Software company Procore Technologies (NYSE: PCOR) is working toward becoming a one-stop shop for general contractors to manage their construction projects more efficiently by offering artificial intelligence capabilities.
The construction of a sports stadium or airport can be tedious and lengthy, but having the ability to search through large amounts of data quickly can help contractors focus on submitting proposals to meet government regulations and use AI tools to manage where equipment should be deployed.
Artificial intelligence offerings boost revenue
Several years ago, the management at Procore Technologies placed a priority on adding artificial intelligence to its software and started buying companies whose machine learning could process invoices, manage the location of equipment, and organize its data. The result created greater efficiency and gives project managers an easier way to oversee larger projects that can take more than a year to complete.
In January, Procore Technologies bought Datagrid to increase its AI strategy and produce enhanced data connectivity to third-party data sources, such as enterprise resource planning (ERP) and cloud storage systems for its customers. This acquisition will help them “eliminate data silos and automate complex workflows” such as autonomously managing reviews and drafting requests for information (RFIs) more quickly, the company said.
Offering construction project managers software that can save them time and money is advantageous, Brent Thill, a Jefferies senior software analyst, told Barron’s.
“One beneficiary in software is going to be vertical applications,” he said. “Procore Technologies sells software for construction management. The company partnered with Nvidia to bring AI to the construction space. Construction is the most manual, highest-waste industry on the planet, and AI can bring better efficiency.”
The company’s software has been in high demand among owners and contractors. Procore Technologies reported fourth quarter revenue was $349 million, an increase of 16% year-over-year, and GAAP gross margin was 80% and non-GAAP gross margin was 84%.
The company generated revenue of $1.32 billion, an increase of 15% year-over-year, and GAAP gross margin was 80%, and non-GAAP gross margin was 84% for 2025.
“We think Procore is a great mid-cap story that is vertically focused on the world of global construction,” Thill said.
Software companies must contend with avoiding the turnover of their customers by retaining the ones who spend the most money and adding software capabilities to generate more revenue.
The number of customers who use six or more of Procore’s products reached 52% of the company’s total annual recurring revenue in 2025, while 78% of its total annual recurring revenue was generated from customers using four or more products.
Procore also reported that the number of organic customers contributing over $100,000 of annual recurring revenue totaled 2,710 in 2025, an increase of 16% year-over-year.
The company is also doing well with customers who have larger budgets since the number of organic customers contributing over $1 million of annual recurring revenue totaled 115 in 2025, an increase of 34% year-over-year.
Procore has 17,850 organic customers, including the addition of 227 net new organic customers in the fourth quarter. The company achieved a gross revenue retention rate of 95% for 2025.
The company estimates its first quarter revenue to generate between $351 million and $353 million, or year-over-year growth of 13% to 14%.
The stock has tumbled by 14% during the past year as investors have been wary of investing in tech.
But Dan Romanoff, a senior equity analyst for Morningstar, said that fundamentals in the industry appear to be solid. The adoption of AI should not impact the number of software licenses being sold.
“We see little evidence that the bear case is unfolding—retention rates and other software metrics appear solid,” he wrote. We acknowledge the risks but believe the fears are overblown.”
Active acquisition pipeline
Procore has been investing heavily in other software companies since 2020 so that it can offer more automation and efficiency products to its customers. It began investing in AI with the acquisition of Avata Intelligence to automate repetitive laborious tasks and find and summarize hidden information for specification requirements for a building.
Through its acquisitions, Procore uses machine learning to give its customers the ability to search more easily through the documents, photos, and communications that are accumulated in larger projects. The software has also helped customers save time by not having to read and manually create submittals for projects, saving up to a week’s worth of an employee’s time.
In 2021, Procore acquired another AI company, INDUS.AI, an AI-powered analytics platform that added computer vision capabilities to assist contractors in reaching more efficiency, safety, and profitability.
Other acquisitions include the purchase of LaborChart, a workforce management software provider for specialty contractors and self-performing general contractors. It helps contractors improve the ability to schedule, manage, forecast, and communicate with their employees.
In September 2021, Procore invested $500 million to purchase Levelset, allowing the company to manage complex compliance workflows and improve the payment process in construction.
Procure added Unearth, a provider for geospatial information mapping for construction, which is critical for larger infrastructure projects, such as airports, so that customers can access all the project data on a map.
Two acquisitions in 2025, Novorender and FlyPaper Technologies, increased the company’s Building Information Modeling (BIM) capabilities. These two deals will allow customers to streamline coordination and connect BIM data across its platform with 3D-rendering technology.
This type of data integration is becoming more crucial as the number of European government mandates and global megaprojects has risen, including data center construction and civil infrastructure projects that have complex data requirements.
Porcore’s strategy to improve construction software by investing in companies that offer machine learning, 3D tech, and other automation tools will likely attract more customers and generate more profit.
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