PROS Holdings, Inc. Reports Second Quarter 2013 Financial Results

PROS Holdings, Inc. (NYSE: PRO), a big data software company, today announced financial results for the second quarter ended June 30, 2013.

Total revenue for the second quarter of 2013 was $35.5 million and represented an increase of 26% over the second quarter of 2012.

CEO Andres Reiner stated, “We are pleased with our results this quarter, which exceeded guidance. Our solid performance reflects increasing recognition among executives that big data is an untapped source for sales growth. PROS is in a strong and differentiated position to deliver on the promise of big data, and we will continue to invest in innovation to drive further value for our customers and continued preference for PROS.”

For the quarter ended June 30, 2013, GAAP operating income was $0.8 million, compared with $2.0 million in the second quarter of 2012. GAAP net income for the second quarter was $0.6 million, or $0.02 per share, compared with $1.0 million, or $0.04 per share, in the second quarter of 2012.

For the quarter ended June 30, 2013, non-GAAP operating income was $4.9 million, compared with $4.4 million in the second quarter of 2012. Non-GAAP net income for the second quarter of 2013 was $3.5 million, or $0.12 per share, compared with $2.8 million, or $0.10 per share, in the second quarter of 2012.

2013 Business Highlights
  • Announced PROS Step™, the company's latest big data application innovation designed to help mid-size companies meet sales targets and outperform in their markets. Step provides pricing and selling recommendations, powered by data science, in a cloud-based, self-serve model that's easy to set up and use. Learn more at http://step.pros.com/
  • Experienced record attendance at PROS Outperform big data conference in Brussels where guests heard many examples from customers of the value delivered by PROS solutions, including 3663, Hewlett Packard, Johnson & Johnson Depuy, Novozymes and Volvo Trucks.
  • Won the 2013 Microsoft Application Development Partner of the Year Award recognizing PROS exceptional innovation for big data solutions delivered on the Microsoft platform.

Executive Vice President and Chief Financial Officer Charles Murphy stated, “We are pleased with our second quarter performance with revenue increasing 26% period over period. Our strong revenue performance through the first half of the year, especially given the challenging macroeconomic environment, reflects that our investments are showing returns and our growth strategies are working, enabling us to capture the opportunity for our real-time Big Data solutions. We continue to believe full year revenue growth will be approximately 23%.”

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 three and six months ended June 30, 2013 and 2012.

Financial Outlook

Based on information as of today, PROS anticipates the following:
  • Total revenue for the third quarter of 2013 in the range of $36.2 million to $36.8 million
  • GAAP income from operations of $0.5 million and GAAP earnings per share of $0.01 for the third quarter of 2013
  • Non-GAAP income from operations of $4.2 million to $4.8 million and non-GAAP earnings per share of $0.10 to $0.11 for the third quarter of 2013, which excludes estimated non-cash share-based compensation charges of approximately $4.3 million for the third quarter of 2013
  • GAAP and non-GAAP estimated tax rate of approximately 27%, for the third quarter of 2013
  • Estimated weighted average of 30.3 million diluted shares outstanding for the third quarter of 2013

Conference Call

In conjunction with this announcement, PROS Holdings, Inc. will host a conference call on August 1, 2013, at 4:30 p.m. (ET) to discuss the company’s financial results. To access this call, dial (866) 318-8618 (domestic) or (617) 399-5137 (international). The pass code for the call is 54837367. 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 74206619. An archived webcast 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 600 solutions in more than 55 countries. The PROS team comprises more than 700 people 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; business predictability 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 software does 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 enhancements with the technical specifications and functionality desired by customers, (f) the difficulties of making accurate estimates necessary to complete a project and recognize revenue and risk that PROS’ 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)
       
June 30, 2013 December 31, 2012
Assets:
Current assets:
Cash and cash equivalents $ 88,227 $ 83,558
Accounts and unbilled receivables, net of allowance of $690 and $760, respectively 37,553 38,801
Prepaid and other current assets 6,041   5,067  
Total current assets 131,821 127,426
Restricted cash 329 329
Property and equipment, net 14,838 12,788
Other long term assets, net 5,759   5,936  
Total assets $ 152,747   $ 146,479  
Liabilities and Stockholders’ Equity:
Current liabilities:
Accounts payable $ 4,532 $ 3,775
Accrued liabilities 4,129 3,258
Accrued payroll and other employee benefits 4,828 7,669
Deferred revenue 36,013   39,774  
Total current liabilities 49,502   54,476  
Long-term deferred revenue 3,149 2,007
Other Long-term liabilities 1,010   1,327  
Total liabilities 53,661   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; 32,486,851 and 31,966,432 shares issued, respectively; 28,069,266 and 27,548,847 shares outstanding, respectively 32 32
Additional paid-in capital 95,795 87,693
Treasury stock, 4,417,585 common shares, at cost (13,938 ) (13,938 )
Retained earnings 17,197   14,882  
Total stockholders’ equity 99,086   88,669  
Total liabilities and stockholders’ equity $ 152,747   $ 146,479  
 

PROS Holdings, Inc.

Condensed Consolidated Statements of Comprehensive Income

(In thousands, except share and per share data)

(Unaudited)
       

For the Three MonthsEnded June 30,

For the Six MonthsEnded June 30,
2013     2012 2013     2012
Revenue:
License and implementation $ 24,170 $ 18,176 $ 46,762 $ 35,972
Maintenance and support 11,357   9,958   22,391   19,183  
Total revenue 35,527 28,134 69,153 55,155
Cost of revenue:
License and implementation 8,808 5,540 17,278 11,543
Maintenance and support 1,978   1,959   4,061   3,895  
Total cost of revenue 10,786   7,499   21,339   15,438  
Gross profit 24,741 20,635 47,814 39,717
Operating expenses:
Selling, marketing, general and administrative 15,935 11,884 30,223 22,140
Research and development 8,026   6,772   16,121   13,469  
Income from operations 780 1,979 1,470 4,108
Other (expense) income, net (129 ) (129 ) (234 ) (106 )
Income before income tax provision 651 1,850 1,236 4,002
Income tax provision (benefit) 71   855   (1,078 ) 1,816  
Net income $ 580   $ 995   $ 2,314   $ 2,186  
Net earnings per share:
Basic $ 0.02 $ 0.04 $ 0.08 $ 0.08
Diluted $ 0.02 $ 0.04 $ 0.08 $ 0.08
Weighted average number of shares:
Basic 28,006,517 27,375,429 27,881,957 27,271,201
Diluted 29,958,580 28,337,143 29,710,202 28,303,760
 

PROS Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)
   

For the Six Months EndedJune 30,
2013     2012
Operating activities:
Net income 2,314 $ 2,186

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 1,999 938
Share-based compensation 7,559 4,472
Excess tax benefits on share-based compensation (1,685 )
Tax (shortfall)/benefit from share-based compensation (10 ) 1,633
Provision for doubtful accounts (70 ) (257 )
Changes in operating assets and liabilities:
Accounts and unbilled receivables 1,317 (2,407 )
Prepaid expenses and other assets (821 ) 4,177
Accounts payable 715 (2,465 )
Accrued liabilities 391 630
Accrued payroll and other employee benefits (2,841 ) (1,115 )
Deferred revenue (2,619 ) 846  
Net cash provided by operating activities 7,934 6,953
Investing activities:
Purchases of property and equipment (2,172 ) (3,264 )
Capitalized internal-use software development costs (1,534 ) (815 )
Net cash used in investing activities (3,706 ) (4,079 )
Financing activities:
Exercise of stock options 2,771 511
Excess tax benefits on share-based compensation 1,685
Tax withholding related to net share settlement of restricted stock units (2,330 ) (2,365 )
Net cash provided by (used in) financing activities 441   (169 )
Net increase in cash and cash equivalents 4,669 2,705
Cash and cash equivalents:
Beginning of period 83,558   68,457  
End of period $ 88,227   $ 71,162  
 

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.
 

 

For the Three MonthsEnded June 30,

QuarteroverQuarter

For the Six MonthsEnded June 30,

YearoverYear
2013 2012 % change 2013 2012 % change
GAAP gross profit $ 24,741 $ 20,635 19.9% $ 47,814 $ 39,717 20.4%
Non-GAAP adjustment:
GAAP share-based compensation 534   301   996   630  
Non-GAAP gross profit $ 25,275   $ 20,936   20.7% $ 48,810   $ 40,347   21.0%
 
Non-GAAP gross margin 71.1 % 74.4 % 70.6 % 73.2 %
 
GAAP selling, marketing, general and administrative $ 15,935 $ 11,884 34.1% $ 30,223 $ 22,140 36.5%
Non-GAAP adjustment:
GAAP share-based compensation 2,838   1,636   5,059   2,904  
Non- GAAP selling, marketing, general and administrative $ 13,097   $ 10,248   27.8% $ 25,164   $ 19,236   30.8%
 
GAAP research and development $ 8,026 $ 6,772 18.5% $ 16,121 $ 13,469 19.7%
Non-GAAP adjustment:
GAAP share-based compensation 767   503   1,504   938  
Non- GAAP research and development $ 7,259   $ 6,269   15.8% $ 14,617   $ 12,531   16.6%
 
Income from operations $ 780 $ 1,979 (60.6)% $ 1,470 $ 4,108 (64.2)%
Non-GAAP adjustment:
GAAP share-based compensation 4,139   2,440   7,559   4,472  
Non-GAAP income from operations $ 4,919   $ 4,419   11.3% $ 9,029   $ 8,580   5.2%
 
Non-GAAP income from operations % of total revenue 13.8 % 15.7 % 13.1 % 15.6 %
 
GAAP net income $ 580 $ 995 (41.7)% $ 2,314 $ 2,186 5.9%
Non-GAAP adjustment:
GAAP share-based compensation 4,139 2,440 7,559 4,472
Tax impact related to non-GAAP adjustments (1,216 ) (647 ) (2,041 ) (1,150 )
Non-GAAP net income $ 3,503   $ 2,788   25.6% $ 7,832   $ 5,508   42.2%
 
Non-GAAP diluted earnings per share $ 0.12 $ 0.10 $ 0.26 $ 0.19
 
Shares used in computing non-GAAP earnings per share 29,959 28,337 29,710 28,304
 
Detail of non-GAAP share-based compensation expense:
Cost of revenue $ 534 $ 301 $ 996 $ 630
Selling, marketing, general and administrative 2,838 1,636 5,059 2,904
Research and development 767   503   1,504   938  
Total share-based compensation expense $ 4,139   $ 2,440   $ 7,559   $ 4,472  
 

Copyright Business Wire 2010

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