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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 | |
---|---|---|---|---|---|---|---|---|
0.63 | 3.66% | 17.84 | 18.40 | 17.59 | 17.84 | 1,166,365 | 01:00:00 |
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 second quarter ended June 30, 2024.
“We delivered a solid second quarter where we exceeded the high-end of our guidance ranges across all metrics,” stated CEO Andres Reiner. “I am proud of our team for building the market-leading profit and revenue optimization platform which drives immense value for our customers, powering 4.1 trillion transactions a year, while delivering to our long-term goal of 80% non-GAAP subscription gross margin.”
Second Quarter 2024 Financial Highlights
Key financial results for the second 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
Q2 2024
Q2 2023
Change
Q2 2024
Q2 2023
Change
Revenue:
Total Revenue
$82.0
$75.8
8%
n/a
n/a
n/a
Subscription Revenue
$65.6
$57.3
14%
n/a
n/a
n/a
Subscription and Maintenance Revenue
$69.0
$62.4
11%
n/a
n/a
n/a
Profitability:
Gross Profit
$53.2
$47.2
13%
$55.3
$49.4
12%
Operating (Loss) Income
$(7.2)
$(13.4)
$6.2
$4.4
$(1.0)
$5.3
Net (Loss) Income
$(7.4)
$(13.3)
$5.9
$3.3
$(0.3)
$3.6
Net (Loss) Earnings Per Share
$(0.16)
$(0.29)
$0.13
$0.07
$(0.01)
$0.08
Adjusted EBITDA
n/a
n/a
n/a
$5.2
$0.1
$5.1
Cash:
Net Cash Provided by (Used in) Operating Activities
$6.4
$(6.5)
$13.0
n/a
n/a
n/a
Free Cash Flow
n/a
n/a
n/a
$6.2
$(6.2)
$12.4
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 47.8 million diluted weighted average shares outstanding for the third quarter of 2024 and a 22% non-GAAP estimated tax rate for the third quarter and full year 2024.
Q3 2024 Guidance
v. Q3 2023 at Mid-Point
Full Year 2024 Guidance
v. Prior Year at Mid-Point
Total Revenue
$81.5 to $82.5
6%
$329.0 to $331.0
9%
Subscription Revenue
$65.8 to $66.3
10%
$263.5 to $265.5
13%
Subscription ARR
n/a
n/a
$280.0 to $284.0
9%
Non-GAAP Earnings Per Share
$0.08 to $0.10
$—
n/a
n/a
Adjusted EBITDA
$6.5 to $7.5
$1.4
$21.0 to $24.0
$16.5
Free Cash Flow
n/a
n/a
$20.0 to $24.0
$10.6
Conference Call
In conjunction with this announcement, PROS Holdings, Inc. will host a conference call on Tuesday, July 30, 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, August 6, 2024, 11:59 PM ET at 1-844-512-2921 (toll-free) or 1-412-317-6671 using the pass code 13747137.
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 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)
June 30, 2024
December 31, 2023
Assets:
Current assets:
Cash and cash equivalents
$
139,086
$
168,747
Trade and other receivables, net of allowance of $801 and $574, respectively
47,714
49,058
Deferred costs, current
4,433
4,856
Prepaid and other current assets
11,816
12,013
Total current assets
203,049
234,674
Restricted cash
10,000
10,000
Property and equipment, net
20,892
23,051
Operating lease right-of-use assets
14,663
14,801
Deferred costs, noncurrent
10,143
10,292
Intangibles, net
9,078
11,678
Goodwill
107,572
107,860
Other assets, noncurrent
9,503
9,477
Total assets
$
384,900
$
421,833
Liabilities and Stockholders’ (Deficit) Equity:
Current liabilities:
Accounts payable and other liabilities
$
6,992
$
3,034
Accrued liabilities
14,760
13,257
Accrued payroll and other employee benefits
19,259
32,762
Operating lease liabilities, current
4,232
5,655
Deferred revenue, current
121,628
120,955
Current portion of convertible debt, net
—
21,668
Total current liabilities
166,871
197,331
Deferred revenue, noncurrent
3,302
3,669
Convertible debt, net, noncurrent
271,553
272,324
Operating lease liabilities, noncurrent
25,032
25,118
Other liabilities, noncurrent
1,182
1,264
Total liabilities
467,940
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; 51,810,281
and 51,184,584 shares issued, respectively; 47,129,558 and 46,503,861 shares outstanding, respectively
52
51
Additional paid-in capital
617,894
604,084
Treasury stock, 4,680,723 common shares, at cost
(29,847
)
(29,847
)
Accumulated deficit
(665,995
)
(647,252
)
Accumulated other comprehensive loss
(5,144
)
(4,909
)
Total stockholders’ (deficit) equity
(83,040
)
(77,873
)
Total liabilities and stockholders’ (deficit) equity
$
384,900
$
421,833
PROS Holdings, Inc.
Condensed Consolidated Statements of Loss
(In thousands, except per share data)
(Unaudited)
Three Months Ended June 30,
Six Months Ended June 30,
2024
2023
2024
2023
Revenue:
Subscription
$
65,600
$
57,304
$
129,949
$
113,273
Maintenance and support
3,385
5,093
6,980
10,805
Total subscription, maintenance and support
68,985
62,397
136,929
124,078
Services
13,028
13,395
25,772
24,896
Total revenue
82,013
75,792
162,701
148,974
Cost of revenue:
Subscription
14,570
14,059
29,183
28,152
Maintenance and support
1,751
1,876
3,613
4,158
Total cost of subscription, maintenance and support
16,321
15,935
32,796
32,310
Services
12,498
12,636
24,856
25,803
Total cost of revenue
28,819
28,571
57,652
58,113
Gross profit
53,194
47,221
105,049
90,861
Operating expenses:
Selling and marketing
23,537
24,880
46,219
50,890
Research and development
21,786
21,847
46,199
44,138
General and administrative
15,055
13,849
30,117
27,984
Loss from operations
(7,184
)
(13,355
)
(17,486
)
(32,151
)
Convertible debt interest and amortization
(1,148
)
(1,576
)
(2,350
)
(3,152
)
Other income, net
1,323
1,791
1,781
3,242
Loss before income tax provision
(7,009
)
(13,140
)
(18,055
)
(32,061
)
Income tax provision
377
149
688
230
Net loss
$
(7,386
)
$
(13,289
)
$
(18,743
)
$
(32,291
)
Net loss per share:
Basic and diluted
$
(0.16
)
$
(0.29
)
$
(0.40
)
$
(0.70
)
Weighted average number of shares:
Basic and diluted
47,068
46,101
46,942
46,013
PROS Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended June 30,
Six Months Ended June 30,
2024
2023
2024
2023
Operating activities:
Net loss
$
(7,386
)
$
(13,289
)
$
(18,743
)
$
(32,291
)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization
2,191
2,751
4,395
5,752
Amortization of debt premium and issuance costs
(302
)
373
(586
)
746
Share-based compensation
10,248
10,752
22,948
20,656
Provision for credit losses
11
(20
)
160
88
Gain on lease modification
—
—
(697
)
—
Loss on disposal of assets
—
—
774
35
Changes in operating assets and liabilities:
Accounts and unbilled receivables
3,271
(8,309
)
1,173
(6,070
)
Deferred costs
(34
)
(84
)
572
341
Prepaid expenses and other assets
(896
)
1,056
174
(1,449
)
Operating lease right-of-use assets and liabilities
(668
)
(646
)
(1,516
)
(1,237
)
Accounts payable and other liabilities
4,522
2,541
3,885
(1,252
)
Accrued liabilities
91
573
2,418
1,077
Accrued payroll and other employee benefits
3,100
4,486
(13,511
)
(3,688
)
Deferred revenue
(7,728
)
(6,726
)
330
4,607
Net cash provided by (used in) operating activities
6,420
(6,542
)
1,776
(12,685
)
Investing activities:
Purchases of property and equipment
(215
)
(277
)
(438
)
(1,823
)
Capitalized internal-use software development costs
(41
)
—
(58
)
—
Investment in equity securities
—
—
(113
)
—
Net cash used in investing activities
(256
)
(277
)
(609
)
(1,823
)
Financing activities:
Proceeds from employee stock plans
—
—
1,024
1,137
Tax withholding related to net share settlement of stock awards
(1,823
)
(958
)
(10,161
)
(5,668
)
Settlement of convertible debt
(21,713
)
—
(21,713
)
—
Net cash used in financing activities
(23,536
)
(958
)
(30,850
)
(4,531
)
Effect of foreign currency rates on cash
35
(32
)
22
(21
)
Net change in cash, cash equivalents and restricted cash
(17,337
)
(7,809
)
(29,661
)
(19,060
)
Cash, cash equivalents and restricted cash:
Beginning of period
166,423
192,376
178,747
203,627
End of period
$
149,086
$
184,567
$
149,086
$
184,567
Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheets
Cash and cash equivalents
$
139,086
$
184,567
$
139,086
$
184,567
Restricted cash
10,000
—
10,000
—
Total cash, cash equivalents and restricted cash
$
149,086
$
184,567
$
149,086
$
184,567
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 June 30,
Quarter over Quarter
Six Months Ended June 30,
Year over Year
2024
2023
% change
2024
2023
% change
GAAP gross profit
$
53,194
$
47,221
13
%
$
105,049
$
90,861
16
%
Non-GAAP adjustments:
Amortization of acquisition-related intangibles
953
1,243
1,906
2,580
Severance
—
—
—
749
Share-based compensation
1,151
985
2,219
1,817
Non-GAAP gross profit
$
55,298
$
49,449
12
%
$
109,174
$
96,007
14
%
Non-GAAP gross margin
67.4
%
65.2
%
67.1
%
64.4
%
GAAP loss from operations
$
(7,184
)
$
(13,355
)
(46
)%
$
(17,486
)
$
(32,151
)
(46
)%
Non-GAAP adjustments:
Amortization of acquisition-related intangibles
1,300
1,620
2,601
3,426
Severance
—
—
—
3,586
Share-based compensation
10,248
10,752
22,948
20,656
Total non-GAAP adjustments
11,548
12,372
25,549
27,668
Non-GAAP income (loss) from operations
$
4,364
$
(983
)
(544
)%
$
8,063
$
(4,483
)
(280
)%
Non-GAAP income (loss) from operations % of total revenue
5.3
%
(1.3
)%
5.0
%
(3.0
)%
GAAP net loss
$
(7,386
)
$
(13,289
)
(44
)%
$
(18,743
)
$
(32,291
)
(42
)%
Non-GAAP adjustments:
Total non-GAAP adjustments affecting income (loss) from operations
11,548
12,372
25,549
27,668
Amortization of debt premium and issuance costs
(372
)
373
(725
)
746
Tax impact related to non-GAAP adjustments
(539
)
235
(801
)
1,032
Non-GAAP net income (loss)
$
3,251
$
(309
)
(1,152
)%
$
5,280
$
(2,845
)
(286
)%
Non-GAAP earnings (loss) per share
$
0.07
$
(0.01
)
$
0.11
$
(0.06
)
Shares used in computing non-GAAP earnings (loss) per share
47,657
46,101
47,732
46,013
PROS Holdings, Inc.
Supplemental Schedule of Non-GAAP Financial Measures
Increase (Decrease) in GAAP Amounts Reported
(In thousands)
(Unaudited)
Three Months Ended June 30,
Six Months Ended June 30,
2024
2023
2024
2023
Cost of Subscription Items
Amortization of acquisition-related intangibles
953
1,243
1,906
2,580
Severance
—
—
—
125
Share-based compensation
235
169
437
294
Total cost of subscription items
$
1,188
$
1,412
$
2,343
$
2,999
Cost of Maintenance Items
Severance
—
—
—
307
Share-based compensation
96
98
233
178
Total cost of maintenance items
$
96
$
98
$
233
$
485
Cost of Services Items
Severance
—
—
—
317
Share-based compensation
820
718
1,549
1,345
Total cost of services items
$
820
$
718
$
1,549
$
1,662
Sales and Marketing Items
Amortization of acquisition-related intangibles
347
377
695
846
Severance
—
—
—
1,595
Share-based compensation
2,437
3,103
6,065
6,031
Total sales and marketing items
$
2,784
$
3,480
$
6,760
$
8,472
Research and Development Items
Severance
—
—
—
1,008
Share-based compensation
2,114
2,673
5,645
5,023
Total research and development items
$
2,114
$
2,673
$
5,645
$
6,031
General and Administrative Items
Severance
—
—
—
234
Share-based compensation
4,546
3,991
9,019
7,785
Total general and administrative items
$
4,546
$
3,991
$
9,019
$
8,019
PROS Holdings, Inc.
Supplemental Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands)
(Unaudited)
Three Months Ended June 30,
Six Months Ended June 30,
2024
2023
2024
2023
Adjusted EBITDA
GAAP Loss from Operations
$
(7,184
)
$
(13,355
)
$
(17,486
)
$
(32,151
)
Amortization of acquisition-related intangibles
1,300
1,620
2,601
3,426
Severance
—
—
—
3,586
Share-based compensation
10,248
10,752
22,948
20,656
Depreciation and other amortization
891
1,131
1,794
2,326
Capitalized internal-use software development costs
(41
)
—
(58
)
—
Adjusted EBITDA
$
5,214
$
148
$
9,799
$
(2,157
)
Net Cash Provided by (Used in) Operating Activities
$
6,420
$
(6,542
)
$
1,776
$
(12,685
)
Severance
—
579
—
3,749
Purchase of property and equipment
(215
)
(277
)
(438
)
(1,823
)
Capitalized internal-use software development costs
(41
)
—
(58
)
—
Free Cash Flow
$
6,164
$
(6,240
)
$
1,280
$
(10,759
)
Guidance
Q3 2024 Guidance
Full Year 2024 Guidance
Low
High
Low
High
Adjusted EBITDA
GAAP Loss from Operations
$
(6,000
)
$
(5,000
)
$
(31,200
)
$
(28,200
)
Amortization of acquisition-related intangibles
1,100
1,100
4,400
4,400
Share-based compensation
10,500
10,500
44,200
44,200
Depreciation and other amortization
900
900
3,600
3,600
Adjusted EBITDA
$
6,500
$
7,500
$
21,000
$
24,000
PROS Holdings, Inc.
Supplemental Reconciliation of GAAP to Non-GAAP Financial Measures (Continued)
(In thousands)
(Unaudited)
Three Months Ended June 30,
Quarter over Quarter
Six Months Ended June 30,
Year over Year
2024
2023
% change
2024
2023
% change
GAAP subscription gross profit
$
51,030
$
43,245
18
%
$
100,766
$
85,121
18
%
Non-GAAP adjustments:
Amortization of acquisition-related intangibles
953
1,243
1,906
2,580
Severance
—
—
—
125
Share-based compensation
235
169
437
294
Non-GAAP subscription gross profit
$
52,218
$
44,657
17
%
$
103,109
$
88,120
17
%
Non-GAAP subscription gross margin
79.6
%
77.9
%
79.3
%
77.8
%
View source version on businesswire.com: https://www.businesswire.com/news/home/20240730249981/en/
Investor Contact: PROS Investor Relations Belinda Overdeput 713-335-5879 ir@pros.com
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