HOUSTON--(BUSINESS WIRE)--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
| Quarter
| Nine Months Ended
| Year over
| |||||||||||||||||||
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
| Quarter
| Nine Months Ended
| Year over
| |||||||||||||||||||
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 | % | ||||||||||||||
Contacts
Investor Contact:
PROS Investor Relations
Belinda Overdeput
713-335-5879
ir@pros.com
