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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Pros Holding Inc | NYSE:PRO | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-0.60 | -1.99% | 29.48 | 30.47 | 29.15 | 30.35 | 321,964 | 22:30:00 |
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 first quarter ended March 31, 2024.
“We delivered a strong start to 2024, exceeding our guidance ranges across all metrics, driving 15% subscription revenue growth and delivering a near 300% improvement to adjusted EBITDA year-over-year,” stated CEO Andres Reiner. “We continue to be excited about our long-term trajectory as the market continues to embrace AI, and we have the right platform, people, and strategy to capitalize on this market opportunity.”
First Quarter 2024 Financial Highlights
Key financial results for the first quarter 2024 are shown below. Throughout this press release all dollar figures are in millions, except net (loss) earnings per share. Unless otherwise noted, all results are on a reported basis and are compared with the prior-year period.
GAAP
Non-GAAP
Q1 2024
Q1 2023
Change
Q1 2024
Q1 2023
Change
Revenue:
Total Revenue
$80.7
$73.2
10%
n/a
n/a
n/a
Subscription Revenue
$64.3
$56.0
15%
n/a
n/a
n/a
Subscription and Maintenance Revenue
$67.9
$61.7
10%
n/a
n/a
n/a
Profitability:
Gross Profit
$51.9
$43.6
19%
$53.9
$46.6
16%
Operating (Loss) Income
$(10.3)
$(18.8)
$8.5
$3.7
$(3.5)
$7.2
Net (Loss) Income
$(11.4)
$(19.0)
$7.6
$2.0
$(2.5)
$4.6
Net (Loss) Earnings Per Share
$(0.24)
$(0.41)
$0.17
$0.04
$(0.06)
$0.10
Adjusted EBITDA
n/a
n/a
n/a
$4.6
$(2.3)
$6.9
Cash:
Net Cash Used in Operating Activities
$(4.6)
$(6.1)
$1.5
n/a
n/a
n/a
Free Cash Flow
n/a
n/a
n/a
$(4.9)
$(4.5)
$(0.4)
The attached table provides a summary of PROS results for the period, including a reconciliation of GAAP to non-GAAP metrics.
Recent Business Highlights
Financial Outlook
PROS currently anticipates the following based on an estimated 48.2 million diluted weighted average shares outstanding for the second quarter of 2024 and a 22% non-GAAP estimated tax rate for the second quarter and full year 2024.
Q2 2024 Guidance
v. Q2 2023 at Mid-Point
Full Year 2024 Guidance
v. Prior Year at Mid-Point
Total Revenue
$80.5 to $81.5
7%
$332.5 to $334.5
10%
Subscription Revenue
$64.0 to $64.5
12%
$263.5 to $265.5
13%
Subscription ARR
n/a
n/a
$289.0 to $292.0
12%
Non-GAAP Earnings Per Share
$0.00 to $0.02
$0.02
n/a
n/a
Adjusted EBITDA
$1.0 to $2.0
$1.4
$17.0 to $20.0
$12.5
Free Cash Flow
n/a
n/a
$22.0 to $26.0
$12.6
Conference Call
In conjunction with this announcement, PROS Holdings, Inc. will host a conference call on Tuesday, May 7, 2024, at 4:45 p.m. ET to discuss the Company’s financial results and business outlook. To access this call, dial 1-877-300-8521 (toll-free) or 1-412-317-6026. 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, May 14, 2024, 11:59 PM ET at 1-844-512-2921 (toll-free) or 1-412-317-6671 using the pass code 10188161.
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 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 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 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:
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 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:
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)
March 31, 2024
December 31, 2023
Assets:
Current assets:
Cash and cash equivalents
$
156,423
$
168,747
Trade and other receivables, net of allowance of $724 and $574, respectively
51,035
49,058
Deferred costs, current
4,642
4,856
Prepaid and other current assets
10,809
12,013
Total current assets
222,909
234,674
Restricted cash
10,000
10,000
Property and equipment, net
21,572
23,051
Operating lease right-of-use assets
15,824
14,801
Deferred costs, noncurrent
9,899
10,292
Intangibles, net
10,378
11,678
Goodwill
107,641
107,860
Other assets, noncurrent
9,666
9,477
Total assets
$
407,889
$
421,833
Liabilities and Stockholders’ (Deficit) Equity:
Current liabilities:
Accounts payable and other liabilities
$
2,535
$
3,034
Accrued liabilities
14,985
13,257
Accrued payroll and other employee benefits
16,157
32,762
Operating lease liabilities, current
5,135
5,655
Deferred revenue, current
128,359
120,955
Current portion of convertible debt, net
21,702
21,668
Total current liabilities
188,873
197,331
Deferred revenue, noncurrent
4,289
3,669
Convertible debt, net, noncurrent
271,937
272,324
Operating lease liabilities, noncurrent
25,616
25,118
Other liabilities, noncurrent
1,191
1,264
Total liabilities
491,906
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; 51,649,163
and 51,184,584 shares issued, respectively; 46,968,440 and 46,503,861 shares outstanding, respectively
52
51
Additional paid-in capital
609,469
604,084
Treasury stock, 4,680,723 common shares, at cost
(29,847
)
(29,847
)
Accumulated deficit
(658,609
)
(647,252
)
Accumulated other comprehensive loss
(5,082
)
(4,909
)
Total stockholders’ (deficit) equity
(84,017
)
(77,873
)
Total liabilities and stockholders’ (deficit) equity
$
407,889
$
421,833
PROS Holdings, Inc.
Condensed Consolidated Statements of Loss
(In thousands, except per share data)
(Unaudited)
Three Months Ended March 31,
2024
2023
Revenue:
Subscription
$
64,349
$
55,969
Maintenance and support
3,595
5,712
Total subscription, maintenance and support
67,944
61,681
Services
12,744
11,501
Total revenue
80,688
73,182
Cost of revenue:
Subscription
14,613
14,093
Maintenance and support
1,862
2,282
Total cost of subscription, maintenance and support
16,475
16,375
Services
12,358
13,167
Total cost of revenue
28,833
29,542
Gross profit
51,855
43,640
Operating expenses:
Selling and marketing
22,682
26,010
Research and development
24,413
22,291
General and administrative
15,062
14,135
Loss from operations
(10,302
)
(18,796
)
Convertible debt interest and amortization
(1,202
)
(1,576
)
Other income, net
458
1,451
Loss before income tax provision
(11,046
)
(18,921
)
Income tax provision
311
81
Net loss
$
(11,357
)
$
(19,002
)
Net loss per share:
Basic and diluted
$
(0.24
)
$
(0.41
)
Weighted average number of shares:
Basic and diluted
46,817
45,926
PROS Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended March 31,
2024
2023
Operating activities:
Net loss
$
(11,357
)
$
(19,002
)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization
2,204
3,001
Amortization of debt premium and issuance costs
(284
)
373
Share-based compensation
12,700
9,904
Provision for credit losses
149
108
Gain on lease modification
(697
)
—
Loss on disposal of assets
774
35
Changes in operating assets and liabilities:
Accounts and unbilled receivables
(2,098
)
2,239
Deferred costs
606
425
Prepaid expenses and other assets
1,070
(2,505
)
Operating lease right-of-use assets and liabilities
(848
)
(591
)
Accounts payable and other liabilities
(637
)
(3,793
)
Accrued liabilities
2,327
504
Accrued payroll and other employee benefits
(16,611
)
(8,174
)
Deferred revenue
8,058
11,333
Net cash used in operating activities
(4,644
)
(6,143
)
Investing activities:
Purchases of property and equipment
(223
)
(1,546
)
Capitalized internal-use software development costs
(17
)
—
Investment in equity securities
(113
)
—
Net cash used in investing activities
(353
)
(1,546
)
Financing activities:
Proceeds from employee stock plans
1,024
1,137
Tax withholding related to net share settlement of stock awards
(8,338
)
(4,710
)
Net cash used in financing activities
(7,314
)
(3,573
)
Effect of foreign currency rates on cash
(13
)
11
Net change in cash, cash equivalents and restricted cash
(12,324
)
(11,251
)
Cash, cash equivalents and restricted cash:
Beginning of period
178,747
203,627
End of period
$
166,423
$
192,376
Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheets
Cash and cash equivalents
$
156,423
$
192,376
Restricted cash
10,000
—
Total cash, cash equivalents and restricted cash
$
166,423
$
192,376
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 March 31,
Year over Year
2024
2023
% change
GAAP gross profit
$
51,855
$
43,640
19
%
Non-GAAP adjustments:
Amortization of acquisition-related intangibles
953
1,337
Severance
—
749
Share-based compensation
1,068
832
Non-GAAP gross profit
$
53,876
$
46,558
16
%
Non-GAAP gross margin
66.8
%
63.6
%
GAAP loss from operations
$
(10,302
)
$
(18,796
)
(45
)%
Non-GAAP adjustments:
Amortization of acquisition-related intangibles
1,301
1,806
Severance
—
3,586
Share-based compensation
12,700
9,904
Total non-GAAP adjustments
14,001
15,296
Non-GAAP income (loss) from operations
$
3,699
$
(3,500
)
(206
)%
Non-GAAP income (loss) from operations % of total revenue
4.6
%
(4.8
)%
GAAP net loss
$
(11,357
)
$
(19,002
)
(40
)%
Non-GAAP adjustments:
Total non-GAAP adjustments affecting income (loss) from operations
14,001
15,296
Amortization of debt premium and issuance costs
(353
)
373
Tax impact related to non-GAAP adjustments
(262
)
797
Non-GAAP net income (loss)
$
2,029
$
(2,536
)
(180
)%
Non-GAAP earnings (loss) per share
$
0.04
$
(0.06
)
Shares used in computing non-GAAP earnings (loss) per share
47,889
45,926
PROS Holdings, Inc.
Supplemental Schedule of Non-GAAP Financial Measures
Increase (Decrease) in GAAP Amounts Reported
(In thousands)
(Unaudited)
Three Months Ended March 31,
2024
2023
Cost of Subscription Items
Amortization of acquisition-related intangibles
953
1,337
Severance
—
125
Share-based compensation
202
125
Total cost of subscription items
$
1,155
$
1,587
Cost of Maintenance Items
Severance
—
307
Share-based compensation
137
80
Total cost of maintenance items
$
137
$
387
Cost of Services Items
Severance
—
317
Share-based compensation
729
627
Total cost of services items
$
729
$
944
Sales and Marketing Items
Amortization of acquisition-related intangibles
348
469
Severance
—
1,595
Share-based compensation
3,628
2,928
Total sales and marketing items
$
3,976
$
4,992
Research and Development Items
Severance
—
1,008
Share-based compensation
3,531
2,350
Total research and development items
$
3,531
$
3,358
General and Administrative Items
Severance
—
234
Share-based compensation
4,473
3,794
Total general and administrative items
$
4,473
$
4,028
PROS Holdings, Inc.
Supplemental Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands)
(Unaudited)
Three Months Ended March 31,
2024
2023
Adjusted EBITDA
GAAP Loss from Operations
$
(10,302
)
$
(18,796
)
Amortization of acquisition-related intangibles
1,301
1,806
Severance
—
3,586
Share-based compensation
12,700
9,904
Depreciation and other amortization
903
1,195
Capitalized internal-use software development costs
(17
)
—
Adjusted EBITDA
$
4,585
$
(2,305
)
Net Cash Used in Operating Activities
$
(4,644
)
$
(6,143
)
Severance
—
3,170
Purchase of property and equipment
(223
)
(1,546
)
Capitalized internal-use software development costs
(17
)
—
Free Cash Flow
$
(4,884
)
$
(4,519
)
Guidance
Q2 2024 Guidance
Low
High
Adjusted EBITDA
GAAP Loss from Operations
$
(11,700
)
$
(10,700
)
Amortization of acquisition-related intangibles
1,300
1,300
Share-based compensation
10,500
10,500
Depreciation and other amortization
900
900
Adjusted EBITDA
$
1,000
$
2,000
Full Year 2024 Guidance
Low
High
Adjusted EBITDA
GAAP Loss from Operations
$
(36,200
)
$
(33,200
)
Amortization of acquisition-related intangibles
4,400
4,400
Share-based compensation
45,200
45,200
Depreciation and other amortization
3,600
3,600
Adjusted EBITDA
$
17,000
$
20,000
View source version on businesswire.com: https://www.businesswire.com/news/home/20240507068489/en/
Investor Contact: PROS Investor Relations Belinda Overdeput 713-335-5879 ir@pros.com
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