Procore Technologies delivered a clean beat-and-raise for the third quarter, and the more important point is that organic growth accelerated again. Non-GAAP earnings of $0.51 per share topped the $0.45 consensus and the $0.49 Earnings Whisper number, a 4.1% surprise, while earnings grew 37.8% year over year. Revenue of $402.31 million beat the $383.0 million consensus by 5.0% and rose 18.7%. Stripping out roughly two points from the newly acquired DroneDeploy, organic revenue of about $397 million grew 17.1%, up from 15.8% in Q2, 15.7% in Q1 and 15.6% in Q4 FY25. For a software company of Procore's scale, a steady upward bend in organic growth is the central development of the quarter.
The quality of the beat holds up on the operating line. Non-GAAP operating margin reached 23.5%, up 620 basis points year over year and 400 basis points above the high end of guidance, compared with 21.5% in Q2 and 17% in Q1. Leverage came mostly from sales and marketing, which fell to 31% of revenue on a non-GAAP basis from 36% a year earlier. GAAP results remain in the red, but the gap is narrowing: the GAAP operating loss shrank to $7.2 million from $15.0 million despite $26.6 million of acquisition-related expenses, and the net loss narrowed to $0.03 per share from $0.06. Reported free cash flow rose only 8% to $73 million, but excluding one-time deal costs it was $92 million, a 23% margin and 36% higher than a year ago.
Forward indicators look as firm as the reported numbers. Organic current remaining performance obligations grew 22.6%, up from 21.9% in Q2 and 21% in Q1, and total RPO rose 28% to $1.81 billion. One caveat matters here: longer contract durations are inflating CRPO relative to revenue, so the backlog figures overstate near-term revenue momentum somewhat. International growth reached 30%, or 26% in constant currency, up from 15% constant currency in Q4 FY25. Customers above $100,000 in annual recurring revenue rose 14% to 2,968, and gross retention held at 95%. Management credited large-deal execution under new go-to-market leadership and described the macro backdrop as unchanged.
Guidance moved higher again. Full-year revenue guidance rose to $1.557 billion to $1.559 billion from $1.510 billion to $1.514 billion. About $24 million of that comes from DroneDeploy, but roughly $21 million is an organic raise. The full-year non-GAAP operating margin outlook climbed another 50 basis points to 19% to 19.5%, the fourth consecutive step up, and the 25% FY27 margin target was reiterated. There are softer spots. Fourth-quarter margin guidance of 15.5% to 16% reflects deal dilution, and the implied Q4 organic growth of about 15.4% sits below Q3's pace, although that fits Procore's pattern of guiding conservatively. Reported full-year free cash flow margin guidance was trimmed to 18% from 19.5% because of roughly $23 million in one-time DroneDeploy payments. Excluding those payments, the 19.5% outlook is unchanged.
The bigger shift is in capital structure. Procore paid about $845 million in cash for DroneDeploy, issued $950 million of zero-coupon convertible notes due 2031 and repurchased $175 million of stock in the quarter. Goodwill and intangibles now total more than $1.6 billion, and a new $300 million buyback authorization replaces the expired one. Bears have legitimate ammunition: the converts add leverage and potential dilution, DroneDeploy brings integration risk, AI compute costs could pressure gross margin as agent usage scales, and an analyst flagged customer success headcount that is flat to declining as the product suite grows more complex. The offsets are early. DroneDeploy is tracking slightly ahead of plan, with about 600 shared customers to cross-sell. Procore AI's digital coworkers reached general availability, and FedRAMP Moderate certification unlocked a new U.S. government agency win. Monetization of the AI agents remains unproven, however, and no adoption statistics were disclosed.
The market setup is more complicated than the surprise implies. Investor sentiment stayed negative heading into the report and weakened slightly, slipping to -0.476 from -0.439. Meanwhile, the stock has gained 12.8% since the open after the July report and trades about 18% above its 200-day moving average of $53.36. Price has improved even as sentiment has not, which suggests the accelerating fundamentals have not yet won over the skeptics. The Earnings Whispers trend signals are uniformly positive, consistent with the improving price action and sequential growth.
The bottom line is that Procore produced its strongest organic quarter in some time. Growth accelerated, margins expanded well beyond guidance and the outlook rose for the third straight quarter. The remaining questions sit outside the core operating results: whether a debt-funded acquisition, convertible dilution and still-unmonetized AI products can be absorbed without blunting the path to a 25% margin in 2027.