Document
false0001392972 0001392972 2020-05-05 2020-05-05


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 5, 2020
PROS Holdings, Inc.
(Exact Name of Registrant as Specified in Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
 
 
 
 
 
001-33554
 
 
 
76-0168604
(Commission File Number)
 
 
 
(IRS Employer Identification No.)
 
3100 Main Street, Suite 900
Houston
TX
 
 
 
 
77002
 
(Address of Principal Executive Offices)
 
 
 
 
(Zip Code)
 
 
 
 
 
 
 
 
Registrant’s telephone number, including area code
(713)
335-5151
 
 
 
 
(Former Name or Former Address, if Changed Since Last Report)
 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading symbol(s)
 
Name of each exchange on which registered
Common stock $0.001 par value per share
 
PRO
 
New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o







Item 2.02.
Results of Operations and Financial Condition. 

On May 5, 2020, PROS Holdings, Inc. (the "Company") issued a press release announcing financial results for its quarter ended March 31, 2020. A copy of the press release, dated as of May 5, 2020, is furnished as Exhibit 99.1 to this Current Report on Form 8-K. The press release contains forward looking statements regarding the Company and includes cautionary statements identifying important factors that could cause actual results to differ materially from those anticipated.
The information in this Current Report, including Exhibit 99.1 attached hereto, shall not be deemed “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section. The information contained herein and in the accompanying exhibit shall not be incorporated by reference into any registration statement or other document filed with the Securities and Exchange Commission ("SEC") by the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing, except as shall be expressly set forth by specific reference in such filing.

Item 7.01.
Regulation FD Disclosure. 

On May 5, 2020, the Company published the Q1 2020 Investor Relations Fact Sheet ("IR Fact Sheet") and Q1 2020 Earnings Presentation ("Investor Presentation") on the Investor Relations section of the Company’s website located at https://ir.pros.com/. From time to time, the Company may also present and/or distribute the IR Fact Sheet and Investor Presentation to the investment community to provide updates and summaries of its business. Copies of the IR Fact Sheet and Q1 2020 Earnings Presentation are furnished herewith as Exhibits 99.2 and 99.3, respectively. Investors should note that the Company uses the Investor Relations section of its corporate website to announce material information to investors and the marketplace. While not all of the information that the Company posts on its corporate website is of a material nature, some information could be deemed to be material. Accordingly, the Company encourages investors, the media, and others interested in the Company to review the information that it shares on the Investor Relations section of our website.

The information contained in the IR Fact Sheet and Investor Presentation are summary information that is intended to be considered in the context of the Company's SEC filings and other public announcements that the Company may make, by press release or otherwise, from time to time. The Company undertakes no duty or obligation to publicly update or revise the information contained in this report, although it may do so from time to time as its management believes is warranted. Any such updating may be made through the filing of other reports or documents with the SEC, through press releases or through other public disclosure.

The information in this Current Report, including Exhibits 99.2 and 99.3 attached hereto, shall not be deemed "filed" for the purpose of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section. The information contained herein and in the accompanying exhibits shall not be incorporated by reference into any registration statement or other document filed with the SEC by the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing, except as shall be expressly set forth by specific reference in such filing.

Item 9.01.
Financial Statements and Exhibits. 

(d) Exhibits    
 
 
 
Exhibit No.
 
Exhibit Description
 
 
 
99.1
 
 
 
 
99.2
 
 
 
 
99.3
 
 
 
 
104
 
The cover page from this Current Report on Form 8-K, formatted in Inline XBRL (included as Exhibit 101).







SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
 
 
PROS HOLDINGS, INC.
 
 
 
May 5, 2020
 
/s/ Stefan Schulz
 
 
Stefan Schulz
 
 
Executive Vice President and Chief Financial Officer







































Exhibit
EXHIBIT 99.1


PROS HOLDINGS, INC. REPORTS FIRST QUARTER 2020 FINANCIAL RESULTS

Subscription revenue of $43.2 million, up 40% year-over-year.
Total revenue of $66.3 million, up 18% year-over-year.


HOUSTON – May 5, 2020 — PROS Holdings, Inc. (NYSE: PRO), a provider of AI-powered solutions that optimize selling in the digital economy, today announced financial results for the first quarter ended March 31, 2020.

“I’m so proud of how our team has kept their focus on supporting our customers and each other during these difficult times,” stated CEO Andres Reiner. “We’ve fully embraced the shift to operating virtually and delivered another strong revenue growth quarter as we help our customers and the industries we serve accelerate their move to digital selling.” 

First Quarter 2020 Financial Highlights

Key financial results for the first quarter 2020 are shown below. Throughout this press release, all dollar figures are in millions, except net loss per share. Unless otherwise noted, all results are on a reported basis and are compared with the prior-year period.
 
GAAP
 
Non-GAAP
 
Q1 2020
 
Q1 2019
 
Change
 
Q1 2020
 
Q1 2019
 
 Change
Revenue:
 
 
 
 
 
 
 
 
 
 
 
  Total Revenue
$66.3
 
$56.1
 
18%
 
n/a
 
n/a
 
n/a
  Subscription Revenue
$43.2
 
$30.9
 
40%
 
n/a
 
n/a
 
n/a
  Subscription and Maintenance Revenue
$55.7
 
$46.2
 
20%
 
n/a
 
n/a
 
n/a
Profitability:
 
 
 
 
 
 
 
 
 
 
 
  Gross Profit
$37.6
 
$35.3
 
6%
 
$39.1
 
$37.1
 
6%
  Operating Loss
$(21.4)
 
$(13.6)
 
$(7.7)
 
$(13.1)
 
$(5.4)
 
$(7.6)
  Net Loss
$(22.7)
 
$(16.9)
 
$(5.8)
 
$(9.8)
 
$(4.2)
 
$(5.6)
  Net Loss Per Share
$(0.53)
 
$(0.45)
 
$(0.08)
 
$(0.23)
 
$(0.11)
 
$(0.12)
  Adjusted EBITDA
n/a
 
n/a
 
n/a
 
$(11.4)
 
$(4.6)
 
$(6.9)
Cash:
 
 
 
 
 
 
 
 
 
 
 
  Net Cash Used In Operating Activities
$(24.2)
 
$(8.1)
 
$(16.1)
 
n/a
 
n/a
 
n/a
  Free Cash Flow
n/a
 
n/a
 
n/a
 
$(25.5)
 
$(9.6)
 
$(15.9)

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

Recent Business Highlights

Extended our leadership position on our Guidance solution with strategic innovations that further enable our B2B customers to self-serve, accelerate their time to value, and drive higher adoption with targeted insights.

Continued innovation in our market-leading airline passenger revenue management product with the release of willingness-to-pay based forecasting and optimization algorithms to help airlines achieve dynamic pricing.

Delivered a series of strategy and training webinars to bring the markets and our customers together to learn, share ideas, and prepare for the post-COVID-19 world; offered free consultations with our industry and pricing experts to help customers proactively manage demand shifts and navigate the current macro environment.

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Launched the PROS B2B pricing transformation value calculator program with Microsoft so companies visiting global Microsoft Technology Centers receive personalized business cases and assessments of the strong value of our AI-powered selling solutions.

Named to the 2020 CRM Watchlist for the sixth consecutive year in recognition of PROS impact in the CRM market, promise for the future, and vision around product strategy and innovation; scored highest in the ‘Customer’ category.

Joined the IATA Airline Industry Retailing (AIR) Think Tank to deliver thought leadership on transformational retailing ideas and concepts to improve the traveler experience through digital transformation.

Proactively moved to fully virtual across our global offices in early March to ensure the safety and well-being of our people, customers, and communities.

Announced a virtual experience for PROS Outperform 2020 Conference, the premier event for pricing, selling, revenue management, and eCommerce executives, and industry strategists from across the globe, extending our reach and engagement with our customers and prospects occurring October 7-8.

Financial Outlook

Based on information as of May 5, 2020, PROS currently anticipates the following based on an estimated 43.3 million basic weighted average shares outstanding and a 22% non-GAAP estimated tax rate for the second quarter ending June 30, 2020. Given uncertainties related to the ongoing COVID-19 pandemic and rapidly changing global economic environment, PROS is withdrawing its previously issued full year 2020 guidance provided February 6, 2020: 
 
Q2 2020 Guidance
 
v. Q2 2019 at Mid-Point
Total Revenue
$60.0 to $61.0
 
(5)%
Subscription Revenue
$39.5 to $40.5
 
14%
Non-GAAP Loss Per Share
$(0.22) to $(0.20)
 
$(0.14)
Adjusted EBITDA
$(11.5) to $(10.5)
 
$(9.2)
Conference Call
In conjunction with this announcement, PROS Holdings, Inc. will host a conference call on Tuesday, May 5, 2020, 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, May 19, 2020, at 1-844-512-2921 (toll-free) or 1-412-317-6671 using the pass code 13700852.

About PROS

PROS Holdings, Inc. (NYSE: PRO) provides AI solutions that power commerce in the digital economy. PROS solutions bring intelligence to commerce by providing companies with predictive and prescriptive guidance that enables them to dynamically price, configure and sell their products and services across all channels with speed, precision and consistency. To learn more, visit 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 the business impact of the coronavirus (COVID-19) pandemic; our financial outlook; expectations; ability to achieve future growth and profitability; management's confidence and optimism; positioning; customer successes; demand for our software solutions; business expansion; revenue; subscription revenue; ARR; non-GAAP 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

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include, among others, risks related to: (a) the impact of the COVID-19 pandemic, such as the scope and duration of the outbreak and timeframe for recovery of the travel industry, (b) cybersecurity, (c) maintaining subscription renewal rates, (d) potential downturns in sales, (e) implementing our solutions, (f) software innovation, (g) maintaining our corporate culture, (h) disruptions from our third party data center, software, data, and other unrelated service providers, (i) evolving data privacy, cyber security and data localization laws, (j) cloud operations, (k) managing our growth effectively, (l) operating globally, including economic and commercial disruptions, (m) personnel risks including loss of any key employees, (n) the timing of revenue recognition and cash flow from operations, (o) competition, (p) market acceptance of our software innovations, (q) development of our target markets, (r) increasing business from existing customers, (s) migrating customers to our latest cloud solutions; (t) expanding and training our direct and indirect sales force, (u) our debt repayment obligations, (v) returning to profitability, and (w) acquiring and integrating businesses and/or technologies. 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 loss, annual recurring revenue, adjusted EBITDA, free cash flow, non-GAAP subscription revenue, non-GAAP tax rate, non-GAAP net income (loss) or non-GAAP net loss, and diluted earnings (loss) per share or non-GAAP net 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 statement on 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 statement on 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.

PROS also presents certain information in “constant currency,” which is also a non-GAAP financial measure. Since PROS has operations outside of the United States reporting in currencies other than the U.S. dollar, the comparability of our operating results reported in U.S. Dollars is affected by foreign currency exchange rate fluctuations because the underlying currencies in which we transact change in value over time compared to the U.S. Dollar. These fluctuations may have a significant effect on our reported results. As such, this release contains references to constant currency measures, which are calculated based on currency rates set at the start of a year and held constant throughout the year. Management believes this supplemental information is useful to investors as a framework for facilitating period-to-period comparisons of our business performance excluding the effects of foreign currency exchange rate fluctuations.

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, annual recurring revenue, non-GAAP 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 new headquarters noncash rent expense. 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.

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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.
New Headquarters Noncash Rent Expense: Noncash rent expense is related to our new corporate headquarters and is incurred prior to occupation of this facility. These amounts are unrelated to our core performance during any particular period and 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 the noncash rent expense on the preoccupied new headquarters in order for investors to better understand our business performance and allow investors to compare our operating results with peer companies.
Non-GAAP 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 discount 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 loss per share are calculated by dividing estimates for non-GAAP loss by our estimate of 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 Discount and Issuance Costs: Amortization of debt discount 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.
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 recognized as license revenue in accordance with GAAP. 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, amortization of acquisition-related intangibles, depreciation and amortization, new headquarters noncash rent expense 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, less capital expenditures (excluding expenditures for PROS new headquarters), 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.

4




Investor Contact:
PROS Investor Relations
Shannon Tatz
713-335-5932
ir@pros.com

Media Contact:
Amanda Parrish
832-924-4731
aparrish@pros.com




5



PROS Holdings, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except share and per share amounts)
(Unaudited)

 
 
March 31, 2020
 
December 31, 2019
Assets:
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
251,782

 
$
306,077

Trade and other receivables, net of allowance of $2,810 and $214, respectively
 
53,591

 
65,074

Deferred costs, current
 
5,829

 
5,756

Prepaid and other current assets
 
9,394

 
9,038

Total current assets
 
320,596

 
385,945

Property and equipment, net
 
26,703

 
14,794

Operating lease right-of-use assets
 
25,707

 
26,550

Deferred costs, noncurrent
 
14,642

 
15,478

Intangibles, net
 
12,954

 
14,605

Goodwill
 
48,912

 
49,104

Other assets, noncurrent
 
7,163

 
6,831

Total assets
 
$
456,677

 
$
513,307

Liabilities and Stockholders’ Equity:
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable and other liabilities
 
$
12,757

 
$
9,098

Accrued liabilities
 
18,734

 
22,748

Accrued payroll and other employee benefits
 
12,604

 
32,656

Operating lease liabilities, current
 
7,383

 
7,173

Deferred revenue, current
 
126,325

 
124,459

Total current liabilities
 
177,803

 
196,134

Deferred revenue, noncurrent
 
13,915

 
17,801

Convertible debt, net, noncurrent
 
112,406

 
110,704

Operating lease liabilities, noncurrent
 
21,683

 
22,391

Other liabilities, noncurrent
 
1,260

 
1,281

Total liabilities
 
327,067

 
348,311

Stockholders' 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; 47,972,383
and 47,310,846 shares issued, respectively; 43,291,660 and 42,630,123 shares outstanding, respectively
 
48

 
47

Additional paid-in capital
 
548,014

 
560,496

Treasury stock, 4,680,723 common shares, at cost
 
(29,847
)
 
(29,847
)
Accumulated deficit
 
(384,524
)
 
(361,789
)
Accumulated other comprehensive loss
 
(4,081
)
 
(3,911
)
Total stockholders’ equity
 
129,610

 
164,996

Total liabilities and stockholders’ equity
 
$
456,677

 
$
513,307


6


PROS Holdings, Inc.
Condensed Consolidated Statements of Income (Loss)
(In thousands, except per share data)
(Unaudited) 

 
 
Three Months Ended March 31,
 
 
2020
 
2019
Revenue:
 
 
 
 
Subscription
 
$
43,170

 
$
30,921

Maintenance and support
 
12,523

 
15,327

Total subscription, maintenance and support
 
55,693

 
46,248

Services
 
10,618

 
9,883

Total revenue
 
66,311

 
56,131

Cost of revenue:
 
 
 
 
Subscription
 
12,864

 
9,786

Maintenance and support
 
2,790

 
2,802

Total cost of subscription, maintenance and support
 
15,654

 
12,588

Services
 
13,073

 
8,202

Total cost of revenue
 
28,727

 
20,790

Gross profit
 
37,584

 
35,341

Operating expenses:
 
 
 
 
Selling and marketing
 
24,920

 
21,485

General and administrative
 
14,880

 
11,667

Research and development
 
19,136

 
15,799

Loss from operations
 
(21,352
)
 
(13,610
)
Convertible debt interest and amortization
 
(2,062
)
 
(4,356
)
Other income, net
 
831

 
1,271

Loss before income tax provision
 
(22,583
)
 
(16,695
)
Income tax provision
 
152

 
222

Net loss
 
$
(22,735
)
 
$
(16,917
)
 
 
 
 
 
Net loss per share:
 
 
 
 
Basic and diluted
 
$
(0.53
)
 
$
(0.45
)
Weighted average number of shares:
 
 
 
 
Basic and diluted
 
43,102

 
37,623


7


PROS Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands) (Unaudited)
 
 
Three Months Ended March 31,
 
 
2020
 
2019
Operating activities:
 
 
 
 
Net loss
 
$
(22,735
)
 
$
(16,917
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
 
Depreciation and amortization
 
3,420

 
3,325

Amortization of debt discount and issuance costs
 
1,712

 
3,116

Share-based compensation
 
6,347

 
6,046

Provision for doubtful accounts
 
2,596

 

Changes in operating assets and liabilities:
 
 
 
 
Accounts and unbilled receivables
 
8,889

 
(3,773
)
Deferred costs
 
763

 
(893
)
Prepaid expenses and other assets
 
(701
)
 
(2,065
)
Accounts payable and other liabilities
 
1,447

 
565

Accrued liabilities
 
(3,840
)
 
2,634

Accrued payroll and other employee benefits
 
(20,055
)
 
(11,779
)
Deferred revenue
 
(2,016
)
 
11,646

Net cash used in operating activities
 
(24,173
)
 
(8,095
)
Investing activities:
 
 
 
 
Purchases of property and equipment
 
(10,993
)
 
(611
)
Capitalized internal-use software development costs
 
(412
)
 
(868
)
Purchase of intangible asset
 

 
(50
)
Net cash used in investing activities
 
(11,405
)
 
(1,529
)
Financing activities:
 
 
 
 
Proceeds from employee stock plans
 
1,364

 
943

Tax withholding related to net share settlement of stock awards
 
(20,172
)
 
(14,239
)
Net cash used in financing activities
 
(18,808
)
 
(13,296
)
Effect of foreign currency rates on cash
 
91

 
80

Net change in cash and cash equivalents
 
(54,295
)
 
(22,840
)
Cash and cash equivalents:
 
 
 
 
Beginning of period
 
306,077

 
295,476

End of period
 
$
251,782

 
$
272,636



8


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
 
 
 
 
2020
 
2019
 
% change
GAAP gross profit
 
$
37,584

 
$
35,341

 
6
%
 
Non-GAAP adjustments:
 
 
 
 
 
 
 
New headquarters noncash rent expense
 
162

 
153

 
 
 
Amortization of acquisition-related intangibles
 
842

 
1,034

 
 
 
Share-based compensation
 
524

 
538

 
 
Non-GAAP gross profit
 
$
39,112

 
$
37,066

 
6
%
 
 
 
 
 
 
 
 
 
Non-GAAP gross margin
 
59.0
 %
 
66.0
 %
 
 
 
 
 
 
 
 
 
 
 
GAAP loss from operations
 
$
(21,352
)
 
$
(13,610
)
 
57
%
 
Non-GAAP adjustments:
 
 
 
 
 
 
 
New headquarters noncash rent expense
 
555

 
554

 
 
 
Amortization of acquisition-related intangibles
 
1,383

 
1,583

 
 
 
Share-based compensation
 
6,347

 
6,046

 
 
 
Total Non-GAAP adjustments
 
8,285


8,183

 
 
Non-GAAP loss from operations
 
$
(13,067
)
 
$
(5,427
)
 
141
%
 
 
 
 
 
 
 
 
 
Non-GAAP loss from operations % of total revenue
 
(19.7
)%
 
(9.7
)%
 
 
 
 
 
 
 
 
 
 
 
GAAP net loss
 
$
(22,735
)
 
$
(16,917
)
 
34
%
 
Non-GAAP adjustments:
 
 
 
 
 
 
 
Total Non-GAAP adjustments affecting loss from operations
 
8,285

 
8,183

 
 
 
Amortization of debt discount and issuance costs
 
1,702

 
3,106

 
 
 
Tax impact related to non-GAAP adjustments
 
2,923

 
1,411

 
 
Non-GAAP net loss
 
$
(9,825
)
 
$
(4,217
)
 
133
%
 
 
 
 
 
 
 
 
Non-GAAP diluted loss per share
 
$
(0.23
)
 
$
(0.11
)
 


 
 
 
 
 
 
 
Shares used in computing non-GAAP loss per share
 
43,102

 
37,623

 
 

9


PROS Holdings, Inc.
Supplemental Schedule of Non-GAAP Financial Measures
Increase (Decrease) in GAAP Amounts Reported
(In thousands)
(Unaudited)

 
 
 
Three Months Ended March 31,
 
 
 
2020
 
2019
Cost of Subscription Items
 
 
 
 
 
New headquarters noncash rent expense
 
14

 
16

 
Amortization of acquisition-related intangibles
 
683

 
870

 
Share-based compensation
 
87

 
71

 
Total cost of subscription items
 
$
784

 
$
957

 
 
 
 
 
 
Cost of Maintenance Items
 
 
 
 
 
New headquarters noncash rent expense
 
26

 
28

 
Amortization of acquisition-related intangibles
 
159

 
164

 
Share-based compensation
 
66

 
60

 
Total cost of maintenance items
 
$
251

 
$
252

 
 
 
 
 
 
Cost of Services Items
 
 
 
 
 
New headquarters noncash rent expense
 
122

 
109

 
Share-based compensation
 
371

 
407

 
Total cost of services items
 
$
493

 
$
516

 
 
 
 
 
 
Sales and Marketing Items
 


 


 
New headquarters noncash rent expense
 
104

 
103

 
Amortization of acquisition-related intangibles
 
541

 
549

 
Share-based compensation
 
1,866

 
1,400

 
Total sales and marketing items
 
$
2,511

 
$
2,052

 
 
 
 
 
General and Administrative Items
 
 
 
 
 
New headquarters noncash rent expense
 
99

 
93

 
Share-based compensation
 
2,450

 
2,812

 
Total general and administrative items
 
$
2,549

 
$
2,905

 
 
 
 
 
Research and Development Items
 
 
 
 
 
New headquarters noncash rent expense
 
190

 
205

 
Share-based compensation
 
1,507

 
1,296

 
Total research and development items
 
$
1,697

 
$
1,501


10


PROS Holdings, Inc.
Supplemental Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands)
(Unaudited)

 
 
Three Months Ended March 31,
 
 
2020
 
2019
 
 
 
 
 
GAAP Loss from Operations
 
$
(21,352
)
 
$
(13,610
)
Amortization of acquisition-related intangibles
 
1,383

 
1,583

New headquarters noncash rent expense
 
555

 
554

Share-based compensation
 
6,347

 
6,046

Depreciation and other amortization
 
2,037

 
1,742

Capitalized internal-use software development costs
 
(412
)
 
(868
)
Adjusted EBITDA
 
$
(11,442
)
 
$
(4,553
)
 
 
 
 
 
 
 
 
 
 
Net cash used in operating activities
 
$
(24,173
)
 
$
(8,095
)
Purchase of property and equipment (excluding new headquarters)
 
(957
)
 
(611
)
Purchase of intangible asset
 

 
(50
)
Capitalized internal-use software development costs
 
(412
)
 
(868
)
Free Cash Flow
 
$
(25,542
)
 
$
(9,624
)
 
 
 
 
 
Guidance
 
 
 
 
 
 
Q2 2020 Guidance
 
 
Low
 
High
Adjusted EBITDA
 
 
 
 
  GAAP Loss from Operations
 
$
(21,900
)
 
$
(20,900
)
Amortization of acquisition-related intangibles
 
1,400

 
1,400

New headquarters noncash rent expense
 
400

 
400

Share-based compensation
 
6,800

 
6,800

Depreciation and other amortization
 
2,200

 
2,200

Capitalized internal-use software development costs
 
(400
)
 
(400
)
Adjusted EBITDA
 
$
(11,500
)
 
$
(10,500
)





11
ex992prosirfactsheetq120
ir@pros.com PROS @PROS_Inc Investor Relations Fact Sheet First Quarter 2020 PROS Holdings, Inc. (NYSE: PRO) provides AI-powered solutions that optimize selling in the digital economy. PROS solutions bring intelligence to commerce by providing companies with predictive and prescriptive guidance that enables them to dynamically price, configure, and sell their products and services across all channels with speed, precision, and consistency. Our customers, who are leaders in their markets, benefit from decades of data science expertise infused into our industry solutions. To learn more, visit www.pros.com. Market Opportunity 2020 First Quarter Earnings Recap With the rise of digital commerce, (Refer to Appendix for GAAP to Non-GAAP Reconciliation) consumers have been trained to expect a Q1 Q1 YoY LTM LTM YoY $MM more dynamic buying experience - they 2020 2019 Change 3/31/20 3/31/19 Change want the freedom to buy what they want, Total whenever they desire, and expect to move 66.3 56.1 18% 260.5 205.2 27% Revenue seamlessly across channels during the Subscription process. 43.2 30.9 40% 157.6 107.6 46% Revenue The need for PROS AI solutions is more acute Adjusted (11.4) (4.6) (6.9) (20.1) (16.9) (3.1) EBITDA than ever as companies grapple with how to meet the real-time needs of today’s Free Cash (25.5) (9.6) (15.9) (16.8) (3.3) (13.5) consumer. Our algorithmic approach to Flow generating personalized, dynamic offers, prices , and experiences to buyers can be access ed across our customers’ direct sales, Highly Visible SaaS Growth Model online, mobile, and partner channels. This seamless experience is helping companies across industries rethink how they sell in the $ MM+ digital economy. 260 40% Total Revenue Q1 Subscription This market environment creates the TTM Revenue Growth backdrop for the $30 billion estimated TAM opportunity that we see in front of us. We focus our go-to-market efforts on a + subset of strategic industries and 93% 84% geographies in which we have a proven track Gross Revenue Retention Q1 Recurring Revenue record of success. We believe our market is Rate in 2019 as a % of Total Revenue highly underpenetrated and that we are well positioned to capture it. OUR VISION To be the AI platform powering commerce in the digital economy Copyright © 2020 | PROS Holdings, Inc. | 3100 Main Street, Suite 900, Houston, TX 77002


 
ir@pros.com PROS @PROS_Inc We Power Digital Commerce for Leading Businesses Across Strategic Industries Automotive Cargo, Freight, Energy & Food & B2B Services Healthcare Technology Travel & Industrial & Logistics Chemicals Consumables PROS AI Solutions Annual Recurring Revenue ($MM) 22% CAGR Our AI solutions and science make it possible for $220 companies to provide fast, frictionless and $189 personalized buying experiences for their $161 customers. The data science and AI embedded in $122 our solutions provide our customers with predictive and prescriptive guidance on key business decisions that drive improved growth and profitability, including offer optimization, product mix optimization, demand forecasting, price optimization, cross-sell and upsell recommendations, attrition detection, product 2016 2017 2018 2019 configuration recommendations, and willingness to pay. Subscription Revenue ($MM) 43% CAGR $145 Our software operates in large and complex information technology environments. Our high- performance software architecture supports $99 real-time, high-volume transaction processing and handles requirements of global enterprise $66 customers who may need sub-second response $50 times. We provide standardized configurations of our software based on the industries we serve and offer professional services to configure innovative solutions to meet the specific needs of each 2016 2017 2018 2019 customer. Note: As of 1/1/2020, license revenue and license cost of revenue are now combined with subscription revenue and subscription cost of revenue, respectively. Included in this Fact Sheet are forward-looking statements including, but not limited to, Globally Diversified Business those related to total addressable market and other financial projections. These predictions, estimates, and other forward-looking statements involve known and United States Europe Rest of World unknown risks and uncertainties that may cause actual results to differ materially from those expressed or implied in this Fact Sheet. We refer you to the documents we file with the Securities and Exchange Commission, which identify and discuss important factors that could cause actual results to differ materially from those discussed in these forward-looking statements. All statements included in these materials are based upon information known as of the date hereof, and PROS Holdings assumes no obligation to update any such statements, except as required by law. This Fact Sheet includes certain supplemental non-GAAP financial measures, that we believe are useful to investors as useful tools for assessing the comparability between periods as well as company by 34% 30% 36% company. These non-GAAP financial measures should be considered in addition to, but not as a substitute for, our financial information and results prepared in accordance with of 2019 Revenue of 2019 Revenue of 2019 Revenue U.S. GAAP included in our periodic filings made with the SEC. Copyright © 2020 | PROS Holdings, Inc. | 3100 Main Street, Suite 900, Houston, TX 77002


 
ir@pros.com PROS @PROS_Inc APPENDIX PROS Holdings, Inc. Supplemental Reconciliation of GAAP to Non-GAAP Financial Measures (In thousands) (Unaudited) Three Months Ended March 31, 2020 2019 GAAP Loss from Operations $ (21,352 ) $ (13,610 ) Amortization of acquisition-related intangibles 1,383 1,583 New headquarters noncash rent expense 555 554 Share-based compensation 6,347 6,046 Depreciation and other amortization 2,037 1,742 Capitalized internal-use software development costs (412 ) (868 ) Adjusted EBITDA $ (11,442 ) $ (4,553 ) Net cash used in operating activities $ (24,173 ) $ (8,095 ) Purchase of property and equipment (excluding new headquarters) (957 ) (611 ) Purchase of intangible asset — (50 ) Capitalized internal-use software development costs (412 ) (868 ) Free Cash Flow $ (25,542 ) $ (9,624 ) Copyright © 2020 | PROS Holdings, Inc. | 3100 Main Street, Suite 900, Houston, TX 77002


 
prosirpresentationq12020
PROS Holdings Q1 2020 NYSE: PRO


 
Disclaimer / Forward-Looking Statements Included in this presentation are forward-looking statements including, but not limited to, those related to earnings, addressable market and other financial projections. These predictions, estimates, and other forward-looking statements involve known and unknown risks and uncertainties that may cause actual results to differ materially from those expressed or implied in this presentation. We refer you to the documents we file with the Securities and Exchange Commission, which identify and discuss important factors that could cause actual results to differ materially from those discussed in these forward-looking statements. All statements included in these materials are based upon information known as of the date hereof, and PROS Holdings assumes no obligation to update any such statements, except as required by law. This presentation includes certain supplemental non-GAAP financial measures, that we believe are useful to investors as useful tools for assessing the comparability between periods as well as company by company. These non-GAAP financial measures should be considered in addition to, but not as a substitute for, our financial information and results prepared in accordance with U.S. GAAP included in our periodic filings made with the SEC. Further information relevant to the interpretation of non-GAAP financial measures, and reconciliations of these non-GAAP financial measures to the most comparable GAAP measures, may be found in the Appendix to this presentation. Page 2 ©2020 PROS Holdings, Inc. All rights reserved.


 
Our Vision To be the dynamic AI platform powering commerce in the digital economy


 
PROS Strategic Pillars Help our people to learn and grow Drive an incredible customer experience, adoption & value Accelerate market penetration & customer expansions Lead AI innovation powering digital commerce 2020 Focus: Operationalize for Growth & Scale Page 4


 
Business Overview ©2020 PROS Holdings, Inc. All rights reserved.


 
PROS at a Glance $260MM+ 93%+ 40% Total Revenue 2019 Customer Gross Q1 Subscription Revenue TTM Revenue Retention Rate YoY Growth 84% 60+ ~1.7T Q1 Recurring Revenue Countries with Transactions as a % of Total Revenue Customers Processed in 2019 Page 6 ©2020 PROS Holdings, Inc. All rights reserved.


 
B2B Buyer Preferences Have Shifted 60%+ 60%+ 40%+ Speed Trust Self-Service 60%+ of buyers will 60%+ of buyers prefer 40%+ of buyers expect to buy pay more to buy pricing driven by algorithms more than half of all purchases faster/instantly via eCommerce in the next 2 years 2019 Survey of 1,053 Purchasing Professionals conducted by Hanover Research, commissioned by PROS. Page 7 ©2020 PROS Holdings, Inc. All rights reserved.


 
PROS AI Solutions Power Companies to Compete and Win in Today’s Digital Economy ©2020 PROS Holdings, Inc. All rights reserved.


 
DIGITAL CHANNELS CRM Cross-sell Merchandising Social Buyer Web Configuration Products & Offers Mobile Quoting & Shopping Cart Marketplaces TRADITIONAL eCommerce CHANNELS Price Optimization Stores Dynamic Pricing Sales Partners Demand Forecasting PROS Provides ERP Price Management Intelligence Supply Optimization to Commerce Opportunity Identification


 
Powerful, Flexible, & Self-Learning AI Capabilities Automotive Chemicals Food & Travel & Industrial B2B Services & Energy Consumables Healthcare Technology Without manual Predicts, intervention Understands Learns from Personalizes prescribes, Improves a user’s data and and adapts and continuously context actions automates Leveraging AI Technology + + All the information Computational Machine learning and available power of the cloud other algorithms Pagepage 10 ©2020 PROS Holdings, Inc. All rights reserved.


 
PROS Drives Tangible Business Results $400M ~$80M 40% Average Per Year 19% revenue improvement, “We've improved the value of Faster quote turnaround time, resulting in $400 million optimization by somewhere around completed global price setting incremental revenue $20 million per quarter” process in half the time Page 11 ©2020 PROS Holdings, Inc. All rights reserved.


 
We Power Commerce for Leading Enterprises Across Industries Automotive Chemicals Food & Travel & Industrial B2B Services & Energy Consumables Healthcare Technology 2 of Top 3 2 of Top 3 2 of Top 7 1 of Top 3 3 of Top 6 2 of Top 8 14 out of 20 auto parts rental car chemicals privately held global medical global electronics of the best global retailers in U.S. companies in U.S. companies companies in U.S. device companies manufacturers airlines 2 of Top 10 1 of Top 3 4 of Top 10 1 of Top 5 1 of Top 3 2 of Top 3 1 of Top 2 global construction waste global oil and paper product medical global PC U.S. railway machinery management gas companies companies distributors manufacturers companies manufacturers companies in U.S. Page 12 ©2020 PROS Holdings, Inc. All rights reserved.


 
PROS TAM is Massive, Global, and Growing Underpenetrated, $30B+ Addressable Market(1) Strategic Industries Emerging Industries $9B and Geographies + $21B and Geographies $2.4B Automotive & Industrial $1.0B B2B Services $1.6B Food & Consumables $800mm Technology $1.3B Healthcare $700mm Chemicals & Energy $1.2B Travel Note: (1) TAM represents our estimated global total revenue and market opportunity but does not represent the actual market opportunity that we may target or ultimately service or otherwise derive revenue from. Our estimate of TAM may be revised in the future depending on a variety of factors, including competitive dynamics, our sales efforts, customer needs, industry shifts and other economic factors. Page 13 ©2020 PROS Holdings, Inc. All rights reserved.


 
Numerous Vectors for Growth Continued Product Innovation Cross/Up-Sell Existing Customers Land New Logos Migrate Legacy Customers to Cloud Strategic M&A Page 14 ©2020 PROS Holdings, Inc. All rights reserved.


 
Financial Overview ©2020 PROS Holdings, Inc. All rights reserved.


 
First Quarter 2020 Earnings Recap Q1 Q1 LTM LTM $MM (Except Per Share) Delta Delta 2020 2019 03/31/20 03/31/19 Total Revenue $66.3 $56.1 18% $260.5 $205.2 27% Subscription Revenue $43.2 $30.9 40% $157.6 $107.6 46% Adjusted EBITDA ($11.4) ($4.6) ($6.9) ($20.1) ($16.9) ($3.1) Free Cash Flow ($25.5) ($9.6) ($15.9) ($16.8) ($3.3) ($13.5) Non-GAAP Net Loss Per Share ($0.23) ($0.11) ($0.12) ($0.47) ($0.46) ($0.01) For a reconciliation of GAAP to Non-GAAP metrics refer to the appendix. Page 16 ©2020 PROS Holdings, Inc. All rights reserved.


 
Strong and Consistent Cloud Growth Trajectory ($MM) Subscription Revenue ARR Recurring Revenue 43% CAGR 22% CAGR 20% CAGR 220 204 189 161 163 145 136 122 119 99 66 50 2016 2017 2018 2019 2016 2017 2018 2019 2016 2017 2018 2019 Note(s): ARR is one of PROS key performance metrics and should be viewed independently of revenue or other similar GAAP measure. ARR is defined, as of a specific date, as 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 recognized as license revenue in accordance with GAAP. Estimated ARR does not represent actual market or revenue opportunity, and such estimates may be revised in the future depending on a variety of factors, including competitive dynamics, our sales efforts, customer needs, industry shifts and other economic factors. As of 1/1/2020, license revenue and license cost of revenue are now combined with subscription revenue and subscription cost of revenue, respectively. Page 17 ©2020 PROS Holdings, Inc. All rights reserved.


 
Globally Diversified Business United States Europe Rest of World 34% 30% 36% of 2019 Total Revenue of 2019 Total Revenue of 2019 Total Revenue Page 18 ©2020 PROS Holdings, Inc. All rights reserved.


 
Investment Highlights • Leading end-to-end AI platform powering digital commerce • We believe the massive market opportunity is at an inflection point • Real-time, mission critical solutions delivering powerful customer ROI • Loyal customer base consisting of leading blue-chip companies • Deep competitive moat built through 30 years of AI leadership • Rapidly growing, highly visible subscription revenue • Strong culture of innovation and execution Page 19 ©2020 PROS Holdings, Inc. All rights reserved.


 
Our Values ©2020 PROS Holdings, Inc. All rights reserved.


 
Helping People and Companies Outperform We are OWNERS We are INNOVATORS We CARE Looking for every opportunity to Thinking creatively to find Putting people first - our customers, create a better PROS and a better new paths to success for our employees, partners, and community - experience for our customers, and people, our customers, and it’s how our company was started, and we hold ourselves accountable our business how we’ll always run it Page 21 ©2020 PROS Holdings, Inc. All rights reserved.


 
Strong and Experienced Leadership Team Andres Reiner Stefan Schulz Tom Dziersk President & CEO Chief Financial Officer EVP of Worldwide Sales 25+ years in enterprise technology 25+ years in enterprise technology 25+ years in enterprise technology including 20 years at PROS including PROS, BMC, Lawson, & Digital River including PROS, JDA & NICE Celia Fleischaker John Allessio Nikki Brewer Chief Marketing Officer Chief Customer Officer Chief People Officer 20+ years in enterprise technology 30+ years in customer success and enterprise 15+ years in HR & Total Rewards including PROS & Epicor technology at Red Hat & IBM including 3 years at PROS Rob Reiner Scott Cook Damian Olthoff Chief Technology Officer Chief Accounting Officer General Counsel & Secretary 20+ years in enterprise technology 20+ years in accounting and finance 20+ years in corporate law including PROS, BMC & NetIQ at PROS including 8 years at PROS Page 22 ©2020 PROS Holdings, Inc. All rights reserved.


 
Employee Resource Groups: The Heart of Our Culture Our Employee Resource Groups (ERGs) are formed and led by employees, with company support, and any interested employee may join any group. Organized around common life experiences and backgrounds, they serve to champion our diversity initiatives and facilitate a workplace culture of equality and inclusion. Dedicated to the professional development of women at PROS and in the surrounding tech community. Created to attract, develop and retain Black talent at PROS. Represents the interests of the PROS and local Hispanic community while also celebrating the culture and values. Serves as a resource that positively influences and ensures the development of its LGBTQIA+ members. Connects the community of young professionals across PROS to foster growth and development of leadership skills. Page 23 ©2020 PROS Holdings, Inc. All rights reserved.


 
Committed to a Diverse & Inclusive Environment Women at PROS Underrepresented Minorities in the U.S. 27% Overall Representation 35% 35% Overall Representation 25% 25% 25% % of All Employees U.S. 32% % of All Employees Globally 24% 23% Management 30% 30% Management 29% % of All Managers U.S. 27% 27% % of All Managers Globally 21% 18% 23% 17% 21% 16% 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 2019 figures based on 1,215 global, full-time employees as of 12/31/19 2019 figures based on 811 full-time employees in the U.S. as of 12/31/19 Note: Underrepresented Minorities include AA, Hispanic and Multicultural Our employees mirror the rich cultural, ethnic and gender diversity of our global customers, and we want those who enter into a business relationship with PROS to see themselves in us. Page 24 ©2020 PROS Holdings, Inc. All rights reserved.


 
Committed to a Sustainable Business Our Corporate Social Responsibility Report outlines our vision and strategy for creating a sustainable business that prioritizes our responsibilities to the world in which we live. Green Office Spaces Our new global headquarters is LEED Silver certified and designed to minimize carbon emissions, conserve energy and water resources, as well as maximize natural light dispersion. Sustainable Data Centers Worldwide By partnering with Microsoft, we deliver our innovative solutions via data centers that operate using at least 50% green energy sources and are 100% carbon neutral. Recycling Efforts All PROS offices have a robust recycling program. Office-wide recycling efforts vary by location, but include such items as paper, plastic, glass, and aluminum, as well as common office consumables. Page 25 ©2020 PROS Holdings, Inc. All rights reserved.


 
Contact Us Email: ir@pros.com Phone: 713.335.5879 Web: pros.com Page 26 ©2020 PROS Holdings, Inc. All rights reserved.


 
Appendix ©2020 PROS Holdings, Inc. All rights reserved.


 
GAAP to Non-GAAP Reconciliation (Unaudited) Page 28 ©2020 PROS Holdings, Inc. All rights reserved.


 
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. Quarter Three Months Ended over Year over December 31, Quarter Year Ended December 31, Year 2019 2018 % change 2019 2018 % change GAAP to Non-GAAP GAAP gross profit $ 37,814 $ 33,155 14 % $ 151,217 $ 119,845 26 % Non-GAAP adjustments: Reconciliation New headquarters noncash rent expense 167 48 646 48 Amortization of acquisition-related intangibles 907 1,077 3,895 4,624 (Unaudited) Share-based compensation 490 396 2,025 1,721 Non-GAAP gross profit $ 39,378 $ 34,676 14 % $ 157,783 $ 126,238 25 % Non-GAAP gross margin 59.5 % 65.9 % 63.0 % 64.1 % GAAP loss from operations $ (15,071 ) $ (9,609 ) 57 % $ (53,338 ) $ (49,215 ) 8 % Non-GAAP adjustments: Acquisition-related expenses 254 — 502 95 Debt extinguishment fees — — 319 — New headquarters noncash rent expense 555 185 2,218 185 Amortization of acquisition-related intangibles 1,398 1,694 5,831 7,396 Share-based compensation 6,446 5,098 24,680 21,453 Total Non-GAAP adjustments 8,653 6,977 33,550 29,129 Non-GAAP loss from operations $ (6,418 ) $ (2,632 ) 144 % $ (19,788 ) $ (20,086 ) (1 )% Non-GAAP loss from operations % of total revenue (9.7 )% (5.0 )% (7.9 )% (10.2 )% GAAP net loss $ (17,300 ) $ (12,760 ) 36 % $ (69,081 ) $ (64,246 ) 8 % Non-GAAP adjustments: Total Non-GAAP adjustments affecting loss from operations 8,653 6,977 33,550 29,129 Amortization of debt discount and issuance costs 1,945 3,065 11,074 11,986 Loss on debt extinguishment 660 — 5,660 — Tax impact related to non-GAAP adjustments 1,375 617 4,623 5,244 Non-GAAP net loss $ (4,667 ) $ (2,101 ) 122 % $ (14,174 ) $ (17,887 ) (21 )% Non-GAAP diluted loss per share $ (0.11 ) $ (0.06 ) $ (0.35 ) $ (0.52 ) Shares used in computing non-GAAP loss per share 42,615 37,154 40,232 34,465 Page 29 ©2020 PROS Holdings, Inc. All rights reserved.


 
GAAP to Non-GAAP Reconciliation Three Months Ended March 31, (Unaudited) 2020 2019 GAAP Loss from Operations $ (21,352) $ (13,610 ) Amortization of acquisition-related intangibles 1,383 1,583 New headquarters noncash rent expense 555 554 Share-based compensation 6,347 6,046 Depreciation and other amortization 2,037 1,742 Capitalized internal-use software development costs (412 ) (868 ) Adjusted EBITDA $ (11,442) $ (4,553 ) Net cash used in operating activities $ (24,173) $ (8,095 ) Purchase of property and equipment (excluding new headquarters) (957 ) (611 ) Purchase of intangible asset — (50 ) Capitalized internal-use software development costs (412 ) (868 ) Free Cash Flow $ (25,542) $ (9,624 ) Page 30 ©2020 PROS Holdings, Inc. All rights reserved.


 
GAAP to Non-GAAP Reconciliation (Unaudited) Three Months Ended December 31, Year Ended December 31, 2019 2018 2019 2018 Adjusted EBITDA GAAP Loss from Operations $ (15,071 ) $ (9,609 ) $ (53,338 ) $ (49,215 ) Acquisition-related expenses 254 — 502 95 Amortization of acquisition-related intangibles 1,398 1,694 5,831 7,396 New headquarters noncash rent expense 555 185 2,218 185 Debt extinguishment fees — — 319 — Share-based compensation 6,446 5,098 24,680 21,453 Depreciation and other amortization 2,208 1,576 8,039 5,659 Capitalized internal-use software development costs (415 ) (927) (1,436 ) (4,613 ) Adjusted EBITDA $ (4,625 ) $ (1,983 ) $ (13,185 ) $ (19,040 ) Free Cash Flow Net cash provided by operating activities $ 12,852 $ 15,188 $ 5,245 $ 5,703 Purchase of property and equipment (excluding new headquarters) (1,481 ) (69) (4,626 ) (1,475 ) Purchase of intangible asset — (125) (50 ) (125 ) Capitalized internal-use software development costs (415 ) (927) (1,436 ) (4,613 ) Free Cash Flow $ 10,956 $ 14,067 $ (867 ) $ (510 ) Page 31 ©2020 PROS Holdings, Inc. All rights reserved.


 
v3.20.1
Document and Entity Information Document
May 05, 2020
Entity Information [Line Items]  
Document Type 8-K
Document Period End Date May 05, 2020
Entity Registrant Name PROS Holdings, Inc.
Entity Central Index Key 0001392972
Amendment Flag false
Entity Incorporation, State or Country Code DE
Entity File Number 001-33554
Entity Tax Identification Number 76-0168604
Entity Address, Address Line One 3100 Main Street, Suite 900
Entity Address, City or Town Houston
Entity Address, State or Province TX
Entity Address, Postal Zip Code 77002
City Area Code (713)
Local Phone Number 335-5151
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common stock $0.001 par value per share
Trading Symbol PRO
Security Exchange Name NYSE
Entity Emerging Growth Company false