PROS Holdings, Inc. (NYSE: PRO), a world leader in pricing and revenue management software, today announced financial results for the third quarter ended September 30, 2012. Total revenue for the third quarter of 2012 was $29.9 million and represented an increase of 19% over the third quarter of 2011, exceeding the high end of our guided range. CEO Andres Reiner stated, “Our results this quarter exceeded expectations as the market increasingly recognizes our ability to improve sales effectiveness through our big data applications. We have successfully extended our big data science expertise to more than 30 sub-industries, resulting in an expanding set of customers looking to PROS to increase sales performance. The strong momentum we are seeing in our business is enabling us to raise our guidance for the full year.” For the quarter ended September 30, 2012, GAAP operating income was $1.8 million, compared with $2.7 million in the third quarter of 2011. GAAP net income in the quarter was $1.4 million, or $0.05 per share, compared with $1.9 million, or $0.07 per share, in the third quarter of 2011. For the quarters ended September 30, 2012 and 2011, non-GAAP operating income was $4.3 million, respectively. Non-GAAP net income for the third quarter of 2012 was $3.2 million, or $0.11 per share, compared with $3.0 million, or $0.11 per share, in the third quarter of 2011. Recent Business Highlights
- Signed new customers across several industries, such as Hewlett Packard, Ecolab , Nexidia and Zimmer, among others.
- Continued to set the pace of innovation in big data software with new capabilities that help companies improve sales effectiveness, such as intelligent quoting for large bid and tender deals.
- Achieved another level of product certifications from SAP for integration of PROS Pricing Solution Suite with SAP ERP and SAP CRM, continuing to provide the most complete and seamless integration experience.
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 and nine months ended September 30, 2012 and 2011.
Financial Outlook Based on information as of today, PROS anticipates the following:- Total revenue for the fourth quarter of 2012 in the range of $31.4 million to $32.0 million and total revenue for the full year ending December 31, 2012 in the range of $116.5 million to $117.1 million
- GAAP income from operations of $1.5 million to $2.0 million and GAAP earnings per share of $0.02 to $0.03 for the fourth quarter of 2012
- Non-GAAP income from operations of $4.2 million to $4.7 million and non-GAAP earnings per share of $0.09 to $0.10, which exclude estimated non-cash share-based compensation charges of approximately $2.7 million for the fourth quarter of 2012
- GAAP and non-GAAP estimated tax rate of approximately 45% and 35%, respectively, for the fourth quarter of 2012
- Estimated weighted average of 28.8 million diluted shares outstanding for the fourth quarter of 2012
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) | ||||||||
September 30, 2012 | December 31, 2011 | |||||||
Assets: | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 72,644 | $ | 68,457 | ||||
Accounts and unbilled receivables, net of allowance of $860 and $1,130, respectively | 46,953 | 33,864 | ||||||
Prepaid and other current assets | 4,816 | 8,353 | ||||||
Total current assets | 124,413 | 110,674 | ||||||
Restricted cash | 329 | 329 | ||||||
Property and equipment, net | 10,698 | 4,703 | ||||||
Other long term assets, net | 5,708 | 5,553 | ||||||
Total assets | $ | 141,148 | $ | 121,259 | ||||
Liabilities and Stockholders’ Equity: | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 5,931 | $ | 4,915 | ||||
Accrued liabilities | 3,881 | 1,667 | ||||||
Accrued payroll and other employee benefits | 5,913 | 4,790 | ||||||
Deferred revenue | 37,957 | 33,094 | ||||||
Total current liabilities | 53,682 | 44,466 | ||||||
Long-term deferred revenue | 2,774 | 2,850 | ||||||
Total liabilities | 56,456 | 47,316 | ||||||
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; 31,872,766 and 31,432,430 shares issued, respectively; 27,455,181 and 27,014,845 shares outstanding, respectively | 32 | 31 | ||||||
Additional paid-in capital | 85,139 | 77,934 | ||||||
Treasury stock, 4,417,585 common shares, at cost | (13,938 | ) | (13,938 | ) | ||||
Accumulated other comprehensive loss | (11 | ) | (11 | ) | ||||
Retained earnings | 13,470 | 9,927 | ||||||
Total stockholders’ equity | 84,692 | 73,943 | ||||||
Total liabilities and stockholders’ equity | $ | 141,148 | $ | 121,259 |
PROS Holdings, Inc. | ||||||||||||||||
Condensed Consolidated Statements of Comprehensive Income | ||||||||||||||||
(In thousands, except share and per share data) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||
Revenue: | ||||||||||||||||
License and implementation | $ | 19,494 | $ | 16,560 | $ | 55,466 | $ | 45,435 | ||||||||
Maintenance and support | 10,419 | 8,648 | 29,602 | 24,964 | ||||||||||||
Total revenue | 29,913 | 25,208 | 85,068 | 70,399 | ||||||||||||
Cost of revenue: | ||||||||||||||||
License and implementation | 6,547 | 4,755 | 18,090 | 14,221 | ||||||||||||
Maintenance and support | 2,122 | 1,578 | 6,017 | 4,931 | ||||||||||||
Total cost of revenue | 8,669 | 6,333 | 24,107 | 19,152 | ||||||||||||
Gross profit | 21,244 | 18,875 | 60,961 | 51,247 | ||||||||||||
Operating expenses: | ||||||||||||||||
Selling, marketing, general and administrative | 12,383 | 9,352 | 34,524 | 26,320 | ||||||||||||
Research and development | 7,049 | 6,843 | 20,518 | 18,952 | ||||||||||||
Income from operations | 1,812 | 2,680 | 5,919 | 5,975 | ||||||||||||
Other (expense) income, net | (15 | ) | (90 | ) | (121 | ) | (33 | ) | ||||||||
Income before income tax provision | 1,797 | 2,590 | 5,798 | 5,942 | ||||||||||||
Income tax provision | 441 | 658 | 2,256 | 1,713 | ||||||||||||
Net income | $ | 1,356 | $ | 1,932 | $ | 3,542 | $ | 4,229 | ||||||||
Net earnings per share: | ||||||||||||||||
Basic | $ | 0.05 | $ | 0.07 | $ | 0.13 | $ | 0.16 | ||||||||
Diluted | $ | 0.05 | $ | 0.07 | $ | 0.13 | $ | 0.15 | ||||||||
Weighted average number of shares: | ||||||||||||||||
Basic | 27,426,269 | 26,928,195 | 27,322,940 | 26,783,812 | ||||||||||||
Diluted | 28,362,582 | 27,842,057 | 28,320,181 | 27,689,804 |
PROS Holdings, Inc. | ||||||||
Condensed Consolidated Statements of Cash Flows | ||||||||
(In thousands) | ||||||||
(Unaudited) | ||||||||
For the Nine Months Ended September 30, | ||||||||
2012 | 2011 | |||||||
Operating activities: | ||||||||
Net income | $ | 3,542 | $ | 4,229 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 1,546 | 1,189 | ||||||
Share-based compensation | 6,962 | 5,008 | ||||||
Excess tax benefits on share-based compensation | (1,715 | ) | (1,241 | ) | ||||
Tax benefit from share-based compensation | 1,621 | 1,210 | ||||||
Deferred income tax | 344 | (521 | ) | |||||
Provision for doubtful accounts | (257 | ) | (2 | ) | ||||
Changes in operating assets and liabilities: | ||||||||
Accounts and unbilled receivables | (12,832 | ) | (336 | ) | ||||
Prepaid expenses and other assets | 3,276 | (2,027 | ) | |||||
Accounts payable | 137 | 2,087 | ||||||
Accrued liabilities | 2,334 | 326 | ||||||
Accrued payroll and other employee benefits | 1,123 | 1,875 | ||||||
Deferred revenue | 4,788 | (712 | ) | |||||
Net cash provided by operating activities | 10,869 | 11,085 | ||||||
Investing activities: | ||||||||
Purchases of property and equipment | (6,769 | ) | (1,932 | ) | ||||
Increase in restricted cash | — | (36 | ) | |||||
Increase in short-term investment | — | 73 | ||||||
Net cash used in investing activities | (6,769 | ) | (1,895 | ) | ||||
Financing activities: | ||||||||
Exercise of stock options | 1,033 | 1,737 | ||||||
Excess tax benefits on share-based compensation | 1,715 | 1,241 | ||||||
Tax withholding related to net share settlement of restricted stock units | (2,411 | ) | (1,610 | ) | ||||
Debt issuance costs related to credit facility | (250 | ) | — | |||||
Net cash provided by financing activities | 87 | 1,368 | ||||||
Net increase in cash and cash equivalents | 4,187 | 10,558 | ||||||
Cash and cash equivalents: | ||||||||
Beginning of period | 68,457 | 55,845 | ||||||
End of period | $ | 72,644 | $ | 66,403 |
PROS HOLDINGS, INC. | ||||||||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES | ||||||||||||||||||||||
(Dollars and shares 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. | ||||||||||||||||||||||
For the Three Months Ended September 30, | Quarter over Quarter % change | For the Nine Months Ended September 30, | Year over Year % change | |||||||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||||||||
GAAP gross profit | $ | 21,244 | $ | 18,875 | 13 | % | $ | 60,961 | $ | 51,247 | 19 | % | ||||||||||
Non-GAAP adjustment: | ||||||||||||||||||||||
GAAP share-based compensation | 335 | 282 | 966 | 894 | ||||||||||||||||||
Non-GAAP gross profit | $ | 21,579 | $ | 19,157 | 13 | % | $ | 61,927 | $ | 52,141 | 19 | % | ||||||||||
Non-GAAP gross margin | 72.1 | % | 76.0 | % | 72.8 | % | 74.1 | % | ||||||||||||||
GAAP selling, marketing, general and administrative | $ | 12,383 | $ | 9,352 | 32 | % | $ | 34,524 | $ | 26,320 | 31 | % | ||||||||||
Non-GAAP adjustment: | ||||||||||||||||||||||
GAAP share-based compensation | 1,662 | 967 | 4,565 | 2,971 | ||||||||||||||||||
Non-GAAP selling, marketing, general and administrative | $ | 10,721 | $ | 8,385 | 28 | % | $ | 29,959 | $ | 23,349 | 28 | % | ||||||||||
GAAP research and development | $ | 7,049 | $ | 6,843 | 3 | % | $ | 20,518 | $ | 18,952 | 8 | % | ||||||||||
Non-GAAP adjustment: | ||||||||||||||||||||||
GAAP share-based compensation | 493 | 398 | 1,431 | 1,143 | ||||||||||||||||||
Non-GAAP research and development | $ | 6,556 | $ | 6,445 | 2 | % | $ | 19,087 | $ | 17,809 | 7 | % | ||||||||||
Income from operations | $ | 1,812 | $ | 2,680 | (32 | )% | $ | 5,919 | $ | 5,975 | (1 | )% | ||||||||||
Non-GAAP adjustment: | ||||||||||||||||||||||
GAAP share-based compensation | 2,490 | 1,647 | 6,962 | 5,008 | ||||||||||||||||||
Non-GAAP income from operations | $ | 4,302 | $ | 4,327 | (1 | )% | $ | 12,881 | $ | 10,983 | 17 | % | ||||||||||
Non-GAAP income from operations % of total revenue | 14.4 | % | 17.2 | % | 15.1 | % | 15.6 | % | ||||||||||||||
GAAP net income | $ | 1,356 | $ | 1,932 | (30 | )% | $ | 3,542 | $ | 4,229 | (16 | )% | ||||||||||
Non-GAAP adjustment: | ||||||||||||||||||||||
GAAP share-based compensation | 2,490 | 1,647 | 6,962 | 5,008 | ||||||||||||||||||
Tax impact related to non-GAAP adjustments | (691 | ) | (550 | ) | (1,840 | ) | (1,695 | ) | ||||||||||||||
Non-GAAP net income | $ | 3,155 | $ | 3,029 | 4 | % | $ | 8,664 | $ | 7,542 | 15 | % | ||||||||||
Non-GAAP diluted earnings per share | $ | 0.11 | $ | 0.11 | $ | 0.31 | $ | 0.27 | ||||||||||||||
Shares used in computing non-GAAP earnings per share | 28,363 | 27,842 | 28,320 | 27,690 | ||||||||||||||||||
Detail of GAAP share-based compensation expense: | ||||||||||||||||||||||
Cost of revenue | $ | 335 | $ | 282 | $ | 966 | $ | 894 | ||||||||||||||
Selling, marketing, general and administrative | 1,662 | 967 | 4,565 | 2,971 | ||||||||||||||||||
Research and development | 493 | 398 | 1,431 | 1,143 | ||||||||||||||||||
Total share-based compensation expense | $ | 2,490 | $ | 1,647 | $ | 6,962 | $ | 5,008 |