PROS Holdings Inc (
Q3 2010 Earnings Call
November 4, 2010 04:30 pm ET
Charlie Murphy - Executive Vice President, CFO
Bert Winemiller - Chairman, Chief Executive Officer
Ian Kell - Northland Capital Markets
Nandan Kamat - Deutsche Bank
John DiFucci - JPMorgan
Nabil Elsheshai - Pacific Crest Securities
Ross MacMillan - Jefferies & Company
Previous Statements by PRO
» PROS Holdings Inc Q2 2010 Earnings Call Transcript
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» PROS Holdings Inc. F1Q09 Earnings Call Transcript
Good day, ladies and gentlemen, and welcome to the third quarter 2010 PROS Holdings Inc earnings conference call. My name is [Keisha] and I'll be your operator for today. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. (Operator Instructions). As a reminder, this conference is being recorded for replay purposes.
I would now like to hand the conference over to your host for today Mr. Charlie Murphy, Executive Vice President and CFO. Please proceed.
Thank you, operator. Good afternoon everyone and thank you for joining us today for the PROS Holdings financial results conference call for the third quarter of 2010. This is Charlie Murphy, Executive Vice President and Chief Financial Officer for PROS. Joining me on today's call is Bert Winemiller, PROS' Chairman and Chief Executive Officer.
In today's conference call, Bert will provide a commentary on the highlights of the third quarter of 2010 and then I will provide the review of the financial results and our outlook before we open up the call to questions.
Before beginning, we must caution you that today's remarks in this discussion, including statements made during the question-and-answer session contain forward-looking statements. These statements are subject to numerous and important factors, risks and uncertainties, which could cause actual results to differ from the results implied by these or other forward-looking statements.
Also these statements are based solely on the present information and are subject to risks and uncertainties that can cause actual results to differ materially from those projected in the forward-looking statements. Please refer to our Form 10-Q, Form 10-K and other filings with the SEC and the risk factors contained therein. Also, please note that a replay of today's webcast will be available in the Investor Relations section of our website at www.prospricing.com.
I would also like to point out that the company's use of non-GAAP financial measures is explained in today's earnings press release, and a full reconciliation between each non-GAAP measure in the most directly comparable GAAP measure is provided in the tables accompanying the press release distributed early today and can also be found on our web site, in the investor relation section.
With that, I would like to turn the call over to Bert.
Thank you, Charlie, and to those of you listening to our call. We continue to make great progress on our strategic initiatives that are positioning us to capitalize on the large, long-term market opportunities for our high return on investment enterprise, pricing and margin optimization software products.
We're very pleased with our financial performance in the third quarter of 2010. This performance is a clear indication of the recognition of the power of pricing and PROS' ability to develop high-value software products. The following are our non-GAAP results.
For the third quarter we are reporting revenue of $18.8 million. In addition to exceeding the high end of our revenue guidance, this was our fourth quarter of sequential revenue growth and also represented double-digit year-over-year revenue growth.
Operating income was $2.4 million for the third quarter, which also exceeded the high end of our guidance while we continued to make strategic investments. Sales activity continues to increase and we are pleased that awareness of the power of PROS' science-based pricing and margin optimization software continues to reach a growing audience.
During the third quarter we continued to invest in R&D, sales and marketing and our pricing partner ecosystem. We also delivered another release of our pricing solution suite of products and have certified more of our system integration partners and increased their involvement in active implementation projects, expanding our partnering program while increasing our costs in the near term provides both greater visibility for the power of pricing software and greater worldwide scalability for customer implementations.
PROS' focus on delivering an industry-leading pricing and margin optimization software solution with fast time to value, high return on investment and low total cost of ownership for our customers is increasingly helping us to win new business as the buying process of our market matures.
We also continue to grow our strong customer relationships which are demonstrated by follow-on sales to our existing customers and our strong maintenance renewal rates. As many companies have exhausted cost reduction initiatives, such as layoffs and plant closures, we believe companies are increasingly recognizing the power of pricing and margin optimization software as a new profit lever.
The third quarter results indicate that PROS is in a strong position to capitalize on the future market opportunity for pricing software.
PROS is a global company with revenue diversified across geographies and our target industry sectors. Revenue that came from outside the United States represented 57% of the third quarter 2010 revenue and 51% of our third quarter license and implementation revenue came from our target industry sectors of manufacturing distribution and services.
We continue to invest in people, products and best practice processes to drive our science in product innovation and to increase our competitive advantage as demonstrated by our R&D expense which was 26% of revenue for the third quarter 2010.