across multiple locations. It's unstructured and a decision that's captured in some documents some place could have a profound impact somewhere else on a schedule or it could trigger rework, and you need to be able to kind of have a broad view across all of this.

Secondly, I mentioned this earlier, it's the physical and the digital. You have to be able to reason about what's actually happening on the site as opposed to a digital abstraction of what's going on. You need to know what's really taking place. The other thing is the application is being used by people who are physically on the job site. And you can't fire up a laptop and take advantage of technology. You've got to start to deliver technology in a manner that's appropriate that means mobile, smart classes, things of that nature of voice.

And as I said earlier, it's multiple stakeholders working together and that's real money every day decisions that are being made. And when a decision is made, you need to know who made that decision, otherwise billing and payments won't work. So you need a secure system.

I've talked about kind of the -- a lot of the moat that we've built over the years, and I mentioned this in the script, so I won't repeat it about data and users and context and security. And that's what gives us kind of the foundation on which to build.

And what we've built is essentially a multimodal index, that beats the drawings and photos, meeting minutes, it reads them all we have a construction ontology and ontology is a live map of the construction logic based on our years of working in the industry, our decades of working in the industry, that connects kind of documents, actions and decisions and we can recognize patterns across these things before they can turn into rework.

And our reasoning engine Mac by, which I talked about earlier, what that does is it breaks complex SaaS down it can route each step to the right tool, the right model, including open weight, and it can cite government -- the specification or the drawing or whatever it is used behind every single answer.

So that's a lot of machinery that we've built. And then we've done acquisitions with respect to drone deploy, I already talked about drone deploy bringing dual intelligence into the proper family. So the physical world comes in. And then, of course, these new applications like AI Go and these Digital Coworkers, which -- and AI Go, obviously, is supports mobile devices, the integration with Meta, with smart glasses and of course, the digital coworkers as well as AI inside our flagships.

That is a significant corpus of work. And we're excited about it. It's something that gives us, we believe, differentiation in the market based on our experience, based on our history, based on our understanding of the customer, the unique nature of the customer, what we've built, what we've acquired. And we believe that this gives us the foundation for this rock-solid system of intelligence that delivers for our customers in a complex environment.

So we're excited about this. It is an important aspect of our strategy, and we believe that we're well on our way to delivering what we need to.

Matthew Martino

Appreciate the perspective there, Ajei. Rachel, for you. Look, if the recent acceleration in organic growth persists, how much flexibility do you have to reinvest behind that momentum while still delivering the 25% fiscal 27 margin target? And are those productivity benefits you're seeing from AI materially changing that trade-off between growth investment and margin expansion?

Rachel Pyles

Yes. So I don't think that we are in a position where we have to make a choice on growth versus profitability. We're still investing significantly in the business. We're investing in new capabilities for our customers. We're investing in AI, we're -- what's really changing is the scale. So we've reached a point where we don't need to add operating expenses in proportion to revenue. You see that for sure in the back office in G&A.

So that means that every dollar of revenue is coming with higher incremental margins. The margin expansion that we're planning for is a natural result of the financial model. It's not about pulling back on the investment. And so I feel really good about our ability to continue to invest in the capabilities that our customers need while also doing it in a very profitable way.

Operator

Your next question comes from the line of Jay Lascar with Griffin Securities.

Unknown Analyst

Ajei, Rachel earlier this year, you introduced 4 new bundles. Could you comment on the contribution of those new bundles to results so far and what your expectations might be for those? And more broadly, before I ask a follow-up, what is your philosophy towards product packaging and segmentation, particularly as the portfolio has become increasingly complex.

Rachel Pyles

So I'll start with your question on the bundling. So as you noted, we did roll out new bundles this year. What we like about those is that they give customers a way to expand with us depending on what they're looking for. And so we have this concept of good, better, best, and you can kind of move through those packages and then you get more and more features and functionality, depending on what package you're in.

And so for example, in some of the higher tiers you would have access to more of the AI capabilities that are embedded within our platform. And so I think those are performing really well. We've been really pleased with them, in particular, as we bring new logos on that's a helpful way for them to kind of buy and sort of simplifies the buying experience for them.

Ajei Gopal

And as far as the packaging is concerned, Jay, the bundles gives and we have an opportunity as we think about packaging to figure out how we can add value to customers when we bring incremental capabilities in. So I'm thinking about tiers of capabilities. So if you think about some of the packaging that we introduced earlier, it's -- at the low end, you have a certain subset of capabilities.

And obviously, you've got more at the high end. And as we start to introduce AI capabilities into the flagship offerings, for example, some of that can happen more at the higher-end tiers within some of these bundles and so we have an incremental ability to monetize some of those capabilities.

So it really gives us our flexibility as we start to think about deploying products, as you note, we have lots of products, and it's fairly sophisticated. So selling a SKU at a time, sometimes it's less efficient than thinking about it from a bundle perspective.

Unknown Analyst

You noted earlier go-to-market and I just commented to a prior question regarding internal investing, a short-term question, over the last few months, there's been a bit of an uptrend in your open sales positions since the spring through the end of October.

On the other hand, the positions related to customer success or what might otherwise be called applications engineers, has been flat to actually tailing off a bit. Wouldn't it stand to reason that particularly with all the new products coming to market and all the complexity in the portfolio, we just talked about there would be more of a rebuilding or addition to that field support or AE support capacity?

Ajei Gopal

Jay, we've got a lot of great people across the company who are able to support our customers. As Walt is taking a broad -- and of course, customer success as part of Wells organization. As Walter is taking a broad look and he's been with the company for about 6, 9 months, as he's taking a broad look at the go-to-market, he's organizing his teams in the most effective way that's necessary.

Operator

Your next question comes from the line of Adam Borg with Stifel.

Adam Borg

Awesome. Jump all for either Ajei or Rachel. When we think about the data center opportunity, it was great to hear continued momentum in the customer example you talked about -- maybe talk a little bit more about the momentum of the business, the current size of the business. And if you just think about the recent election results from last night, does that have any impact on the data center market opportunity for you guys? And then I have a follow-up.

Ajei Gopal

Yes. So let me start, and then I'll turn it over to Rachel. Look, data centers are clearly important, and they're a very complex build. AI factories are -- as they sometimes Vertu are complex. They're sophisticated. They need to be built quickly. And that's exactly the kind of the complexity that Procore can help solve. But it's important to understand that our exposure -- we price on annual construction volume.

Many of our customers are building data centers, of course, but they're also building hospitals and they're building warehouses and they're building residential, multifamily and manufacturing. They build different multiple things. And we're exposed to that entire nonresidential multifamily end market, not just to one segment. I mentioned earlier that our customers many of our customers have a significant level, significant backlog.

And that backlog is across the spectrum of market or subsegments that they support. And so they're not building one thing, they're building something else. Their gating factor is labor. They're gating factor is the ability to be able to get to the backlog and to be able to move forward.

So our exposure to data centers is roughly in line with the overall market. obviously, be very capable of supporting these complex bills, which is why, and as customers are building, you certainly see that and you see us highlighting that. But at the end of the day, you have to understand that we are tied overall to the construction of the annual construction volume, and our large customers do multiple things, not just data centers.

Adam Borg

That's really helpful. And maybe just as a follow-up for Rachel, I really appreciate all the inorganic disclosures across the business. One I was curious about was just drone deploy and your international exposure. So any color there on of the $5 million in the quarter or the $24 million for the year, how we should think about international versus domestic? And any color on inorganic to total RP would well would be really helpful.

Rachel Pyles

Yes, sure. So on international, we haven't disclosed that specifically, but you should think about it as roughly in line with the Procore business, so not different than our core business, not having a significant impact on those splits at all. And then in terms of the inorganic contribution on CRPO, so as I mentioned in the prepared remarks, if you exclude the contribution from CRPO is about 21% of the increase in CRPO growth in CRPO was 22.6%, up from 21.9% in the quarter prior.

Adam Borg

That was great. I was just talking total RPO, any color there, if not, really appreciate it.

Rachel Pyles

No, I don't think that we have disclosed that.

Operator

Your next question comes from the line of Jason Celino with KeyBanc Capital Markets.

Jason Celino

Maybe this is a build off of Adam's question. But if we annualize the Q4 revenue from DroneDeploy, we get like $76 million I think when you acquired it, is it done $78 million on a last 12 months basis. Is there something about the Q4 seasonality with DroneDeplo? Or are there certain accounting haircuts? Maybe that is my first one there.

Rachel Pyles

Yes. So when we announced the deal, we said that drone deploy would be accretive to growth, dilutive to margins and cash flow breakeven. That's exactly how it's playing out. So in Q3, it contributed $5 million of revenue. That was for roughly the 3 weeks after September 9. For Q4, we expect the inorganic contribution of $19 million. So that's about $24 million for the full year? And then to give you a sense of scale, their trailing 12-month revenue as of September was about $83 million. And then we're absorbing the margin dilution in our 25% target for FY '27.

Jason Celino

Okay. Great. That's very helpful. And then nice to hear the U.S. agency win. I'm just curious, is this the first U.S. agency that you have as a customer and then curious if there is a percentage of revenue that you have in your business today that you attribute specifically to public sector?

Ajei Gopal

Yes. No, it's a -- we obviously have U.S. government customers. But this is about FedRAMP because FedRAMP is really an important aspect of this particular contract. And what's important to recognize is that -- we have customers who deal with both federal business as well as nonfederal business. They're as not GCL uniquely focused on just the federal business. For example, I mean, there may be some, but many of them focused on will do everything, including federal.

And so having that capability, the FedRAMP capability helps us certainly with GCs who are specializing on the federal business, but it also helps us more broadly across other general contractors who are looking at a broad portfolio of activity, including federal. So that was an important piece of work that we did earlier this year. We were very proud of the rate and pace at which we were able to get that done, and that's obviously yielding results.

Rachel Pyles

And then just to add on that in terms of the contribution -- if you think about what Ajei said, it's not just specific U.S. government customers, it's really broader than that. So from our perspective, we see FedRAMP as helping us only get public sector business, but also customers see that designation, and that kind of assures them of the security of the platform. And so we think about it as helping us across a broader base than just pubsect.

Operator

Your next question comes from the line of Alexei Gogolev with JPMorgan.

Alexei Gogolev

Congrats with great results. I wanted to start with gross margin, Rachel, it stayed at 84% even as AI prudence and 1 employees consolidated. So what's the sensitivity of gross margin to AI compute at scale?

Rachel Pyles

Yes. So first of all, AI is already built into our core products. And as you noted, our gross margins have been stable. So while there is some gross margin impact from our new agentic Digital Coworkers, we're seeing efficiencies elsewhere in the business, and we've contemplated all of that in our 25% operating margin target for FY '27. We don't see AI as a structural risk to the margins, and that's really for 3 reasons.

So first, we price our agents on usage. So customers are committing to a level of consumption cost is a component when we consider that pricing.

Second, the cost of AI is coming down. models are getting smarter. You don't need the most sophisticated models for every task. And so it's about using the right model for the right task. That's very similar to what we saw happen with cloud infrastructure costs and how those came down over time. Same thing is happening with AI just at a much faster pace.

And then finally, third, customers really want certainty over their spend. So we introduced control tower, we demoed that at ground break, and customers can use that to see exactly how much their team is using in selements. -- we're not selling an all-you-can AI solution.

Alexei Gogolev

Okay. And Ajei, very strong gross revenue retention of 95%. Could you maybe decompose what's driving that renewal execution versus pricing or customer health? And are you seeing any churn, downsell, concentrated thing in cohorts, specs versus specialty or domestic or international?

Ajei Gopal

Nothing stands out. It's very consistent. Our business performance is very consistent as it has been in multiple quarters, that 95% is pretty consistent across multiple quarters. Look, at the end of the day, what customers care about is are we able to help them solve their problems, and they want to be able to build buildings.

They want to be able to manage those buildings. We sell to GCs. We sell to owners we sell to specialty contractors. And what you're seeing is innovation across the portfolio that's giving them the tools that they need to be able to do their jobs. And so obviously, that shows up in the performance of our business, and I'm excited about that.

Operator

We have reached the end of our Q&A session. This concludes today's call. Thank you for attending. You may now disconnect.