Welcome back. We've got Procore Matt is with us. Matt and I have known each other for a long time. He spent a decade at Salesforce and has been with Procore since, I believe, 2021. Yeah. Very beginning of 2021, yeah. Yeah. Five and a half years. Yeah. Congrats on the run. Great to see your role rising there, now SVP of Finance. You've seen quite a lot transition at Procore. You've had- Multiple, yeah multiple kind of transitions and now you're probably seeing the biggest one just initially hit now with the brand new team, new- Yep CFO, new CEO, new head of sales. Maybe just walk through, I think we published a deep dive showing the success of this team in Ansys and what they did to the business, which is pretty incredible. They drove a 300% stock return, which beat the market. Revenue went from 5% to 13%. Margins were steady. Did a number of great things. I think everyone's saying, "Look, this team," whether it was LeBron and pick your two other favorite players, have now come into the new team. There's a track record with a great asset, but there's an initial shock value of, "Okay, we've got to make some changes." I think the feedback I get is, okay, we're aware of what's happening, but how much shock and awe are we going to feel as they come in and reset this? Or maybe we don't. Maybe it's more seamless. Ajei joined, we announced Ajei in September, and he started formally in November. He had a tough decision to make. When we announced, too, a CRO, CFO, it was actually several more. There was a whole free agent class that basically became available when their time with Synopsys came to an end at the end of February, beginning of March. There was a group of free agents that he knew, that he liked. They know how he likes his coffee in the morning, and they all have a lot of years and chemistry together, and he decided to sign the whole class. There were some good people at Procore that had to leave because of that, including Howard, our old CFO, who's a great guy. The decision makes a ton of sense. If you're him, every head coach is going to surround himself with a coaching staff that knows his playbook and knows how he wants to run things. I could see there's a lot of value in that. There's people like me, there's a guy named Geoff Lewis, you've met him. He runs a lot of our products. There's some other go-to-market leaders that have been in the company for a long time. We are spending a lot of our time ramping these new folks up quite a bit. I will say Walt, our CRO, really sharp, super curious. Rachel, my new boss, very similar. They all look at problems the same way, and there is value, even though you're new, but you've worked together for a long time. They diagnose problems, and they move quickly together. I think they have a thesis, too, and it probably wasn't too dissimilar to what they did at Ansys, which is they understand accelerating growth is tough, and we are tied to a cyclical end market. What are our options? What do we control there? More specifically, we have a lot of control on the margin leverage. Things that we were going to do in three years, can we do them in two? Things we can do in two years, can we do in one? There's been a lot of focus on that. There's a lot of optimism internally around it. That's great. When you think about just this massive wake turbulence from them arriving versus, "Hey, we're going to ease through things, and it's not going to be as turbulent." How would you describe what you're feeling so far? Well, look, I've been at the company, like I said, for five and a half years. This change transition, not nearly as disruptive as when we remodeled our go-to-market operating model 18 months ago. That was a much bigger change. There's just a lot more people involved. You're looking now, some leaders coming in, some people get some new boss, but that happens in software. I spent, to your point, a dozen years at Salesforce. We had a few different co-CEOs during that time. I think I had three CFOs in those 13 years there, because I was technically there for Amy's first call or two calls. That happens. I wouldn't describe this as overly disruptive to the business. I think they're trying to figure out where they put their tweaks and touches and then off we go. Tooey is a unique individual, as you know, and I know you know him well, and I think we all look at him and say he's pretty unique. He has said, "Hey, I'm going to amplify my ability to be in the market and in the field." Is that still happening? Yeah, you're seeing his touches still. He's great with customers. Well, first of all, anytime you meet Tooey, he just kind of has this salt of the earth energy, and customers like that, especially people in construction. That's one. He's got a lot of thoughts and opinions on product, and I think that's where him and Ajei do a lot of iron sharpens iron, because Ajei is an engineer product person by background as well. There's other things Tooey's still involved with that you may not appreciate, which is culture. Just yesterday, Ajei kind of gathered the top 30 leaders at the company, and we were going through employee survey scores and talking about our values and what changes to the culture narrative we want to have internally. He was sharing a lot of the conversation. He uses Tooey as like a sounding board on that stuff because those values were implemented by Tooey 15 years ago. He still has his fingerprints on the company. He's still chair of the board. He just doesn't want to run it day-to-day anymore, and he knew we got to a size and a scale where he felt like someone like Ajei would be better served. The team now, is center of power going to be Texas going forward versus Santa Barbara? How do you- Yeah. Austin has always been the biggest office post-COVID. Pre-COVID, it was Santa Barbara, as you know. Once COVID hit and we started hiring more and more, just Austin became much more natural to grow there. Ajei lives on the East Coast. A lot of the executive team. We're all spread out, and so Austin is our center of gravity. If you're downtown or you will be in downtown Austin, shoot us a note. We'd more likely be able to meet you there than we would in Santa Barbara. Santa Barbara still is our headquarters, but eventually, I would imagine that will move over time as well to Texas. Yeah. We'll still have an office in- Jo's Coffee in Austin. Yeah. It's really good. There's a lot of good barbecue too. Yeah. I guess, this last quarter, I know you beat me up on this. It's a game of inches, and I think everyone, as I say, don't hate the player, hate the game. It was a game of inches, and the inches, it was a game of inches. We'll say it that way. Everyone asks, is the demand environment not what you thought? Is everything kind of tracking as is? How do you see it, and what has the market gotten wrong? Yeah. We clearly did not anticipate the market's reaction correctly. The quarter, from our perspective, the financials shook out exactly like we thought. Very consistent. Margins expanded like we had thought they would. Obviously, we didn't anticipate buying back as many shares as we did in Q1. That was probably the biggest thing that deviated from our plan, if you will. Everything else was pretty consistent. We were a little surprised at the reaction. I honestly felt better as the rest of the software started reporting because there is some misery loves company, so to speak, in that regard. We're doing what we need to do. Our head's down right now. We've had consistent growth for the past few quarters. We've been growing 15%-16%. That's who we are right now. Our margins have been improving significantly. Share count actually declined 1% in Q1. Those are all the right building blocks for good free cash flow per share, and we're going to work on a strong AI offering, which we went GA in Q1, January, more broader go-to-market rollout in Q3. We're optimistic around that. There's some good things cooking internally. Yeah, I guess the reaction we had in Q1 was pretty strong, just like the reaction in Q4 was pretty strong, they were both pretty similar quarters. You thought it was just me. I'm sorry, it wasn't. It wasn't just you. Yeah. It wasn't just you. Yeah. I always appreciate the feedback. I just didn't agree with it all. Yeah. When you think about the macro levers, obviously, I like real estate, so I agree with Trump. We need lower rates for this industry to kind of open back up. Hopefully, that happens. We need material costs, and the inflation we're seeing is insane. What are the other things that you think we need to see to open up, maybe to get to that 20% sustainability? Let's assume things stay the same with your own execution. Do you think you can get there, or do we need all these other levers to kind of open up to really enable that 20-plus% growth again? Yeah. Our end market, which is in the U.S., it's in total non-resi construction and multifamily construction. There's two types of construction I would exclude from our end market, which is single-family homes and home improvements, so kitchen, bathroom models. Exclude that for a moment. Total non-resi and multifamily is growing anywhere between 0% to 1%. They were -1% to -2% in the winter. Pretty stable from there. We have historically grown anywhere between 10-20 points faster than our end market. Right now, we're 15-16 points faster. The 10-20 will vary where we are in the cycle. Okay? Let's just assume the end market does not improve. Your question is how do we get to our upside growth case, so a revenue acceleration? There's two components of that. There is a macro end market improving. Maybe instead of 0% to 1%, it goes to 3% or 4% or 5%. Typically, our end market grows 4% a year. If you go back over decades, that's been the median growth rate. It is cyclical, as you know. The parts we can control are our internal execution, our AI offerings. Those are the things that we think could be incremental upside from here, and that's where Ajei's spending a lot of his time, frankly, is our AI solutions and what's the margin profile look like in the next 12-24 months. Those are the things we are focused on. I'm constantly reminding him, if that non-resi cycle moves, you want to have some flexibility to invest in that to get revenue potentially to come back up, and that's the big unknown. We are looking for optionality there. I think in the U.S., you've also said that it's not about new customers, it's about expanding the wallet share of the existing customers. Can you talk to the penetration today, where you're at, where you think that can go? We had put in our last investor day, which is about a year and a half from now, but this data point still holds. It was something like on average, we have half of our customers' total volume that they run, half of it is committed to Procore. That's the dynamic that I was bringing up. When you think about landing a logo, if we landed Jefferies Construction as a brand-new logo and knew nothing about them, the statistical probability is you will, one, buy our most expensive product right away, project management, but you will, two, commit to a small amount of construction volume. This is because you're probably going to ramp into Procore over the next few contract cycles. The land ARR mix is heavily weighted to product. The expansion ARR mix is weighted to volume upsell. A lot of our motion is getting Jefferies Construction from 10% of their volume up to 50%, ultimately up to 100%. That's a lot of the motion there, as well as selling our second, third, fourth most popular products as well. Yeah. The concept of AI impacting construction, I'm working on a project right now, and they're not super sophisticated users. They want simplicity. I highly doubt they're going to be vibe coding the solution. I'm not too worried about that risk. I've said repeatedly, if you guys want a demo, I am here demoing Procore. Tooey Courtemanche, the founder of Procore, said this is the smallest project in his platform. It is a little A-frame. I'm telling you, they took this tool away from my contractor, I complained, he brought it back on, I did win a customer back for you. It's the smallest customer you have. We'll take it. Yeah I'm just telling you, it's transformative even for I don't see anything in AI that can disrupt this. When I look at pictures for insurance, I look at materials, I look at budgeting, I look at all the drawings, the daily logs, everything goes into this application, I don't have to drive to the project. I feel better from an insurance perspective because I had a fire at my house, and everything disappeared. I did not know that. Yeah There's timestamps of the project, of all the material, and when the insurance inspector, if this happened again, would know it's not a Home Depot door, my wife likes expensive doors. Yeah. So- Dolans. Yeah. Yeah. To me, I don't see how this is AI'd, but I guess I'm an outlier right now in terms of the view on software. Yeah, I'm sure some people in the room disagree with you, but our internal thesis is similar. We're not too worried about people vibe coding it themselves. That's not the concern. The concern is how do we make it so usable and accessible so that your contractor and his crew don't have to be overly trained to use it? One of the things that, frankly, my FP&A team had the light bulb moment just this year is using the Claude Excel plugin kind of blows your mind. We have our long-range plan at Procore. It's being updated right now with Claude. I have an analyst who's literally just in the plugin, improve bookings rates in this year, improve margin here, and the model just works. You don't have to be a technician to use it. You just have to understand what you're asking it to do. When you have that moment, you have like, "Holy shit, this is real." We're trying to do that for the field. There are, on a typical project like yours or even a hotel like this, half of the spend is on labor. If there's not enough good labor, how do we get them to be able to do more things quicker and better? There's a lot of outcomes that we've been talking to customers of what they're trying to solve. An outcome could be, "I have to put together these really complex bids that force me to go through thousands of old PDFs and specs to make sure I get my bid right. Super painful and manual. How can you help me do that faster and better?" Another use case could be, "I have a superintendent that has to walk the job site for 30 minutes every day and track the inventory on the job site. How can we get the AI to do that on her behalf using visual or audio detection?" There's a lot of things like that that we're trying to solve. It's real, but we're not too worried about them doing it themselves. We need to be the right provider vendor for them so that we keep the category leadership going. That's great. The one thing that's always stuck with me is when Tooey, when you took the company public, you said 90% of the TAM is outside North America, yet I think mid-teens is. Yep % total revenues. Yeah is outside North America. What are the steps Walt and the team are making? Maybe it's way too early. No, it's still fair. Yeah. International, I wouldn't view it too much as what the mix is to the total business, because that's going to be predicated on how well the U.S. is doing. International should be growing several points faster than the U.S., they're growing pretty similar right now, they should not be. To fix that or to get to what it used to be, what it should be, you probably need a combination of three things. You need to make sure you've got the strongest product market fit, which is a little bit different in each market that you're in. That's one. You'll obviously need to have go-to-market capacity execution. That's a no-brainer. Three, you have to have the right macro conditions. Over the last three years, we have not had all three of those. 1-2 of those have been missing in each market we're in right now. That's why you haven't seen it grow faster. We still remain optimistic and confident. I think the one thing Walt and Ajei are looking at, they have mentioned this to some folks, so I have no mind repeating it, is we are very direct. 99% of our go-to-market is direct. They are used to a channel motion in certain markets or maybe even certain segments, they are exploring that. While they like the operating model change we made in go-to-market with a more regional motion, more technical roles, they do view this as the next thing that's part of our maturation evolution. That could be something that helps on that second component there. The third component is out of our control. That's just how our cycle is. The first two is very much in our control. Everyone asks about data centers. I think it's low single-digit% of total bookings or revenue. It's 2% of U.S. construction. Therefore, it's not going to be a big mix of our business. Data centers is growing incredibly fast, and I think that 2% will become 3%-4% very soon, and that will be good for us. What folks have to remember is data centers is not growing the total construction pie. There are other segments of construction that are doing really poorly right now, which is manufacturing is the big one. Manufacturing was our tailwind 3 years ago with the CHIPS and Science Act and everything else. That growth is decelerating. It's actually negative growth right now, it's kind of offsetting some of the data centers' tailwind. We don't look at it too much as data centers manufacturing. We look at what's all of non-residential and multifamily doing. That's a better indication for us, what's the spread between that growth rate and our business? You said Claude's doing your forecasting. Do you use another planning tool? We use Pigment for planning. Pigment has some agent offerings. Pigment's like an Anaplan replacement up and coming. We used to use Anaplan. We moved off of them to Pigment. Pigment has a connector to Claude. If you want to do deeper analytics, you can use Claude. I like the Claude agentic capabilities, yeah. From an AI perspective internally, what else are you using to make yourselves more efficient? Claude Code, Cursor. R&D is the big use case. There's some peripheral apps, I would say, in go-to-market as well. R&D is by far the big one of Cursor and Claude Code. They're already seeing a lot of leverage this year alone, yeah. No OpenAI? We do have some OpenAI on the product side, but when engineering, writing code, it's been Cursor and Claude Code. You're on AWS? We are hosted on AWS, correct. Yeah. Yeah. Any other big questions from the audience? The big question, I guess is, when you had the 18-month ago sales transition, the question we get is, well, what% of that's going to be kept by Walt or tossed in terms of just the plan, not the people. Yeah just the plan? I don't think a whole lot. I think. More of a tweak? Well, yeah. If you think about what we did, we moved to a geographical regional motion, which makes sense for our end market, and then we introduced technical seller roles. There's no change that I'm hearing he's going to make on either of those two. I can see him introducing an indirect channel motion to help us scale in certain markets. I would have no doubt he might tweak some ratios and how many people do we surround for each type of seller. I would put that as normal stuff that we would do, not disruptive things. What we did 18 months ago, it was a big remodel, and that's not really what I expect going forward. From a product perspective, there was a lot of talk about pay and financials and insurance and all these other things are tangential. Is that still kind of in the hopper, could be potential drivers down the road, or is it- Yeah. We had a few fintech skunkworks-like things five years ago. Pay was the big one. We also had a material financing, which is another way of addressing working capital. We also had an insurance thing, which is another way of addressing risk. Pay is the one that graduated from lab skunkworks to real now. When you spend $1 on project management, we have three products that could be an incremental $0.50 each. Quality and safety, financials, and then pay. Pay is very meaningful if you're selling to a general contractor in the U.S. Those folks in go-to-market that have that role, they view pay as very relevant to hit their quota. We remain optimistic about that for sure. The other two never really graduated out of the skunkworks to labs because we didn't think we can get it to scale. It didn't make sense, or it made more sense to just go with a partner than it did to do direct. Broadly, most of our product roadmap is tied on AI owners, and I would say things in the international markets to make us very relevant product-market-fit wise that are more unique to that country or geo. I say you design in Autodesk and you collaborate in Procore. Autodesk would say you design in Autodesk and you collaborate in Autodesk. To each his own, yeah. We have They're very loud on their rhetoric. I think the numbers do all the talking here. Yeah. We feel good about our leadership. Plenty of our customers use different design tools, including Autodesk. I don't see that changing. That's not a world we're too interested in moving into. Historically, what we hear from them is the best tool for the field that gets them to save labor, get things on time, on budget, that's what's going to win. As long as we're focused on that, we'll be okay. Yeah. Question? Yeah. You talked about Ajei wanting to just focus on AI solutions and improve the margin structure. If I'm right, your support documentation basically says you guys use closed models, so GPT, Claude, Gemini. Given that they have a lot of pricing power right now and you're relying on them, what things can you guys do to improve AI margins when, for example, are you looking at open source or alternatives? I don't think we're looking at any of those. The sample size is small, so I am extrapolating off of a, because we've just been GA since January. If our core business has non-GAAP gross margins of call it 80, 85, what I would expect with the AI offerings is something like 10, maybe 15 points less than that right now. If we assume the inference costs don't drop over time, let's be conservative and assume they hold. One of the things we've done so we don't have to constantly ping them for every little thing we need is we have built our own reasoning models on top of the foundational models. You can think of a reasoning model as a micro-foundational models that's just entirely about construction-specific context. Those reasoning models then determine when they need to reach out to a Gemini or when they need to reach out to a GPT or when it can just resolve it itself, and that will help as well. Our theory internally right now is that 10 to 15 points will improve over time for a few different reasons. For it to impact the overall business's gross margins, we would need the AI revenue to be very significant for a $1.5 billion business today. I think we have time to see how this plays out, and I would imagine a lot of our assumptions today will be very different 18 months from now as this dynamic changes, and it does seem quite dynamic. Yeah. Ultimately, let's just say it doesn't change. I would be very surprised if this still is not gross profit dollar accretive. Even if it comes with a lower gross margin, that still could be okay if you're getting incremental revenue, incremental gross profit dollars, and ultimately incremental free cash flow. I think we'd be fine with that trade-off. We look forward to seeing you construct the future. Thanks, Matt. You're welcome. I really appreciate it. Thank you. Good to see you, Brent. Thanks again.