Le Lézard
Classified in: Science and technology, Business, Covid-19 virus
Subjects: EARNINGS, Contract/Agreement, Webcast

PROS Holdings, Inc. Reports Third Quarter 2020 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 third quarter ended September 30, 2020.

"I'm proud of how our team is executing and rallying to help our customers win in their markets during these difficult times," stated CEO Andres Reiner. "Buyers are continuing to shift to digital, self-serve channels, and our latest innovations and AI solutions are enabling companies to deliver an optimized, omnichannel experience wherever their customers want to buy. Our digital selling technology is more important than ever, and we're focused on delivering on our mission of helping people and companies outperform."

Third Quarter 2020 Financial Highlights

Key financial results for the third quarter 2020 are shown below. Throughout this press release, all dollar figures are in millions, except net loss per share. Unless otherwise noted, all results are on a reported basis and are compared with the prior-year period.

 

GAAP

 

Non-GAAP

 

Q3 2020

 

Q3 2019

 

Change

 

Q3 2020

 

Q3 2019

 

Change

Revenue:

 

 

 

 

 

 

 

 

 

 

 

Total Revenue

$61.5

 

 

$64.2

 

 

(4

)%

 

n/a

 

 

n/a

 

 

n/a

 

Subscription Revenue

$42.0

 

 

$38.6

 

 

9

%

 

n/a

 

 

n/a

 

 

n/a

 

Subscription and Maintenance Revenue

$52.8

 

 

$53.0

 

 

?

%

 

n/a

 

 

n/a

 

 

n/a

 

Profitability:

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

$36.9

 

 

$37.8

 

 

(2

)%

 

$38.4

 

 

$39.4

 

 

(3

)%

Operating Loss

$(16.2

)

 

$(12.5

)

 

$(3.7

)

 

$(8.0

)

 

$(4.1

)

 

$(4.0

)

Net Loss

$(18.9

)

 

$(17.3

)

 

$(1.5

)

 

$(6.6

)

 

$(2.5

)

 

$(4.1

)

Net Loss Per Share

$(0.44

)

 

$(0.42

)

 

$(0.02

)

 

$(0.15

)

 

$(0.06

)

 

$(0.09

)

Adjusted EBITDA

n/a

 

 

n/a

 

 

n/a

 

 

$(6.2

)

 

$(2.2

)

 

$(4.0

)

Cash:

 

 

 

 

 

 

 

 

 

 

 

Net Cash (Used In) Provided by Operating Activities

$(14.9

)

 

$4.0

 

 

$(18.9

)

 

n/a

 

 

n/a

 

 

n/a

 

Free Cash Flow

n/a

 

 

n/a

 

 

n/a

 

 

$(15.7

)

 

$3.0

 

 

$(18.7

)

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

Recent Business Highlights

Financial Outlook

Based on information as of October 29, 2020, PROS currently anticipates the following based on an estimated 43.4 million basic weighted average shares outstanding and a 22% non-GAAP estimated tax rate for the fourth quarter ending December 31, 2020.

 

Q4 2020 Guidance

 

v. Q4 2019 at Mid-
Point

 

Full Year 2020 Guidance

 

v. Prior Year at Mid-
Point

Total Revenue

$58.9 to $59.9

 

(10)%

 

$250.5 to $251.5

 

?%

Subscription Revenue

$41.1 to $41.6

 

2%

 

$168.7 to $169.2

 

16%

ARR

n/a

 

n/a

 

$207.0 to $209.0

 

(5)%

Non-GAAP Loss Per Share

$(0.18) to $(0.16)

 

$(0.06)

 

n/a

 

n/a

Adjusted EBITDA

$(9.1) to $(8.1)

 

$(4.0)

 

$(32.5) to $(31.5)

 

$(18.8)

Free Cash Flow

n/a

 

n/a

 

$(65.0) to $(60.0)

 

$(61.6)

Conference Call

In conjunction with this announcement, PROS Holdings, Inc. will host a conference call on Thursday, October 29, 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, November 12, 2020, at 1-844-512-2921 (toll-free) or 1-412-317-6671 using the pass code 13710898.

About PROS

PROS Holdings, Inc. (NYSE: PRO) provides AI solutions that power commerce in the digital economy. PROS solutions bring intelligence to commerce by providing companies with predictive and prescriptive guidance that enables them to dynamically price, configure and sell their products and services across all channels with speed, precision and consistency. To learn more, visit www.pros.com.

Forward-looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about the business impact and duration of the coronavirus (COVID-19) pandemic; our financial outlook; expectations; ability to achieve future growth and profitability; management's confidence and optimism; positioning; customer successes; demand for our software solutions; pipeline; 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) the impact of the COVID-19 pandemic, such as the scope and duration of the outbreak and timeframe for recovery of the travel industry, (b) cybersecurity, (c) maintaining subscription renewal rates, (d) potential downturns in sales, (e) implementing our solutions, (f) software innovation, (g) maintaining our corporate culture, (h) disruptions from our third party data center, software, data, and other unrelated service providers, (i) evolving data privacy, cyber security and data localization laws, (j) cloud operations, (k) managing our growth effectively, (l) operating globally, including economic and commercial disruptions, (m) personnel risks including loss of any key employees, (n) the timing of revenue recognition and cash flow from operations, (o) competition, (p) market acceptance of our software innovations, (q) development of our target markets, (r) increasing business from existing customers, (s) migrating customers to our latest cloud solutions; (t) expanding and training our direct and indirect sales force, (u) our debt repayment obligations, (v) returning to profitability, and (w) acquiring and integrating businesses and/or technologies. Additional information relating to the risks and uncertainties affecting our business is contained in our filings with the SEC. These forward-looking statements represent our expectations as of the date hereof. Subsequent events may cause these expectations to change, and PROS disclaims any obligations to update or alter these forward-looking statements in the future, whether as a result of new information, future events or otherwise.

Non-GAAP Financial Measures

PROS has provided in this release certain non-GAAP financial measures, including non-GAAP gross profit and margin, non-GAAP income (loss) from operations or non-GAAP operating loss, annual recurring revenue, adjusted EBITDA, free cash flow, non-GAAP subscription revenue, non-GAAP tax rate, non-GAAP net income (loss) or non-GAAP net loss, and diluted earnings (loss) per share or non-GAAP net loss per share. PROS uses these non-GAAP financial measures internally in analyzing its financial results and believes they are useful to investors, as a supplement to GAAP measures, in evaluating PROS' ongoing operational performance and cloud transition. Non-GAAP gross margin can be compared to gross margin which can be calculated from the condensed consolidated statement on income (loss) by dividing gross profit by total revenue. Non-GAAP gross margin is similarly calculated but first adds back to gross profit the portion of certain of the non-GAAP adjustments described below attributable to cost of revenue. Non-GAAP subscription margin can be compared to subscription margin which can be calculated from the condensed consolidated statement on income (loss) by dividing subscription gross profit (subscription revenue minus subscription cost) by subscription revenue. Non-GAAP subscription margin is similarly calculated but first subtracts out from subscription cost the portion of certain of the non-GAAP adjustments described below attributable to cost of subscription. These items and amounts are presented in the Supplemental Schedule of Non-GAAP Financial Measures.

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

Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measure as detailed above. A reconciliation of GAAP to the non-GAAP financial measures has been provided in the tables included as part of this press release, and can be found, along with other financial information, in the investor relations portion of our website. PROS' use of non-GAAP financial measures may not be consistent with the presentations by similar companies in PROS' industry. PROS has also provided in this release certain forward-looking non-GAAP financial measures, including non-GAAP income (loss) from operations, annual recurring revenue, non-GAAP loss per share, adjusted EBITDA, free cash flow, non-GAAP tax rates, and calculated billings (collectively the "non-GAAP financial measures") as follows:

Non-GAAP income (loss) from operations: Non-GAAP income (loss) from operations excludes the impact of share-based compensation, amortization of acquisition-related intangibles, 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 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, 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)

 

 

 

September 30, 2020

 

December 31, 2019

Assets:

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

322,352

 

 

 

$

306,077

 

 

Trade and other receivables, net of allowance of $4,616 and $214, respectively

 

67,940

 

 

 

65,074

 

 

Deferred costs, current

 

5,917

 

 

 

5,756

 

 

Prepaid and other current assets

 

9,010

 

 

 

9,038

 

 

Total current assets

 

405,219

 

 

 

385,945

 

 

Property and equipment, net

 

35,994

 

 

 

14,794

 

 

Operating lease right-of-use assets

 

31,030

 

 

 

26,550

 

 

Deferred costs, noncurrent

 

12,974

 

 

 

15,478

 

 

Intangibles, net

 

9,869

 

 

 

14,605

 

 

Goodwill

 

49,560

 

 

 

49,104

 

 

Other assets, noncurrent

 

6,796

 

 

 

6,831

 

 

Total assets

 

$

551,442

 

 

 

$

513,307

 

 

Liabilities and Stockholders' Equity:

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable and other liabilities

 

$

14,014

 

 

 

$

9,098

 

 

Accrued liabilities

 

11,906

 

 

 

22,748

 

 

Accrued payroll and other employee benefits

 

22,017

 

 

 

32,656

 

 

Operating lease liabilities, current

 

5,132

 

 

 

7,173

 

 

Deferred revenue, current

 

106,547

 

 

 

124,459

 

 

Total current liabilities

 

159,616

 

 

 

196,134

 

 

Deferred revenue, noncurrent

 

11,493

 

 

 

17,801

 

 

Convertible debt, net, noncurrent

 

214,751

 

 

 

110,704

 

 

Operating lease liabilities, noncurrent

 

35,218

 

 

 

22,391

 

 

Other liabilities, noncurrent

 

1,330

 

 

 

1,281

 

 

Total liabilities

 

422,408

 

 

 

348,311

 

 

Stockholders' equity:

 

 

 

 

Preferred stock, $0.001 par value, 5,000,000 shares authorized; none issued

 

?

 

 

 

?

 

 

Common stock, $0.001 par value, 75,000,000 shares authorized; 48,030,340 and 47,310,846 shares issued, respectively; 43,349,617 and 42,630,123 shares outstanding, respectively

 

48

 

 

 

47

 

 

Additional paid-in capital

 

583,284

 

 

 

560,496

 

 

Treasury stock, 4,680,723 common shares, at cost

 

(29,847

)

 

 

(29,847

)

 

Accumulated deficit

 

(420,589

)

 

 

(361,789

)

 

Accumulated other comprehensive loss

 

(3,862

)

 

 

(3,911

)

 

Total stockholders' equity

 

129,034

 

 

 

164,996

 

 

Total liabilities and stockholders' equity

 

$

551,442

 

 

 

$

513,307

 

 

 

PROS Holdings, Inc.

Condensed Consolidated Statements of Income (Loss)

(In thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2020

 

2019

 

2020

 

2019

Revenue:

 

 

 

 

 

 

 

 

Subscription

 

$

42,029

 

 

 

$

38,592

 

 

 

$

127,576

 

 

 

$

104,621

 

 

Maintenance and support

 

10,765

 

 

 

14,405

 

 

 

35,029

 

 

 

44,772

 

 

Total subscription, maintenance and support

 

52,794

 

 

 

52,997

 

 

 

162,605

 

 

 

149,393

 

 

Services

 

8,714

 

 

 

11,153

 

 

 

28,961

 

 

 

34,766

 

 

Total revenue

 

61,508

 

 

 

64,150

 

 

 

191,566

 

 

 

184,159

 

 

Cost of revenue:

 

 

 

 

 

 

 

 

Subscription

 

12,897

 

 

 

11,090

 

 

 

38,153

 

 

 

30,695

 

 

Maintenance and support

 

2,177

 

 

 

2,632

 

 

 

7,577

 

 

 

8,269

 

 

Total cost of subscription, maintenance and support

 

15,074

 

 

 

13,722

 

 

 

45,730

 

 

 

38,964

 

 

Services

 

9,563

 

 

 

12,661

 

 

 

33,584

 

 

 

31,792

 

 

Total cost of revenue

 

24,637

 

 

 

26,383

 

 

 

79,314

 

 

 

70,756

 

 

Gross profit

 

36,871

 

 

 

37,767

 

 

 

112,252

 

 

 

113,403

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Selling and marketing

 

21,951

 

 

 

21,600

 

 

 

67,882

 

 

 

66,030

 

 

General and administrative

 

11,948

 

 

 

11,553

 

 

 

40,356

 

 

 

35,260

 

 

Research and development

 

19,135

 

 

 

16,878

 

 

 

56,668

 

 

 

50,132

 

 

Acquisition-related

 

?

 

 

 

248

 

 

 

?

 

 

 

248

 

 

Loss from operations

 

(16,163

)

 

 

(12,512

)

 

 

(52,654

)

 

 

(38,267

)

 

Convertible debt interest and amortization

 

(2,498

)

 

 

(3,717

)

 

 

(6,645

)

 

 

(12,347

)

 

Other income (expense), net

 

122

 

 

 

(1,010

)

 

 

1,099

 

 

 

(601

)

 

Loss before income tax provision

 

(18,539

)

 

 

(17,239

)

 

 

(58,200

)

 

 

(51,215

)

 

Income tax provision

 

318

 

 

 

108

 

 

 

600

 

 

 

566

 

 

Net loss

 

$

(18,857

)

 

 

$

(17,347

)

 

 

$

(58,800

)

 

 

$

(51,781

)

 

 

 

 

 

 

 

 

 

 

Net loss per share:

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(0.44

)

 

 

$

(0.42

)

 

 

$

(1.36

)

 

 

$

(1.31

)

 

Weighted average number of shares:

 

 

 

 

 

 

 

 

Basic and diluted

 

43,347

 

 

 

41,276

 

 

 

43,251

 

 

 

39,438

 

 

 

PROS Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands) (Unaudited)

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2020

 

2019

 

2020

 

2019

Operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(18,857

)

 

 

$

(17,347

)

 

 

$

(58,800

)

 

 

$

(51,781

)

 

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

 

 

 

 

 

 

 

 

Depreciation and amortization

 

3,651

 

 

 

3,435

 

 

 

10,584

 

 

 

10,264

 

 

Amortization of debt discount and issuance costs

 

2,008

 

 

 

2,864

 

 

 

5,456

 

 

 

9,159

 

 

Share-based compensation

 

6,378

 

 

 

6,209

 

 

 

18,477

 

 

 

18,234

 

 

Provision for doubtful accounts

 

263

 

 

 

?

 

 

 

5,549

 

 

 

?

 

 

Loss on debt extinguishment

 

?

 

 

 

2,734

 

 

 

?

 

 

 

5,000

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts and unbilled receivables

 

(13,700

)

 

 

(2,641

)

 

 

(8,584

)

 

 

(13,888

)

 

Deferred costs

 

717

 

 

 

(1,191

)

 

 

2,343

 

 

 

(3,124

)

 

Prepaid expenses and other assets

 

(192

)

 

 

(1,059

)

 

 

131

 

 

 

(4,582

)

 

Accounts payable and other liabilities

 

5,747

 

 

 

76

 

 

 

9,344

 

 

 

(492

)

 

Accrued liabilities

 

(4,877

)

 

 

4,646

 

 

 

(11,500

)

 

 

9,877

 

 

Accrued payroll and other employee benefits

 

4,378

 

 

 

6,737

 

 

 

(10,601

)

 

 

2,717

 

 

Deferred revenue

 

(402

)

 

 

(426

)

 

 

(24,240

)

 

 

11,009

 

 

Net cash (used in) provided by operating activities

 

(14,886

)

 

 

4,037

 

 

 

(61,841

)

 

 

(7,607

)

 

Investing activities:

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

(4,353

)

 

 

(1,053

)

 

 

(23,551

)

 

 

(3,360

)

 

Capitalized internal-use software development costs

 

(459

)

 

 

(153

)

 

 

(1,265

)

 

 

(1,021

)

 

Acquisition of Travelaer, net of cash acquired

 

?

 

 

 

(10,510

)

 

 

?

 

 

 

(10,510

)

 

Purchase of equity securities

 

(113

)

 

 

(112

)

 

 

(113

)

 

 

(180

)

 

Purchase of intangible asset

 

?

 

 

 

?

 

 

 

?

 

 

 

(50

)

 

Net cash used in investing activities

 

(4,925

)

 

 

(11,828

)

 

 

(24,929

)

 

 

(15,121

)

 

Financing activities:

 

 

 

 

 

 

 

 

Proceeds from employee stock plans

 

1,460

 

 

 

1,052

 

 

 

2,824

 

 

 

1,995

 

 

Tax withholding related to net share settlement of stock awards

 

(113

)

 

 

(2,956

)

 

 

(20,334

)

 

 

(21,598

)

 

Proceeds from issuance of convertible debt, net

 

146,925

 

 

 

?

 

 

 

146,925

 

 

 

140,156

 

 

Debt issuance costs related to convertible debt

 

(675

)

 

 

(212

)

 

 

(675

)

 

 

(860

)

 

Purchase of capped call

 

(25,335

)

 

 

?

 

 

 

(25,335

)

 

 

(16,445

)

 

Settlement of convertible debt

 

?

 

 

 

(60

)

 

 

?

 

 

 

(76,018

)

 

Proceeds from termination of bond hedge

 

?

 

 

 

?

 

 

 

?

 

 

 

64,819

 

 

Payment for termination of warrant

 

?

 

 

 

?

 

 

 

?

 

 

 

(45,243

)

 

Net cash provided by (used in) financing activities

 

122,262

 

 

 

(2,176

)

 

 

103,405

 

 

 

46,806

 

 

Effect of foreign currency rates on cash

 

(256

)

 

 

(433

)

 

 

(360

)

 

 

(392

)

 

Net change in cash and cash equivalents

 

102,195

 

 

 

(10,400

)

 

 

16,275

 

 

 

23,686

 

 

Cash and cash equivalents:

 

 

 

 

 

 

 

 

Beginning of period

 

220,157

 

 

 

329,562

 

 

 

306,077

 

 

 

295,476

 

 

End of period

 

$

322,352

 

 

 

$

319,162

 

 

 

$

322,352

 

 

 

$

319,162

 

 

 

PROS Holdings, Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands, except per share data)

(Unaudited)

 

We use these non-GAAP financial measures to assist in the management of the Company because we believe that this information provides a more consistent and complete understanding of the underlying results and trends of the ongoing business due to the uniqueness of these charges.

See breakdown of the reconciling line items on page 10.

 

 

 

 

Three Months Ended
September 30,

 

Quarter
over
Quarter

 

Nine Months Ended
September 30,

 

Year
over
Year

 

 

 

2020

 

2019

 

% change

 

2020

 

2019

 

% change

GAAP gross profit

 

$

36,871

 

 

 

$

37,767

 

 

 

(2

)

%

 

$

112,252

 

 

 

$

113,403

 

 

 

(1

)

%

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

New headquarters noncash rent expense

 

99

 

 

 

166

 

 

 

 

 

417

 

 

 

479

 

 

 

 

 

Amortization of acquisition-related intangibles

 

910

 

 

 

961

 

 

 

 

 

2,700

 

 

 

2,988

 

 

 

 

 

Share-based compensation

 

519

 

 

 

503

 

 

 

 

 

1,545

 

 

 

1,535

 

 

 

 

Non-GAAP gross profit

 

$

38,399

 

 

 

$

39,397

 

 

 

(3

)

%

 

$

116,914

 

 

 

$

118,405

 

 

 

(1

)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP gross margin

 

62.4

 

%

 

61.4

 

%

 

 

 

61.0

 

%

 

64.3

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP loss from operations

 

$

(16,163

)

 

 

$

(12,512

)

 

 

29

 

%

 

$

(52,654

)

 

 

$

(38,267

)

 

 

38

 

%

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition-related expenses

 

?

 

 

 

248

 

 

 

 

 

?

 

 

 

248

 

 

 

 

 

Debt extinguishment fees

 

?

 

 

 

?

 

 

 

 

 

?

 

 

 

319

 

 

 

 

 

New headquarters noncash rent expense

 

370

 

 

 

554

 

 

 

 

 

1,479

 

 

 

1,663

 

 

 

 

 

Amortization of acquisition-related intangibles

 

1,386

 

 

 

1,425

 

 

 

 

 

4,144

 

 

 

4,433

 

 

 

 

 

Share-based compensation

 

6,378

 

 

 

6,209

 

 

 

 

 

18,477

 

 

 

18,234

 

 

 

 

 

Total Non-GAAP adjustments

 

8,134

 

 

 

8,436

 

 

 

 

 

24,100

 

 

 

24,897

 

 

 

 

Non-GAAP loss from operations

 

$

(8,029

)

 

 

$

(4,076

)

 

 

97

 

%

 

$

(28,554

)

 

 

$

(13,370

)

 

 

114

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP loss from operations % of total revenue

 

(13.1

)

%

 

(6.4

)

%

 

 

 

(14.9

)

%

 

(7.3

)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP net loss

 

$

(18,857

)

 

 

$

(17,347

)

 

 

9

 

%

 

$

(58,800

)

 

 

$

(51,781

)

 

 

14

 

%

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Non-GAAP adjustments affecting loss from operations

 

8,134

 

 

 

8,436

 

 

 

 

 

24,100

 

 

 

24,897

 

 

 

 

 

Amortization of debt discount and issuance costs

 

1,998

 

 

 

2,855

 

 

 

 

 

5,426

 

 

 

9,129

 

 

 

 

 

Loss on debt extinguishment

 

?

 

 

 

2,734

 

 

 

 

 

?

 

 

 

5,000

 

 

 

 

 

Tax impact related to non-GAAP adjustments

 

2,168

 

 

 

815

 

 

 

 

 

6,908

 

 

 

3,248

 

 

 

 

Non-GAAP net loss

 

$

(6,557

)

 

 

$

(2,507

)

 

 

162

 

%

 

$

(22,366

)

 

 

$

(9,507

)

 

 

135

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP diluted loss per share

 

$

(0.15

)

 

 

$

(0.06

)

 

 

 

 

$

(0.52

)

 

 

$

(0.24

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in computing non-GAAP loss per share

 

43,347

 

 

 

41,276

 

 

 

 

 

43,251

 

 

 

39,438

 

 

 

 

 

PROS Holdings, Inc.

Supplemental Schedule of Non-GAAP Financial Measures

Increase (Decrease) in GAAP Amounts Reported

(In thousands)

(Unaudited)

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

 

2020

 

2019

 

2020

 

2019

Cost of Subscription Items

 

 

 

 

 

 

 

 

 

New headquarters noncash rent expense

 

13

 

 

16

 

 

42

 

 

48

 

 

Amortization of acquisition-related intangibles

 

742

 

 

801

 

 

2,214

 

 

2,502

 

 

Share-based compensation

 

119

 

 

71

 

 

297

 

 

210

 

 

Total cost of subscription items

 

$

874

 

 

$

888

 

 

$

2,553

 

 

$

2,760

 

 

 

 

 

 

 

 

 

 

 

Cost of Maintenance Items

 

 

 

 

 

 

 

 

 

New headquarters noncash rent expense

 

13

 

 

27

 

 

64

 

 

83

 

 

Amortization of acquisition-related intangibles

 

168

 

 

160

 

 

486

 

 

486

 

 

Share-based compensation

 

50

 

 

48

 

 

178

 

 

152

 

 

Total cost of maintenance items

 

$

231

 

 

$

235

 

 

$

728

 

 

$

721

 

 

 

 

 

 

 

 

 

 

 

Cost of Services Items

 

 

 

 

 

 

 

 

 

New headquarters noncash rent expense

 

73

 

 

123

 

 

311

 

 

348

 

 

Share-based compensation

 

350

 

 

384

 

 

1,070

 

 

1,173

 

 

Total cost of services items

 

$

423

 

 

$

507

 

 

$

1,381

 

 

$

1,521

 

 

 

 

 

 

 

 

 

 

 

Sales and Marketing Items

 

 

 

 

 

 

 

 

 

New headquarters noncash rent expense

 

73

 

 

99

 

 

283

 

 

305

 

 

Amortization of acquisition-related intangibles

 

476

 

 

464

 

 

1,444

 

 

1,445

 

 

Share-based compensation

 

1,727

 

 

1,515

 

 

5,558

 

 

4,329

 

 

Total sales and marketing items

 

$

2,276

 

 

$

2,078

 

 

$

7,285

 

 

$

6,079

 

 

 

 

 

 

 

 

 

 

General and Administrative Items

 

 

 

 

 

 

 

 

 

New headquarters noncash rent expense

 

65

 

 

91

 

 

262

 

 

272

 

 

Debt extinguishment fees

 

?

 

 

?

 

 

?

 

 

319

 

 

Share-based compensation

 

2,593

 

 

2,901

 

 

6,960

 

 

8,521

 

 

Total general and administrative items

 

$

2,658

 

 

$

2,992

 

 

$

7,222

 

 

$

9,112

 

 

 

 

 

 

 

 

 

 

Research and Development Items

 

 

 

 

 

 

 

 

 

New headquarters noncash rent expense

 

133

 

 

198

 

 

517

 

 

607

 

 

Share-based compensation

 

1,539

 

 

1,290

 

 

4,414

 

 

3,849

 

 

Total research and development items

 

$

1,672

 

 

$

1,488

 

 

$

4,931

 

 

$

4,456

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition-related expenses

 

$

?

 

 

$

248

 

 

$

?

 

 

$

248

 

 

PROS Holdings, Inc.

Supplemental Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands)

(Unaudited)

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2020

 

2019

 

2020

 

2019

Adjusted EBITDA

 

 

 

 

 

 

 

 

GAAP Loss from Operations

 

$

(16,163

)

 

 

$

(12,512

)

 

 

$

(52,654

)

 

 

$

(38,267

)

 

Acquisition-related expenses

 

?

 

 

 

248

 

 

 

?

 

 

 

248

 

 

Amortization of acquisition-related intangibles

 

1,386

 

 

 

1,425

 

 

 

4,144

 

 

 

4,433

 

 

New headquarters noncash rent expense

 

370

 

 

 

554

 

 

 

1,479

 

 

 

1,663

 

 

Debt extinguishment fees

 

?

 

 

 

?

 

 

 

?

 

 

 

319

 

 

Share-based compensation

 

6,378

 

 

 

6,209

 

 

 

18,477

 

 

 

18,234

 

 

Depreciation and other amortization

 

2,265

 

 

 

2,010

 

 

 

6,440

 

 

 

5,831

 

 

Capitalized internal-use software development costs

 

(459

)

 

 

(153

)

 

 

(1,265

)

 

 

(1,021

)

 

Adjusted EBITDA

 

$

(6,223

)

 

 

$

(2,219

)

 

 

$

(23,379

)

 

 

$

(8,560

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash (used in) provided by operating activities

 

$

(14,886

)

 

 

$

4,037

 

 

 

$

(61,841

)

 

 

$

(7,607

)

 

Purchase of property and equipment (excluding new headquarters)

 

(384

)

 

 

(876

)

 

 

(1,647

)

 

 

(3,145

)

 

Purchase of intangible asset

 

?

 

 

 

?

 

 

 

?

 

 

 

(50

)

 

Capitalized internal-use software development costs

 

(459

)

 

 

(153

)

 

 

(1,265

)

 

 

(1,021

)

 

Free Cash Flow

 

$

(15,729

)

 

 

$

3,008

 

 

 

$

(64,753

)

 

 

$

(11,823

)

 

 

 

 

 

 

 

 

 

 

Guidance

 

 

 

 

 

 

 

 

 

 

Q4 2020 Guidance

 

Full Year 2020 Guidance

 

 

Low

 

High

 

Low

 

High

Adjusted EBITDA

 

 

 

 

 

 

 

 

GAAP Loss from Operations

 

$

(18,900

)

 

 

$

(17,900

)

 

 

$

(71,900

)

 

 

$

(70,900

)

 

Amortization of acquisition-related intangibles

 

1,400

 

 

 

1,400

 

 

 

5,500

 

 

 

5,500

 

 

New headquarters noncash rent expense

 

600

 

 

 

600

 

 

 

1,500

 

 

 

1,500

 

 

Share-based compensation

 

5,800

 

 

 

5,800

 

 

 

25,300

 

 

 

25,300

 

 

Depreciation and other amortization

 

2,400

 

 

 

2,400

 

 

 

8,800

 

 

 

8,800

 

 

Capitalized internal-use software development costs

 

(400

)

 

 

(400

)

 

 

(1,700

)

 

 

(1,700

)

 

Adjusted EBITDA

 

$

(9,100

)

 

 

$

(8,100

)

 

 

$

(32,500

)

 

 

$

(31,500

)

 

 


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