- PROS raises its revenue and profitability outlook for the full
year 2023 after exceeding the Company’s Q3 guidance ranges across
all metrics.
- Subscription revenue of $60.0 million, up 16%
year-over-year.
- Total revenue of $77.3 million, up 10% year-over-year.
- Subscription gross margin of 76% and non-GAAP subscription
gross margin of 78%, up 135 basis points year-over-year.
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, 2023.
“We delivered a strong third quarter, exceeding our guidance
ranges across all metrics, delivering 16% subscription revenue
growth and more than $17 million of improvement to free cash flow
year-over-year,” stated CEO Andres Reiner. “We are delivering on
our growth objectives while driving incredible improvements to our
operational efficiency, a testament to our team's relentless focus
on achieving our goal of being a rule of 40 company by 2026.”
Third Quarter 2023 Financial Highlights
Key financial results for the third quarter 2023 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
Q3 2023
Q3 2022
Change
Q3 2023
Q3 2022
Change
Revenue:
Total Revenue
$77.3
$70.3
10%
n/a
n/a
n/a
Subscription Revenue
$60.0
$51.8
16%
n/a
n/a
n/a
Subscription and Maintenance Revenue
$64.7
$58.8
10%
n/a
n/a
n/a
Profitability:
Gross Profit
$48.8
$42.7
14%
$50.9
$45.3
12%
Operating (Loss) Income
$(7.8)
$(16.2)
$8.3
$4.5
$(3.3)
$7.9
Net (Loss) Income
$(13.9)
$(13.9)
$—
$4.0
$(2.9)
$6.9
Net (Loss) Earnings Per Share
$(0.30)
$(0.31)
$0.01
$0.09
$(0.06)
$0.15
Adjusted EBITDA
n/a
n/a
n/a
$5.6
$(2.2)
$7.8
Cash:
Net Cash Provided by (Used in) Operating
Activities
$8.7
$(9.0)
$17.7
n/a
n/a
n/a
Free Cash Flow
n/a
n/a
n/a
$8.5
$(9.1)
$17.6
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 Genesis Energy, GOL Airlines, JetSMART, SKS Airways, and
Trivium Packaging, among others.
- Expanded adoption of the PROS Platform within existing
customers including Air New Zealand, Graybar, Ingredion, Spire
Healthcare, and Turkish Airlines, among others.
- Announced the go live of PROS Smart Price Optimization and
Management for Qatar Airways Cargo, the third largest air cargo
carrier in the world by volume; PROS now powers online bookings
across Qatar Cargo’s entire network, providing their customers an
enhanced digital buying experience that allows immediate online
booking confirmation with accurate and personalized pricing.
- Launched registration for the 2024 Outperform with PROS
Conference, one of the preeminent AI conferences in the world,
scheduled for May 20-22, 2024 in Orlando, FL; the conference will
bring together experts from across industries to discuss how AI can
drive business forward.
- Awarded one of the “Best Technology Companies to Work For” by
U.S. News in recognition of our people-first culture; the scorecard
cited PROS as having exceptionally high rankings by employees
across areas such as company stability, belongingness and esteem,
and opportunities for career development.
- Selected to present PROS AI team’s published paper “Machine
Learning based Framework for Robust Price-Sensitivity Estimation
with Application to Airline Pricing” at the prestigious and highly
selective 29th Annual KDD Conference, the premier international
forum for data mining researchers and practitioners.
- Recently completed the exchange of approximately 85% of PROS
outstanding convertible notes due in May 2024 for newly issued
convertible notes due in September 2027 under the existing
indenture for the 2027 notes; the exchange shifts the maturity of
most of PROS debt to 2027 while slightly lowering the total amount
of convertible debt outstanding at par value.
Financial Outlook
PROS currently anticipates the following based on an estimated
47.5 million diluted weighted average shares outstanding for the
fourth quarter of 2023 and a 22% non-GAAP estimated tax rate for
the fourth quarter and full year 2023.
Q4 2023 Guidance
v. Q4 2022 at Mid
Point
Full Year 2023
Guidance
v. Prior Year at Mid
Point
Total Revenue
$76.0 to $77.0
8%
$302.2 to $303.2
10%
Subscription Revenue
$60.0 to $60.5
13%
$233.3 to $233.8
14%
Subscription ARR
n/a
n/a
$251.0 to $254.0
11%
Non-GAAP Earnings Per Share
$0.03 to $0.05
$0.02
n/a
n/a
Adjusted EBITDA
$3.0 to $4.0
$1.1
$6.5 to $7.5
$21.9
Free Cash Flow
n/a
n/a
$3.5 to $6.5
$26.7
Conference Call
In conjunction with this announcement, PROS Holdings, Inc. will
host a conference call on Tuesday, October 31, 2023, 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 7,
2023, 11:59 PM ET at 1-844-512-2921 (toll-free) or 1-412-317-6671
using the pass code 13741806.
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 over 30 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) the
macroeconomic environment, (b) the effects of inflation, (c) the
impact of the COVID-19 pandemic, (d) 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, (e) increasing business from customers
and maintaining subscription renewal rates, (f) managing our growth
and profit objectives effectively, (g) disruptions from our third
party data center, software, data, and other unrelated service
providers, (h) implementing our solutions, (i) cloud operations,
(j) intellectual property and third-party software, (k) acquiring
and integrating businesses and/or technologies, (l) catastrophic
events, (m) operating globally, including economic and commercial
disruptions, (n) potential downturns in sales and lengthy sales
cycles, (o) software innovation, (p) competition, (q) market
acceptance of our software innovations, (r) maintaining our
corporate culture, (s) personnel risks including loss of any key
employees and competition for talent, (t) expanding and training
our direct and indirect sales force, (u) evolving data privacy,
cyber security and data localization laws, (v) our debt repayment
obligations, (w) the timing of revenue recognition and cash flow
from operations, (x) migrating customers to our latest cloud
solutions, and (y) 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 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 costs relate to the separation of
our Chief Operations Officer in Q1 2022 and costs related to other
internal role consolidations as well as severance cost incurred in
Q4 2022 and Q1 2023 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 issuance costs, gain on equity investment, 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 Issuance Costs: Amortization of
debt 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.
- Gain on Equity Investment: Gain on equity investment
relate to an observable price change for an equity investment
without a readily determinable fair value identified during the
quarter ended September 30, 2022. 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. 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 Notes 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.
Annual Recurring Revenue: Annual Recurring Revenue
("ARR") is used to assess the trajectory of our cloud business. ARR
means, as of a specified date, the contracted recurring revenue,
including contracts with a future start date, together with
annualized overage fees incurred above contracted minimum
transactions, and excluding perpetual and term license agreements.
ARR should be viewed independently of revenue and any other GAAP
measure. Subscription ARR is calculated in the same manner, but
excludes maintenance and support ARR.
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, and depreciation and amortization.
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, purchases of other (non-acquisition-related)
intangible assets 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, 2023
December 31, 2022
Assets:
Current assets:
Cash and cash equivalents
$
159,080
$
203,627
Trade and other receivables, net of
allowance of $681 and $609, respectively
49,688
48,178
Deferred costs, current
6,306
6,032
Prepaid and other current assets
10,449
9,441
Total current assets
225,523
267,278
Restricted cash
10,000
—
Property and equipment, net
23,922
25,012
Operating lease right-of-use assets
13,076
17,474
Deferred costs, noncurrent
7,786
8,764
Intangibles, net
12,979
17,851
Goodwill
107,445
107,561
Derivative asset, noncurrent
22,260
—
Other assets, noncurrent
8,863
9,012
Total assets
$
431,854
$
452,952
Liabilities and Stockholders’ (Deficit)
Equity:
Current liabilities:
Accounts payable and other liabilities
$
4,741
$
7,964
Accrued liabilities
16,755
12,854
Accrued payroll and other employee
benefits
23,555
23,797
Operating lease liabilities, current
3,998
7,662
Deferred revenue, current
112,311
108,659
Current portion of convertible debt,
net
21,635
—
Total current liabilities
182,995
160,936
Deferred revenue, noncurrent
4,211
8,298
Convertible debt, net, noncurrent
272,542
289,779
Operating lease liabilities,
noncurrent
25,794
28,184
Other liabilities, noncurrent
1,190
1,228
Total liabilities
486,732
488,425
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; 50,929,132
and 50,318,726 shares issued,
respectively; 46,248,409 and 45,638,003 shares outstanding,
respectively
51
50
Additional paid-in capital
617,402
590,475
Treasury stock, 4,680,723 common shares,
at cost
(29,847
)
(29,847
)
Accumulated deficit
(637,057
)
(590,898
)
Accumulated other comprehensive loss
(5,427
)
(5,253
)
Total stockholders’ (deficit) equity
(54,878
)
(35,473
)
Total liabilities and stockholders’
(deficit) equity
$
431,854
$
452,952
PROS Holdings, Inc.
Condensed Consolidated
Statements of Loss
(In thousands, except per share
data)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Revenue:
Subscription
$
59,987
$
51,763
$
173,260
$
150,914
Maintenance and support
4,693
7,071
15,498
22,175
Total subscription, maintenance and
support
64,680
58,834
188,758
173,089
Services
12,570
11,514
37,466
32,113
Total revenue
77,250
70,348
226,224
205,202
Cost of revenue:
Subscription
14,510
13,829
42,662
41,354
Maintenance and support
1,769
1,952
5,927
6,107
Total cost of subscription, maintenance
and support
16,279
15,781
48,589
47,461
Services
12,185
11,829
37,988
35,151
Total cost of revenue
28,464
27,610
86,577
82,612
Gross profit
48,786
42,738
139,647
122,590
Operating expenses:
Selling and marketing
20,324
22,221
71,214
71,528
Research and development
22,205
23,303
66,343
71,171
General and administrative
14,099
13,395
42,083
41,561
Impairment of fixed assets
—
—
—
1,551
Loss from operations
(7,842
)
(16,181
)
(39,993
)
(63,221
)
Convertible debt interest and
amortization
(1,497
)
(1,576
)
(4,649
)
(4,728
)
Other (expense) income, net
(4,288
)
4,158
(1,046
)
3,738
Loss before income tax provision
(13,627
)
(13,599
)
(45,688
)
(64,211
)
Income tax provision
241
254
471
688
Net loss
$
(13,868
)
$
(13,853
)
$
(46,159
)
$
(64,899
)
Net loss per share:
Basic and diluted
$
(0.30
)
$
(0.31
)
$
(1.00
)
$
(1.44
)
Weighted average number of shares:
Basic and diluted
46,225
45,314
46,084
45,207
PROS Holdings, Inc.
Condensed Consolidated
Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Operating activities:
Net loss
$
(13,868
)
$
(13,853
)
$
(46,159
)
$
(64,899
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
2,549
3,395
8,301
11,843
Amortization of debt issuance costs
348
373
1,094
1,119
Share-based compensation
10,933
10,626
31,589
32,617
Provision for credit losses
—
(71
)
88
(371
)
Loss on disposal of assets
16
—
51
—
Impairment of fixed assets
—
—
—
1,551
Gain on equity investment
—
(3,308
)
—
(3,308
)
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
4,497
(11,341
)
(1,573
)
(4,900
)
Deferred costs
363
598
704
730
Prepaid expenses and other assets
1,480
824
31
(571
)
Operating lease right-of-use assets and
liabilities
(449
)
(808
)
(1,686
)
(1,925
)
Accounts payable and other liabilities
(2,123
)
1,282
(3,375
)
2,911
Accrued liabilities
412
885
1,489
817
Accrued payroll and other employee
benefits
3,446
1,756
(242
)
(7,388
)
Deferred revenue
(5,008
)
651
(401
)
9,838
Net cash provided by (used in) operating
activities
8,718
(8,991
)
(3,967
)
(21,936
)
Investing activities:
Purchases of property and equipment
(345
)
(76
)
(2,168
)
(845
)
Purchase of equity securities
(113
)
—
(113
)
(169
)
Net cash used in investing activities
(458
)
(76
)
(2,281
)
(1,014
)
Financing activities:
Proceeds from employee stock plans
1,033
1,279
2,170
2,722
Tax withholding related to net share
settlement of stock awards
(1,163
)
—
(6,831
)
(212
)
Debt issuance cost related to Credit
Agreement
(837
)
—
(837
)
—
Purchase of capped call
(22,771
)
—
(22,771
)
—
Net cash (used in) provided by financing
activities
(23,738
)
1,279
(28,269
)
2,510
Effect of foreign currency rates on
cash
(9
)
(566
)
(30
)
(289
)
Net change in cash, cash equivalents and
restricted cash
(15,487
)
(8,354
)
(34,547
)
(20,729
)
Cash, cash equivalents and restricted
cash:
Beginning of period
184,567
215,178
203,627
227,553
End of period
$
169,080
$
206,824
$
169,080
$
206,824
Reconciliation of cash, cash
equivalents and restricted cash to the condensed consolidated
balance sheets
Cash and cash equivalents
$
159,080
$
206,824
$
159,080
$
206,824
Restricted cash
10,000
—
10,000
—
Total cash, cash equivalents and
restricted cash
$
169,080
$
206,824
$
169,080
$
206,824
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
2023
2022
% change
2023
2022
% change
GAAP gross profit
$
48,786
$
42,738
14
%
$
139,647
$
122,590
14
%
Non-GAAP adjustments:
Amortization of acquisition-related
intangibles
1,099
1,555
3,679
5,223
Severance
—
—
749
—
Share-based compensation
1,033
1,050
2,850
2,881
Non-GAAP gross profit
$
50,918
$
45,343
12
%
$
146,925
$
130,694
12
%
Non-GAAP gross margin
65.9
%
64.5
%
64.9
%
63.7
%
GAAP loss from operations
$
(7,842
)
$
(16,181
)
(52
)%
$
(39,993
)
$
(63,221
)
(37
)%
Non-GAAP adjustments:
Amortization of acquisition-related
intangibles
1,446
2,221
4,872
7,793
Severance
—
—
3,586
1,508
Share-based compensation
10,933
10,626
31,589
32,617
Total Non-GAAP adjustments
12,379
12,847
40,047
41,918
Non-GAAP income (loss) from operations
$
4,537
$
(3,334
)
(236
)%
$
54
$
(21,303
)
(100
)%
Non-GAAP income (loss) from operations %
of total revenue
5.9
%
(4.7
)%
—
%
(10.4
)%
GAAP net loss
$
(13,868
)
$
(13,853
)
—
%
$
(46,159
)
$
(64,899
)
(29
)%
Non-GAAP adjustments:
Total Non-GAAP adjustments affecting
income (loss) from operations
12,379
12,847
40,047
41,918
Amortization of debt issuance costs
294
373
1,040
1,119
Gain on equity investment
—
(3,308
)
—
(3,308
)
Loss on derivatives
4,343
—
4,343
—
Loss on debt extinguishment
1,779
—
1,779
—
Tax impact related to non-GAAP
adjustments
(895
)
1,066
137
6,078
Non-GAAP net income (loss)
$
4,032
$
(2,875
)
(240
)%
$
1,187
$
(19,092
)
(106
)%
Non-GAAP earnings (loss) per share
$
0.09
$
(0.06
)
$
0.03
$
(0.42
)
Shares used in computing non-GAAP earnings
(loss) per share
47,397
45,314
46,823
45,207
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,
2023
2022
2023
2022
Cost of Subscription Items
Amortization of acquisition-related
intangibles
1,099
1,555
3,679
5,223
Severance
—
—
125
—
Share-based compensation
201
174
495
510
Total cost of subscription items
$
1,300
$
1,729
$
4,299
$
5,733
Cost of Maintenance Items
Severance
—
—
307
—
Share-based compensation
93
109
271
298
Total cost of maintenance items
$
93
$
109
$
578
$
298
Cost of Services Items
Severance
—
—
317
—
Share-based compensation
739
767
2,084
2,073
Total cost of services items
$
739
$
767
$
2,401
$
2,073
Sales and Marketing Items
Amortization of acquisition-related
intangibles
347
666
1,193
2,570
Severance
—
—
1,595
1,444
Share-based compensation
2,992
2,897
9,023
9,413
Total sales and marketing items
$
3,339
$
3,563
$
11,811
$
13,427
Research and Development Items
Severance
—
—
1,008
—
Share-based compensation
2,817
2,995
7,840
9,607
Total research and development items
$
2,817
$
2,995
$
8,848
$
9,607
General and Administrative
Items
Severance
—
—
234
64
Share-based compensation
4,091
3,684
11,876
10,716
Total general and administrative items
$
4,091
$
3,684
$
12,110
$
10,780
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,
2023
2022
2023
2022
Adjusted EBITDA
GAAP Loss from Operations
$
(7,842
)
$
(16,181
)
$
(39,993
)
$
(63,221
)
Amortization of acquisition-related
intangibles
1,446
2,221
4,872
7,793
Severance
—
—
3,586
1,508
Share-based compensation
10,933
10,626
31,589
32,617
Depreciation and other amortization
1,103
1,174
3,429
4,050
Adjusted EBITDA
$
5,640
$
(2,160
)
$
3,483
$
(17,253
)
Net cash provided by (used in)
operating activities
$
8,718
$
(8,991
)
$
(3,967
)
$
(21,936
)
Severance
121
—
3,870
—
Purchase of property and equipment
(345
)
(76
)
(2,168
)
(845
)
Free Cash Flow
$
8,494
$
(9,067
)
$
(2,265
)
$
(22,781
)
Guidance
Q4 2023 Guidance
Full Year 2023
Guidance
Low
High
Low
High
Adjusted EBITDA
GAAP Loss from Operations
$
(10,400
)
$
(9,400
)
$
(50,500
)
$
(49,500
)
Amortization of acquisition-related
intangibles
1,400
1,400
6,200
6,200
Severance
—
—
3,600
3,600
Share-based compensation
10,900
10,900
42,500
42,500
Depreciation and other amortization
1,100
1,100
4,700
4,700
Adjusted EBITDA
$
3,000
$
4,000
$
6,500
$
7,500
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231031472974/en/
PROS Investor Relations Belinda Overdeput 713-335-5879
ir@pros.com
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