The Deal
Procore is paying $845 million in cash for DroneDeploy, a reality capture and drone software company doing roughly $78 million in trailing revenue. That is 10.8x revenue. Procore itself trades at about 4.3x forward revenue.
The construction software leader is taking on leverage for the first time to fund the acquisition, using a committed bridge facility while evaluating permanent financing. DroneDeploy is cash flow breakeven with gross margins above 80%. Deal closes later this year pending regulatory approval.
This is the second AI-focused acquisition in six months. Procore bought Datagrid for about $159 million in January 2026. The thesis: combine DroneDeploy's visual intelligence (what is happening on jobsites) with Datagrid's reasoning layer (what to do about it) to build what they are calling digital coworkers for construction.
The Numbers
Procore reported $375 million in Q2 revenue, up 16%, beating guidance of $364 million to $366 million. That is three full points above the 12.9% growth analysts expected.
First ever GAAP operating profit: $4.3 million, versus a $30.3 million loss a year ago. Non-GAAP operating margin hit 21%, up 800 basis points. Free cash flow was $65 million, up 507%.
Net revenue retention: 106%. Gross revenue retention: 95%. Customers over $100k ARR: 2,871, up 14%, now representing 68% of total ARR.
Full year revenue guidance raised to approximately $1.51 billion to $1.514 billion. That puts the company at roughly $1.5 billion in ARR.
The Efficiency Story
Total operating expenses grew 3% while revenue grew 16%. Procore added $51 million of quarterly revenue on $9 million of incremental operating expense.
Sales and marketing spend was up just 2.7% year over year and actually declined sequentially from Q1. GAAP S&M went from 44% of revenue to 39%.
R&D grew 5% in GAAP terms (includes Datagrid acquisition expense) but just 3.4% on a non-GAAP basis, falling from 20% of revenue to 18%. The company is buying AI capability rather than building it internally.
Leadership Context
This is six months into a full executive swap. Ajei Gopal took over as CEO in November 2025 from founder Tooey Courtemanche, who remains Chairman. CFO Rachel Pyles and CRO Walt Hearn both came from Ansys, where Gopal was CEO before leading its $35 billion sale to Synopsys.
For sales professionals watching M&A: vertical incumbents with compressed multiples will pay AI-native premiums for the perception layer. If you are selling sensing or capture tech in a vertical, the platform owner is your buyer and they will stretch on price.