PROS Holdings, Inc. Reports Fourth Quarter and Full Year 2022 Financial Results

Rhea-AI Summary

PROS Holdings, Inc. (NYSE: PRO) reported strong financial results for Q4 and FY 2022, with subscription revenue reaching $204.0 million, a 15% year-over-year increase. The company achieved a 73% subscription gross margin, reflecting a growth of over 500 basis points. Despite a net loss of $82.2 million for FY 2022, adjusted EBITDA turned positive in the second half. For Q1 2023, the company forecasts total revenue between $70.4 million and $71.4 million, with subscription revenue expected to rise by 11%.

PROS aims for positive adjusted EBITDA and free cash flow in 2023, positioning itself to capitalize on market opportunities.

Positive

• Subscription revenue increased by 15% year-over-year to $204.0 million.
• Subscription gross margin improved to 73%, up over 500 basis points.
• Positive adjusted EBITDA achieved in the second half of 2022.
• Forecasts for Q1 2023 predict total revenue growth of 7%.

Negative

• Net loss for FY 2022 was $82.2 million.
• Operating loss of $78.1 million for FY 2022.

• Subscription revenue of $204.0 million, up 15% year-over-year.
• Subscription gross margin of 73% and non-GAAP subscription gross margin of 77%, up over 500 basis points year-over-year.

HOUSTON--(BUSINESS WIRE)-- PROS Holdings, Inc. (NYSE: PRO), the CFO’s best-kept secret for profitable growth, today announced financial results for the fourth quarter and full year ended December 31, 2022.

“I’m proud of our team for their strong execution in delivering 15% subscription revenue growth in 2022 while driving greater efficiencies in our business,” stated CEO Andres Reiner. “Our market-leading profit and revenue optimization solutions are mission critical for businesses looking to thrive in economic uncertainty and fuel profitable growth. We enter this year well positioned to capitalize on the market opportunity in front of us.”

CFO Stefan Schulz said, “In 2022 we consistently drove revenue outperformance while delivering positive adjusted EBITDA in the second half of the year, despite a challenging economic environment. We are now projecting to generate positive adjusted EBITDA and free cash flow in 2023, accelerating our path to our long-term profitability goals.”

Fourth Quarter and Full Year 2022 Financial Highlights

Key financial results for the fourth quarter and full year 2022 are shown below. Throughout this press release all dollar figures are in millions, except net (loss) earnings per share. Unless otherwise noted, all results are on a reported basis and are compared with the prior-year period.

	GAAP						Non-GAAP
	Q4 2022		Q4 2021		Change		Q4 2022		Q4 2021		Change
Revenue:
Total Revenue	$70.9		$65.0		9%		n/a		n/a		n/a
Subscription Revenue	$53.1		$47.0		13%		n/a		n/a		n/a
Subscription and Maintenance Revenue	$59.5		$55.4		7%		n/a		n/a		n/a
Profitability:
Gross Profit	$43.5		$39.0		11%		$46.2		$40.7		14%
Operating (Loss) Income	$(14.9)		$(21.6)		$6.8		$1.2		$(8.2)		$9.4
Net (Loss) Income	$(17.3)		$(23.6)		$6.3		$1.1		$(7.2)		$8.3
Net (Loss) Earnings Per Share	$(0.38)		$(0.53)		$0.15		$0.02		$(0.16)		$0.18
Adjusted EBITDA	n/a		n/a		n/a		$2.4		$(6.4)		$8.7
Cash:
Net Cash Used in Operating Activities	$(2.0)		$(1.0)		$(1.0)		n/a		n/a		n/a
Free Cash Flow	n/a		n/a		n/a		$1.1		$(1.3)		$2.4

	GAAP						Non-GAAP
	FY 2022		FY 2021		Change		FY 2022		FY 2021		Change
Revenue:
Total Revenue	$276.1		$251.4		10%		n/a		n/a		n/a
Subscription Revenue	$204.0		$178.0		15%		n/a		n/a		n/a
Subscription and Maintenance Revenue	$232.6		$213.1		9%		n/a		n/a		n/a
Annual Recurring Revenue ("ARR")	n/a		n/a		n/a		$245.3		$226.7		8%
Annual Recurring Revenue in constant currency	n/a		n/a		n/a		$247.5		$226.7		9%
Subscription ARR	n/a		n/a		n/a		$227.0		$195.1		16%
Subscription ARR in constant currency	n/a		n/a		n/a		$229.0		$195.1		17%
Profitability:
Gross Profit	$166.1		$146.5		13%		$176.9		$152.1		16%
Operating Loss	$(78.1)		$(74.3)		$(3.8)		$(20.1)		$(32.9)		$12.8
Net Loss	$(82.2)		$(81.2)		$(1.0)		$(18.0)		$(29.1)		$11.1
Net Loss Per Share	$(1.82)		$(1.83)		$0.01		$(0.40)		$(0.66)		$0.26
Adjusted EBITDA	n/a		n/a		n/a		$(14.9)		$(24.8)		$10.0
Cash:
Net Cash Used in Operating Activities	$(23.9)		$(18.6)		$(5.4)		n/a		n/a		n/a
Free Cash Flow	n/a		n/a		n/a		$(21.7)		$(20.2)		$(1.5)

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

Recent Business Highlights

• Welcomed new customers who are adopting PROS solutions such as Aegean Airlines, Air Albania, Auto Wares, GE Power, Greater Bay Airlines, Sidel, Signature Aviation, Unlimited Technology and Vector Security, among others.

• Continued to be recognized for our innovation leadership with 15 awards and accolades received in 2022, including being named a leader again in the Gartner 2022 Magic Quadrant for Configure, Price, and Quote Application Suites; together with our leadership position in the IDC MarketScape, PROS continues to be the only platform with a leadership position in both Price Optimization and Management and CPQ.

• Launched our next generation of Price Optimization powered by PROS Gen IV AI which makes PROS the first in the market to drive hyper-personalized price recommendations using neural network technology.

• Announced an Analyst Day event to take place on Tuesday, May 23, 2023, during our 2023 Outperform user conference in Denver, CO; investors who wish to attend the full conference will receive a discounted conference rate - register today.

• Recognized as one of PEOPLE’s 2022 Companies that Care, a list of the top 100 US companies that have succeeded in business while demonstrating outstanding respect, care, and concern for their employees.

Financial Outlook

PROS currently anticipates the following based on an estimated 46.0 million basic weighted average shares outstanding for the first quarter of 2023 and a 22% non-GAAP estimated tax rate for the first quarter and full year 2023.

	Q1 2023 Guidance		v. Q1 2022 at Mid-Point		Full Year 2023 Guidance		v. Prior Year at Mid-Point
Total Revenue	$70.4 to $71.4		7%		$293.0 to $296.0		7%
Subscription Revenue	$54.0 to $54.5		11%		$230.7 to $232.7		14%
Subscription ARR	n/a		n/a		$250.0 to $253.0		11%
Non-GAAP Loss Per Share	$(0.12) to $(0.09)		$0.11		n/a		n/a
Adjusted EBITDA	$(4.0) to $(3.0)		$5.6		$3.0 to $6.0		$19.4
Free Cash Flow	n/a		n/a		$2.0 to $6.0		$25.7

Conference Call

In conjunction with this announcement, PROS Holdings, Inc. will host a conference call on Thursday, February 9, 2023, at 4:45 p.m. EST 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, February 16, 2023, 11:59 PM EST at 1-844-512-2921 (toll-free) or 1-412-317-6671 using the pass code 13735564.

About PROS

PROS Holdings, Inc. (NYSE: PRO) is your company’s best-kept secret for profitable growth. Viewed as a market-leader by both Gartner and IDC for its CPQ and price optimization capabilities, PROS advanced AI delivers results to the world’s top brands including Cargill, Etihad, Honeywell, HP, Lenovo, Lufthansa, Siemens and more. With more than 30 million AI models, PROS award winning AI is the driving force in processing more than 2 trillion transactions per year. PROS customers report up to 96% efficiency gain, up to 5% margin improvement and up to 20% revenue lift, according to a recent ROI study. 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 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 earnings (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 macroeconomic environment, (b) the effects of inflation, (c) the impact of the COVID-19 pandemic, (d) cyberattacks, data breaches and breaches of security measures within our products, systems and infrastructure or products, systems and infrastructure of third parties upon whom we rely, (e) increasing business from customers and maintaining subscription renewal rates, (f) managing our growth and profit objectives effectively, (g) disruptions from our third party data center, software, data, and other unrelated service providers, (h) implementing our solutions, (i) cloud operations, (j) intellectual property and third-party software, (k) acquiring and integrating businesses and/or technologies, (l) catastrophic events, (m) operating globally, including economic and commercial disruptions, (n) potential downturns in sales and lengthy sales cycles, (o) software innovation, (p) competition, (q) market acceptance of our software innovations, (r) maintaining our corporate culture, (s) personnel risks including loss of any key employees and competition for talent, (t) expanding and training our direct and indirect sales force, (u) evolving data privacy, cyber security and data localization laws, (v) our debt repayment obligations, (w) the timing of revenue recognition and cash flow from operations, (x) migrating customers to our latest cloud solutions, and (y) returning to profitability. 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 income (loss), annual recurring revenue, adjusted EBITDA, free cash flow, non-GAAP tax rate, non-GAAP net income (loss), and earnings (loss) per share or non-GAAP earnings (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 statements of 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 statements of 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.

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 earnings (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 and severance. Non-GAAP income (loss) from operations excludes the following items from non-GAAP estimates:

• Share-Based Compensation: Although share-based compensation is an important aspect of compensation for our employees and executives, our share-based compensation expense can vary because of changes in our stock price and market conditions at the time of grant, varying valuation methodologies, and the variety of award types. Since share-based compensation expense can vary for reasons that are generally unrelated to our performance during any particular period, we believe this could make it difficult for investors to compare our current financial results to previous and future periods. Therefore, we believe it is useful to exclude share-based compensation in order to better understand our business performance and allow investors to compare our operating results with peer companies.

• Amortization of Acquisition-Related Intangibles: We view amortization of acquisition-related intangible assets, such as the amortization of the cost associated with an acquired company's research and development efforts, trade names, customer lists and customer relationships, as items arising from pre-acquisition activities determined at the time of an acquisition. While these intangible assets are continually evaluated for impairment, amortization of the cost of purchased intangibles is a static expense, one that is not typically affected by operations during any particular period.

• Severance: Severance costs relate to the separation of our Chief Operations Officer in Q1 2022 and costs related to other internal role consolidations as well as severance cost incurred in Q4 2022 as the Company reprioritized its investments to focus on supporting key growth areas of its business. As a result of this reprioritization, the Company incurred severance, employee benefits, outplacement and related costs. These amounts are unrelated to our core performance during any particular period, and therefore, we believe it is useful to exclude these amounts in order to better understand our business performance and allow investors to compare our results with peer companies.

Non-GAAP earnings (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 issuance costs, loss (gain) on equity investments, net and the taxes related to these items and the items excluded from non-GAAP income (loss) from operations. Estimates of non-GAAP earnings (loss) per share are calculated by dividing estimates for non-GAAP net income (loss) by our estimate of weighted average 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:

• Amortization of Debt Issuance Costs: Amortization of debt issuance costs are related to our convertible notes. These amounts are unrelated to our core performance during any particular period, and therefore, we believe it is useful to exclude these amounts in order to better understand our business performance and allow investors to compare our results with peer companies.

• Loss (Gain) on Equity Investments, net: Loss (gain) on equity investments, net relate to observable price changes for equity investments without a readily determinable fair value identified during the quarters ended September 30, 2022 and December 31, 2022, including other-than-temporary loss. These amounts are unrelated to our core performance during any particular period, and therefore, we believe it is useful to exclude these amounts in order to better understand our business performance and allow investors to compare our results with peer companies.

• Taxes: We exclude the tax consequences associated with non-GAAP items to provide investors with a useful comparison of our operating results to prior periods and to our peer companies because such amounts can vary significantly. In the fourth quarter of 2014, we concluded that it is more likely than not that we will be unable to fully realize our deferred tax assets and accordingly, established a valuation allowance against those assets. The ongoing impact of the valuation allowance on our non-GAAP effective tax rate has been eliminated to allow investors to better understand our business performance and compare our operating results with peer companies.

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. ARR should be viewed independently of revenue and any other GAAP measure. Subscription ARR is calculated in the same manner, but excludes maintenance and support ARR.

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, severance, amortization of acquisition-related intangibles, and depreciation and amortization. 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, excluding severance payments, 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)
		December 31, 2022				December 31, 2021
Assets:
Current assets:
Cash and cash equivalents		$	203,627			$	227,553
Trade and other receivables, net of allowance of $609 and $1,206, respectively			48,178				40,581
Deferred costs, current			6,032				5,772
Prepaid and other current assets			9,441				9,623
Total current assets			267,278				283,529
Property and equipment, net			25,012				30,958
Operating lease right-of-use assets			17,474				25,732
Deferred costs, noncurrent			8,764				9,510
Intangibles, net			17,851				27,618
Goodwill			107,561				108,133
Other assets, noncurrent			9,012				9,003
Total assets		$	452,952			$	494,483
Liabilities and Stockholders’ (Deficit) Equity:
Current liabilities:
Accounts payable and other liabilities		$	7,964			$	4,034
Accrued liabilities			12,854				12,631
Accrued payroll and other employee benefits			23,797				31,994
Operating lease liabilities, current			7,662				8,457
Deferred revenue, current			108,659				97,713
Total current liabilities			160,936				154,829
Deferred revenue, noncurrent			8,298				8,553
Convertible debt, net, noncurrent			289,779				288,287
Operating lease liabilities, noncurrent			28,184				38,034
Other liabilities, noncurrent			1,228				1,196
Total liabilities			488,425				490,899
Stockholders' (deficit) 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; 50,318,726 and 49,201,265 shares issued, respectively; 45,638,003 and 44,520,542 shares outstanding, respectively			50				49
Additional paid-in capital			590,475				546,693
Treasury stock, 4,680,723 common shares, at cost			(29,847	)			(29,847	)
Accumulated deficit			(590,898	)			(508,652	)
Accumulated other comprehensive loss			(5,253	)			(4,659	)
Total stockholders’ (deficit) equity			(35,473	)			3,584
Total liabilities and stockholders’ (deficit) equity		$	452,952			$	494,483

PROS Holdings, Inc. Condensed Consolidated Statements of Loss (In thousands, except per share data) (Unaudited)
		Three Months Ended December 31,								Year Ended December 31,
			2022				2021				2022				2021
Revenue:
Subscription		$	53,127			$	47,015			$	204,041			$	178,006
Maintenance and support			6,417				8,390				28,592				35,111
Total subscription, maintenance and support			59,544				55,405				232,633				213,117
Services			11,391				9,568				43,504				38,306
Total revenue			70,935				64,973				276,137				251,423
Cost of revenue:
Subscription			13,685				12,906				55,039				53,418
Maintenance and support			1,897				2,053				8,004				8,512
Total cost of subscription, maintenance and support			15,582				14,959				63,043				61,930
Services			11,886				11,018				47,037				42,995
Total cost of revenue			27,468				25,977				110,080				104,925
Gross profit			43,467				38,996				166,057				146,498
Operating expenses:
Selling and marketing			23,458				22,666				94,986				86,445
Research and development			22,241				21,422				93,412				82,268
General and administrative			12,641				14,161				54,202				49,742
Acquisition-related			—				2,386				—				2,386
Impairment of fixed assets			—				—				1,551				—
Loss from operations			(14,873	)			(21,639	)			(78,094	)			(74,343	)
Convertible debt interest and amortization			(1,576	)			(1,576	)			(6,304	)			(6,304	)
Other (expense) income, net			(654	)			89				3,084				308
Loss before income tax provision			(17,103	)			(23,126	)			(81,314	)			(80,339	)
Income tax provision			244				483				932				870
Net loss		$	(17,347	)		$	(23,609	)		$	(82,246	)		$	(81,209	)
Net loss per share:
Basic and diluted		$	(0.38	)		$	(0.53	)		$	(1.82	)		$	(1.83	)
Weighted average number of shares:
Basic and diluted			45,456				44,438				45,269				44,348

PROS Holdings, Inc. Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited)
		Three Months Ended December 31,								Year Ended December 31,
			2022				2021				2022				2021
Operating activities:
Net loss		$	(17,347	)		$	(23,609	)		$	(82,246	)		$	(81,209	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			3,124				3,232				14,967				12,060
Amortization of debt issuance costs			372				372				1,491				1,491
Share-based compensation			10,097				9,665				42,714				35,075
Provision for credit losses			91				168				(280	)			(1,910	)
Impairment of fixed assets			—				—				1,551				—
Loss (gain) on equity investments, net			2,000				—				(1,308	)			—
Changes in operating assets and liabilities:
Accounts and unbilled receivables			(2,430	)			4,039				(7,330	)			12,560
Deferred costs			(244	)			906				486				3,202
Prepaid expenses and other assets			2,283				1,431				1,712				1,828
Operating lease right-of-use assets and liabilities			(250	)			1,499				(2,175	)			1,534
Accounts payable and other liabilities			1,053				(1,108	)			3,964				(515	)
Accrued liabilities			(791	)			113				26				(426	)
Accrued payroll and other employee benefits			(803	)			4,478				(8,191	)			4,693
Deferred revenue			875				(2,156	)			10,713				(6,938	)
Net cash used in operating activities			(1,970	)			(970	)			(23,906	)			(18,555	)
Investing activities:
Purchases of property and equipment			(16	)			(364	)			(861	)			(2,796	)
Acquisition of EveryMundo, net of cash acquired			—				(79,482	)			—				(79,482	)
Purchase of equity securities			(112	)			(225	)			(281	)			(2,895	)
Net cash used in investing activities			(128	)			(80,071	)			(1,142	)			(85,173	)
Financing activities:
Proceeds from employee stock plans			—				—				2,722				3,111
Tax withholding related to net share settlement of stock awards			(1,441	)			—				(1,653	)			(352	)
Payments of notes payable			—				—				—				(288	)
Net cash (used in) provided by financing activities			(1,441	)			—				1,069				2,471
Effect of foreign currency rates on cash			342				(48	)			53				(324	)
Net change in cash and cash equivalents			(3,197	)			(81,089	)			(23,926	)			(101,581	)
Cash and cash equivalents:
Beginning of period			206,824				308,642				227,553				329,134
End of period		$	203,627			$	227,553			$	203,627			$	227,553

 

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 11.
		Three Months Ended December 31,								Quarter over Quarter			Year Ended December 31,								Year over Year
			2022				2021			% change				2022				2021			% change
GAAP gross profit		$	43,467			$	38,996			11	%		$	166,057			$	146,498			13	%
Non-GAAP adjustments:
Amortization of acquisition-related intangibles			1,441				752							6,664				1,948
Severance			245				—							245				—
Share-based compensation			1,017				926							3,898				3,679
Non-GAAP gross profit		$	46,170			$	40,674			14	%		$	176,864			$	152,125			16	%
Non-GAAP gross margin			65.1	%			62.6	%						64.0	%			60.5	%
GAAP loss from operations		$	(14,873	)		$	(21,639	)		(31	)%		$	(78,094	)		$	(74,343	)		5	%
Non-GAAP adjustments:
Acquisition-related expenses			—				2,386							—				2,386
Amortization of acquisition-related intangibles			1,973				1,420							9,766				4,017
Severance			4,034				—							5,542				—
Share-based compensation			10,097				9,665							42,714				35,075
Total Non-GAAP adjustments			16,104				13,471							58,022				41,478
Non-GAAP income (loss) from operations		$	1,231			$	(8,168	)		(115	)%		$	(20,072	)		$	(32,865	)		(39	)%
Non-GAAP income (loss) from operations % of total revenue			1.7	%			(12.6	)%						(7.3	)%			(13.1	)%
GAAP net loss		$	(17,347	)		$	(23,609	)		(27	)%		$	(82,246	)		$	(81,209	)		1	%
Non-GAAP adjustments:
Total Non-GAAP adjustments affecting income (loss) from operations			16,104				13,471							58,022				41,478
Amortization of debt issuance costs			372				372							1,491				1,491
Loss (gain) on equity investments, net			2,000				—							(1,308	)			—
Tax impact related to non-GAAP adjustments			(62	)			2,529							6,016				9,098
Non-GAAP net income (loss)		$	1,067			$	(7,237	)		(115	)%		$	(18,025	)		$	(29,142	)		(38	)%
Non-GAAP diluted earnings (basic loss) per share		$	0.02			$	(0.16	)					$	(0.40	)		$	(0.66	)
Shares used in computing non-GAAP loss per share			45,833				44,438							45,269				44,348

PROS Holdings, Inc. Supplemental Schedule of Non-GAAP Financial Measures Increase (Decrease) in GAAP Amounts Reported (In thousands) (Unaudited)
		Three Months Ended December 31,						Year Ended December 31,
		2022			2021			2022			2021
Cost of Subscription Items
Amortization of acquisition-related intangibles			1,441			752			6,664			1,935
Severance			8			—			8			—
Share-based compensation			148			207			658			715
Total cost of subscription items		$	1,597		$	959		$	7,330		$	2,650
Cost of Maintenance Items
Amortization of acquisition-related intangibles			—			—			—			13
Share-based compensation			118			136			416			498
Total cost of maintenance items		$	118		$	136		$	416		$	511
Cost of Services Items
Severance			237			—			237			—
Share-based compensation			751			583			2,824			2,466
Total cost of services items		$	988		$	583		$	3,061		$	2,466
Sales and Marketing Items
Amortization of acquisition-related intangibles			532			668			3,102			2,069
Severance			1,503			—			2,947			—
Share-based compensation			2,947			3,073			12,360			10,407
Total sales and marketing items		$	4,982		$	3,741		$	18,409		$	12,476
Research and Development Items
Severance			1,845			—			1,845			—
Share-based compensation			2,889			2,421			12,496			8,288
Total research and development items		$	4,734		$	2,421		$	14,341		$	8,288
General and Administrative Items
Severance			441			—			505			—
Share-based compensation			3,244			3,245			13,960			12,701
Total general and administrative items		$	3,685		$	3,245		$	14,465		$	12,701
Acquisition-related expenses		$	—		$	2,386		$	—		$	2,386

PROS Holdings, Inc. Supplemental Reconciliation of GAAP to Non-GAAP Financial Measures (In thousands) (Unaudited)
		Three Months Ended December 31,								Year Ended December 31,
			2022				2021				2022				2021
Adjusted EBITDA
GAAP Loss from Operations		$	(14,873	)		$	(21,639	)		$	(78,094	)		$	(74,343	)
Acquisition-related expenses			—				2,386				—				2,386
Amortization of acquisition-related intangibles			1,973				1,420				9,766				4,017
Severance			4,034				—				5,542				—
Share-based compensation			10,097				9,665				42,714				35,075
Depreciation and other amortization			1,151				1,812				5,201				8,043
Adjusted EBITDA		$	2,382			$	(6,356	)		$	(14,871	)		$	(24,822	)
Net cash used in operating activities		$	(1,970	)		$	(970	)		$	(23,906	)		$	(18,555	)
Severance			3,058				—				3,058				—
Purchase of property and equipment (excluding new headquarters)			(16	)			(364	)			(861	)			(1,655	)
Free Cash Flow		$	1,072			$	(1,334	)		$	(21,709	)		$	(20,210	)
Guidance
		Q1 2023 Guidance								Full Year 2023 Guidance
		Low				High				Low				High
Adjusted EBITDA
GAAP Loss from Operations		$	(19,900	)		$	(18,900	)		$	(54,400	)		$	(51,400	)
Amortization of acquisition-related intangibles			1,800				1,800				6,100				6,100
Severance			3,000				3,000				3,000				3,000
Share-based compensation			10,000				10,000				43,900				43,900
Depreciation and other amortization			1,100				1,100				4,400				4,400
Adjusted EBITDA		$	(4,000	)		$	(3,000	)		$	3,000			$	6,000

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230209005318/en/

Investor Contact:

PROS Investor Relations

Belinda Overdeput

713-335-5879

ir@pros.com

Source: PROS Holdings, Inc.

FAQ

What were PRO's subscription revenues for 2022?

PRO's subscription revenues for 2022 were $204.0 million, which is a 15% increase from the previous year.

What is PRO's financial outlook for 2023?

PRO anticipates total revenue between $293.0 million and $296.0 million for 2023, representing a 7% growth from 2022.

How did PRO perform in Q4 2022?

In Q4 2022, PRO reported total revenue of $70.9 million, up 9% from Q4 2021.

What was the adjusted EBITDA for PRO in 2022?

PRO achieved positive adjusted EBITDA in the second half of 2022.

What is the projected non-GAAP loss per share for Q1 2023?

The projected non-GAAP loss per share for Q1 2023 is between $(0.12) and $(0.09).