PCOR Q1 Earnings Call: Revenue Growth Outpaces Expectations Amid Uncertain Tariff Backdrop

Construction management software maker Procore (NYSE: PCOR) reported revenue ahead of Wall Street’s expectations in Q1 CY2025, with sales up 15.3% year on year to $310.6 million. The company expects next quarter’s revenue to be around $311 million, close to analysts’ estimates. Its non-GAAP profit of $0.23 per share was 25% above analysts’ consensus estimates.

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StockStory’s Take

Procore’s first quarter results reflected year-on-year revenue growth, with management attributing performance to continued demand across its core construction software platform and new customer wins spanning both domestic and international markets. CEO Tooey Courtemanche pointed to the company’s ability to deliver measurable productivity gains and risk management for customers navigating supply chain complexity and cost volatility. He highlighted, “Thousands of customers rely on the Procore platform to run their business, improving visibility and predictability so that they could manage risk and make smarter decisions.”

Looking ahead, management indicated that full-year guidance remains cautious due to uncertainty stemming from evolving tariff policies. CFO Howard Fu emphasized that, despite strong first quarter execution, the company’s guidance philosophy is intentionally conservative to account for possible changes in demand. He explained that Procore’s approach is to “control what we can control,” including scenario planning and cost discipline, while remaining flexible to respond to any shifts in the macro environment.

Key Insights from Management’s Remarks

Procore’s leadership discussed several operational and strategic developments influencing first quarter performance and provided insight into how the company is preparing for potential macroeconomic headwinds.

• Tariff Uncertainty and Customer Behavior: Management reported no material change in customer procurement or project activity so far, despite new tariff policies. Most customers are using contract clauses and pre-purchasing strategies to manage cost risk, with Courtemanche noting that modest cost increases can be absorbed, but significant cost surges could delay or cancel projects.
• AI and Product Innovation: The company is prioritizing the development of AI-powered "agents" designed to automate tasks such as monitoring project schedules, budgets, and daily jobsite logs. These agents, currently being tested with customers, are intended to drive productivity and reduce risk by leveraging Procore’s integrated data across project stakeholders.
• Go-to-Market Transition Impact: Procore completed a major go-to-market realignment in the quarter, shifting to a general manager-led model tailored to specific markets. While some disruption occurred, management said early feedback from teams and customers has been positive, especially in providing specialized technical support.
• International Expansion: International revenue grew faster than overall company growth, with management attributing progress to the new market-specific approach and increased technical resources. Courtemanche cited wins with large global customers as signs that international momentum is building.
• Contract Duration and Revenue Stability: CFO Howard Fu highlighted a shift toward longer contract durations, which increases revenue visibility and backlog stability. The proportion of annual recurring revenue on multiyear deals rose, supporting more predictable long-term performance.

Drivers of Future Performance

Management’s outlook for the coming quarters is shaped by the evolving tariff environment, continued investment in product innovation, and adjustments to the company’s go-to-market structure.

• Tariff-Driven Demand Risks: Management cautioned that persistent or escalating tariffs could raise construction costs and potentially delay or cancel projects, affecting software demand. The company is prepared to adjust spending and operations if demand weakens.
• AI Rollout and Platform Expansion: The planned deployment of AI agents and expanded platform capabilities are expected to drive incremental customer value, supporting both new sales and cross-sell opportunities. Management believes these investments will help customers manage complexity regardless of market conditions.
• Go-to-Market Execution: The ongoing transition to a market-specific sales model is designed to improve customer engagement and drive growth across underpenetrated segments and international markets. Management views successful adaptation to this new structure as a key determinant of future performance.

Top Analyst Questions

• Saket Kalia (Barclays): Asked how the shift toward longer contract durations affects backlog and revenue visibility. Howard Fu clarified that longer multi-year deals increase backlog metrics but do not alter revenue recognition timing.
• Dylan Becker (William Blair): Questioned the impact of AI-driven product enhancements on cross-sell and customer relationships. Courtemanche explained that the platform’s data and workflow integration uniquely position Procore to automate high-value tasks and deepen partnerships.
• Joe Vruwink (Baird): Inquired whether customers are adjusting project commitments in anticipation of a downturn. Courtemanche responded that contractors typically plan for the long term and are not making abrupt changes in response to tariff headlines.
• Brent Bracelin (Piper Sandler): Asked what metric best tracks progress if construction activity slows. Courtemanche said annual recurring revenue per customer is a better indicator than simple customer count, given the focus on larger accounts and cross-sell.
• Jason Celino (KeyBanc): Sought clarity on the rationale and conservatism behind revenue guidance. Fu stated that guidance is built to withstand significant demand declines and that scenario planning supports management’s confidence in meeting targets.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be watching (1) whether Procore’s AI agent rollout translates into measurable operational improvements for customers; (2) signs of sustained international growth as the market-specific go-to-market model matures; and (3) any changes in customer procurement or project timelines stemming from evolving tariff policies. Progress on longer contract durations and successful cross-sell initiatives will also be critical indicators of execution.

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