PRO Pros Holding Inc

• Subscription revenue of $67.1 million, up 12% year-over-year.
• Subscription gross margin of 78% and non-GAAP subscription gross margin of 80%, an improvement of more than 190 basis points year-over-year.
• Continued improvement in areas of profitability, including a 185% improvement in operating cash flow year-to-date.

PROS Holdings, Inc. (NYSE: PRO), a leading provider of AI-powered SaaS pricing, CPQ, revenue management, and digital offer marketing solutions, today announced financial results for the third quarter ended September 30, 2024.

“I’m proud of our team for delivering a strong third quarter where we exceeded the high-end of our guidance ranges across all metrics,” stated CEO Andres Reiner. “Our strong performance reflects the trust and confidence businesses have in our platform, which is why we’re winning prominent new customers and expanding our existing base, further demonstrating the value and innovation we bring to the market.”

Third Quarter 2024 Financial Highlights

Key financial results for the third quarter 2024 are shown below. Throughout this press release all dollar figures are in millions, except net earnings (loss) per share. Unless otherwise noted, all results are on a reported basis and are compared with the prior-year period.

 

 

GAAP

 

Non-GAAP

 

Q3 2024

 

Q3 2023

 

Change

 

Q3 2024

 

Q3 2023

 

Change

Revenue:

 

 

 

 

 

 

 

 

 

 

 

Total Revenue

$

82.7

 

$

77.3

 

 

 

7

%

 

 

n/a

 

 

n/a

 

 

n/a

 

Subscription Revenue

$

67.1

 

$

60.0

 

 

 

12

%

 

 

n/a

 

 

n/a

 

 

n/a

 

Subscription and Maintenance Revenue

$

70.4

 

$

64.7

 

 

 

9

%

 

 

n/a

 

 

n/a

 

 

n/a

 

Profitability:

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

$

54.4

 

$

48.8

 

 

 

12

%

 

$

56.3

 

$

50.9

 

 

11

%

Operating Income (Loss)

$

—

 

$

(7.8

)

 

$

7.9

 

 

$

8.4

 

$

4.5

 

$

3.8

 

Net Income (Loss)

$

0.2

 

$

(13.9

)

 

$

14.1

 

 

$

6.6

 

$

4.0

 

$

2.5

 

Net Earnings (Loss) Per Share

$

—

 

$

(0.30

)

 

$

0.30

 

 

$

0.14

 

$

0.09

 

$

0.05

 

Adjusted EBITDA

 

n/a

 

 

n/a

 

 

 

n/a

 

 

$

9.3

 

$

5.6

 

$

3.6

 

Cash:

 

 

 

 

 

 

 

 

 

 

 

Net Cash Provided by Operating Activities

$

1.6

 

$

8.7

 

 

$

(7.1

)

 

 

n/a

 

 

n/a

 

 

n/a

 

Free Cash Flow

 

n/a

 

 

n/a

 

 

 

n/a

 

 

$

1.4

 

$

8.5

 

$

(7.1

)

The attached table provides a summary of PROS results for the period, including a reconciliation of GAAP to non-GAAP metrics.

Recent Business Highlights

• Welcomed many new customers who are adopting the PROS Platform such as a global top 5 telecommunications provider, Dan Air, Fox Rent-A-Car, Noweda, South African Airways, Twist Bioscience, and Vallen, among others.
• Expanded adoption of the PROS Platform within existing customers including Asiana Air, BASF, Fonterra, Etihad. Kenworth de Monterrey, Lufthansa, and TE Connectivity, among others.
• Added an AI agent to PROS Search Engine Marketing (SEM) solution that leverages advanced models to optimize bidding strategies for paid search; one AI model analyzes trends in clicks and average cost-per-click, while another estimates the probability of conversion—these insights inform the AI agent's optimized bid proposals, helping marketing teams improve search engine performance and maximize ROI.
• Launched Smart Rebate Management, enabling sellers to deliver optimized, fully digital offers by integrating pricing, discounts, promotions and rebates, while providing a holistic view of economic levers for more tailored and optimal offers across all channels.
• Certified as a Great Place to Work® for the third time and across all eligible countries, recognizing our inclusive, people-first culture.

Financial Outlook

PROS currently anticipates the following based on an estimated 47.5 million diluted weighted average shares outstanding for the fourth quarter of 2024 and a 22% non-GAAP estimated tax rate for the fourth quarter and full year 2024.

 

 

Q4 2024 Guidance

 

v. Q4 2023 at Mid-Point

 

Full Year 2024 Guidance

 

v. Prior Year at Mid-Point

Total Revenue

$84.1 to $85.1

 

9%

 

$329.5 to $330.5

 

9%

Subscription Revenue

$68.5 to $69.0

 

13%

 

$265.5 to $266.0

 

14%

Subscription ARR

n/a

 

n/a

 

$280.0 to $284.0

 

9%

Non-GAAP Earnings Per Share

$0.12 to $0.14

 

$0.11

 

n/a

 

n/a

Adjusted EBITDA

$8.4 to $9.4

 

$6.4

 

$27.5 to $28.5

 

$22.0

Free Cash Flow

n/a

 

n/a

 

$21.0 to $24.0

 

$11.1

 

Conference Call

In conjunction with this announcement, PROS Holdings, Inc. will host a conference call on Tuesday, October 29, 2024, at 4:45 p.m. ET to discuss the Company’s financial results and business outlook. To access this call, dial 1-877-407-9039 (toll-free) or 1-201-689-8470. The live and archived webcasts of this call can be accessed under the “Investor Relations” section of the Company’s website at www.pros.com.

A telephone replay will be available until Tuesday, November 5, 2024, 11:59 PM ET at 1-844-512-2921 (toll-free) or 1-412-317-6671 using the pass code 13748298.

About PROS

PROS Holdings, Inc. (NYSE: PRO) is a leading provider of AI-powered SaaS pricing, CPQ, revenue management, and digital offer marketing solutions. Our vision is to optimize every shopping and selling experience. With nearly 40 years of industry expertise and a proven track record of success, PROS helps B2B and B2C companies across the globe, in a variety of industries, including airlines, manufacturing, distribution, and services, drive profitable growth. The PROS Platform leverages AI to provide real-time predictive insights that enable businesses to drive revenue and margin improvements. To learn more about PROS and our innovative SaaS solutions, please visit our website at www.pros.com.

Forward-looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about our financial outlook; expectations; ability to achieve future growth and profitability goals; management's confidence and optimism; positioning; customer successes; demand for our software solutions; pipeline; business expansion; revenue; subscription revenue; subscription ARR; non-GAAP earnings (loss) per share; adjusted EBITDA; free cash flow; shares outstanding and effective tax rate. The forward-looking statements contained in this press release are based upon our historical performance and our current plans, estimates and expectations and are not a representation that such plans, estimates or expectations will be achieved. Factors that could cause actual results to differ materially from those described herein include, among others, risks related to: (a) cyberattacks, data breaches and breaches of security measures within our products, systems and infrastructure or products, systems and infrastructure of third parties upon whom we rely, (b) the macroeconomic environment and geopolitical uncertainty and events, (c) increasing business from customers, maintaining subscription renewal rates and capturing customer IT spend, (d) managing our growth and profit objectives effectively, (e) disruptions from our third party data center, software, data, and other unrelated service providers, (f) implementing our solutions, (g) cloud operations, (h) intellectual property and third-party software, (i) acquiring and integrating businesses and/or technologies, (j) catastrophic events, (k) operating globally, including economic and commercial disruptions, (l) potential downturns in sales and lengthy sales cycles, (m) software innovation, (n) competition, (o) market acceptance of our software innovations, (p) maintaining our corporate culture, (q) personnel risks including loss of any key employees and competition for talent, (r) expanding and training our direct and indirect sales force, (s) evolving data privacy, cyber security, data localization and AI laws, (t) our debt repayment obligations, (u) the timing of revenue recognition and cash flow from operations, and (v) returning to profitability. Additional information relating to the risks and uncertainties affecting our business is contained in our filings with the SEC. These forward-looking statements represent our expectations as of the date hereof. Subsequent events may cause these expectations to change, and PROS disclaims any obligations to update or alter these forward-looking statements in the future, whether as a result of new information, future events or otherwise.

Non-GAAP Financial Measures

PROS has provided in this release certain non-GAAP financial measures, including non-GAAP gross profit and margin, non-GAAP subscription margin, non-GAAP income (loss) from operations or non-GAAP operating income (loss), subscription annual recurring revenue, adjusted EBITDA, free cash flow, non-GAAP tax rate, non-GAAP net income (loss), and non-GAAP earnings (loss) per share. PROS uses these non-GAAP financial measures internally in analyzing its financial results and believes they are useful to investors, as a supplement to GAAP measures, in evaluating PROS ongoing operational performance and cloud transition. Non-GAAP gross margin can be compared to gross margin which can be calculated from the condensed consolidated statements of income (loss) by dividing gross profit by total revenue. Non-GAAP gross margin is similarly calculated but first adds back to gross profit the portion of certain of the non-GAAP adjustments described below attributable to cost of revenue. Non-GAAP subscription margin can be compared to subscription margin which can be calculated from the condensed consolidated statements of income (loss) by dividing subscription gross profit (subscription revenue minus subscription cost) by subscription revenue. Non-GAAP subscription margin is similarly calculated but first subtracts out from subscription cost the portion of certain of the non-GAAP adjustments described below attributable to cost of subscription. These items and amounts are presented in the Supplemental Schedule of Non-GAAP Financial Measures.

Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measure as detailed above. A reconciliation of GAAP financial measures to the non-GAAP financial measures has been provided in the tables included as part of this press release, and can be found, along with other financial information, in the investor relations portion of our website. PROS use of non-GAAP financial measures may not be consistent with the presentations by similar companies in PROS industry. PROS has also provided in this release certain forward-looking non-GAAP financial measures, including non-GAAP income (loss) from operations, subscription annual recurring revenue, non-GAAP earnings (loss) per share, adjusted EBITDA, free cash flow, non-GAAP tax rates, and calculated billings (collectively the "non-GAAP financial measures") as follows:

Non-GAAP income (loss) from operations: Non-GAAP income (loss) from operations excludes the impact of share-based compensation, amortization of acquisition-related intangibles and severance. Non-GAAP income (loss) from operations excludes the following items from non-GAAP estimates:

• Share-Based Compensation: Although share-based compensation is an important aspect of compensation for our employees and executives, our share-based compensation expense can vary because of changes in our stock price and market conditions at the time of grant, varying valuation methodologies, and the variety of award types. Since share-based compensation expense can vary for reasons that are generally unrelated to our performance during any particular period, we believe this could make it difficult for investors to compare our current financial results to previous and future periods. Therefore, we believe it is useful to exclude share-based compensation in order to better understand our business performance and allow investors to compare our operating results with peer companies.
• Amortization of Acquisition-Related Intangibles: We view amortization of acquisition-related intangible assets, such as the amortization of the cost associated with an acquired company's research and development efforts, trade names, customer lists and customer relationships, as items arising from pre-acquisition activities determined at the time of an acquisition. While these intangible assets are continually evaluated for impairment, amortization of the cost of purchased intangibles is a static expense, one that is not typically affected by operations during any particular period.
• Severance: Severance related to costs incurred as the Company reprioritized its investments to focus on supporting key growth areas of its business. As a result of this reprioritization, the Company incurred severance, employee benefits, outplacement and related costs. These amounts are unrelated to our core performance during any particular period, and therefore, we believe it is useful to exclude these amounts in order to better understand our business performance and allow investors to compare our results with peer companies.

Non-GAAP earnings (loss) per share: Non-GAAP net income (loss) excludes the items listed above as excluded from non-GAAP income (loss) from operations and also excludes amortization of debt premium and issuance costs, loss on derivatives, loss on debt extinguishment and the taxes related to these items and the items excluded from non-GAAP income (loss) from operations. Estimates of non-GAAP earnings (loss) per share are calculated by dividing estimates for non-GAAP net income (loss) by our estimate of weighted average shares outstanding for the future period. In addition to the items listed above as excluded from non-GAAP income (loss) from operations, non-GAAP net income (loss) excludes the following items from non-GAAP estimates:

• Amortization of Debt Premium and Issuance Costs: Amortization of debt premium and issuance costs are related to our convertible notes. These amounts are unrelated to our core performance during any particular period, and therefore, we believe it is useful to exclude these amounts in order to better understand our business performance and allow investors to compare our results with peer companies.
• Loss on Derivatives: Loss on derivatives relates to mark to market features identified as part of the exchange of certain of our convertible notes (the "Exchange") and related capped call, non-recurring transactions, during the quarter ended September 30, 2023. These amounts are unrelated to our core performance during any particular period, and therefore, we believe it is useful to exclude these amounts in order to better understand our business performance and allow investors to compare our results with peer companies.
• Loss on Debt Extinguishment: Loss on debt extinguishment relates to the Exchange, a non-recurring transaction, during the quarter ended September 30, 2023. These amounts are unrelated to our core performance during any particular period, and therefore, we believe it is useful to exclude these amounts in order to better understand our business performance and allow investors to compare our results with peer companies.
• Taxes: We exclude the tax consequences associated with non-GAAP items to provide investors with a useful comparison of our operating results to prior periods and to our peer companies because such amounts can vary significantly. In the fourth quarter of 2014, we concluded that it is more likely than not that we will be unable to fully realize our deferred tax assets and accordingly, established a valuation allowance against those assets. The ongoing impact of the valuation allowance on our non-GAAP effective tax rate has been eliminated to allow investors to better understand our business performance and compare our operating results with peer companies.

Subscription Annual Recurring Revenue: Subscription Annual Recurring Revenue ("subscription ARR") is used to assess the trajectory of our cloud business. Subscription ARR means, as of a specified date, the contracted subscription revenue, including contracts with a future start date, together with annualized overage fees incurred above contracted minimum transactions. Subscription ARR should be viewed independently of revenue and any other GAAP measure.

Non-GAAP Tax Rate: The estimated non-GAAP effective tax rate adjusts the tax effect to quantify the impact of the excluded non-GAAP items.

Adjusted EBITDA: Adjusted EBITDA is defined as GAAP net income (loss) before interest expense, provision for income taxes, depreciation and amortization, as adjusted to eliminate the effect of stock-based compensation cost, severance, amortization of acquisition-related intangibles, depreciation and amortization, and capitalized internal-use software development costs. Adjusted EBITDA should not be considered as an alternative to net income (loss) as an indicator of our operating performance.

Free Cash Flow: Free cash flow is a non-GAAP financial measure which is defined as net cash provided by (used in) operating activities, excluding severance payments, less capital expenditures and capitalized internal-use software development costs.

Calculated Billings: Calculated billings is defined as total subscription, maintenance and support revenue plus the change in recurring deferred revenue in a given period.

These non-GAAP estimates are not measurements of financial performance prepared in accordance with GAAP, and we are unable to reconcile these forward-looking non-GAAP financial measures to their directly comparable GAAP financial measures because the information described above which is needed to complete a reconciliation is unavailable at this time without unreasonable effort.

 

PROS Holdings, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share and per share amounts)

(Unaudited)

 

 

 

 

 

 

 

September 30, 2024

 

December 31, 2023

Assets:

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

140,564

 

 

$

168,747

 

Trade and other receivables, net of allowance of $690 and $574, respectively

 

 

48,225

 

 

 

49,058

 

Deferred costs, current

 

 

4,448

 

 

 

4,856

 

Prepaid and other current assets

 

 

10,782

 

 

 

12,013

 

Total current assets

 

 

204,019

 

 

 

234,674

 

Restricted cash

 

 

10,000

 

 

 

10,000

 

Property and equipment, net

 

 

20,391

 

 

 

23,051

 

Operating lease right-of-use assets

 

 

13,770

 

 

 

14,801

 

Deferred costs, noncurrent

 

 

10,690

 

 

 

10,292

 

Intangibles, net

 

 

7,997

 

 

 

11,678

 

Goodwill

 

 

107,970

 

 

 

107,860

 

Other assets, noncurrent

 

 

9,332

 

 

 

9,477

 

Total assets

 

$

384,169

 

 

$

421,833

 

Liabilities and Stockholders’ (Deficit) Equity:

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable and other liabilities

 

$

5,270

 

 

$

3,034

 

Accrued liabilities

 

 

13,603

 

 

 

13,257

 

Accrued payroll and other employee benefits

 

 

22,831

 

 

 

32,762

 

Operating lease liabilities, current

 

 

3,590

 

 

 

5,655

 

Deferred revenue, current

 

 

114,538

 

 

 

120,955

 

Current portion of convertible debt, net

 

 

—

 

 

 

21,668

 

Total current liabilities

 

 

159,832

 

 

 

197,331

 

Deferred revenue, noncurrent

 

 

2,675

 

 

 

3,669

 

Convertible debt, net, noncurrent

 

 

271,173

 

 

 

272,324

 

Operating lease liabilities, noncurrent

 

 

24,482

 

 

 

25,118

 

Other liabilities, noncurrent

 

 

1,231

 

 

 

1,264

 

Total liabilities

 

 

459,393

 

 

 

499,706

 

Stockholders' (deficit) equity:

 

 

 

 

Preferred stock, $0.001 par value, 5,000,000 shares authorized; none issued

 

 

—

 

 

 

—

 

Common stock, $0.001 par value, 75,000,000 shares authorized; 51,953,232 and 51,184,584 shares issued, respectively; 47,272,509 and 46,503,861 shares outstanding, respectively

 

 

52

 

 

 

51

 

Additional paid-in capital

 

 

625,085

 

 

 

604,084

 

Treasury stock, 4,680,723 common shares, at cost

 

 

(29,847

)

 

 

(29,847

)

Accumulated deficit

 

 

(665,760

)

 

 

(647,252

)

Accumulated other comprehensive loss

 

 

(4,754

)

 

 

(4,909

)

Total stockholders’ (deficit) equity

 

 

(75,224

)

 

 

(77,873

)

Total liabilities and stockholders’ (deficit) equity

 

$

384,169

 

 

$

421,833

 

 

PROS Holdings, Inc.

Condensed Consolidated Statements of Income (Loss)

(In thousands, except per share data)

(Unaudited)

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2024

 

2023

 

2024

 

2023

Revenue:

 

 

 

 

 

 

 

 

Subscription

 

$

67,068

 

 

$

59,987

 

 

$

197,017

 

 

$

173,260

 

Maintenance and support

 

 

3,361

 

 

 

4,693

 

 

 

10,341

 

 

 

15,498

 

Total subscription, maintenance and support

 

 

70,429

 

 

 

64,680

 

 

 

207,358

 

 

 

188,758

 

Services

 

 

12,273

 

 

 

12,570

 

 

 

38,045

 

 

 

37,466

 

Total revenue

 

 

82,702

 

 

 

77,250

 

 

 

245,403

 

 

 

226,224

 

Cost of revenue:

 

 

 

 

 

 

 

 

Subscription

 

 

14,470

 

 

 

14,510

 

 

 

43,653

 

 

 

42,662

 

Maintenance and support

 

 

1,698

 

 

 

1,769

 

 

 

5,311

 

 

 

5,927

 

Total cost of subscription, maintenance and support

 

 

16,168

 

 

 

16,279

 

 

 

48,964

 

 

 

48,589

 

Services

 

 

12,130

 

 

 

12,185

 

 

 

36,986

 

 

 

37,988

 

Total cost of revenue

 

 

28,298

 

 

 

28,464

 

 

 

85,950

 

 

 

86,577

 

Gross profit

 

 

54,404

 

 

 

48,786

 

 

 

159,453

 

 

 

139,647

 

Operating expenses:

 

 

 

 

 

 

 

 

Selling and marketing

 

 

20,074

 

 

 

20,324

 

 

 

66,293

 

 

 

71,214

 

Research and development

 

 

21,081

 

 

 

22,205

 

 

 

67,280

 

 

 

66,343

 

General and administrative

 

 

13,218

 

 

 

14,099

 

 

 

43,335

 

 

 

42,083

 

Income (loss) from operations

 

 

31

 

 

 

(7,842

)

 

 

(17,455

)

 

 

(39,993

)

Convertible debt interest and amortization

 

 

(1,121

)

 

 

(1,497

)

 

 

(3,471

)

 

 

(4,649

)

Other income (expense), net

 

 

1,531

 

 

 

(4,288

)

 

 

3,312

 

 

 

(1,046

)

Income (loss) before income tax provision

 

 

441

 

 

 

(13,627

)

 

 

(17,614

)

 

 

(45,688

)

Income tax provision

 

 

206

 

 

 

241

 

 

 

894

 

 

 

471

 

Net income (loss)

 

$

235

 

 

$

(13,868

)

 

$

(18,508

)

 

$

(46,159

)

 

 

 

 

 

 

 

 

 

Net income (loss) per share:

 

 

 

 

 

 

 

 

Basic and diluted

 

$

—

 

 

$

(0.30

)

 

$

(0.39

)

 

$

(1.00

)

Weighted average number of shares:

 

 

 

 

 

 

 

 

Basic

 

 

47,231

 

 

 

46,225

 

 

 

47,038

 

 

 

46,084

 

Diluted

 

 

47,338

 

 

 

46,225

 

 

 

47,038

 

 

 

46,084

 

 

PROS Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2024

 

2023

 

2024

 

2023

Operating activities:

 

 

 

 

 

 

 

 

Net income (loss)

 

$

235

 

 

$

(13,868

)

 

$

(18,508

)

 

$

(46,159

)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

1,976

 

 

 

2,549

 

 

 

6,371

 

 

 

8,301

 

Amortization of debt premium and issuance costs

 

 

(310

)

 

 

348

 

 

 

(896

)

 

 

1,094

 

Share-based compensation

 

 

7,271

 

 

 

10,933

 

 

 

30,219

 

 

 

31,589

 

Provision for credit losses

 

 

(108

)

 

 

—

 

 

 

52

 

 

 

88

 

Gain on lease modification

 

 

—

 

 

 

—

 

 

 

(697

)

 

 

—

 

Loss on disposal of assets

 

 

—

 

 

 

16

 

 

 

774

 

 

 

51

 

Loss on derivatives

 

 

—

 

 

 

4,343

 

 

 

—

 

 

 

4,343

 

Loss on debt extinguishment

 

 

—

 

 

 

1,779

 

 

 

—

 

 

 

1,779

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts and unbilled receivables

 

 

(385

)

 

 

4,497

 

 

 

788

 

 

 

(1,573

)

Deferred costs

 

 

(562

)

 

 

363

 

 

 

10

 

 

 

704

 

Prepaid expenses and other assets

 

 

984

 

 

 

1,480

 

 

 

1,158

 

 

 

31

 

Operating lease right-of-use assets and liabilities

 

 

(322

)

 

 

(449

)

 

 

(1,838

)

 

 

(1,686

)

Accounts payable and other liabilities

 

 

(1,694

)

 

 

(2,123

)

 

 

2,191

 

 

 

(3,375

)

Accrued liabilities

 

 

(1,331

)

 

 

412

 

 

 

1,087

 

 

 

1,489

 

Accrued payroll and other employee benefits

 

 

3,605

 

 

 

3,446

 

 

 

(9,906

)

 

 

(242

)

Deferred revenue

 

 

(7,765

)

 

 

(5,008

)

 

 

(7,435

)

 

 

(401

)

Net cash provided by (used in) operating activities

 

 

1,594

 

 

 

8,718

 

 

 

3,370

 

 

 

(3,967

)

Investing activities:

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(231

)

 

 

(345

)

 

 

(669

)

 

 

(2,168

)

Capitalized internal-use software development costs

 

 

—

 

 

 

—

 

 

 

(58

)

 

 

—

 

Investment in equity securities

 

 

—

 

 

 

(113

)

 

 

(113

)

 

 

(113

)

Net cash used in investing activities

 

 

(231

)

 

 

(458

)

 

 

(840

)

 

 

(2,281

)

Financing activities:

 

 

 

 

 

 

 

 

Proceeds from employee stock plans

 

 

1,055

 

 

 

1,033

 

 

 

2,079

 

 

 

2,170

 

Tax withholding related to net share settlement of stock awards

 

 

(1,135

)

 

 

(1,163

)

 

 

(11,296

)

 

 

(6,831

)

Debt issuance costs related to Credit Agreement

 

 

—

 

 

 

(837

)

 

 

—

 

 

 

(837

)

Purchase of capped call

 

 

—

 

 

 

(22,771

)

 

 

—

 

 

 

(22,771

)

Repayment of convertible debt

 

 

—

 

 

 

—

 

 

 

(21,713

)

 

 

—

 

Net cash used in financing activities

 

 

(80

)

 

 

(23,738

)

 

 

(30,930

)

 

 

(28,269

)

Effect of foreign currency rates on cash

 

 

195

 

 

 

(9

)

 

 

217

 

 

 

(30

)

Net change in cash, cash equivalents and restricted cash

 

 

1,478

 

 

 

(15,487

)

 

 

(28,183

)

 

 

(34,547

)

Cash, cash equivalents and restricted cash:

 

 

 

 

 

 

 

 

Beginning of period

 

 

149,086

 

 

 

184,567

 

 

 

178,747

 

 

 

203,627

 

End of period

 

$

150,564

 

 

$

169,080

 

 

$

150,564

 

 

$

169,080

 

 

 

 

 

 

 

 

 

 

Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

140,564

 

 

$

159,080

 

 

$

140,564

 

 

$

159,080

 

Restricted cash

 

 

10,000

 

 

 

10,000

 

 

 

10,000

 

 

 

10,000

 

Total cash, cash equivalents and restricted cash

 

$

150,564

 

 

$

169,080

 

 

$

150,564

 

 

$

169,080

 

 

PROS Holdings, Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands, except per share data)

(Unaudited)

We use these non-GAAP financial measures to assist in the management of the Company because we believe that this information provides a more consistent and complete understanding of the underlying results and trends of the ongoing business due to the uniqueness of these charges.

See breakdown of the reconciling line items on page 10.

 

 

 

Three Months Ended September 30,

 

Quarter over Quarter

 

Nine Months Ended September 30,

 

Year over Year

 

 

2024

 

2023

 

% change

 

2024

 

2023

 

% change

GAAP gross profit

 

$

54,404

 

 

$

48,786

 

 

12

%

 

$

159,453

 

 

$

139,647

 

 

14

%

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of acquisition-related intangibles

 

 

738

 

 

 

1,099

 

 

 

 

 

2,644

 

 

 

3,679

 

 

 

Severance

 

 

—

 

 

 

—

 

 

 

 

 

—

 

 

 

749

 

 

 

Share-based compensation

 

 

1,177

 

 

 

1,033

 

 

 

 

 

3,396

 

 

 

2,850

 

 

 

Non-GAAP gross profit

 

$

56,319

 

 

$

50,918

 

 

11

%

 

$

165,493

 

 

$

146,925

 

 

13

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP gross margin

 

 

68.1

%

 

 

65.9

%

 

 

 

 

67.4

%

 

 

64.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP income (loss) from operations

 

$

31

 

 

$

(7,842

)

 

(100

)%

 

$

(17,455

)

 

$

(39,993

)

 

(56

)%

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of acquisition-related intangibles

 

 

1,074

 

 

 

1,446

 

 

 

 

 

3,675

 

 

 

4,872

 

 

 

Severance

 

 

—

 

 

 

—

 

 

 

 

 

—

 

 

 

3,586

 

 

 

Share-based compensation

 

 

7,271

 

 

 

10,933

 

 

 

 

 

30,219

 

 

 

31,589

 

 

 

Total non-GAAP adjustments

 

 

8,345

 

 

 

12,379

 

 

 

 

 

33,894

 

 

 

40,047

 

 

 

Non-GAAP income from operations

 

$

8,376

 

 

$

4,537

 

 

85

%

 

$

16,439

 

 

$

54

 

 

30,343

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP income from operations % of total revenue

 

 

10.1

%

 

 

5.9

%

 

 

 

 

6.7

%

 

 

—

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP net income (loss)

 

$

235

 

 

$

(13,868

)

 

(102

)%

 

$

(18,508

)

 

$

(46,159

)

 

(60

)%

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Total non-GAAP adjustments affecting income (loss) from operations

 

 

8,345

 

 

 

12,379

 

 

 

 

 

33,894

 

 

 

40,047

 

 

 

Amortization of debt premium and issuance costs

 

 

(380

)

 

 

294

 

 

 

 

 

(1,105

)

 

 

1,040

 

 

 

Loss on derivatives

 

 

—

 

 

 

4,343

 

 

 

 

 

—

 

 

 

4,343

 

 

 

Loss on debt extinguishment

 

 

—

 

 

 

1,779

 

 

 

 

 

—

 

 

 

1,779

 

 

 

Tax impact related to non-GAAP adjustments

 

 

(1,643

)

 

 

(895

)

 

 

 

 

(2,444

)

 

 

137

 

 

 

Non-GAAP net income

 

$

6,557

 

 

$

4,032

 

 

63

%

 

$

11,837

 

 

$

1,187

 

 

897

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP earnings per share

 

$

0.14

 

 

$

0.09

 

 

 

 

$

0.25

 

 

$

0.03

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in computing non-GAAP earnings per share

 

 

47,338

 

 

 

47,397

 

 

 

 

 

47,554

 

 

 

46,823

 

 

 

 

PROS Holdings, Inc.

Supplemental Schedule of Non-GAAP Financial Measures

Increase (Decrease) in GAAP Amounts Reported

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2024

 

2023

 

2024

 

2023

Cost of Subscription Items

 

 

 

 

 

 

 

 

Amortization of acquisition-related intangibles

 

 

738

 

 

1,099

 

 

2,644

 

 

3,679

Severance

 

 

—

 

 

—

 

 

—

 

 

125

Share-based compensation

 

 

244

 

 

201

 

 

681

 

 

495

Total cost of subscription items

 

$

982

 

$

1,300

 

$

3,325

 

$

4,299

 

 

 

 

 

 

 

 

 

Cost of Maintenance Items

 

 

 

 

 

 

 

 

Severance

 

 

—

 

 

—

 

 

—

 

 

307

Share-based compensation

 

 

98

 

 

93

 

 

331

 

 

271

Total cost of maintenance items

 

$

98

 

$

93

 

$

331

 

$

578

 

 

 

 

 

 

 

 

 

Cost of Services Items

 

 

 

 

 

 

 

 

Severance

 

 

—

 

 

—

 

 

—

 

 

317

Share-based compensation

 

 

835

 

 

739

 

 

2,384

 

 

2,084

Total cost of services items

 

$

835

 

$

739

 

$

2,384

 

$

2,401

 

 

 

 

 

 

 

 

 

Sales and Marketing Items

 

 

 

 

 

 

 

 

Amortization of acquisition-related intangibles

 

 

336

 

 

347

 

 

1,031

 

 

1,193

Severance

 

 

—

 

 

—

 

 

—

 

 

1,595

Share-based compensation

 

 

675

 

 

2,992

 

 

6,740

 

 

9,023

Total sales and marketing items

 

$

1,011

 

$

3,339

 

$

7,771

 

$

11,811

 

 

 

 

 

 

 

 

 

Research and Development Items

 

 

 

 

 

 

 

 

Severance

 

 

—

 

 

—

 

 

—

 

 

1,008

Share-based compensation

 

 

898

 

 

2,817

 

 

6,543

 

 

7,840

Total research and development items

 

$

898

 

$

2,817

 

$

6,543

 

$

8,848

 

 

 

 

 

 

 

 

 

General and Administrative Items

 

 

 

 

 

 

 

 

Severance

 

 

—

 

 

—

 

 

—

 

 

234

Share-based compensation

 

 

4,521

 

 

4,091

 

 

13,540

 

 

11,876

Total general and administrative items

 

$

4,521

 

$

4,091

 

$

13,540

 

$

12,110

 

PROS Holdings, Inc.

Supplemental Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2024

 

2023

 

2024

 

2023

Adjusted EBITDA

 

 

 

 

 

 

 

 

GAAP Income (Loss) from Operations

 

$

31

 

 

$

(7,842

)

 

$

(17,455

)

 

$

(39,993

)

Amortization of acquisition-related intangibles

 

 

1,074

 

 

 

1,446

 

 

 

3,675

 

 

 

4,872

 

Severance

 

 

—

 

 

 

—

 

 

 

—

 

 

 

3,586

 

Share-based compensation

 

 

7,271

 

 

 

10,933

 

 

 

30,219

 

 

 

31,589

 

Depreciation and other amortization

 

 

902

 

 

 

1,103

 

 

 

2,696

 

 

 

3,429

 

Capitalized internal-use software development costs

 

 

—

 

 

 

—

 

 

 

(58

)

 

 

—

 

Adjusted EBITDA

 

$

9,278

 

 

$

5,640

 

 

$

19,077

 

 

$

3,483

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Cash Provided by (Used in) Operating Activities

 

$

1,594

 

 

$

8,718

 

 

$

3,370

 

 

$

(3,967

)

Severance

 

 

—

 

 

 

121

 

 

 

—

 

 

 

3,870

 

Purchase of property and equipment

 

 

(231

)

 

 

(345

)

 

 

(669

)

 

 

(2,168

)

Capitalized internal-use software development costs

 

 

—

 

 

 

—

 

 

 

(58

)

 

 

—

 

Free Cash Flow

 

$

1,363

 

 

$

8,494

 

 

$

2,643

 

 

$

(2,265

)

 

 

 

 

 

 

 

 

 

Guidance

 

 

 

 

 

 

 

 

 

 

Q4 2024 Guidance

 

Full Year 2024 Guidance

 

 

Low

 

High

 

Low

 

High

Adjusted EBITDA

 

 

 

 

 

 

 

 

GAAP Loss from Operations

 

$

(3,600

)

 

$

(2,600

)

 

$

(21,000

)

 

$

(20,000

)

Amortization of acquisition-related intangibles

 

 

800

 

 

 

800

 

 

 

4,400

 

 

 

4,400

 

Share-based compensation

 

 

10,300

 

 

 

10,300

 

 

 

40,500

 

 

 

40,500

 

Depreciation and other amortization

 

 

900

 

 

 

900

 

 

 

3,600

 

 

 

3,600

 

Adjusted EBITDA

 

$

8,400

 

 

$

9,400

 

 

$

27,500

 

 

$

28,500

 

 

PROS Holdings, Inc.

Supplemental Reconciliation of GAAP to Non-GAAP Financial Measures (Continued)

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Quarter over Quarter

 

Nine Months Ended September 30,

 

Year over Year

 

 

2024

 

2023

 

% change

 

2024

 

2023

 

% change

GAAP subscription gross profit

 

$

52,598

 

 

$

45,477

 

 

16

%

 

$

153,364

 

 

$

130,598

 

 

17

%

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of acquisition-related intangibles

 

 

738

 

 

 

1,099

 

 

 

 

 

2,644

 

 

 

3,679

 

 

 

Severance

 

 

—

 

 

 

—

 

 

 

 

 

—

 

 

 

125

 

 

 

Share-based compensation

 

 

244

 

 

 

201

 

 

 

 

 

681

 

 

 

495

 

 

 

Non-GAAP subscription gross profit

 

$

53,580

 

 

$

46,777

 

 

15

%

 

$

156,689

 

 

$

134,897

 

 

16

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP subscription gross margin

 

 

79.9

%

 

 

78.0

%

 

 

 

 

79.5

%

 

 

77.9

%

 

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20241029370725/en/

Investor Contact: PROS Investor Relations Belinda Overdeput 713-335-5879 ir@pros.com