Le Lézard
Classified in: Science and technology, Business
Subjects: EARNINGS, Merger/Acquisition, Conference Call, Webcast

PROS Holdings, Inc. Reports Fourth Quarter and Full Year 2019 Financial Results


PROS Holdings, Inc. (NYSE: PRO), a provider of AI-powered solutions that optimize selling in the digital economy, today announced financial results for the fourth quarter and full year ended December 31, 2019.

"We are excited by the continued strong momentum in our business as we have achieved a 48% subscription revenue CAGR over the past four years," stated CEO Andres Reiner. "We enter this decade excited about our market opportunity and committed to our mission of helping people and companies outperform as we power sales in the digital era."

CFO Stefan Schulz said, "In 2019 we accelerated our total revenue growth rate to 27% while improving our non-GAAP recurring gross margins to 76%. Our AI innovations are more efficiently helping customers drive their digital selling transformations. We have strong momentum coming into 2020 and remain on track to achieve our long-term growth objective."

Fourth Quarter and Full Year 2019 Financial Highlights

Key financial results for the fourth quarter and full year 2019 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

 

Q4 2019

 

Q4 2018

 

Change

 

Q4 2019

 

Q4 2018

 

Change

Revenue:

 

 

 

 

 

 

 

 

 

 

 

Total Revenue

$66.2

 

$52.6

 

26%

 

n/a

 

n/a

 

n/a

Subscription Revenue

$40.2

 

$28.3

 

42%

 

n/a

 

n/a

 

n/a

Subscription and Maintenance Revenue

$53.6

 

$44.0

 

22%

 

n/a

 

n/a

 

n/a

Profitability:

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

$37.8

 

$33.2

 

14%

 

$39.4

 

$34.7

 

14%

Operating Loss

$(15.1)

 

$(9.6)

 

$(5.5)

 

$(6.4)

 

$(2.6)

 

$(3.8)

Net Loss

$(17.3)

 

$(12.8)

 

$(4.5)

 

$(4.7)

 

$(2.1)

 

$(2.6)

Net Loss Per Share

$(0.41)

 

$(0.34)

 

$(0.07)

 

$(0.11)

 

$(0.06)

 

$(0.05)

Adjusted EBITDA

n/a

 

n/a

 

n/a

 

$(4.6)

 

$(2.0)

 

$(2.6)

Cash:

 

 

 

 

 

 

 

 

 

 

 

Net Cash Provided by Operating Activities

$12.9

 

$15.2

 

$(2.3)

 

n/a

 

n/a

 

n/a

Free Cash Flow

n/a

 

n/a

 

n/a

 

$11.0

 

$14.1

 

$(3.1)

 

GAAP

 

Non-GAAP

 

FY 2019

 

FY 2018

 

Change

 

FY 2019

 

FY 2018

 

Change

Revenue:

 

 

 

 

 

 

 

 

 

 

 

Total Revenue

$250.3

 

$197.0

 

27%

 

n/a

 

n/a

 

n/a

Subscription Revenue

$141.2

 

$95.2

 

48%

 

n/a

 

n/a

 

n/a

Subscription and Maintenance Revenue

$199.3

 

$160.0

 

25%

 

n/a

 

n/a

 

n/a

Annual Recurring Revenue ("ARR")

n/a

 

n/a

 

n/a

 

$219.8

 

$189.3

 

16%

Annual Recurring Revenue in constant currency

n/a

 

n/a

 

n/a

 

$220.4

 

$190.5

 

16%

Profitability:

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

$151.2

 

$119.8

 

26%

 

$157.8

 

$126.2

 

25%

Operating Loss

$(53.3)

 

$(49.2)

 

$(4.1)

 

$(19.8)

 

$(20.1)

 

$0.3

Net Loss

$(69.1)

 

$(64.2)

 

$(4.8)

 

$(14.2)

 

$(17.9)

 

$3.7

Net Loss Per Share

$(1.72)

 

$(1.86)

 

$0.14

 

$(0.35)

 

$(0.52)

 

$0.17

Adjusted EBITDA

n/a

 

n/a

 

n/a

 

$(13.2)

 

$(19.0)

 

$5.9

Cash:

 

 

 

 

 

 

 

 

 

 

 

Net Cash Provided by Operating Activities

$5.2

 

$5.7

 

$(0.5)

 

n/a

 

n/a

 

n/a

Free Cash Flow

n/a

 

n/a

 

n/a

 

$(0.9)

 

$(0.5)

 

$(0.4)

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

Recent Business Highlights

Financial Outlook

PROS anticipates the following based on an estimated 43.1 million basic weighted average shares outstanding for the first quarter of 2020 and a 22% non-GAAP estimated tax rate for the first quarter and full year 2020:

 

Q1 2020 Guidance

 

v. Q1 2019 at Mid-Point

 

Full Year 2020 Guidance

 

v. Prior Year at Mid-Point

Total Revenue

$65.5 to $66.0

 

17%

 

$288.5 to $290.5

 

16%

Subscription Revenue

$40.5 to $41.0

 

34%

 

$193.0 to $194.0

 

37%

ARR

n/a

 

n/a

 

$257.0 to $259.0

 

17%

Non-GAAP Loss Per Share

$(0.23) to $(0.22)

 

$(0.12)

 

n/a

 

n/a

Adjusted EBITDA

$(12.0) to $(11.5)

 

$(7.2)

 

$(13.6) to $(11.6)

 

$0.6

Free Cash Flow

n/a

 

n/a

 

$(5.0) to $(3.0)

 

$(3.1)

Conference Call

In conjunction with this announcement, PROS Holdings, Inc. will host a conference call on Thursday, February 6, 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 Thursday, February 20, 2020, at 1-844-512-2921 (toll-free) or 1-412-317-6671 using the pass code 13697793.

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 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 include, among others, risks related to: (a) cybersecurity, (b) maintaining subscription renewal rates, (c) potential downturns in sales, (d) implementing our solutions, (e) software innovation, (f) maintaining our corporate culture, (g) disruptions from our third party data center, software, data, and other unrelated service providers, (h) evolving data privacy, cyber security and data localization laws, (i) cloud operations, (j) managing our growth effectively, (k) operating globally, including economic and commercial disruptions, (l) personnel risks including loss of any key employees, (m) the timing of revenue recognition and cash flow from operations, (n) competition, (o) market acceptance of our software innovations, (p) development of our target markets, (q) increasing business from existing customers, (r) migrating customers to our latest cloud solutions; (s) expanding and training our direct and indirect sales force, (t) our debt repayment obligations, (u) returning to profitability, and (v) 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 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 subscription margin can be compared to subscription margin which can be calculated from the income statement 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 in the definition of non-GAAP income (loss) from operations 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, acquisition-related expenses, new headquarters noncash rent expense and debt extinguishment fees. Non-GAAP income (loss) from operations excludes the following items from non-GAAP estimates:

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, loss on debt extinguishment and the taxes related to these items and the items excluded from non-GAAP income (loss) from operations. Estimates of non-GAAP 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:

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, new headquarters noncash rent expense, debt extinguishment fees 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.

PROS Holdings, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share and per share amounts)

(Unaudited)

 

 

December 31, 2019

 

December 31, 2018

Assets:

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

306,077

 

 

$

295,476

 

Trade and other receivables, net of allowance of $214 and $978, respectively

 

65,074

 

 

41,822

 

Deferred costs, current

 

5,756

 

 

4,089

 

Prepaid and other current assets

 

9,038

 

 

4,756

 

Total current assets

 

385,945

 

 

346,143

 

Property and equipment, net

 

14,794

 

 

14,676

 

Operating lease right-of-use assets

 

26,550

 

 

?

 

Deferred costs, noncurrent

 

15,478

 

 

13,373

 

Intangibles, net

 

14,605

 

 

19,354

 

Goodwill

 

49,104

 

 

38,231

 

Other assets, noncurrent

 

6,831

 

 

5,190

 

Total assets

 

$

513,307

 

 

$

436,967

 

Liabilities and Stockholders' Equity:

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable and other liabilities

 

$

9,098

 

 

$

6,934

 

Accrued liabilities

 

22,748

 

 

9,506

 

Accrued payroll and other employee benefits

 

32,656

 

 

22,519

 

Operating lease liabilities, current

 

7,173

 

 

?

 

Deferred revenue, current

 

124,459

 

 

99,262

 

Current portion of convertible debt, net

 

?

 

 

136,529

 

Total current liabilities

 

196,134

 

 

274,750

 

Deferred revenue, noncurrent

 

17,801

 

 

17,903

 

Convertible debt, net, noncurrent

 

110,704

 

 

88,661

 

Operating lease liabilities, noncurrent

 

22,391

 

 

?

 

Other liabilities, noncurrent

 

1,281

 

 

754

 

Total liabilities

 

348,311

 

 

382,068

 

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; 47,310,846 and 41,573,491 shares issued, respectively; 42,630,123 and 37,155,906 shares outstanding, respectively

 

47

 

 

42

 

Additional paid-in capital

 

560,496

 

 

364,877

 

Treasury stock, 4,680,723 and 4,417,585 common shares, at cost, respectively

 

(29,847

)

 

(13,938

)

Accumulated deficit

 

(361,789

)

 

(292,708

)

Accumulated other comprehensive loss

 

(3,911

)

 

(3,374

)

Total stockholders' equity

 

164,996

 

 

54,899

 

Total liabilities and stockholders' equity

 

$

513,307

 

 

$

436,967

 

PROS Holdings, Inc.

Condensed Consolidated Statements of Income (Loss)

(In thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended December 31,

 

Year Ended December 31,

 

 

2019

 

2018

 

2019

 

2018

Revenue:

 

 

 

 

 

 

 

 

Subscription

 

$

40,207

 

 

$

28,316

 

 

$

141,165

 

 

$

95,192

 

Maintenance and support

 

13,412

 

 

15,723

 

 

58,184

 

 

64,760

 

Total subscription, maintenance and support

 

53,619

 

 

44,039

 

 

199,349

 

 

159,952

 

License

 

499

 

 

662

 

 

4,162

 

 

3,516

 

Services

 

12,057

 

 

7,912

 

 

46,823

 

 

33,556

 

Total revenue

 

66,175

 

 

52,613

 

 

250,334

 

 

197,024

 

Cost of revenue:

 

 

 

 

 

 

 

 

Subscription

 

11,547

 

 

9,060

 

 

42,090

 

 

35,368

 

Maintenance and support

 

2,783

 

 

2,840

 

 

11,052

 

 

11,602

 

Total cost of subscription, maintenance and support

 

14,330

 

 

11,900

 

 

53,142

 

 

46,970

 

License

 

97

 

 

51

 

 

249

 

 

251

 

Services

 

13,934

 

 

7,507

 

 

45,726

 

 

29,958

 

Total cost of revenue

 

28,361

 

 

19,458

 

 

99,117

 

 

77,179

 

Gross profit

 

37,814

 

 

33,155

 

 

151,217

 

 

119,845

 

Operating expenses:

 

 

 

 

 

 

 

 

Selling and marketing

 

23,523

 

 

18,335

 

 

89,553

 

 

72,006

 

General and administrative

 

11,994

 

 

10,289

 

 

47,254

 

 

41,302

 

Research and development

 

17,114

 

 

14,140

 

 

67,246

 

 

55,657

 

Acquisition-related

 

254

 

 

?

 

 

502

 

 

95

 

Loss from operations

 

(15,071

)

 

(9,609

)

 

(53,338

)

 

(49,215

)

Convertible debt interest and amortization

 

(2,418

)

 

(4,315

)

 

(14,765

)

 

(16,986

)

Other income (expense), net

 

247

 

 

1,188

 

 

(354

)

 

2,155

 

Loss before income tax provision

 

(17,242

)

 

(12,736

)

 

(68,457

)

 

(64,046

)

Income tax provision

 

58

 

 

24

 

 

624

 

 

200

 

Net loss

 

$

(17,300

)

 

$

(12,760

)

 

$

(69,081

)

 

$

(64,246

)

 

 

 

 

 

 

 

 

 

Net loss per share:

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(0.41

)

 

$

(0.34

)

 

$

(1.72

)

 

$

(1.86

)

Weighted average number of shares:

 

 

 

 

 

 

 

 

Basic and diluted

 

42,615

 

 

37,154

 

 

40,232

 

 

34,465

 

PROS Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands) (Unaudited)

 

 

 

Three Months Ended December 31,

 

Year Ended December 31,

 

 

2019

 

2018

 

2019

 

2018

Operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(17,300

)

 

$

(12,760

)

 

$

(69,081

)

 

$

(64,246

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

3,606

 

 

3,270

 

 

13,870

 

 

13,055

 

Amortization of debt discount and issuance costs

 

1,956

 

 

3,069

 

 

11,115

 

 

12,027

 

Share-based compensation

 

6,446

 

 

5,098

 

 

24,680

 

 

21,453

 

Deferred income tax, net

 

(119

)

 

(211

)

 

(119

)

 

(463

)

Provision for doubtful accounts

 

(754

)

 

(3

)

 

(754

)

 

212

 

Loss on disposal of assets

 

?

 

 

?

 

 

?

 

 

37

 

Loss on debt extinguishment

 

660

 

 

?

 

 

5,660

 

 

?

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts and unbilled receivables

 

(8,385

)

 

4,348

 

 

(22,273

)

 

(9,550

)

Deferred costs

 

(648

)

 

(2,569

)

 

(3,772

)

 

(4,086

)

Prepaid expenses and other assets

 

(462

)

 

1,971

 

 

(5,044

)

 

87

 

Accounts payable and other liabilities

 

2,981

 

 

1,362

 

 

2,489

 

 

3,931

 

Accrued liabilities

 

5,578

 

 

3,297

 

 

15,455

 

 

2,764

 

Accrued payroll and other employee benefits

 

5,220

 

 

6,172

 

 

7,937

 

 

5,830

 

Deferred revenue

 

14,073

 

 

2,144

 

 

25,082

 

 

24,652

 

Net cash provided by operating activities

 

12,852

 

 

15,188

 

 

5,245

 

 

5,703

 

Investing activities:

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

(1,911

)

 

(69

)

 

(5,271

)

 

(1,475

)

Capitalized internal-use software development costs

 

(415

)

 

(927

)

 

(1,436

)

 

(4,613

)

Acquisition of Travelaer, net of cash acquired

 

?

 

 

?

 

 

(10,510

)

 

?

 

Purchase of equity securities

 

(113

)

 

(45

)

 

(293

)

 

(45

)

Purchase of intangible asset

 

?

 

 

(125

)

 

(50

)

 

(125

)

Net cash used in investing activities

 

(2,439

)

 

(1,166

)

 

(17,560

)

 

(6,258

)

Financing activities:

 

 

 

 

 

 

 

 

Exercise of stock options

 

?

 

 

?

 

 

?

 

 

1,142

 

Proceeds from employee stock plans

 

?

 

 

?

 

 

1,995

 

 

1,720

 

Tax withholding related to net share settlement of stock awards

 

(2,155

)

 

(257

)

 

(23,753

)

 

(9,410

)

Proceeds from Secondary Offering, net

 

?

 

 

?

 

 

?

 

 

141,954

 

Payments of notes payable

 

?

 

 

?

 

 

?

 

 

(54

)

Proceeds from issuance of convertible debt, net

 

?

 

 

?

 

 

140,156

 

 

?

 

Debt issuance costs related to convertible debt

 

?

 

 

?

 

 

(860

)

 

?

 

Purchase of capped call

 

?

 

 

?

 

 

(16,445

)

 

?

 

Settlement of convertible debt

 

(21,660

)

 

?

 

 

(97,678

)

 

?

 

Proceeds from termination of bond hedge

 

?

 

 

?

 

 

64,819

 

 

?

 

Payment for termination of warrant

 

?

 

 

?

 

 

(45,243

)

 

?

 

Net cash (used in) provided by financing activities

 

(23,815

)

 

(257

)

 

22,991

 

 

135,352

 

Effect of foreign currency rates on cash

 

317

 

 

(178

)

 

(75

)

 

174

 

Net change in cash and cash equivalents

 

(13,085

)

 

13,587

 

 

10,601

 

 

134,971

 

Cash and cash equivalents:

 

 

 

 

 

 

 

 

Beginning of period

 

319,162

 

 

281,889

 

 

295,476

 

 

160,505

 

End of period

 

$

306,077

 

 

$

295,476

 

 

$

306,077

 

 

$

295,476

 

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 11.

 

 

 

Three Months Ended
December 31,

 

Quarter
over
Quarter

 

Year Ended
December 31,

 

Year over
Year

 

 

2019

 

2018

 

% change

 

2019

 

2018

 

% change

GAAP gross profit

 

$

37,814

 

 

$

33,155

 

 

14

%

 

$

151,217

 

 

$

119,845

 

 

26

%

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

New headquarters noncash rent expense

 

167

 

 

48

 

 

 

 

646

 

 

48

 

 

 

Amortization of acquisition-related intangibles

 

907

 

 

1,077

 

 

 

 

3,895

 

 

4,624

 

 

 

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

 

 

 

PROS Holdings, Inc.

Supplemental Schedule of Non-GAAP Financial Measures

Increase (Decrease) in GAAP Amounts Reported

(In thousands)

(Unaudited)

 

 

 

Three Months Ended December 31,

 

Year Ended December 31,

 

 

2019

 

2018

 

2019

 

2018

Cost of Subscription Items

 

 

 

 

 

 

 

 

New headquarters noncash rent expense

 

16

 

 

5

 

 

64

 

 

5

 

Amortization of acquisition-related intangibles

 

736

 

 

901

 

 

3,207

 

 

3,898

 

Share-based compensation

 

70

 

 

53

 

 

280

 

 

218

 

Total cost of subscription items

 

$

822

 

 

$

959

 

 

$

3,551

 

 

$

4,121

 

 

 

 

 

 

 

 

 

 

Cost of Maintenance Items

 

 

 

 

 

 

 

 

New headquarters noncash rent expense

 

27

 

 

9

 

 

110

 

 

9

 

Amortization of acquisition-related intangibles

 

160

 

 

165

 

 

646

 

 

682

 

Share-based compensation

 

45

 

 

57

 

 

197

 

 

242

 

Total cost of maintenance items

 

$

232

 

 

$

231

 

 

$

953

 

 

$

933

 

 

 

 

 

 

 

 

 

 

Cost of License Items

 

 

 

 

 

 

 

 

Amortization of acquisition-related intangibles

 

11

 

 

11

 

 

42

 

 

44

 

Total cost of license items

 

$

11

 

 

$

11

 

 

$

42

 

 

$

44

 

 

 

 

 

 

 

 

 

 

Cost of Services Items

 

 

 

 

 

 

 

 

New headquarters noncash rent expense

 

124

 

 

34

 

 

472

 

 

34

 

Share-based compensation

 

375

 

 

286

 

 

1,548

 

 

1,261

 

Total cost of services items

 

$

499

 

 

$

320

 

 

$

2,020

 

 

$

1,295

 

 

 

 

 

 

 

 

 

 

Sales and Marketing Items

 

 

 

 

 

 

 

 

New headquarters noncash rent expense

 

104

 

 

35

 

 

409

 

 

35

 

Amortization of acquisition-related intangibles

 

491

 

 

617

 

 

1,936

 

 

2,772

 

Share-based compensation

 

1,666

 

 

1,049

 

 

5,995

 

 

4,396

 

Total sales and marketing items

 

$

2,261

 

 

$

1,701

 

 

$

8,340

 

 

$

7,203

 

 

 

 

 

 

 

 

 

 

General and Administrative Items

 

 

 

 

 

 

 

 

New headquarters noncash rent expense

 

95

 

 

33

 

 

367

 

 

33

 

Debt extinguishment fees

 

?

 

 

?

 

 

319

 

 

?

 

Share-based compensation

 

2,930

 

 

2,515

 

 

11,451

 

 

10,717

 

Total general and administrative items

 

$

3,025

 

 

$

2,548

 

 

$

12,137

 

 

$

10,750

 

 

 

 

 

 

 

 

 

 

Research and Development Items

 

 

 

 

 

 

 

 

New headquarters noncash rent expense

 

189

 

 

69

 

 

796

 

 

69

 

Share-based compensation

 

1,360

 

 

1,138

 

 

5,209

 

 

4,619

 

Total research and development items

 

$

1,549

 

 

$

1,207

 

 

$

6,005

 

 

$

4,688

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition-related expenses

 

$

254

 

 

$

?

 

 

$

502

 

 

$

95

 

PROS Holdings, Inc.

Supplemental Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands)

(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

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Guidance

 

Q1 2020 Guidance

 

Full Year 2020 Guidance

 

 

Low

 

High

 

Low

 

High

Adjusted EBITDA

 

 

 

 

 

 

 

 

GAAP Loss from Operations

 

$

(23,200

)

 

$

(22,700

)

 

$

(58,300

)

 

$

(56,300

)

Amortization of acquisition-related intangibles

 

1,400

 

 

1,400

 

 

5,500

 

 

5,500

 

New headquarters noncash rent expense

 

600

 

 

600

 

 

700

 

 

700

 

Share-based compensation

 

7,700

 

 

7,700

 

 

31,000

 

 

31,000

 

Depreciation and other amortization

 

1,800

 

 

1,800

 

 

8,200

 

 

8,200

 

Capitalized internal-use software development costs

 

(300

)

 

(300

)

 

(700

)

 

(700

)

Adjusted EBITDA

 

$

(12,000

)

 

$

(11,500

)

 

$

(13,600

)

 

$

(11,600

)

 


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