Procore Technologies (PCOR) Q2 2026 earnings call transcript

I would now like to turn the call over to Matthew Puyis as VP of Finance. Please go ahead. Good morning, and welcome to Procord's 2026 second quarter earnings call. I'm Matthew Puyis, SCC of Finance. With me today are Ajay Gopal, President and CEO, and Rachel Piles, CFO.

Further disclosure of our results can be found in our press release issue today, which is available on the investor relations section of our website and our periodic reports filed at the SCC. 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, platform and products, customer demand, business strategies, transactions, 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 that are based on management's current expectations that use as of today, July 30th, 2026. Procord 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 after 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-GAP financial measures to provide additional information to investors. A reconciliation of non-GAP to GAP measures is provided in our press release and our periodic reports filed at the SCC. And with that, let me turn the call over to Ajay.

Good morning, and thank you for joining us today. I'm delighted to report that our core business continues to perform very well as evidenced by our outstanding financial and operational results for the quarter. Nearly nine months into my tenure as CEO, I have a clear view on Procord's go-forward strategy and the operational rigor needed to execute it. And I'm more excited than ever about our prospects for the short and long-terms.

Procord has built one of the most essential vertical software platforms in the industry. A system of collaboration that creates a powerful network effect across the industry's stakeholders. We sit at the intersection of the physical and the digital world where the decisions made on paper meet the realities of the job site. I believe we have the opportunity to lead at the AI era by continuing to build a true next-generation AI-native construction management application that delivers meaningful efficiency and safety gains across the construction lifecycle, saving our customers time and money. We have taken concrete steps towards that vision for both organic development and two targeted acquisitions, including our agreement to acquire drone deploy, which we announced yesterday.

Even as we pursued our strategy, we have continued to execute, recruit, keep personnel, and organize ourselves in success. This quarter's outstanding results and our raised expectations for the year reflect that display.

My conversations with customers these past months have only fortified my conviction in our business and in our path to long-term value creation. I'm confident that the strength of our business, our abilities are excused, and the depth of our customer relationships give us a clear runway to durable growth, meaningful margin expansion, and compounding free cash flow for share.

Let me start with a quarter. Q2 was an outstanding quarter for Pro Corps, where we delivered 15.8% Euro video revenue growth and 21.5% non-gap operating margin, which represents 800 basis points of Euro video margin expansion.

I'm excited that in Q2 we signed a contract for the King Salman International Airport, or KSIA, in the Kingdom of Saudi Arabia. This public investment fund project, which will become one of the largest airports in the world, is implementing Pro Corps for unified digital construction management. Working with strategic delivery partner, KSI will use Pro Corps to have one connected source of project data from design through delivery, with stronger governance and transparency from the earlier stages.

To reflect our momentum in the market, I'm pleased that we have raised our annual guidance just as we did last quarter. I'm also excited about the margin expansion we have delivered over the past few years, the operating leverage we are building, and our commitment to sustained profitability.

Rachel will walk through the details in a few minutes. In the last few years, leading to negative growth in late 2025. Despite this, Pro Corps has sustained mid-teens top line growth, significantly outperforming the end market, and reflecting the critical nature of our products and our ongoing success across stakeholders.

Today, we are seeing an uneven end market with weakness in certain sub-sectors, such as manufacturing, and unprecedented strength in data center construction, driven by ongoing investments in AI. In the US alone, construction spending in the data center sub-sector has tripled over the last three years, according to Goldman Sachs research. Commercial real estate services company JLL reports that nearly 100 gigawatts of new data centers will be added between 2026 and 2030, doubling global capacity.

The enormous magnitude of spending on data center construction will continue to drive top line benefits to Pro Corps. And, of course, any acceleration in data center construction would be an additional tailwind for us.

Pro Corps is the market leader in data centers with nine of the 10 largest North American data center sites using our solutions during construction.

Because data centers are highly sophisticated facilities built on the tight deadlines, our customers rely on Pro Corps to automate approvals and communication, and to keep every stakeholder collaborating in real time on a single platform. We are expanding our solution set with new product capabilities and connected commissioning and asset workflows. And through our NVIDIA partnership, we are streaming omnivores powered 3D digital twins of data centers directly inside Pro Corps.

In Q2, we close our largest contract in India history, a nearly $7 million agreement with a European company that builds hyperscale AI data centers across Europe, the US, and APAC. This company will use Pro Corps as its system of record for the entire global construction program, including project execution, document control, and cost management. In the process, this customer will replace side spreadsheets with a single, standardized, or ready platform integrated into the ERP.

Moving to our products, Pro Corps was founded with a mission to bring efficiency and collaboration to the job site. Since then, we have expanded our market leadership, evolving from a system of record to a global system of collaboration. We are with physical assets and activities that digitize, and where actions are taken to change the physical world. And our technology strategy is anchored by four key pillars.

Our extensive data set and depth of context fueled by nearly 3 million active users. The trust we have established through a secure and compliant infrastructure, the powerful network effect of having dozens of stakeholders collaborating on every project, and a focus on moving work forward in addition to providing insight.

Building on this foundation, we are now integrating AI into our platforms core to address the industry's most pressing challenges, including a labor shortage of nearly 350,000 workers in the US alone. Our AI-powered digital co-workers are designed to bridge this gap by delivering purpose-built capabilities for every project stakeholder. To accelerate our ambitious roadmaps, we are driving organic innovation alongside strategic acquisitions, specifically Datagrid, which joined our portfolio in January, and grown deploy our latest announcement yesterday.

After coding the Datagrid acquisition, we focused on technical integration and launched Procore AI to a dedicated specialist team working as an overlay alongside our core sales force. Our product enabled customers to use construction-specific AI natively, and with full context within their existing Procore environment. In the last week, we have expanded our library of pre-built digital co-workers to 20 AI agents purpose-built for construction, and we expanded sales to include our broader GoToMarket organization.

Initial customer interest has been very positive with leading companies, including Haskell and Level 10 construction amongst the early adopters. Another great example is Constiggly, a top North American general contractor and Procore customer for more than a decade. As part of our early limited availability program, the company moved from an internal AI hackathon to deploying four Procore AI agents in three test projects to help with common workflows like reviewing submittals or drafting RFIs. Searching drawings that once took their project engineers 30 minutes now takes five.

Material verifications that took 10 minutes can be accomplished in seconds. With that success, Constiggly is now deploying the generally available Procore AI across 50 projects.

We are very excited about the speed at which Datagrid has been integrated, the reception by our customers to our Procore AI strategy, and the momentum we are building in our AI business. This early success gives us further confidence to make another AI accelerating acquisition in drone deploy. I will cover the strategy around drone deploy while Rachel will discuss the financial details.

As a leader in reality capture and robotic automation, what we are calling visual intelligence, drone deploy bridges the physical construction site with the digital world, delivering critical real-time visibility into job site activity.

While its name reflects its origins in drone-based imaging, the company has evolved over the last 13 years into a fully unified platform for three-dimensional ground and aerial imaging, spanning drones to ground deploy robots as well as mobile, fixed, and wearable cameras. That products are based on artificial intelligence and machine learning, with particular focus on computer vision and image recognition.

Their robotic solutions enable robots and dock drones to conduct scheduled fully autonomous missions, launching, capturing, and uploading data without on-site personnel. Drone deploys being used on over 3 million job sites across more than 180 countries, including many of the large data centers that I mentioned earlier. It is important to note that pro-core and drone deploy offer complimentary solutions that do not overlap.

As long-time partners, we have market-tested integrations that joint customers are using today. As soon as the transactional closes, we intend to rapidly build on those integrations to deliver AI-enabled, intelligent, multi-modal capture via cameras, drones, and robots deeply integrated into the pro-core platform. We expect our event solutions will address some of the most challenging pain points customers are facing.

Building on their strong AI and technology foundation, drone deploy has recently developed three AI agents to enable customers to track progress, like safety risks, and monitor asset conditions. These agents, which are in the early stages of commercialization, are intended to optimize entire workflows, and they help point the way to how pro-core AI will transform construction management software. To illustrate, I'll reference the customer scenario I mentioned in our Q4 core.

I described how, during a job site inspection, a supervisor manually took videos of a column to share with stakeholders. An early incarnation of a pro-core digital co-worker analyzed the audio and visual cues and the specifications and determined that the column had been coded incorrectly and ordered remediation. What would have normally demanded several hours of manual efforts and specialized expertise to navigate across project specifications, was solved by pro-core AI in minutes.

When drone deploy added to the scenario, the manual job site inspection and logging up observations will no longer be the trigger. Instead, a multi-modal perception capability, driven by a range of cameras, drones, robots, and other devices will regularly evaluate the construction site and automatically initiate any appropriate response securely, compliantly, and in the right context.

With the acute shortage of labor faced by the construction industry, even the simple example shows that AI-driven automation is a potential game-changer because action can be taken without waiting for a site visit by an over-scheduled supervisor. This example demonstrates how pro-core in the future will incorporate a seamless integration of several capabilities, purpose-built for construction, specifically advanced reasoning, or the brain, perception, or the eyes and ears, and a secure, collaborative and auditable platform where actions are taken or the arms and legs.

Such a system will enable us to deliver digital co-workers to the field and in the back office to track what's actually happening on a project, make sense of it, and then take action to change the outcome. That's real value for customers. It offsets labor shortages and saves time and money.

Now let me talk about the power of data. Data is the lifeblood for AI. Access to relevant data separates a proof of concept from a mission-critical AI offering. Drone Deploy has captured 20 trillion square feet of visual construction data, an area about the combined size of California, Arizona, New Mexico, Texas, and Louisiana, and it goes well beyond raw reality capture.

That data includes tens of millions of user-generated annotations, image segmentation, construction progress labeling, and well over 100,000 labeled safety issues. That data will enable us to create smarter AI solutions that solve genuinely meaningful problems in construction.

Once the transaction closes, we plan to immediately cross our Drone Deploy solutions into our broader customer base and vice versa. We already share nearly 600 mutual customers, including enterprise brands like Skanska and Turner, a substantial number that validates both the organic demand and the clear synergy potential. Beyond this overlap, we estimate that there are several thousand existing customers of Procore who can benefit from a combined offering.

As a trusted partner, Procore is well positioned to drive adoption of Drone Deploy across those customers. As I reflect on the quarter, four key points stand out.

First, our core business is performing incredibly well. Second, we have a well-defined strategy to emerge as a leader in the AI era, and I'm excited that Drone Deploy, with a strong AI foundation, will make a significant contribution to that strategy.

Next, even as we are implementing our strategy, we continue to improve our operational capabilities as evidenced by our exceptional results in the quarter and our raised guidance.

And finally, as I speak with customers, I'm even more confident in our direction, our ability to execute as a success of our company. Let me end by thanking my fellow Procoreans for their tireless dedication to our customers. And with that, I'll turn the call over to Rachel. Rachel?

Thanks, Ajay, and thanks, everyone, for joining us. Before I get into the results, you will notice we are introducing a new supplemental earnings presentation this quarter, which can be found alongside our press release on our investor relations website.

We had an excellent Q2, beating the high end of our revenue guidance by approximately two and a half percent and delivering our first quarter of GAAP operating profitability. Total revenue in Q2 was $375 million of 15.8% year over year. Our Q2 international revenue grew 23% year over year, or 19% on a constant currency basis. Q2, non-GAAP operating income with $81 million representing a non-GAAP operating margin of 21.5% of 800 basis points year over year.

And free cash flow with $65 million of 507% year over year. We ended Q2 with broad base momentum, driven by strong operational performance and robust demand across our portfolio.

Large deal execution led the way. We are seeing customers increasingly commit to larger, more strategic partnerships with us, which speaks to the critical roles we play in their operations. When we look under the hood of the large deal performance, the strength was multi-faceted. We gained significant traction landing high-profile new logos across both domestic and international markets, while rapidly accelerating our momentum in large-scale data center opportunities.

This ability to win across multiple vectors gives us confidence as we head into the back half of the year. Our strength in the quarter also contributed to improvement in CRPO, where a year over year growth rate accelerated by 100 basis points. The primary driver of this quarter's acceleration was stronger underlying booking performance.

CRPO also benefited from an increase in our average contract duration. When normalizing CRPO, the year over year growth remains highly consistent with both our Q2 revenue growth and ending ARR growth. As a reminder, one's contract duration stabilizes, reported and normalized CRPO growth, will eventually converge with revenue growth.

Turning to profitability, we are pleased with the margin expansion delivered this quarter, which is reflected in both our non-GAP and GAP results. The latter, reflecting the company's first quarter of GAP operating profit. This reflects not only strong execution across our team, but also the growing inherent operating leverage in our business model. This quarter's performance is an initial step and a broader trajectory of profitable growth.

Looking ahead, we are committed to driving sustained efficiency. Specifically, we are initiating FY27 guidance for non-GAP operating margin at 25%, which would represent nearly 1,100 basis points of improvement versus FY25. As we scale further, we will continue to optimize our cost structure, which includes tailwinds from AI efficiencies. We intend to build on the significant margin expansion we've delivered over the past few years, carrying that same upward momentum into the future.

Next, I want to discuss our exciting agreement to acquire drone deploys for $845 million in cash. We approach M&A with a high bar for both strategic alignment and financial rigor. We selectively evaluate targets that can accelerate our strategy, but maintain strict discipline by ensuring every deal is financially a creative tour of business over time. That dual focus on strategic acceleration and financial returns remains central to our capital allocation philosophy.

As Ajay detailed, this acquisition represents an important component of our AI strategy, and we see significant synergy opportunities across the combined businesses that will directly benefit customers.

To give you a sense of scale, drone deploy has generated approximately $78 million in trailing 12-month revenue. We expect this transaction to be a creative to organic revenue growth, and importantly, we expect to absorb their near-term margin headwind with no changes to the FY26 and FY27 margin outlook we have shared today. We remain confident in our multi-year margin expansion roadmap.

In terms of funding, we have arranged committed bridge financing to fund a majority of the purchase price while we evaluate and finalize our long-term capital structure solution in the most EPS, a creative manner. Because we expect the deal to close later this year, we will provide formal financial details along with any relevant capital updates at the appropriate time.

With that, let's move on to our outlook. And to reiterate, this outlook represents our organic business and does not reflect any contributions from drone deploy. For the third quarter of 2026, we expect revenue between $382 million and $384 million representing year-over-year growth of 13.3% at the high end. Two, three, non-GAP operating margin is expected to be between 19 to 19.5%. For the full year 26, we are raising our revenue guide to a range of $1.51 billion to $1.514 billion representing total year-over-year growth of 14.5% at the high end. We are also raising our non-GAP operating margin guidance for the year by 50 basis points to be between 18.5% and 19%, which implies year-over-year margin expansion of 440 to 490 basis points.

Finally, we are raising our free cash flow margin guidance by 50 basis points to 19.5%, which implies year-over-year free cash flow margin expansion of approximately 310 basis points. And as important to note, we are confident that we can maintain our margin guidance post the closing of our acquisition of drone deploy.

In summary, we delivered an excellent quarter that highlights both our top-line growth and expanding margin profile by pairing our underlying business momentum with the synergistic acquisition of drone deploys, which bolsters our AI strategy, we are setting up the business for sustained, profitable growth. We remain focused on relentless execution and building on this momentum to generate compounding free cash flow for share over the long term.

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

Sure. I mean, that's a great question. Look, you know, we are seeing right now, I think it's stating the obvious. We're obviously seeing a profound transformational opportunity in the industry. I think AI is making an enormous impact on a number of different industries, and certainly we see an opportunity for us to be able to create this next generation AI-centric, AI-first construction application, which we believe will have tremendous impact on our customers. And as we start to lay out the strategy of what we needed to do, it became very clear that the perception piece of it was something that needed to be part of our strategy towards delivering digital coworkers.

I mean, when you think about the concept of a coworker, the whole idea is to be able to collect information, reason about it, and act. And one aspect of that collection was something that that aspect of perception was something that we needed to add into our business. And obviously, when you look at the technology that drone deploy had developed, we are longtime partners. We understand how to work with them. We have a great culture. They have deep technology. They have really great, really great people. And we saw that opportunity to be able to integrate them into our organization very seamlessly. We had, as I mentioned in my prepared remarks, we have something like 600 or thereabouts combined customers.

And having seen success at those customers, that gave us confidence, and certainly our diligence work as well gave us confidence, directly into our customer base. We have thousands of customers who are not using drone deploy today, and that represents incremental opportunity. So we saw as part of this acquisition, we saw the opportunity to not only drive our long-term strategic direction towards creating digital coworkers with some great technology. We also saw the opportunity in the short-term to be able to achieve some of the synergies that I think are relevant in an acquisition and a strategic acquisition of this nature.

I'd also make the point about robotics. And this is something certainly we all believe that robotics has a future to play on the construction site. And obviously, drone deploy has investments in robotics, and that exposes us to the future of robotics as well. So there are a number of areas where we were very excited about this technology, very excited about the company, great partner, but certainly the opportunity right now to build this AI native application for the future is on us. It's right in front of us. We have a great strategy, we have great momentum, and the ability to execute that is something that we value and we were excited about.

Well, I think it's pretty clear to say that everyone, I mean, you have to be living under a rock to not have heard about the AI and the opportunity to impact your organization. And certainly our customers are very sophisticated and our customers have all tried to understand what the impact of AI could be on their organization. But as you dig into it, the path forward becomes very clear.

Our customers recognize as frankly, we do in our own IT infrastructure when we think about our own applications, when we're deploying AI, we're relying on people and vendors that we've used in the past. And so when we want, for example, AI in our HR systems, we're going to use our HRIS and leverage that vendor. In our case, with respect to pro-core, our customers are using pro-core as a system of collaboration. They're using pro-core as a system within which they operate their business. And so when we talk about digital co-workers and the opportunity to go after a fundamental problem such as saving, for example, labor, that resonates as long as it works in the system within which they're used to working.

And so that's one of the reasons why we invested in making sure that our AI capabilities are integrated into pro-core. And that's the work we did, certainly when Datagrid came on board, it was integrating Datagrid into pro-core to create this pro-core AI capability that we just made available generally to the market. So that's really what I think customers are looking for. It's, can I take advantage of AI, but can I do so in a safe and secure way in a way that's convenient for my business so I don't have all my employees don't have to become AI experts, but I can get the benefit of that in the context of the work that I'm doing.

And that's what we're trying to roll out and make our customers successful.

Yeah, look, obviously we have a business which is primarily focused on the domestic market and about 85% of our businesses, domestic and about 15% approximately of our business in our national. And we've seen an opportunity to continue to expand internationally.

And one of the key things as we think about international, well, actually the two key things. One is product and one is do we have the right to go to market motion. Walt who recently joined our company as the CRO, some of you know him, you know, vertically enabled software business such as ours. What we're seeing is really a couple of different kinds of international customers or international geographies.

So let's say UK Ireland, for example, so UK Ireland, there are some product differences between the North American market and say UK Ireland and other parts of Europe. Because in Europe, the customers are CDE led so they require a common data environment within which they can work. And that's an important aspect and there's some very specific requirements in the market.

This year we launched a CDE specifically for Europe and we have seen very positive customer feedback as a result of that. And so that gives me a lot of confidence in our strategy of being able to establish beachheads in geographies and expand. There are other geographies where the US product that we offer is very consistent with the needs of the market and an example of that is in the Middle East. And that's so that's been an area where we've made some incremental investments and focus in the recent past resulting in success. And certainly I talked about a very important and valued relationship here with KSI. So we're excited about it in national. We have a path towards expansion.

It is still early days. But I think the framework is in place and we're excited about our opportunities. That's great.

Yeah, absolutely. Happy to unpack that for you. So as I began to talk to investors following our last call, it was really clear that there was a lot of interest in our margin profile. And how do we get to be comparable with our vertical software peers? So I've spent kind of last four months really digging into the cost structure and looking really hard at where those levels are. Now, that gave me a lot of conviction in our ability to improve the margins.

So much so that I wanted to be able to share that milestone with you now, kind of rather than wait. You know, that 25% non-gap operating margin, that represents you almost 1100 basis points of expansion. Well, that's really a notable milestone. It's really just the first of many in our long upward trajectory to get to those best in class software margins.

You mentioned a comment about the revenue. And, you know, we go through an annual planning process. We are in the process of doing that. We don't have revenue yet to share with you. That'll come in the normal timeframe early next year. But we were so confident in the cost structure that we wanted to give this metric out now because there's a number of different ways that we can get there. So you should view this as a comment on cost and not a comment on revenue.

The way to think about a drone deploy. Drone deploy has some very strong capabilities on perception, which are certainly being used by sort of more traditional construction companies. But they're also being used by by companies that I would classify as being owners in our in our category. So people who are building out infrastructure, but managing infrastructure. So drone deploy is able to sell to both owners as well as as well. People who are actually performing the build the build on the ground that technology is tied to. So it's very consistent with our with our with our end market view of owners and builders.

The their technology is essentially, you know, they're rooted in AI and machine learning around visual visual intelligence. So it's about being able to capture images, whether they be from the drones or robots or all the kind of cameras, being able to capture those images, process them and evaluate them. So I'm sure, I mean, I'm obviously you can see multiple uses for those images, but the focus clearly for for us and for drone deploy has been on that around that construction build out use case, which is all related to the the business we're in.

Well, you know, I think the the reality of selling AI and making sure that that's something where the as you say, where the the sales organization is enabled that comes from experience. And what we what we've been very deliberate about is not trying to push the technology out to the general sales force, but to go through this limited availability period. And if you look at the time from the time of acquisition of data grid into a portfolio, we already had our core organic innovation around AI.

And you added we added in data grid and rather than just simply push everything out to the market, we we took a moment to integrate the technology and created in the right way and make sure the technology was available through a very small, very targeted team of just a couple of people facing customers who were able to bring in sort of lighthouse accounts earlier accounts where we could see how the technology would be positioned, how it could be deployed, what would be the low friction way to get getting started.

And so that was that was the idea and it actually worked out really well because as we started to go through that, it became clear to us that there was a issue of packaging that we needed to address in order to be able to be more rapid to market. And so we created these starter packs, as you saw in our most recent press release from a few days ago.

And the starter packs give a team a low friction way to get started. They are ready to use agents and things like submittals and RFIs and daily logs and they have very, they have restricted usage for a certain number of projects and a certain capability. So it's an easy way for a customer to come in and say, I want to use this. I want to use AI. I'm not sure exactly how it's going to get used, but I want to take advantage of it. I'm going to use it across these few projects. I'm going to use it in this capability. That gives them the ability to come in. And then that allows them to experience user technology and then to move move on.

So that's the, that's the path that we've laid out for ourselves based on this very deliberate limited availability of general availability rollout. And as I said, the product has just gone GA. And so the sales, so now it's, it's available to the broader Salesforce to position with their customers.

Well, you know, it's, it's obviously early days, but if you, if you think about, if you think about a robotics in general, there's always been.

A broad dream that robots are going to be in a position to address labor. And you see this certainly in industrial settings, which are very constrained, but in a construction environment, it's a much more unconstrained setting and it becomes a little bit more challenging to imagine exactly the role of robots. In conjunction with human beings and there's concerns about safety and so on and so forth. So these, it's a very complicated problem. But there is an enormous amount of advances, advancements that are taking place. And I'm not just talking about humanoid robots. I'm talking about special purpose robots that are working in mixed use environments where the are human beings and robots working together. And that, that is, that is, that is work in progress, that's the fault.

What drone deploy brings to the table is they understand how to manage robots. And so part of their technology is the management of robots and management of drones, and, and robots in these environments. So people, people are using robotic cameras, for example, or drones, being able to manage them so that you essentially have autonomous activity on the construction site is an important aspect. So a great example would be, I want to make sure that I get exactly the same at exactly the same time and exactly the same path. I want to follow and, and get a perspective of exactly what's happened on that, on that day. So at five o'clock every evening, I'd like over every afternoon, I'd like to understand what happened.

Well, that's a predetermined, pre-scheduled activity. And drone deploy has the technology to be able to do that as a simple example. So that gives us, so we see ourselves from construction management as being able to expand broadly into, as and when the industry is ready into the, into the management of robots and robotics. So we don't see ourselves as building robots, that's not our business, but we certainly see ourselves as in the, in the management space. And again, this is early days, but we're very excited about the technology and the capabilities that drone deploy brings to the company.

Sure, I'm happy to take that. So as you mentioned, we saw really strong underlying performance. The growth was really broad-based. So it was across multiple geographies, it was among multiple stakeholders, and it was also across multiple customer sizes. Specifically, as it relates to CRPO, the majority of that acceleration was driven by the underlying strength in bookings. There was a smaller portion that was related to duration.

So I mentioned in my comments that we had strength in particular with some large customers, those deals tend to be larger in duration. And so that did take up duration a little bit, but that was only a small portion of the acceleration in CRPO. So the majority of it came from the momentum that we saw in the overall booking number.

Well, it's an interesting question. You can't, any good company cannot focus uniquely on one go-to-market motion or one customer base, one single customer. As you start to expand the organization, you have to think more broadly. And if you look at the origins of pro-core, pro-core started as a product targeting the larger North American general contractors.

And we have expanded over the years. And if you look at our business from owners and subs, owners and subs represented, I would say maybe 40% of our business thereabouts over the last few years. And that came from almost, you know, from a standing start, because obviously initially we were focused on, we were focused on the general contractor space.

We've also seen success with larger customers and smaller customers. And as part of our go-to-market or as part of our strategy, we are developing technology and solutions that are appropriate for those stakeholders.

So initially, we had a set of capabilities which targeted the needs of general contractors, and then we added in capabilities that would support the owners and the subs. But now we're adding in capabilities that we think are really important to specific stakeholders. So, for example, I talked about the CDE that we deployed in Europe. That was very specifically targeting the European customers.

And there, that large deal that I talked about in my script, that included the CDE, so it pays off. We have a solution with just recently launched for owners around portfolio management and capital planning. And that's specifically targeting the owners. And so what we see as our path forward is the ability to create both products that are targeting the stakeholders in a very specific way, as well as, of course, addressing a go-to-market to be able to make sure that we can address those customers.

And, you know, the go-to-market sometimes can be direct. It can be channels. I talked about expanding to channels as an opportunity. And in fact, one of the examples I gave earlier on the International with KSIA, that was done in part with the channel partner, with the partner. So, partnering direct the combination of the go-to-market, figuring out what the product looks like, making sure you have the right product for the right customer. All of that is part of the alchemy that needs to come together in order to continue to drive growth and success to the organization.

Yeah, so as we kind of look at the components of what makes up our gross margin, we expect that that will be consistent over time. You know, I think that what you're starting to see is that, you know, you don't need the most expensive model to do every single task. And so, you know, our focus is on optimizing how we deliver those digital co-workers to make sure that we can maintain those margins.

So, what it, so, just want to make sure I'm understanding your question. Could you, could you give me another sentence there, please?

Look, I think the, if you look at the mix today at a point in time, it is, it is certainly, it has been relatively stable for the last several quarters. But if you look at the mix as to where we were sometime back, you can certainly see expansion in both the owners, as well as the, as well as the specialty contractor segments or stakeholders.

And in with respect to international, again, that's been an area where we see opportunity where we haven't seen as much expansion capabilities. And I think that there continues to be opportunity there and it's a question of putting the right go to market in place. So, some of these expansion opportunities are short term, some of these expansion opportunities are long term. So, this is as far as the sort of the stakeholders are concerned.

And then in terms of incremental growth opportunities, obviously, we see AI as we're making investments in AI and we expect our digital co-worker strategy to also monetize and to contribute in the future. So, as we start to look at the aggregate, we see, we see opportunities from, from our overall growth, we see opportunities with respect to the stakeholders to go to market AI.

And then, of course, the end markets. I mean, we talked about end markets. We are, we are driven in part by ACV. And so, as the annual construction volume, you know, if there is a recovery in that and the aggregate, that translates into tailwinds for us. And there's certainly segments like, for example, like, for example, data centers, if they continue to grow, we get benefits from that. So, look, we're growing, you know, 15 points plus faster than the end market. And so any upside on that translates into further upside on that. So, we are, we feel very good about, we feel very good about our position. So, I think there is a, perhaps a misunderstanding that our business is really tied to the ENR 400 and GCs only.

That's really not the case. We have a very broad set of customers across the different stakeholders, across the different sizes.

I think, I think you, you, you, you, you, you are, you are to get into the answer in your question, which is obviously. When we look at, when we look at the rollout of innovative technology, it isn't simply a matter of rolling technology out and saying have added. Because of the change management issues. And so the starter packs have been very well defined and thought through so that they are a bite sized chunk that can be deployed and understood and, and, and, and incorporated into the way that our customers work.

And so in the spirit of trying to create a long term sustainable business, we're trying to be thoughtful about how we do this. And this is, this is clearly the strategy that we're pursuing and we feel very good about the onboarding strategy here.

Well, so as I said, as I said earlier, when we, when we, as we were building out a strategy for AI, it became very clear that this was an area that we were excited about perception. So the eyes and the years metaphor that I used in the, in the script. We, we really were excited about that space. We felt that it was important to be integrated into our core platform. And so that's why we, we pursued the drone deploy acquisition.

Now, I've always viewed acquisitions as a way to accelerate our strategy. So, for us, building out, it's, it's, it's not a strategy unto itself. So we're not building out AI by acquisition, where we have a well-defined strategy for our AI capabilities. And then we are determining whether to build, whether to partner, or whether to buy based upon the needs of the moment. And right now we have, we have, I have tremendous confidence in our team, our capabilities to execute.

I'm excited to welcome drone deploy into an already vibrant pro-core AI environment. I'm excited of what we can be, what we're going to be able to do together.

And then just to answer your question on the margin, you know, as we evaluate acquisition opportunities, we are looking at their strategic fit and then also making sure that they fit within our financial profile. So, as we thought about the margin target, you know, we thought about the impact that future M&A would have. And in particular, as I noted in my comment, we see no change to that commitment with the acquisition of drone deploy.

To that first point, look, again, as I said in my previous answer, Joe, for us, it's about the strategy.

And there is no single element to the strategy. It's about the strategy. It builds on each other. And so all of the different elements that we have brought in and assembled as part of Procore AI and that will continue to build as part of Procore AI will facilitate that, but obviously a right to point out that there is synergy and there's technical synergy between the data grid capabilities and the drone deploy capabilities along the lines as you suggested.

And that's really exciting to us as well. So, but we are, we are, we have a clearly identified strategy and we're going to continue to execute that strategy.

So, in the short term, I would point to rather than specifically talk about time, I would talk about short-term synergy opportunities in the short-term synergy opportunities. We have about a slightly shy of, and I think I mentioned this script, slightly shy of about 600 joint customers who are using both drone deploy and Procore. But that means that there are thousands of customers who are not using drone deploy today who are Procore customers. And we have a cross-sell opportunity. So, from our perspective, that is an immediate available opportunity.

In the long term, as we've talked about digital co-workers, the opportunity, the TAM expansion opportunity is not so much about adding incremental software capabilities. It's really going after a different pool, which is essentially the labor shortage that our customers are facing. They just don't have people. So, they have a budget for people, but they just don't have people set aside. They're able to hire people just for the task at hand. And so, that represents a different pool of money that is accessible to us. So, that from a TAM expansion perspective, the digital co-worker strategy exposes to incremental addressable market that goes beyond the traditional TAM that's associated with construction management software.