PROS Holdings, Inc. Reports Second Quarter 2018 Financial Results
- Subscription revenue up 64% year-over-year.
- Total revenue up 17% year-over-year.
- Free cash flow improvement of $4.9 million year-over-year.
PROS Holdings, Inc. (NYSE: PRO), a cloud software company powering the shift to modern commerce, today announced
financial results for the second quarter ended June 30, 2018.
CEO Andres Reiner stated, “I’m really pleased with the velocity that we are driving in our business. In the first half of the
year, we increased our deal volume by 32%. We are in a great position to continue our growth trajectory since our solutions sit
squarely at the cross section of two defining business trends of our time: digital transformation and AI. Our strong momentum and
large market opportunity contributed to our Q2 beat and gives us confidence to improve our growth outlook for the year.”
Second Quarter 2018 Financial Highlights
Key financial results for the second quarter 2018 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.
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|
GAAP |
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|
Non-GAAP |
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|
Q2 2018 |
|
Q2 2017 |
|
% Change |
|
|
Q2 2018 |
|
Q2 2017 |
|
% Change |
| Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total Revenue |
|
|
47.4 |
|
40.4 |
|
17% |
|
|
n/a |
|
n/a |
|
n/a |
| Subscription Revenue |
|
|
22.0 |
|
13.4 |
|
64% |
|
|
n/a |
|
n/a |
|
n/a |
| Subscription and Maintenance Revenue |
|
|
38.3 |
|
30.6 |
|
25% |
|
|
n/a |
|
n/a |
|
n/a |
| Profitability: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gross Profit |
|
|
28.7 |
|
24.3 |
|
18% |
|
|
30.3 |
|
25.3 |
|
20% |
| Operating Loss |
|
|
(13.0) |
|
(16.7) |
|
nm |
|
|
(5.6) |
|
(10.1) |
|
nm |
| Net Loss |
|
|
(16.8) |
|
(19.5) |
|
nm |
|
|
(5.2) |
|
(7.0) |
|
nm |
| Net Loss Per Share |
|
|
(0.52) |
|
(0.62) |
|
nm |
|
|
(0.16) |
|
(0.22) |
|
nm |
| Adjusted EBITDA |
|
|
n/a |
|
n/a |
|
n/a |
|
|
(5.4) |
|
(9.5) |
|
nm |
| Cash: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net Cash Used in Operating Activities |
|
|
(3.6) |
|
(9.1) |
|
nm |
|
|
n/a |
|
n/a |
|
n/a |
| Free Cash Flow |
|
|
n/a |
|
n/a |
|
n/a |
|
|
(5.2) |
|
(10.1) |
|
nm |
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
The attached tables provide a summary of PROS results for the period, including a reconciliation of GAAP to non-GAAP
metrics.
Recent Business Highlights
- Hosted PROS Outperform 2018 global customer conference, the premiere conference for companies powering their
digital transformation, where PROS unveiled plans to extend solution capabilities to fully integrate with leading eCommerce platforms, including Salesforce CloudCraze and SAP Hybris.
- Announced a partnership with SAP Hybris to integrate PROS shopping and merchandising solutions with SAP’s omnichannel commerce solution
to deliver a best-of-breed digital selling solution to the airline industry.
- Showcased PROS manufacturing solutions in the Microsoft booth at Hannover Messe 2018, the world’s leading exhibition for industrial technology with more than 200,000
professionals in attendance, representing virtually every aspect of manufacturing.
- Joined forces with YRC Freight at the SMC3 Connections Conference to share best practices related to leveraging
predictive analytics in the logistics industry in a panel titled “Strategic Analytics: Maximizing Data and Information Value.”
- Awarded twelve prominent speaking positions to share PROS science and research thought leadership at
prestigious conferences, including the 29th Annual Production and Operations Management Society (POMS) Conference, the 2018 INFORMS Revenue Management and Pricing Conference, and the Professional Pricing Society 29th Annual Spring Pricing Workshops and Conference.
- Appointed Michael Wu, Ph.D., one of the world’s premier authorities, thought leaders and authors on artificial
intelligence, data science and the digital experience, as Chief Artificial Intelligence Strategist.
Financial Outlook
PROS anticipates the following for the third quarter and full year 2018 based on an estimated 32.8 million and 32.6 million,
respectively, basic weighted average shares outstanding and a 22% non-GAAP estimated tax rate:
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Q3 2018 Guidance |
|
|
v. Q3 2017 at
Mid-Point
|
|
|
Full Year 2018
Guidance
|
|
|
v. Prior Year at
Mid-Point
|
| Total Revenue |
|
|
$47.5 to $48.5 |
|
|
14% |
|
|
$192.0 to $194.0 |
|
|
14% |
| Subscription Revenue |
|
|
$23.0 to $23.5 |
|
|
47% |
|
|
$91.5 to $92.5 |
|
|
52% |
| ARR |
|
|
n/a |
|
|
n/a |
|
|
$187.0 to $190.0 |
|
|
17% |
| Non-GAAP Loss Per Share |
|
|
$(0.20) to $(0.18) |
|
|
nm |
|
|
n/a |
|
|
n/a |
| Adjusted EBITDA |
|
|
$(7.0) to $(6.0) |
|
|
$2.7 |
|
|
$(26.0) to $(24.0) |
|
|
$8.7 |
| Free Cash Flow |
|
|
n/a |
|
|
n/a |
|
|
$(5.0) to $(2.0) |
|
|
$26.0 |
|
|
|
|
|
|
|
|
|
|
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|
Conference Call
In conjunction with this announcement, PROS Holdings, Inc. will host a conference call on Thursday, July 26, 2018, 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 webcast of the conference 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 Thursday, August 9, 2018, at 1-844-512-2921 (toll-free) or 1-412-317-6671 using the
pass code 13680874. An archived webcast of this conference call will also be available in the “Investor Relations” section of the
Company’s website at www.pros.com.
About PROS
PROS Holdings, Inc. (NYSE: PRO) is a cloud software company powering the shift to modern commerce by helping companies create
personalized and frictionless buying experiences for their customers. Fueled by dynamic pricing science and machine learning, PROS
solutions make it possible for companies to price, configure and sell their products and services in an omni-channel environment
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.
Forward-looking Statements
This press release contains forward-looking statements, including statements about our future financial performance;
positioning; management's confidence and optimism; customer successes; demand for enterprise revenue, profit realization and modern
commerce software solutions; business expansion; business predictability; ARR; revenue; adjusted EBITDA; free cash flow; shares
outstanding and effective tax rate. The forward-looking statements contained in this press release are based upon our historical
performance and our current plans, estimates and expectations and are not a representation that such plans, estimates or
expectations will be achieved. Factors that could cause actual results to differ materially from those described herein include
risks related to: (a) our ability to execute on our cloud strategy, (b) reduced revenue and cash flow resulting from our transition
to a cloud strategy, (c) threats to the security of our or our customer’s data, (d) potential business or service disruptions from
our third party data centers, cloud platform providers or other unrelated service providers, (e) market acceptance of our new
products and product enhancements, (f) the risk that the markets for our software do not grow as anticipated, (g) the length of our
sales cycles, (h) the risk that we will not be able to maintain historical maintenance, support and subscription renewal rates, (i)
competition from vendors of sales, pricing, revenue management and configure-price-quote solutions as well as from companies
internally developing their own solutions, (j) potential unauthorized or improper actions of our personnel, (k) the risk that
acquisitions we have and may enter into in the future may be difficult to integrate, fail to achieve our objectives, disrupt our
business, dilute stockholder value or divert management attention, (l) any downturn in sales to our target markets, (m) potential
delays or other challenges related to the implementation of our solutions, (n) the difficulties of making accurate estimates
necessary to complete a project and recognize revenue, (o) personnel risks associated with growing a business generally, (p) the
impact that a slowdown in the world or any particular economy has on our business sales cycles, prospects’ and customers’ spending
decisions, timing of implementation decisions, payment and renewal decision, (q) our debt repayment obligations, (r) the impact of
currency fluctuations on our results of operations, and (s) civil and political unrest in geographic regions in which we operate.
Additional information relating to the uncertainty affecting PROS’ business is contained in our filings with the Securities and
Exchange Commission. These forward-looking statements represent PROS’ expectations as of the date of this press release. 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 financial information that has not been prepared in accordance with GAAP. This
information includes non-GAAP income (loss) from operations, annual recurring revenue, adjusted EBITDA, free cash flow, tax rate,
net income (loss) and diluted earnings (loss) per share. PROS uses these non-GAAP financial measures internally in analyzing its
financial results and believes they are useful to investors, as a supplement to GAAP measures, in evaluating PROS’ ongoing
operational performance and cloud-first transition.
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, adjusted EBITDA, free cash flow and non-GAAP tax rates
(collectively the "non-GAAP financial measures") as follows:
Non-GAAP income (loss) from operations: Non-GAAP income (loss) from operations excludes the impact of stock-based
compensation, amortization of acquisition-related intangibles, acquisition-related expenses, amortization of debt discount and
issuance costs, and related taxes. Non-GAAP income (loss) from operations excludes the following items from non-GAAP estimates:
- Share-Based Compensation: Although share-based compensation is an important aspect of
compensation for our employees and executives, our share-based compensation expense can vary because of changes in our stock
price and market conditions at the time of grant, varying valuation methodologies, and the variety of award types. Since
share-based compensation expense can vary for reasons that are generally unrelated to our performance during any particular
period, we believe this could make it difficult for investors to compare our current financial results to previous and future
periods. Therefore, we believe it is useful to exclude share-based compensation in order to better understand our business
performance and allow investors to compare our operating results with peer companies.
- Amortization of Acquisition-Related Intangibles: We view amortization of acquisition-related
intangible assets, such as the amortization of the cost associated with an acquired company's research and development efforts,
trade names, customer lists and customer relationships, as items arising from pre-acquisition activities determined at the time
of an acquisition. While these intangible assets are continually evaluated for impairment, amortization of the cost of
purchased intangibles is a static expense, one that is not typically affected by operations during any particular period.
- Acquisition-Related Expenses: Acquisition-related expenses include integration costs and
other one-time direct costs associated with our acquisitions. These amounts are unrelated to our core performance during any
particular period and are impacted by the timing and size of the acquisitions. We exclude acquisition-related expenses to provide
investors a method to compare our operating results to prior periods and to peer companies because such amounts can vary
significantly based on the frequency of acquisitions and magnitude of acquisition expenses.
- 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, integration costs and other one-time direct costs associated with
our acquisitions, 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 additions to property, plant and equipment, purchases of other (non-acquisition-related) intangible
assets and capitalized internal-use software development costs.
These non-GAAP estimates are not measurements of financial performance prepared in accordance with GAAP, and we are unable to
reconcile these forward-looking non-GAAP financial measures to their directly comparable GAAP financial measures because the
information described above which is needed to complete a reconciliation is unavailable at this time without unreasonable
effort.
| |
|
PROS Holdings, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except share and per share amounts)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
June 30, 2018 |
|
|
December 31, 2017 |
| Assets: |
|
|
|
|
|
|
| Current assets: |
|
|
|
|
|
|
| Cash and cash equivalents |
|
|
$ |
141,867 |
|
|
|
$ |
160,505 |
|
| Trade and other receivables, net of allowance of $983 and $760, respectively |
|
|
39,349 |
|
|
|
32,484 |
|
| Deferred costs |
|
|
3,053 |
|
|
|
3,137 |
|
| Prepaid and other current assets |
|
|
5,518 |
|
|
|
5,930 |
|
| Total current assets |
|
|
189,787 |
|
|
|
202,056 |
|
| Property and equipment, net |
|
|
14,856 |
|
|
|
14,007 |
|
| Long-term deferred costs |
|
|
10,966 |
|
|
|
3,194 |
|
| Intangibles, net |
|
|
22,921 |
|
|
|
26,929 |
|
| Goodwill |
|
|
38,443 |
|
|
|
38,458 |
|
| Other long-term assets |
|
|
4,467 |
|
|
|
4,039 |
|
| Total assets |
|
|
$ |
281,440 |
|
|
|
$ |
288,683 |
|
| Liabilities and Stockholders’ Equity: |
|
|
|
|
|
|
| Current liabilities: |
|
|
|
|
|
|
| Accounts payable and other liabilities |
|
|
$ |
4,725 |
|
|
|
$ |
2,976 |
|
| Accrued liabilities |
|
|
8,828 |
|
|
|
6,733 |
|
| Accrued payroll and other employee benefits |
|
|
12,392 |
|
|
|
16,712 |
|
| Deferred revenue |
|
|
89,270 |
|
|
|
75,604 |
|
| Total current liabilities |
|
|
115,215 |
|
|
|
102,025 |
|
| Long-term deferred revenue |
|
|
14,957 |
|
|
|
19,591 |
|
| Convertible debt, net |
|
|
219,108 |
|
|
|
213,203 |
|
| Other long-term liabilities |
|
|
819 |
|
|
|
843 |
|
| Total liabilities |
|
|
350,099 |
|
|
|
335,662 |
|
| 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; 37,128,924
|
|
|
|
|
|
|
|
|
|
and 36,356,760 shares issued, respectively; 32,711,339 and 31,939,175 shares
|
|
|
|
|
|
|
|
|
| outstanding, respectively |
|
|
37 |
|
|
|
36 |
|
| Additional paid-in capital |
|
|
212,481 |
|
|
|
207,924 |
|
| Treasury stock, 4,417,585 common shares, at cost |
|
|
(13,938 |
) |
|
|
(13,938 |
) |
| Accumulated deficit |
|
|
(264,161 |
) |
|
|
(238,185 |
) |
| Accumulated other comprehensive loss |
|
|
(3,078 |
) |
|
|
(2,816 |
) |
| Total stockholders’ equity |
|
|
(68,659 |
) |
|
|
(46,979 |
) |
| Total liabilities and stockholders’ equity |
|
|
$ |
281,440 |
|
|
|
$ |
288,683 |
|
|
|
|
|
|
|
|
|
PROS Holdings, Inc.
Condensed Consolidated Statements of Income (Loss)
(In thousands, except per share data)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
|
2018 |
|
2017 |
|
|
2018 |
|
2017 |
| Revenue: |
|
|
|
|
|
|
|
|
|
|
| Subscription |
|
|
$ |
22,038 |
|
|
$ |
13,434 |
|
|
|
$ |
42,988 |
|
|
$ |
25,648 |
|
| Maintenance and support |
|
|
16,225 |
|
|
17,132 |
|
|
|
32,799 |
|
|
35,208 |
|
| Total subscription, maintenance and support |
|
|
38,263 |
|
|
30,566 |
|
|
|
75,787 |
|
|
60,856 |
|
| License |
|
|
695 |
|
|
1,090 |
|
|
|
1,761 |
|
|
3,280 |
|
| Services |
|
|
8,468 |
|
|
8,750 |
|
|
|
17,788 |
|
|
16,399 |
|
| Total revenue |
|
|
47,426 |
|
|
40,406 |
|
|
|
95,336 |
|
|
80,535 |
|
| Cost of revenue: |
|
|
|
|
|
|
|
|
|
|
| Subscription |
|
|
8,491 |
|
|
5,800 |
|
|
|
17,255 |
|
|
11,737 |
|
| Maintenance and support |
|
|
2,953 |
|
|
2,881 |
|
|
|
5,910 |
|
|
6,027 |
|
| Total cost of subscription, maintenance and support |
|
|
11,444 |
|
|
8,681 |
|
|
|
23,165 |
|
|
17,764 |
|
| License |
|
|
64 |
|
|
72 |
|
|
|
137 |
|
|
137 |
|
| Services |
|
|
7,216 |
|
|
7,333 |
|
|
|
14,943 |
|
|
14,794 |
|
| Total cost of revenue |
|
|
18,724 |
|
|
16,086 |
|
|
|
38,245 |
|
|
32,695 |
|
| Gross profit |
|
|
28,702 |
|
|
24,320 |
|
|
|
57,091 |
|
|
47,840 |
|
| Operating expenses: |
|
|
|
|
|
|
|
|
|
|
| Selling and marketing |
|
|
18,590 |
|
|
17,172 |
|
|
|
36,158 |
|
|
33,645 |
|
| General and administrative |
|
|
10,145 |
|
|
9,782 |
|
|
|
20,834 |
|
|
20,190 |
|
| Research and development |
|
|
12,960 |
|
|
14,076 |
|
|
|
27,744 |
|
|
28,383 |
|
| Acquisition-related |
|
|
— |
|
|
— |
|
|
|
95 |
|
|
— |
|
| Loss from operations |
|
|
(12,993 |
) |
|
(16,710 |
) |
|
|
(27,740 |
) |
|
(34,378 |
) |
| Convertible debt interest and amortization |
|
|
(4,226 |
) |
|
(2,590 |
) |
|
|
(8,405 |
) |
|
(4,984 |
) |
| Other income (expense), net |
|
|
244 |
|
|
(64 |
) |
|
|
446 |
|
|
(32 |
) |
| Loss before income tax (benefit) provision |
|
|
(16,975 |
) |
|
(19,364 |
) |
|
|
(35,699 |
) |
|
(39,394 |
) |
| Income tax (benefit) provision |
|
|
(131 |
) |
|
149 |
|
|
|
1 |
|
|
326 |
|
| Net loss |
|
|
$ |
(16,844 |
) |
|
$ |
(19,513 |
) |
|
|
$ |
(35,700 |
) |
|
$ |
(39,720 |
) |
|
|
|
|
|
|
|
|
|
|
|
| Net loss per share: |
|
|
|
|
|
|
|
|
|
|
| Basic and diluted |
|
|
$ |
(0.52 |
) |
|
$ |
(0.62 |
) |
|
|
$ |
(1.10 |
) |
|
$ |
(1.27 |
) |
| Weighted average number of shares: |
|
|
|
|
|
|
|
|
|
|
| Basic and diluted |
|
|
32,651 |
|
|
31,615 |
|
|
|
32,514 |
|
|
31,357 |
|
|
|
|
|
|
|
|
|
PROS Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
|
2018 |
|
2017 |
|
|
2018 |
|
2017 |
| Operating activities: |
|
|
|
|
|
|
|
|
|
|
| Net loss |
|
|
$ |
(16,844 |
) |
|
$ |
(19,513 |
) |
|
|
$ |
(35,700 |
) |
|
$ |
(39,720 |
) |
| Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|
| Depreciation and amortization |
|
|
3,256 |
|
|
1,972 |
|
|
|
6,620 |
|
|
4,005 |
|
| Amortization of debt discount and issuance costs |
|
|
2,988 |
|
|
1,835 |
|
|
|
5,929 |
|
|
3,510 |
|
| Share-based compensation |
|
|
5,462 |
|
|
5,932 |
|
|
|
11,398 |
|
|
12,094 |
|
| Deferred income tax, net |
|
|
(252 |
) |
|
— |
|
|
|
(252 |
) |
|
33 |
|
| Provision for doubtful accounts |
|
|
215 |
|
|
— |
|
|
|
215 |
|
|
— |
|
| Loss on disposal of assets |
|
|
2 |
|
|
— |
|
|
|
37 |
|
|
— |
|
| Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
| Accounts and unbilled receivables |
|
|
(10,556 |
) |
|
(406 |
) |
|
|
(7,102 |
) |
|
137 |
|
| Deferred costs |
|
|
(880 |
) |
|
— |
|
|
|
(642 |
) |
|
— |
|
| Prepaid expenses and other assets |
|
|
1,513 |
|
|
(315 |
) |
|
|
(62 |
) |
|
(981 |
) |
| Accounts payable and other liabilities |
|
|
1,039 |
|
|
(793 |
) |
|
|
1,729 |
|
|
2,838 |
|
| Accrued liabilities |
|
|
3,529 |
|
|
(147 |
) |
|
|
2,114 |
|
|
287 |
|
| Accrued payroll and other employee benefits |
|
|
3,854 |
|
|
2,356 |
|
|
|
(4,327 |
) |
|
(8,601 |
) |
| Deferred revenue |
|
|
3,096 |
|
|
(37 |
) |
|
|
11,733 |
|
|
5,089 |
|
| Net cash used in operating activities |
|
|
(3,578 |
) |
|
(9,116 |
) |
|
|
(8,310 |
) |
|
(21,309 |
) |
| Investing activities: |
|
|
|
|
|
|
|
|
|
|
| Purchases of property and equipment |
|
|
(409 |
) |
|
(211 |
) |
|
|
(1,187 |
) |
|
(695 |
) |
| Capitalized internal-use software development costs |
|
|
(1,168 |
) |
|
(736 |
) |
|
|
(2,484 |
) |
|
(1,308 |
) |
| Proceeds from maturities of short-term investments |
|
|
— |
|
|
— |
|
|
|
— |
|
|
9,983 |
|
| Net cash (used in) provided by investing activities |
|
|
(1,577 |
) |
|
(947 |
) |
|
|
(3,671 |
) |
|
7,980 |
|
| Financing activities: |
|
|
|
|
|
|
|
|
|
|
| Exercise of stock options |
|
|
326 |
|
|
3,078 |
|
|
|
1,201 |
|
|
5,276 |
|
| Proceeds from employee stock plans |
|
|
— |
|
|
— |
|
|
|
834 |
|
|
776 |
|
| Tax withholding related to net share settlement of stock awards |
|
|
(1,713 |
) |
|
(89 |
) |
|
|
(8,968 |
) |
|
(5,754 |
) |
| Payments of notes payable |
|
|
3 |
|
|
(105 |
) |
|
|
(55 |
) |
|
(155 |
) |
| Debt issuance costs related to Revolver |
|
|
— |
|
|
— |
|
|
|
— |
|
|
(125 |
) |
| Proceeds from issuance of convertible debt, net |
|
|
— |
|
|
93,500 |
|
|
|
— |
|
|
93,500 |
|
| Net cash (used in) provided by financing activities |
|
|
(1,384 |
) |
|
96,384 |
|
|
|
(6,988 |
) |
|
93,518 |
|
| Effect of foreign currency rates on cash |
|
|
260 |
|
|
(220 |
) |
|
|
331 |
|
|
(259 |
) |
| Net change in cash and cash equivalents |
|
|
(6,279 |
) |
|
86,101 |
|
|
|
(18,638 |
) |
|
79,930 |
|
| Cash and cash equivalents: |
|
|
|
|
|
|
|
|
|
|
| Beginning of period |
|
|
148,146 |
|
|
111,868 |
|
|
|
160,505 |
|
|
118,039 |
|
| End of period |
|
|
$ |
141,867 |
|
|
$ |
197,969 |
|
|
|
$ |
141,867 |
|
|
$ |
197,969 |
|
| |
|
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 9.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Quarter
over
Quarter
|
|
Six Months Ended June 30, |
|
Year over
Year
|
|
|
|
2018 |
|
2017 |
|
% change |
|
2018 |
|
2017 |
|
% change |
| GAAP gross profit |
|
|
$ |
28,702 |
|
|
$ |
24,320 |
|
|
18 |
% |
|
$ |
57,091 |
|
|
$ |
47,840 |
|
|
19 |
% |
| Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Amortization of acquisition-related intangibles |
|
|
1,181 |
|
|
485 |
|
|
|
|
2,422 |
|
|
962 |
|
|
|
| Share-based compensation |
|
|
398 |
|
|
515 |
|
|
|
|
880 |
|
|
1,090 |
|
|
|
| Non-GAAP gross profit |
|
|
$ |
30,281 |
|
|
$ |
25,320 |
|
|
20 |
% |
|
$ |
60,393 |
|
|
$ |
49,892 |
|
|
21 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Non-GAAP gross margin |
|
|
63.8 |
% |
|
62.7 |
% |
|
|
|
63.3 |
% |
|
62.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| GAAP loss from operations |
|
|
$ |
(12,993 |
) |
|
$ |
(16,710 |
) |
|
(22 |
)% |
|
$ |
(27,740 |
) |
|
$ |
(34,378 |
) |
|
(19 |
)% |
| Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Acquisition-related expenses |
|
|
— |
|
|
— |
|
|
|
|
95 |
|
|
— |
|
|
|
| Amortization of acquisition-related intangibles |
|
|
1,897 |
|
|
680 |
|
|
|
|
3,912 |
|
|
1,349 |
|
|
|
| Share-based compensation |
|
|
5,462 |
|
|
5,932 |
|
|
|
|
11,398 |
|
|
12,094 |
|
|
|
| Total Non-GAAP adjustments |
|
|
7,359 |
|
|
6,612 |
|
|
|
|
15,405 |
|
|
13,443 |
|
|
|
| Non-GAAP loss from operations |
|
|
$ |
(5,634 |
) |
|
$ |
(10,098 |
) |
|
(44 |
)% |
|
$ |
(12,335 |
) |
|
$ |
(20,935 |
) |
|
(41 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Non-GAAP loss from operations % of total revenue |
|
|
(11.9 |
)% |
|
(25.0 |
)% |
|
|
|
(12.9 |
)% |
|
(26.0 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| GAAP net loss |
|
|
$ |
(16,844 |
) |
|
$ |
(19,513 |
) |
|
(14 |
)% |
|
$ |
(35,700 |
) |
|
$ |
(39,720 |
) |
|
(10 |
)% |
| Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total Non-GAAP adjustments affecting loss from operations |
|
|
7,359 |
|
|
6,612 |
|
|
|
|
15,405 |
|
|
13,443 |
|
|
|
| Amortization of debt discount and issuance costs |
|
|
2,976 |
|
|
1,818 |
|
|
|
|
5,905 |
|
|
3,493 |
|
|
|
| Tax impact related to non-GAAP adjustments |
|
|
1,330 |
|
|
4,084 |
|
|
|
|
3,167 |
|
|
8,410 |
|
|
|
| Non-GAAP net loss |
|
|
$ |
(5,179 |
) |
|
$ |
(6,999 |
) |
|
(26 |
)% |
|
$ |
(11,223 |
) |
|
$ |
(14,374 |
) |
|
(22 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Non-GAAP diluted loss per share |
|
|
$ |
(0.16 |
) |
|
$ |
(0.22 |
) |
|
|
|
$ |
(0.35 |
) |
|
$ |
(0.46 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Shares used in computing non-GAAP loss per share |
|
|
32,651 |
|
|
31,615 |
|
|
|
|
32,514 |
|
|
31,357 |
|
|
|
| |
|
PROS Holdings, Inc.
Supplemental Schedule of Non-GAAP Financial Measures
Increase (Decrease) in GAAP Amounts Reported
(In thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
|
2018 |
|
2017 |
|
|
2018 |
|
2017 |
| Cost of Subscription Items |
|
|
|
|
|
|
|
|
|
|
| Amortization of acquisition-related intangibles |
|
|
997 |
|
|
317 |
|
|
|
2,050 |
|
|
630 |
| Share-based compensation |
|
|
35 |
|
|
51 |
|
|
|
88 |
|
|
129 |
| Total cost of subscription items |
|
|
$ |
1,032 |
|
|
$ |
368 |
|
|
|
$ |
2,138 |
|
|
$ |
759 |
|
|
|
|
|
|
|
|
|
|
|
| Cost of Maintenance Items |
|
|
|
|
|
|
|
|
|
|
| Amortization of acquisition-related intangibles |
|
|
172 |
|
|
158 |
|
|
|
349 |
|
|
312 |
| Share-based compensation |
|
|
54 |
|
|
84 |
|
|
|
132 |
|
|
173 |
| Total cost of maintenance items |
|
|
$ |
226 |
|
|
$ |
242 |
|
|
|
$ |
481 |
|
|
$ |
485 |
|
|
|
|
|
|
|
|
|
|
|
| Cost of License Items |
|
|
|
|
|
|
|
|
|
|
| Amortization of acquisition-related intangibles |
|
|
12 |
|
|
10 |
|
|
|
23 |
|
|
20 |
| Total cost of license items |
|
|
$ |
12 |
|
|
$ |
10 |
|
|
|
$ |
23 |
|
|
$ |
20 |
|
|
|
|
|
|
|
|
|
|
|
| Cost of Services Items |
|
|
|
|
|
|
|
|
|
|
| Share-based compensation |
|
|
309 |
|
|
380 |
|
|
|
660 |
|
|
788 |
| Total cost of services items |
|
|
$ |
309 |
|
|
$ |
380 |
|
|
|
$ |
660 |
|
|
$ |
788 |
|
|
|
|
|
|
|
|
|
|
|
| Sales and Marketing Items |
|
|
|
|
|
|
|
|
|
|
| Amortization of acquisition-related intangibles |
|
|
716 |
|
|
195 |
|
|
|
1,490 |
|
|
387 |
| Share-based compensation |
|
|
1,284 |
|
|
1,131 |
|
|
|
2,568 |
|
|
2,404 |
| Total sales and marketing items |
|
|
$ |
2,000 |
|
|
$ |
1,326 |
|
|
|
$ |
4,058 |
|
|
$ |
2,791 |
|
|
|
|
|
|
|
|
|
|
|
| General and Administrative Items |
|
|
|
|
|
|
|
|
|
|
| Share-based compensation |
|
|
2,688 |
|
|
2,880 |
|
|
|
5,567 |
|
|
5,682 |
| Total general and administrative items |
|
|
$ |
2,688 |
|
|
$ |
2,880 |
|
|
|
$ |
5,567 |
|
|
$ |
5,682 |
|
|
|
|
|
|
|
|
|
|
|
| Research and Development Items |
|
|
|
|
|
|
|
|
|
|
| Share-based compensation |
|
|
1,092 |
|
|
1,406 |
|
|
|
2,383 |
|
|
2,918 |
| Total research and development items |
|
|
$ |
1,092 |
|
|
$ |
1,406 |
|
|
|
$ |
2,383 |
|
|
$ |
2,918 |
|
|
|
|
|
|
|
|
|
|
|
| Acquisition-related expenses |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
$ |
95 |
|
|
$ |
— |
| |
|
PROS Holdings, Inc.
Supplemental Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
|
2018 |
|
2017 |
|
|
2018 |
|
2017 |
| Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|
| GAAP Loss from Operations |
|
|
$ |
(12,993 |
) |
|
$ |
(16,710 |
) |
|
|
$ |
(27,740 |
) |
|
$ |
(34,378 |
) |
| Acquisition-related expenses |
|
|
— |
|
|
— |
|
|
|
95 |
|
|
— |
|
| Amortization of acquisition-related intangibles |
|
|
1,897 |
|
|
680 |
|
|
|
3,912 |
|
|
1,349 |
|
| Share-based compensation |
|
|
5,462 |
|
|
5,932 |
|
|
|
11,398 |
|
|
12,094 |
|
| Depreciation |
|
|
1,359 |
|
|
1,292 |
|
|
|
2,708 |
|
|
2,656 |
|
| Capitalized internal-use software development costs |
|
|
(1,168 |
) |
|
(736 |
) |
|
|
(2,484 |
) |
|
(1,308 |
) |
| Adjusted EBITDA |
|
|
$ |
(5,443 |
) |
|
$ |
(9,542 |
) |
|
|
$ |
(12,111 |
) |
|
$ |
(19,587 |
) |
|
|
|
|
|
|
|
|
|
|
|
| Free Cash Flow |
|
|
|
|
|
|
|
|
|
|
| Net cash used in operating activities |
|
|
$ |
(3,578 |
) |
|
$ |
(9,116 |
) |
|
|
$ |
(8,310 |
) |
|
$ |
(21,309 |
) |
| Purchase of property and equipment |
|
|
(409 |
) |
|
(211 |
) |
|
|
(1,187 |
) |
|
(695 |
) |
| Capitalized internal-use software development costs |
|
|
(1,168 |
) |
|
(736 |
) |
|
|
(2,484 |
) |
|
(1,308 |
) |
| Free Cash Flow |
|
|
$ |
(5,155 |
) |
|
$ |
(10,063 |
) |
|
|
$ |
(11,981 |
) |
|
$ |
(23,312 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Guidance |
|
|
Q3 2018 Guidance |
|
|
Full Year 2018 Guidance |
|
|
|
Low |
|
High |
|
|
Low |
|
High |
| Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|
| GAAP Loss from Operations |
|
|
$ |
(14,600 |
) |
|
$ |
(13,600 |
) |
|
|
$ |
(56,300 |
) |
|
$ |
(54,300 |
) |
| Amortization of acquisition-related intangibles |
|
|
1,900 |
|
|
1,900 |
|
|
|
7,500 |
|
|
7,500 |
|
| Share-based compensation |
|
|
5,500 |
|
|
5,500 |
|
|
|
22,100 |
|
|
22,100 |
|
| Depreciation |
|
|
1,300 |
|
|
1,300 |
|
|
|
5,300 |
|
|
5,300 |
|
| Capitalized internal-use software development costs |
|
|
(1,100 |
) |
|
(1,100 |
) |
|
|
(4,600 |
) |
|
(4,600 |
) |
| Adjusted EBITDA |
|
|
$ |
(7,000 |
) |
|
$ |
(6,000 |
) |
|
|
$ |
(26,000 |
) |
|
$ |
(24,000 |
) |
Investor Contact:
PROS Investor Relations
Shannon Tatz, 713-335-5932
ir@pros.com
or
Media Contact:
PROS Public Relations
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ydonaldson@pros.com
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