PROS Holdings, Inc. Reports First Quarter 2013 Financial Results

  PROS Holdings, Inc. Reports First Quarter 2013 Financial Results

  *Record first quarter revenue of $33.6 million, exceeding the high end of
    guidance, an increase of 24% over the first quarter of 2012.
  *GAAP operating income of $0.7 million for the first quarter.
  *Non-GAAP operating income for the first quarter was $4.1 million,
    exceeding the high end of guidance.
  *GAAP earnings per share for the first quarter of $0.06, and non-GAAP
    earnings per share of $0.15.

Business Wire

HOUSTON -- May 02, 2013

PROS Holdings, Inc. (NYSE: PRO), a big data software company, today announced
financial results for the first quarter ended March31, 2013.

Total revenue for the first quarter of 2013 was $33.6 million and represented
an increase of 24% over the first quarter of 2012, exceeding the high end of
guidance.

CEO Andres Reiner stated, “We are pleased with our strong first quarter
results, with record revenue exceeding expectations. The momentum we built in
2012 continued into the first quarter as we realized benefits from improved
awareness, greater market reach, and ongoing acceptance of our big data
applications. In addition, PROS' value proposition is resonating now more than
ever as companies are looking for solutions that deliver growth and
profitability improvements across their business.”

For the quarter ended March31, 2013, GAAP operating income was $0.7 million,
compared with $2.1 million in the first quarter of 2012. GAAP net income for
the first quarter was $1.7 million, or $0.06per share, compared with $1.2
million, or $0.04per share, in the first quarter of 2012.

For the quarter ended March31, 2013, non-GAAP operating income was $4.1
million, compared with $4.2 million in the first quarter of 2012. Non-GAAP net
income for the first quarter of 2013 was $4.3 million, or $0.15 per share,
compared with $2.7 million, or $0.10 per share, in the first quarter of 2012.

Recent Business Highlights

  *Continued to scale across a diverse range of industries with new customers
    such as Alliance Laundry Systems, Gates Corporation, Great Lakes Cheese,
    LATAM Airlines, and Sterling Infosystems among others. PROS serves
    customers in more than 30 sub-industries.
  *Announced OEM agreement with SAP, enabling PROS to offer SAP HANA® as a
    real-time analytics engine embedded in PROS big data applications. The
    planned integration of PROS and SAP HANA will provide customers with
    additional flexibility, speed and data science capabilities for optimizing
    pricing and sales.
  *Extended PROS product leadership position with four newly filed data
    science patents that center on turning big data into predictive and
    prescriptive insights for sales and pricing effectiveness.
  *Experienced record attendance at PROS Outperform big data conference in
    New York, where guests heard many examples of the tangible value PROS big
    data solutions provide from customers such as American Standard, Arrow
    Electronics, Ecolab, Depuy Synthes Spine (a Johnson & Johnson company),
    and Panduit.

Executive Vice President and Chief Financial Officer Charles Murphy stated,
“We are pleased with our first quarter performance, with revenue increasing
24% year over year. Our business continues to benefit from the investments we
have made to grow and diversify our revenue. Our first quarter performance,
combined with current demand and our significant visibility, provide us with
confidence to slightly increase our revenue growth expectations for the full
year to approximately 23%."

The retroactive reinstatement of the 2012 Research and Experimentation tax
credit resulted in a $0.05 increase in earnings per share on a GAAP and
non-GAAP basis for the quarter ended March 31, 2013.

The attached table provides a reconciliation of GAAP to non-GAAP income from
operations and net income, as well as net income per share available to common
stockholders, for the quarter ended March 31, 2013 and 2012.

Financial Outlook

Based on information as of today, PROS anticipates the following:

  *Total revenue for the second quarter of 2013 in the range of $34.8 million
    to $35.4 million
  *GAAP income from operations of $0.3 million and GAAP earnings per share at
    break even for the second quarter of 2013
  *Non-GAAP income from operations of $3.9 million to $4.5 million and
    non-GAAP earnings per share of $0.09 to $0.11 for the second quarter of
    2013. which excludes estimated non-cash share-based compensation charges
    of approximately $4.2 million for the second quarter of 2013
  *GAAP and non-GAAP estimated tax rate of approximately 48% and 27%,
    respectively, for the second quarter of 2013
  *Estimated weighted average of 29.8 million diluted shares outstanding for
    the second quarter of 2013

Conference Call

In conjunction  with this announcement, PROS Holdings, Inc. will host a
conference call on May 2, 2013, at 4:30 p.m. (ET) to discuss the company’s
financial results. To access this call, dial (877) 280-4956 (domestic) or
(857) 244-7313 (international). The pass code for the call is 40038414.
Additionally, a live webcast of the conference call will be available in the
“Investor Relations” section of the Company’s web site at www.PROS.com.

Following the conference call, a replay will be available at (888) 286-8010
(domestic) or (617) 801-6888 (international). The replay pass code is
54425225. An archived web cast of this conference call will also be available
in the “Investor Relations” section of the Company’s web site at www.PROS.com.

About PROS

PROS Holdings, Inc. (NYSE: PRO) is a big data software company that helps
customers outperform in their markets by using big data to sell more
effectively. We apply 27 years of data science experience to unlock buying
patterns and preferences within transaction data to reveal which opportunities
are most likely to close, which offers are most likely to sell and which
prices are most likely to win. PROS offers big data solutions to optimize
sales, pricing, quoting, rebates and revenue management across more than 30
industries. PROS has implemented more than 500 solutions in more than 50
countries. The PROS team comprises more than 700 professionals around the
world. To learn more, visit www.PROS.com.

Forward-looking Statements

This press release contains forward-looking statements,including statements
about PROS’ momentum and future financial performance; positioning;
management's confidence and optimism; customer successes; reseller and OEM
network growth and reach; big data solutions to optimize sales, pricing,
quoting, rebates and revenue management; solutions demand;
businesspredictability and effective tax rate. The forward-looking statements
contained in this press release are based upon PROS’ historical performance
and its 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) the risk that we will face increased competition
as part of entering new markets, (b)the risk that the market for PROS’ sales,
pricing quoting, rebate and revenue management optimization softwaredoes not
grow as anticipated, (c) the challenges associated with selling, installing,
and delivering PROS' products and services, (d) the impact that a slowdown in
the world or any particular economy has on PROS’ business sales cycles,
prospects’ and customers’ spending decisions and timing of implementation
decisions, (e) the difficulties and risks associated with developing and
selling complex new products and enhancementswith the technical
specifications and functionalitydesired by customers,(f) the difficulties of
making accurate estimates necessary to complete a project and recognize
revenue and risk thatPROS’ revenue model will not continue to provide
predictability of the PROS business, (g) the risk that PROS will not be able
to maintain historical maintenance renewal rates, (h) personnel and other
risks associated with growing a business generally, (i) the risk that
modification or negotiation of contractual arrangements will be necessary
during PROS’ implementations of its solutions, (j) the impact of currency
fluctuations on PROS’ results of operations,(k) civil and political unrest in
regions in which PROS operate and (l) the risk that reseller and other
relationships do not increase sales of PROS’ solutions. Additional information
relating to the uncertainty affecting the PROS business are contained in PROS’
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 from operations, net income and diluted earnings 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.

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. PROS use of
non-GAAP financial measures may not be consistent with the presentations by
similar companies in PROS industry.


PROS Holdings, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except share amounts)
(Unaudited)
                                                          
                                            March 31, 2013   December 31, 2012
Assets:
Current assets:
Cash and cash equivalents                   $  82,462        $   83,558
Accounts and unbilled receivables, net of   42,742           38,801
allowance of $700 and $760, respectively
Prepaid and other current assets            6,199           5,067         
Total current assets                        131,403          127,426
Restricted cash                             329              329
Property and equipment, net                 14,709           12,788
Other long term assets, net                 5,955           5,936         
Total assets                                $  152,396      $   146,479   
                                                             
Liabilities and Stockholders’ Equity:
Current liabilities:
Accounts payable                            $  5,743         $   3,775
Accrued liabilities                         4,418            3,258
Accrued payroll and other employee          3,123            7,669
benefits
Deferred revenue                            42,097          39,774        
Total current liabilities                   55,381          54,476        
Long-term deferred revenue                  2,432            2,007
Other Long-term liabilities                 1,327           1,327         
Total liabilities                           59,140          57,810        
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; 32,332,136
and 31,966,432 shares issued,               32               32
respectively; 27,914,551 and 27,548,847
shares outstanding, respectively
Additional paid-in capital                  90,544           87,693
Treasury stock, 4,417,585 common shares,    (13,938     )    (13,938       )
at cost
Retained earnings                           16,618          14,882        
Total stockholders’ equity                  93,256          88,669        
Total liabilities and stockholders’         $  152,396      $   146,479   
equity
                                                                           


PROS Holdings, Inc.
Condensed Consolidated Statements of Comprehensive Income
(Dollars in thousands, except share and per share data)
(Unaudited)

                                         For the three months ended March 31,
                                          2013                  2012
Revenue:
License and implementation                $     22,592           $    17,796
Maintenance and support                   11,034                9,225
Total revenue                             33,626                 27,021
Cost of revenue:
License and implementation                8,471                  6,003
Maintenance and support                   2,082                 1,935
Total cost of revenue                     10,553                7,938
Gross profit                              23,073                 19,083
Operating expenses:
Selling, marketing, general and           14,288                 10,256
administrative
Research and development                  8,096                 6,697
Income from operations                    689                    2,130
Other (expense) income, net               (103           )       22
Income before income tax provision        586                    2,152
Income tax (benefit) provision            (1,148         )       961
Net income                                $     1,734           $    1,191
Net earnings per share:
Basic                                     $     0.06             $    0.04
Diluted                                   $     0.06             $    0.04
Weighted average number of shares:
Basic                                     27,757,397             27,166,973
Diluted                                   29,365,342             28,284,044
                                                                 


PROS Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

                                         For the three months ended March 31,
                                          2013                2012
Operating activities:
Net income                                $   1,734            $   1,191
Adjustments to reconcile net income to
net cash provided by operating
activities:
                                                               
Depreciation and amortization             967                  427
Share-based compensation                  3,420                2,032
Excess tax benefits on share-based        —                    (1,395       )
compensation
Tax benefit from share-based              (10          )       1,358
compensation
Provision for doubtful accounts           (60          )       (220         )
Changes in operating assets and
liabilities:
Accounts and unbilled receivables         (3,877       )       6,219
Prepaid expenses and other assets         (1,162       )       (318         )
Accounts payable                          1,070                (183         )
Accrued liabilities                       980                  (226         )
Accrued payroll and other employee        (4,549       )       (3,059       )
benefits
Deferred revenue                          2,748               (2,402       )
Net cash provided by operating            1,261                3,424
activities
Investing activities:
Purchases of property and equipment       (948         )       (684         )
Capitalized internal-use software         (796         )       (347         )
development costs
Net cash used in investing activities     (1,744       )       (1,031       )
Financing activities:
Exercise of stock options                 1,409                488
Excess tax benefits on share-based        —                    1,395
compensation
Tax withholding related to net share      (2,022       )       (1,820       )
settlement of restricted stock units
Net cash (used in) provided by            (613         )       63           
financing activities
Net (decrease) increase in cash and       (1,096       )       2,456
cash equivalents
Cash and cash equivalents:
Beginning of period                       83,558              68,457       
End of period                             $   82,462          $   70,913   
                                                                            


PROS Holdings, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(Dollars 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.

                                                                     Quarter
                        For the three months ended March 31,       over
                                                                     Quarter
                         2013                   2012                % change
GAAP gross profit        $    23,073             $   19,083          20.9%
Non-GAAP adjustment:
GAAP share-based         462                    329          
compensation
Non-GAAP gross           $    23,535            $   19,412         21.2%
profit
                                                                     
Non-GAAP gross           70.0           %        71.8         %
margin
                                                                     
GAAP selling,
marketing, general       $    14,288             $   10,256          39.3%
and administrative
Non-GAAP adjustment:
GAAP share-based         2,222                  1,268        
compensation
Non-GAAP selling,
marketing, general       $    12,066            $   8,988          34.2%
and administrative
                                                                     
GAAP research and        $    8,096              $   6,697           20.9%
development
Non-GAAP adjustment:
GAAP share-based         736                    435          
compensation
Non-GAAP research        $    7,360             $   6,262          17.5%
and development
                                                                     
Income from              $    689                $   2,130           (67.7)%
operations
Non-GAAP adjustment:
GAAP share-based         3,420                  2,032        
compensation
Non-GAAP income from     $    4,109             $   4,162          (1.3)%
operations
                                                                     
Non-GAAP income from
operations % of          12.2           %        15.4         %
total revenue
                                                                     
GAAP net income          $    1,734              $   1,191           45.6%
Non-GAAP adjustment:
GAAP share-based         3,420                   2,032
compensation
Tax impact related
to non-GAAP              (833           )        (503         )
adjustments
Non-GAAP net income      $    4,321             $   2,720          58.9%
                                                                     
Non-GAAP diluted         $    0.15               $   0.10
earnings per share
                                                                     
Shares used in
computing non-GAAP       29,365                  28,284
earnings per share
                                                                     
Detail of non-GAAP
share-based
compensation
expense:
Cost of revenue          $    462                $   329
Selling, marketing,
general and              2,222                   1,268
administrative
Research and             736                    435          
development
Total share-based        $    3,420              $   2,032
compensation expense

Contact:

Investor Contact:
PROS Investor Relations
Staci Strauss-Mortenson, 646-277-1200
Staci.Mortenson@icrinc.com
or
Media Contact:
PROS Public Relations
Yvonne Donaldson, 713-335-5310
ydonaldson@pros.com
 
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