PROCORE TECHNOLOGIES, INC.

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Item 1A. Risk Factors.

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Our failure to successfully incorporate AI into our products, services, and platform, as well as our business operations, or our failure to comply with laws, regulations, contractual obligations, or other requirements that now or in the future could apply to our use of AI, could materially adversely affect our business, financial condition, results of operations, and prospects.

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We are increasingly building or incorporating AI tools (including generative and agentic AI tools) into our products, services, and platform. We also deploy AI tools in our business operations. We have used, and may continue to use, third parties to provide and support these tools. Our use of AI may present significant risks, uncertainties, and challenges that could materially adversely affect our business, financial condition, results of operations, and prospects.

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AI models may create flawed, inaccurate, or incomplete outputs, some of which may appear to be correct. This may happen if the inputs that an AI model relied on were flawed, inaccurate, incomplete (including if a bad actor “poisons” an AI model with bad inputs or logic), or if the logic of the AI model is flawed (a so-called hallucination). We, our customers or partners, or other third parties may use or rely on such outputs to our or their detriment, or such outputs may lead to adverse outcomes, including delays and errors, any of which may negatively impact our ability to attract and retain customers and to expand the use of our products, services, and platform, and expose us to brand or reputational harm, competitive risk, and legal liability. Social or ethical concerns about the use of AI, such as the risk of AI models creating discriminatory outcomes using biased information, may also hinder the use and adoption of AI by our customers, partners, and employees. As we expand the use of AI in our own business operations, there is a risk that we will experience such outcomes, which would harm our business and reputation. Further, developing, testing, selling, deploying, and adopting resource-intensive AI capabilities has increased and will likely continue to increase our operating costs.

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If we use any third-party AI technologies that misuse or fail to protect the data that we or our employees, customers, partners, or vendors input, then that data (including confidential, competitive, proprietary, customer, or personal data) could be leaked, disclosed, or revealed to others. Additionally, where an AI model ingests sensitive data without appropriate safeguards, and makes connections using such data, the AI model may produce outputs that reveal other sensitive data generated by the AI model that was not intended to be revealed. Any such leak, disclosure, or revelation of data could harm our business, expose us to reputational harm and competitive risk, or result in legal or regulatory action against us. We could also experience an increased risk of litigation if any AI tools that we provide or use are alleged to produce outputs that infringe or violate third-party intellectual property rights.

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The legal and regulatory landscape surrounding AI is rapidly evolving and uncertain. Several jurisdictions around the world have proposed, enacted, or are considering laws governing AI, including the EU’s AI Act, and we expect that lawmakers and regulators will continue to maintain a heightened focus on AI and promulgate new legislation and regulations, which could impact our business and our actual or planned use of AI. Laws and regulations governing AI may apply in new, unpredictable ways, and differences in how jurisdictions choose to address issues related to AI may require us to navigate a complex web of different obligations. For example, the European Union’s (“EU”) AI Act sets out a risk-based framework, subjecting certain AI technologies to numerous compliance obligations, including transparency, conformity, risk assessment, monitoring, and human oversight requirements. Under the EU’s AI Act, non-compliant companies may be subject to administrative fines of up to 35 million euros or 7% of such company’s total worldwide annual turnover for the preceding financial year, whichever is greater. Certain of our activities may subject us to aspects of the EU’s AI Act. Depending on how the EU’s AI Act is implemented and interpreted, we may have to adapt our business practices, contractual arrangements, and current or planned products or services to comply with obligations imposed by the EU’s AI Act. Our use of AI technologies could also lead to regulatory investigations and consumer lawsuits. Certain privacy laws extend rights to consumers (such as the right to delete certain personal data) and regulate automated decision-making, which may complicate our use of AI, lead to regulatory fines or penalties, be incompatible with our use of AI, require us to change our business practices, retrain our AI, or prevent our use of AI. For example, the Federal Trade Commission has required other companies to turn over or disgorge valuable insights or trainings generated through the use of AI where they allege the company has violated privacy and consumer protection laws. Complying with applicable laws, rules, and regulations governing AI could increase our cost of doing business, require significant resources or technical modifications to our systems, change the way that we operate in certain jurisdictions, and impede our ability to offer AI in certain products or use AI in our business operations.