[Second Quarter 2024 Financial Highlights](index=1&type=section&id=Second%20Quarter%202024%20Financial%20Highlights) PROS Holdings exceeded Q2 2024 guidance with strong revenue and profitability growth, achieving 80% non-GAAP subscription gross margin - CEO Andres Reiner stated the company delivered a solid quarter, exceeding the high-end of guidance ranges for all metrics, highlighting achievement of the long-term goal of **80% non-GAAP subscription gross margin**[2](index=2&type=chunk) Q2 2024 Key Financial Metrics (YoY) | Metric | Q2 2024 (GAAP) ($ million) | Q2 2023 (GAAP) ($ million) | Change ($ million) | Q2 2024 (Non-GAAP) ($ million) | Q2 2023 (Non-GAAP) ($ million) | Change ($ million) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | $82.0 | $75.8 | +$6.2 | n/a | n/a | n/a | | **Subscription Revenue** | $65.6 | $57.3 | +$8.3 | n/a | n/a | n/a | | **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) EPS** | $(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 | | **Operating Cash Flow** | $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) | +$12.4 | [Recent Business Highlights](index=1&type=section&id=Recent%20Business%20Highlights) PROS expanded its customer base and platform adoption, earning industry recognition including Microsoft's Global ISV Partner of the Year Award - Welcomed new customers including Air Moana, Atlantic Aviation, Dynata, Lao Airlines, Tropic Air, VitalEdge, and Zeus Fire & Security[6](index=6&type=chunk) - Expanded platform use with existing customers such as Aeromexico, Allegiant Air, BASF, Carrier, Cathay Pacific, Hertz, and Ingredion[6](index=6&type=chunk) - Won Microsoft's Global ISV Partner of the Year Award for the second time, recognizing excellence in AI innovation and collaboration, including the launch of the PROS Plugin for Microsoft's Copilot for Sales[12](index=12&type=chunk) - Hosted the record-breaking 2024 Outperform with PROS Conference, its largest in-person user event, featuring 60 customer speakers[12](index=12&type=chunk) [Financial Outlook](index=2&type=section&id=Financial%20Outlook) PROS projects continued growth for Q3 and full-year 2024, with total revenue expected to increase by 9% and subscription revenue by 13% Q3 and Full Year 2024 Guidance | Metric | Q3 2024 Guidance ($ million) | Full Year 2024 Guidance ($ million) | YoY Growth (Mid-Point) | | :--- | :--- | :--- | :--- | | **Total Revenue** | $81.5 - $82.5 | $329.0 - $331.0 | 9% | | **Subscription Revenue** | $65.8 - $66.3 | $263.5 - $265.5 | 13% | | **Subscription ARR** | n/a | $280.0 - $284.0 | 9% | | **Adjusted EBITDA** | $6.5 - $7.5 | $21.0 - $24.0 | +$16.5 | | **Free Cash Flow** | n/a | $20.0 - $24.0 | +$10.6 | | **Non-GAAP EPS** | $0.08 - $0.10 | n/a | n/a | - The outlook is based on an estimated **47.8 million diluted weighted average shares** for Q3 2024 and a **22% non-GAAP estimated tax rate** for Q3 and the full year 2024[7](index=7&type=chunk) [Consolidated Financial Statements](index=6&type=section&id=Consolidated%20Financial%20Statements) This section presents the company's financial position and performance through detailed Balance Sheets, Statements of Loss, and Cash Flows [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) PROS reported total assets of **$384.9 million** and a stockholders' deficit of **$83.0 million** as of June 30, 2024 Balance Sheet Summary (in thousands) | Account | June 30, 2024 ($ thousands) | December 31, 2023 ($ thousands) | | :--- | :--- | :--- | | **Total Current Assets** | $203,049 | $234,674 | | Cash and cash equivalents | $139,086 | $168,747 | | **Total Assets** | **$384,900** | **$421,833** | | **Total Current Liabilities** | $166,871 | $197,331 | | Deferred revenue, current | $121,628 | $120,955 | | **Total Liabilities** | **$467,940** | **$499,706** | | **Total Stockholders' (Deficit) Equity** | **$(83,040)** | **$(77,873)** | [Condensed Consolidated Statements of Loss](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Loss) Q2 2024 total revenue grew to **$82.0 million**, with GAAP net loss significantly narrowing to **$7.4 million** from **$13.3 million** YoY Statement of Loss Summary - Three Months Ended June 30 (in thousands) | Account | 2024 ($ thousands) | 2023 ($ thousands) | | :--- | :--- | :--- | | **Total Revenue** | **$82,013** | **$75,792** | | Subscription Revenue | $65,600 | $57,304 | | **Gross Profit** | **$53,194** | **$47,221** | | Loss from Operations | $(7,184) | $(13,355) | | **Net Loss** | **$(7,386)** | **$(13,289)** | | Net Loss Per Share | $(0.16) | $(0.29) | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities turned positive to **$6.4 million** in Q2 2024, a **$13.0 million** improvement YoY Cash Flow Summary - Three Months Ended June 30 (in thousands) | Activity | 2024 ($ thousands) | 2023 ($ thousands) | | :--- | :--- | :--- | | **Net Cash Provided by (Used in) Operating Activities** | **$6,420** | **$(6,542)** | | Net Cash Used in Investing Activities | $(256) | $(277) | | Net Cash Used in Financing Activities | $(23,536) | $(958) | | **Net Change in Cash** | **$(17,337)** | **$(7,809)** | [Reconciliation of GAAP to Non-GAAP Financial Measures](index=9&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Financial%20Measures) This section reconciles GAAP financial results to non-GAAP measures, adjusting for items like share-based compensation and amortization of intangibles Reconciliation of GAAP Loss from Operations to Non-GAAP Income from Operations (Q2 2024, in thousands) | Description | Amount ($ thousands) | | :--- | :--- | | **GAAP Loss from Operations** | **$(7,184)** | | Share-based compensation | $10,248 | | Amortization of acquisition-related intangibles | $1,300 | | **Non-GAAP Income from Operations** | **$4,364** | Reconciliation of GAAP Net Loss to Non-GAAP Net Income (Q2 2024, in thousands) | Description | Amount ($ thousands) | | :--- | :--- | | **GAAP Net Loss** | **$(7,386)** | | Total non-GAAP adjustments affecting operations | $11,548 | | Amortization of debt premium and issuance costs | $(372) | | Tax impact related to non-GAAP adjustments | $(539) | | **Non-GAAP Net Income** | **$3,251** | Reconciliation to Adjusted EBITDA (Q2 2024, in thousands) | Description | Amount ($ thousands) | | :--- | :--- | | **GAAP Loss from Operations** | **$(7,184)** | | Amortization of acquisition-related intangibles | $1,300 | | Share-based compensation | $10,248 | | Depreciation and other amortization | $891 | | Capitalized internal-use software development costs | $(41) | | **Adjusted EBITDA** | **$5,214** | [Explanation of Non-GAAP Financial Measures](index=4&type=section&id=Non-GAAP%20Financial%20Measures) PROS utilizes non-GAAP measures like Adjusted EBITDA, Free Cash Flow, and Subscription ARR to provide insights into operational performance - Non-GAAP measures exclude items like share-based compensation, amortization of acquisition-related intangibles, and severance to facilitate comparison of financial results across periods and with peer companies[16](index=16&type=chunk)[17](index=17&type=chunk) - **Adjusted EBITDA** is defined as GAAP net income (loss) adjusted for interest, taxes, depreciation, amortization, share-based compensation, severance, and capitalized software development costs[20](index=20&type=chunk) - **Free Cash Flow** is defined as net cash from operating activities, excluding severance payments, less capital expenditures and capitalized internal-use software development costs[21](index=21&type=chunk) - **Subscription Annual Recurring Revenue (ARR)** represents the contracted subscription revenue as of a specific date, including future start date contracts and annualized overage fees, used to assess the trajectory of the cloud business[18](index=18&type=chunk)

Pros Holdings (PRO) is expected to deliver a year-over-year increase in earnings on higher revenues when it reports results for the quarter ended June 2024. This widely-known consensus outlook gives a good sense of the company's earnings picture, but how the actual results compare to these estimates is a powerful factor that could impact its near-term stock price. This pricing and revenue-management software maker is expected to post quarterly earnings of $0.02 per share in its upcoming report, which repres ...

Pros Holdings (PRO) has been on a downward spiral lately with significant selling pressure. After declining 11.4% over the past four weeks, the stock looks well positioned for a trend reversal as it is now in oversold territory and there is strong agreement among Wall Street analysts that the company will report better earnings than they predicted earlier. How to Determine if a Stock is Oversold We use Relative Strength Index (RSI), one of the most commonly used technical indicators, for spotting whether a ...

We use Relative Strength Index (RSI), one of the most commonly used technical indicators, for spotting whether a stock is oversold. This is a momentum oscillator that measures the speed and change of price movements. RSI oscillates between zero and 100. Usually, a stock is considered oversold when its RSI reading falls below 30. Technically, every stock oscillates between being overbought and oversold irrespective of the quality of their fundamentals. And the beauty of RSI is that it helps you quickly and e ...

Financial Data and Key Metrics Changes - Subscription revenue for Q1 was $64.3 million, up 15% year-over-year, and total revenue was $80.7 million, up 10% year-over-year, both exceeding guidance ranges [44][102] - Non-GAAP subscription gross margin improved to 79%, a year-over-year increase of over 140 basis points, while overall non-GAAP gross margin increased to 67%, an improvement of 315 basis points year-over-year [76] - Adjusted EBITDA for Q1 was $4.6 million, reflecting a near 300% improvement year-over-year [117] Business Line Data and Key Metrics Changes - The PROS Platform saw new customer activations, including ECE Group and Les Schwab, which adopted Smart CPQ and Smart Price Optimization respectively [19] - Hyatt expanded its use of Offer Marketing on the PROS Platform to enhance customer acquisition strategies [41] - Air Baltic activated Dynamic Ancillary Pricing, expected to drive a revenue uplift of 2% to 6% through AI-powered dynamic pricing [73] Market Data and Key Metrics Changes - The company noted that travel continues to drive improvements, with B2B remaining the main growth driver [32][130] - The adoption of dynamic pricing algorithms in B2B industries represents a significant opportunity, with a total addressable market exceeding $30 billion [34] Company Strategy and Development Direction - The company aims to achieve its 2026 financial objectives, focusing on operational efficiency and AI innovations to drive growth [29][102] - The integration of Microsoft Copilot is expected to enhance the visibility of the company's AI-driven solutions in the market [40][89] - The company is committed to a land, realize, and expand strategy to scale its business and improve profitability [57][102] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the visibility for the second half of the year, expecting an increase in revenue [11][106] - The company anticipates a meaningful jump in services revenue in the second half of the year, consistent with historical trends [106] - Management highlighted that the marketplace is still in its infancy but sees significant potential for product-led growth [60] Other Important Information - The company raised its full-year guidance for subscription revenue to a range of $263.5 million to $265.5 million, representing 13% growth at the midpoint [53] - The company welcomed Todd McNabb as Chief Revenue Officer to lead the global go-to-market team [42] Q&A Session Summary Question: Visibility for the second half of the year - Management feels more optimistic about visibility compared to the previous quarter, expecting an increase in revenue [11] Question: Dynamics of calculated billings - Calculated billings increased 3% year-over-year, with expectations for consistency with last year's trends [44][132] Question: Impact of new AI technologies on monetization - The company is excited about the potential to enhance differentiation and possibly increase average revenue per user (ARPU) through new AI functionalities [55] Question: Travel business recovery - The travel business is showing good momentum, with expectations for strong contributions from both new logos and existing customer expansions [62][130] Question: Sales cycle improvements - Sales cycle times for B2B have improved, and the company expects a similar ratio of first half to second half performance as in previous years [121][130]

© 2024 PROS, Inc. All rights reserved. Confidential and Proprietary. This presentation includes certain supplemental non-GAAP financial measures, that we believe are useful to investors as tools for assessing the comparability between periods as well as company by company. Our computation of these measures may not be comparable to other similarly titled measures computed by other companies. These non-GAAP financial measures should be considered in addition to, but not as a substitute for, our financial info ...

FORM 10-Q General Information This section details the Quarterly Report on Form 10-Q, registrant information, and filer status as of March 31, 2024 - This is a Quarterly Report on Form 10-Q for the period ended March 31, 2024[2](index=2&type=chunk) - Registrant: PROS HOLDINGS, INC. (Commission File Number: 001-33554), listed on the New York Stock Exchange under trading symbol **PRO**[3](index=3&type=chunk)[4](index=4&type=chunk)[6](index=6&type=chunk) - Number of shares outstanding of Common Stock: **47,004,361** as of May 1, 2024[7](index=7&type=chunk) Registrant Filer Status | Filer Status | | | | | :-------------------- | :--- | :---------------- | :--- | | Large accelerated filer | ☒ | Accelerated Filer | ☐ | | Non-Accelerated Filer | ☐ | Smaller Reporting Company | ☐ | | Emerging Growth Company | ☐ | | | CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This section warns that the report contains forward-looking statements subject to risks and uncertainties, and should not be relied upon as future predictions - This report contains forward-looking statements based on current estimates, assumptions, trends, and projections, identified by words like 'believes,' 'expects,' 'may,' 'should,' 'intends,' 'plans,' 'anticipates,' and 'estimates'[11](index=11&type=chunk) - Actual results could differ materially due to numerous important factors, risks, and uncertainties described in the Annual Report on Form 10-K and this Quarterly Report on Form 10-Q[11](index=11&type=chunk) - Readers should not rely on forward-looking statements as predictions of future events, and the company undertakes no obligation to publicly update them[12](index=12&type=chunk) PART I. FINANCIAL INFORMATION [Item 1. Interim Condensed Consolidated Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Interim%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements, including balance sheets, income statements, cash flows, and equity, with explanatory notes [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity as of March 31, 2024, and December 31, 2023 - Total assets decreased by **$13.9 million**, and total stockholders' (deficit) equity decreased by **$6.1 million** from December 31, 2023, to March 31, 2024[14](index=14&type=chunk) Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | March 31, 2024 | December 31, 2023 | | :------------------------------------------ | :------------- | :------------------ | | Cash and cash equivalents | $156,423 | $168,747 | | Total current assets | $222,909 | $234,674 | | Total assets | $407,889 | $421,833 | | Total current liabilities | $188,873 | $197,331 | | Total liabilities | $491,906 | $499,706 | | Total stockholders' (deficit) equity | $(84,017) | $(77,873) | [Condensed Consolidated Statements of Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) This section outlines the company's financial performance, including revenue, gross profit, and net loss for the three months ended March 31, 2024 and 2023 - Total revenue increased by **10.26%** year-over-year, driven by a **14.97%** increase in subscription revenue[16](index=16&type=chunk) - Net loss improved by **40.23%** year-over-year, from **$(19.0) million** in Q1 2023 to **$(11.4) million** in Q1 2024[16](index=16&type=chunk) Condensed Consolidated Statements of Comprehensive Loss Highlights (in thousands, except per share data) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Total revenue | $80,688 | $73,182 | | Gross profit | $51,855 | $43,640 | | Loss from operations | $(10,302) | $(18,796) | | Net loss | $(11,357) | $(19,002) | | Basic and diluted net loss per share | $(0.24) | $(0.41) | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section details the cash inflows and outflows from operating, investing, and financing activities for the three months ended March 31, 2024 and 2023 - Net cash used in operating activities improved by **24.40%** year-over-year, primarily due to increased cash collections[19](index=19&type=chunk) - Net cash used in financing activities increased by **104.70%** year-over-year, mainly due to higher tax withholding payments related to stock awards[19](index=19&type=chunk) Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(4,644) | $(6,143) | | Net cash used in investing activities | $(353) | $(1,546) | | Net cash used in financing activities | $(7,314) | $(3,573) | | Net change in cash, cash equivalents and restricted cash | $(12,324) | $(11,251) | | Cash, cash equivalents and restricted cash, end of period | $166,423 | $192,376 | [Condensed Consolidated Statements of Stockholders' (Deficit) Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20(Deficit)%20Equity) This section presents changes in stockholders' (deficit) equity, including common stock, additional paid-in capital, and accumulated deficit for Q1 2024 - Noncash share-based compensation expense was **$12.7 million** for Q1 2024, an increase from **$9.9 million** in Q1 2023[22](index=22&type=chunk) Stockholders' (Deficit) Equity Changes (in thousands, except share data) | Item | Balance at Dec 31, 2023 | Q1 2024 Activity | Balance at Mar 31, 2024 | | :-------------------------- | :---------------------- | :----------------- | :---------------------- | | Common Stock (Shares) | 46,503,861 | 464,579 | 46,968,440 | | Common Stock (Amount) | $51 | $1 | $52 | | Additional Paid-In Capital | $604,084 | $5,485 | $609,469 | | Accumulated Deficit | $(647,252) | $(11,357) | $(658,609) | | Total Stockholders' (Deficit) Equity | $(77,873) | $(6,144) | $(84,017) | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements [1. Organization and Nature of Operations](index=8&type=section&id=1.%20Organization%20and%20Nature%20of%20Operations) This note describes PROS Holdings, Inc.'s business, focusing on its AI-driven solutions for optimizing shopping and selling experiences - PROS Holdings, Inc. provides AI-driven solutions that optimize shopping and selling experiences for both B2B and B2C companies across various industry verticals[25](index=25&type=chunk) - The company's solutions leverage artificial intelligence, self-learning, and automation to deliver customized prices and offers in real-time, supporting fluid, personalized experiences across sales channels[25](index=25&type=chunk) [2. Summary of Significant Accounting Policies](index=8&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the key accounting policies used in preparing the financial statements and discusses the impact of new accounting pronouncements - The financial statements are prepared in accordance with GAAP for interim financial reporting, and no material changes in significant accounting policies were reported compared to the Annual Report[26](index=26&type=chunk)[28](index=28&type=chunk) - The company is currently evaluating the impact of new FASB ASUs 2023-07 (Segment Reporting) and 2023-09 (Income Tax Disclosures) on its consolidated financial statements[31](index=31&type=chunk)[32](index=32&type=chunk) Deferred Costs (in thousands) | Metric | March 31, 2024 | December 31, 2023 | | :------------- | :------------- | :------------------ | | Deferred costs | $14,500 | $15,100 | | Amortization expense (Q1) | $1,300 | $1,500 | [3. Deferred Revenue and Performance Obligations](index=9&type=section&id=3.%20Deferred%20Revenue%20and%20Performance%20Obligations) This note details the company's deferred revenue balances and expected revenue recognition from remaining performance obligations - As of March 31, 2024, the company expects to recognize approximately **$447.6 million** of revenue from remaining performance obligations, with **$227.4 million** expected within the next 12 months[35](index=35&type=chunk) Revenue Recognized from Deferred Balances (in thousands) | Period | Revenue Recognized | | :----- | :----------------- | | Q1 2024 | $54,500 | | Q1 2023 | $49,400 | [4. Disaggregation of Revenue](index=10&type=section&id=4.%20Disaggregation%20of%20Revenue) This note breaks down total revenue by geographic region for the three months ended March 31, 2024 and 2023 - The rest of the world segment contributed the largest share of revenue (**35%**) in Q1 2024, increasing from **33%** in Q1 2023[37](index=37&type=chunk) Revenue by Geography (in thousands) | Geographic Region | Q1 2024 Revenue | Q1 2024 Percent | Q1 2023 Revenue | Q1 2023 Percent | | :------------------------ | :-------------- | :-------------- | :-------------- | :-------------- | | United States of America | $26,933 | 33% | $26,232 | 36% | | Europe | $25,671 | 32% | $22,949 | 31% | | The rest of the world | $28,084 | 35% | $24,001 | 33% | | **Total revenue** | **$80,688** | **100%** | **$73,182** | **100%** | [5. Leases](index=10&type=section&id=5.%20Leases) This note provides information on the company's lease arrangements, including cash flows and changes in right-of-use assets and liabilities - A lease modification in February 2024 resulted in a **$2.1 million** increase in right-of-use assets, a **$1.4 million** increase in lease liability, a **$0.7 million** noncash gain, and an **$0.8 million** loss on disposal of assets[40](index=40&type=chunk) - Total operating lease liabilities as of March 31, 2024, were **$30.751 million**, with **$5.738 million** due in the remaining 2024 period[42](index=42&type=chunk) Lease-Related Cash Flow Information (in thousands) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :---------------------------------------- | :-------------------------------- | :-------------------------------- | | Cash paid for operating lease liabilities | $2,233 | $2,251 | | Right-of-use asset obtained | $2,126 | — | [6. Earnings per Share](index=11&type=section&id=6.%20Earnings%20per%20Share) This note presents the calculation of basic and diluted net loss per share, including factors affecting the share count - Potential common shares from RSUs, MSUs, and convertible notes were excluded from diluted EPS calculation due to their antidilutive effect, totaling **1.5 million** and **6.7 million** shares, respectively, for Q1 2024[43](index=43&type=chunk) Earnings Per Share (in thousands, except per share data) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Net loss | $(11,357) | $(19,002) | | Weighted average shares (basic and diluted) | 46,817 | 45,926 | | Basic and diluted loss per share | $(0.24) | $(0.41) | [7. Noncash Share-based Compensation](index=11&type=section&id=7.%20Noncash%20Share-based%20Compensation) This note details the company's share-based compensation plans, grants, and related expenses for the reporting period - As of March 31, 2024, **3,281,287** shares remain available for issuance under the 2017 Stock Plan[44](index=44&type=chunk) - In Q1 2024, the company granted **1,196,087** time-based RSUs (weighted average fair value **$35.69/share**) and **131,892** MSUs (weighted average fair value **$41.07/share**)[45](index=45&type=chunk) - Estimated unrecognized compensation costs related to share-based arrangements totaled **$100.0 million** as of March 31, 2024, to be recognized over a weighted average period of **2.8 years**[47](index=47&type=chunk) Share-based Compensation Expense (in thousands) | Category | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Cost of revenue | $1,068 | $832 | | Operating expenses | $11,632 | $9,072 | | **Total expense** | **$12,700** | **$9,904** | [8. Convertible Senior Notes](index=12&type=section&id=8.%20Convertible%20Senior%20Notes) This note provides details on the company's outstanding convertible senior notes, including principal balances, interest rates, and fair value - In October 2023, the company exchanged **$122.0 million** of 2024 Notes for **$116.8 million** of newly issued 2027 Notes[53](index=53&type=chunk) - The fair value of the Notes was **$310.7 million** as of March 31, 2024, down from **$320.5 million** at December 31, 2023[55](index=55&type=chunk) Convertible Senior Notes Outstanding (as of March 31, 2024, in thousands) | Note Type | Unpaid Principal Balance | Contractual Interest Rate | Maturity Date | | :-------------------------- | :----------------------- | :------------------------ | :------------ | | 1% Convertible Notes due 2024 | $21,713 | 1% | May 15, 2024 | | 2.25% Convertible Notes due 2027 | $266,816 | 2.25% | September 15, 2027 | | **Total Notes** | **$288,529** | | | Convertible Debt Interest Expense (in thousands) | Component | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Coupon interest | $1,555 | $1,203 | | Amortization of debt issuance costs | $323 | $373 | | Amortization of debt premium | $(676) | — | | **Total** | **$1,202** | **$1,576** | [9. Commitments and Contingencies](index=14&type=section&id=9.%20Commitments%20and%20Contingencies) This note discloses the company's legal proceedings, claims, and significant purchase commitments - The company is not currently involved in any legal proceedings or claims that are expected to have a material adverse effect on its business or financial condition[60](index=60&type=chunk) - Remaining purchase commitment for a noncancelable software support services agreement is **$2.4 million**, expiring in March 2027[61](index=61&type=chunk) [10. Severance and Other Related Costs](index=14&type=section&id=10.%20Severance%20and%20Other%20Related%20Costs) This note outlines severance and related costs incurred due to organizational changes in Q1 2023 - In Q1 2023, the company incurred approximately **$3.6 million** in severance, employee benefits, and related costs due to organizational changes, with **$3.2 million** paid in cash[62](index=62&type=chunk) [11. Other Income, Net](index=14&type=section&id=11.%20Other%20Income,%20Net) This note details the components of other income, net, including interest income, foreign currency effects, and other gains or losses - The decrease in other income, net, was primarily due to an **$0.8 million** loss on disposal of assets related to a lease modification in Q1 2024[63](index=63&type=chunk) Other Income, Net (in thousands) | Component | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Interest income, net | $1,762 | $1,730 | | Foreign currency (loss) gain, net | $(536) | $(203) | | Other (includes loss on disposal of assets) | $(768) | $(76) | | **Total other income, net** | **$458** | **$1,451** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=15&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's analysis of the company's financial condition, operational results, liquidity, and capital resources for Q1 2024 [Q1 2024 Financial Overview](index=15&type=section&id=Q1%202024%20Financial%20Overview) This overview highlights key financial performance metrics for Q1 2024, including revenue growth and cash flow trends - Subscription revenue increased by **15%** and total revenue increased by **10%** for the three months ended March 31, 2024, compared to the same period in 2023[66](index=66&type=chunk) - Recurring revenue accounted for **84%** of total revenue, and gross revenue retention rates remained above **93%** during the twelve months ended March 31, 2024[67](index=67&type=chunk) - Cash used in operating activities improved by **$1.5 million** year-over-year, while free cash flow usage slightly increased by **$0.4 million**[68](index=68&type=chunk)[69](index=69&type=chunk)[70](index=70&type=chunk) Cash Flow Metrics (in thousands) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :---------------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(4,644) | $(6,143) | | Free cash flow | $(4,884) | $(4,519) | [Factors Affecting Our Performance](index=15&type=section&id=Factors%20Affecting%20Our%20Performance) This section discusses macroeconomic conditions, strategic priorities, AI market trends, and industry-specific factors influencing the company's performance - Macroeconomic and Geopolitical Environment: Complex conditions (inflation, interest rates, conflicts) create a challenging selling environment, but also drive demand for AI-driven price optimization solutions[71](index=71&type=chunk) - Profitable Growth as a Priority: Focused on disciplined investment to accelerate customer time-to-value, improve efficiency, leverage AI, and develop new applications, expecting operating expenses as a percentage of revenue to decrease long-term[73](index=73&type=chunk) - Artificial Intelligence: Rapid market interest in AI fuels demand for PROS's AI-powered solutions, which utilize deep neural networks and are being expanded for internal business operations to drive efficiencies[73](index=73&type=chunk) - Travel Industry Stabilizing: Global air passenger traffic has recovered to pre-pandemic levels, with strong travel demand forecast for 2024, positioning PROS's solutions well for airlines enhancing digital marketing and booking capabilities[73](index=73&type=chunk) - Digital Purchasing Driving Technology Adoption: Long-term trends toward digital purchasing by consumers and corporate buyers increase demand for technology that provides fast, frictionless, and personalized buying experiences across all sales channels[73](index=73&type=chunk) [Results of Operations](index=17&type=section&id=Results%20of%20Operations) This section provides a detailed analysis of the company's revenue, cost of revenue, gross profit, and operating expenses for the reporting period [Revenue](index=17&type=section&id=Revenue) This subsection analyzes revenue performance by category, including subscription, maintenance and support, and services revenue - Subscription revenue growth was primarily driven by an increase in new and existing customer contracts[75](index=75&type=chunk) - Maintenance and support revenue declined due to customer migration to cloud solutions and, to a lesser extent, customer churn[76](index=76&type=chunk) Revenue Performance (in thousands) | Revenue Category | Q1 2024 | Q1 2023 | Variance ($) | Variance (%) | | :-------------------------- | :------ | :------ | :----------- | :----------- | | Subscription | $64,349 | $55,969 | $8,380 | 15% | | Maintenance and support | $3,595 | $5,712 | $(2,117) | (37)% | | Services | $12,744 | $11,501 | $1,243 | 11% | | **Total revenue** | **$80,688** | **$73,182** | **$7,506** | **10%** | [Cost of revenue and gross profit](index=18&type=section&id=Cost%20of%20revenue%20and%20gross%20profit) This subsection details the cost of revenue and gross profit by category, highlighting changes in profitability - Gross profit increased by **19%** year-over-year, with subscription gross profit percentage improving from **75%** to **77%**[78](index=78&type=chunk) - Services gross profit percentage significantly improved from **(14)%** in Q1 2023 to **3%** in Q1 2024, driven by increased services revenue and decreased costs[80](index=80&type=chunk) Cost of Revenue and Gross Profit Performance (in thousands) | Category | Q1 2024 | Q1 2023 | Variance ($) | Variance (%) | | :-------------------------------- | :------ | :------ | :----------- | :----------- | | Cost of subscription | $14,613 | $14,093 | $520 | 4% | | Cost of maintenance and support | $1,862 | $2,282 | $(420) | (18)% | | Cost of services | $12,358 | $13,167 | $(809) | (6)% | | **Total cost of revenue** | **$28,833** | **$29,542** | **$(709)** | **(2)%** | | **Gross profit** | **$51,855** | **$43,640** | **$8,215** | **19%** | [Operating expenses](index=18&type=section&id=Operating%20expenses) This subsection examines trends in selling and marketing, research and development, and general and administrative expenses - Selling and marketing expenses decreased primarily due to lower employee-related costs and events, partially offset by increased noncash share-based compensation[81](index=81&type=chunk) - Research and development and general and administrative expenses increased mainly due to higher employee-related costs, including share-based compensation[82](index=82&type=chunk)[83](index=83&type=chunk) Operating Expenses Performance (in thousands) | Expense Category | Q1 2024 | Q1 2023 | Variance ($) | Variance (%) | | :---------------------- | :------ | :------ | :----------- | :----------- | | Selling and marketing | $22,682 | $26,010 | $(3,328) | (13)% | | Research and development | $24,413 | $22,291 | $2,122 | 10% | | General and administrative | $15,062 | $14,135 | $927 | 7% | | **Total operating expenses** | **$62,157** | **$62,436** | **$(279)** | **(0.4)%** | [Non-operating expenses](index=19&type=section&id=Non-operating%20expenses) This subsection discusses convertible debt interest and amortization, along with other income and expenses impacting net results - The decrease in convertible debt expense was related to the exchange of 2024 Notes for 2027 Notes[84](index=84&type=chunk) - The significant decrease in other income, net, was primarily due to a loss on disposal of assets associated with a lease modification[85](index=85&type=chunk) Non-Operating Expenses Performance (in thousands) | Category | Q1 2024 | Q1 2023 | Variance ($) | Variance (%) | | :-------------------------------- | :------ | :------ | :----------- | :----------- | | Convertible debt interest and amortization | $(1,202) | $(1,576) | $374 | (24)% | | Other income, net | $458 | $1,451 | $(993) | (68)% | [Income tax provision](index=19&type=section&id=Income%20tax%20provision) This subsection details the income tax provision and effective tax rate, explaining factors influencing tax expense - The effective tax rate varies from the **21%** federal statutory rate primarily due to valuation allowances on deferred tax assets and foreign income and withholding taxes[87](index=87&type=chunk) Income Tax Provision (in thousands) | Metric | Q1 2024 | Q1 2023 | Variance ($) | Variance (%) | | :------------------ | :------ | :------ | :----------- | :----------- | | Income tax provision | $311 | $81 | $230 | 284% | | Effective tax rate | (2.8)% | (0.4)% | n/a | n/a | [Liquidity and Capital Resources](index=19&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's ability to meet its financial obligations, including cash position and available credit - Principal sources of liquidity include cash and cash equivalents, cash flows from operations, and potential borrowings under a **$50 million** credit agreement[90](index=90&type=chunk) - Management believes the company has adequate liquidity to meet operational requirements, anticipated capital expenditures, and coupon interest for the next twelve months, including principal payments for the remaining 2024 Notes[91](index=91&type=chunk) Liquidity Position (in thousands) | Metric | March 31, 2024 | December 31, 2023 | | :-------------------------- | :------------- | :------------------ | | Cash and cash equivalents | $156,400 | $168,700 | | Working capital | $34,000 | $37,300 | [Off-Balance Sheet Arrangements](index=20&type=section&id=Off-Balance%20Sheet%20Arrangements) This section confirms the absence of any material off-balance sheet arrangements impacting the company's financial position - The company does not have any material off-balance sheet arrangements[97](index=97&type=chunk) [Contractual Obligations and Commitments](index=20&type=section&id=Contractual%20Obligations%20and%20Commitments) This section outlines the company's contractual obligations and commitments, including credit agreements and restricted cash balances - No material changes to contractual obligations and commitments were reported, other than those described in Note 9[98](index=98&type=chunk) - The company has a **$50 million** credit agreement with no outstanding borrowings as of March 31, 2024, and maintains a **$10.0 million** restricted cash balance as a depository condition[99](index=99&type=chunk)[100](index=100&type=chunk) [Recent Accounting Pronouncements](index=20&type=section&id=Recent%20Accounting%20Pronouncements) This section refers to Note 2 for a discussion of recently issued accounting pronouncements not yet adopted - Refer to Note 2 for a discussion of recently issued accounting pronouncements not yet adopted[101](index=101&type=chunk) [Critical accounting policies and estimates](index=21&type=section&id=Critical%20accounting%20policies%20and%20estimates) This section highlights the significant estimates and assumptions required for financial statement preparation, as detailed in the Annual Report - The preparation of financial statements requires significant estimates and assumptions, particularly concerning revenue recognition, receivables, leases, and income taxes[102](index=102&type=chunk) - Critical accounting policies related to these estimates and judgments are discussed in the company's Annual Report[102](index=102&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=22&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section confirms no material changes in the company's market risk exposure compared to its Annual Report disclosures - No material changes in market risk exposure were reported from those disclosed in Part II, Item 7A, of the Annual Report[104](index=104&type=chunk) [Item 4. Controls and Procedures](index=22&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details management's evaluation of disclosure controls and procedures and reports on changes in internal control over financial reporting [Disclosure Controls and Procedures](index=22&type=section&id=Disclosure%20Controls%20and%20Procedures) This subsection confirms the effectiveness of the company's disclosure controls and procedures as of March 31, 2024 - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2024[105](index=105&type=chunk) [Changes in Internal Control over Financial Reporting](index=22&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This subsection reports no material changes in the company's internal control over financial reporting during Q1 2024 - There have been no material changes in the company's internal control over financial reporting during the three months ended March 31, 2024[106](index=106&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=23&type=section&id=Item%201.%20Legal%20Proceedings) This section confirms the company is not involved in any legal proceedings expected to materially adversely affect its business - The company is not currently aware of any legal proceedings or claims that are believed to have a material adverse effect on its business, financial condition, results of operations, or cash flows[108](index=108&type=chunk) [Item 1A. Risk Factors](index=23&type=section&id=Item%201A.%20Risk%20Factors) This section states no material changes in the company's risk factors from those disclosed in its Annual Report - No material changes in the company's risk factors were reported from those disclosed in Part I, Item 1A, of the Annual Report[109](index=109&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=23&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports no unregistered sales of equity securities or use of proceeds during the reporting period - None reported[110](index=110&type=chunk) [Item 3. Defaults Upon Senior Securities](index=23&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section indicates no defaults upon senior securities occurred during the reporting period - None reported[111](index=111&type=chunk) [Item 4. Mine Safety Disclosure](index=23&type=section&id=Item%204.%20Mine%20Safety%20Disclosure) This section states that there is no mine safety disclosure information to report - None reported[112](index=112&type=chunk) [Item 5. Other Information](index=23&type=section&id=Item%205.%20Other%20Information) This section reports on other information, specifically regarding securities trading plans of directors and executive officers - None of the company's directors or officers adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended March 31, 2024[113](index=113&type=chunk) [Item 6. Exhibits](index=23&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including certifications and XBRL documents - Exhibits include certifications from the Chief Executive Officer and Chief Financial Officer (31.1, 31.2, 32.1) and various XBRL taxonomy documents (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE)[114](index=114&type=chunk) SIGNATURES This section provides the signatures of the company's President, Chief Executive Officer, and Chief Financial Officer, certifying the report - The report was signed on May 7, 2024, by Andres Reiner, President and Chief Executive Officer, and Stefan Schulz, Executive Vice President and Chief Financial Officer[118](index=118&type=chunk)

EXHIBIT 99.1 PROS HOLDINGS, INC. REPORTS FIRST QUARTER 2024 FINANCIAL RESULTS HOUSTON – May 7, 2024 — PROS Holdings, Inc. (NYSE: PRO), a leading provider of AI-powered SaaS pricing, CPQ, revenue management, and digital offer marketing solutions, today announced financial results for the first quarter ended March 31, 2024. "We delivered a strong start to 2024, exceeding our guidance ranges across all metrics, driving 15% subscription revenue growth and delivering a near 300% improvement to adjusted EBITDA ye ...

Table of Contents (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 or UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-33554 PROS HOLDINGS, INC. (Exact Name of Registrant as Specified in Its Charter) (State or Other Jurisdiction of In ...

PROS Holdings, Inc. (NYSE:PRO) Q4 2023 Results Conference Call February 8, 2024 4:45 PM ET Company Participants Belinda Overdeput - Director, IR Andres Reiner - President, CEO Stefan Schulz - CFO Conference Call Participants Brian Schwartz - Oppenheimer Chad Bennett - Craig-Hallum Jason Celino - KeyBanc Capital Markets Rob Oliver - Baird Parker Lane - Stifel Nehal Chokshi - Northland Capital Markets Operator Greetings. Welcome to the PROS Holdings Fourth Quarter 2023 Earnings Conference Call. At this time, ...