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| 8-K - 8-K - PROS Holdings, Inc. | form8-kearningreleasexlead.htm |
Exhibit 99.1
PROS HOLDINGS, INC. REPORTS THIRD QUARTER 2013 FINANCIAL RESULTS
• | Record third quarter revenue of $36.8 million, meeting the high end of guidance, an increase of 23% over the third quarter of 2012. |
• | GAAP operating income of $1.4 million for the third quarter. |
• | Non-GAAP operating income for the third quarter was $6.3 million, exceeding the high end of guidance. |
• | GAAP earnings per share for the third quarter of $0.03, and non-GAAP earnings per share of $0.15. |
HOUSTON, – November 4, 2013 — PROS Holdings, Inc. (NYSE: PRO), a big data software company, today announced financial results for the third quarter ended September 30, 2013.
Total revenue for the third quarter of 2013 was $36.8 million and represented an increase of 23% over the third quarter of 2012.
CEO Andres Reiner stated, “We are pleased to deliver another solid quarter with revenue at the high end of guidance. We believe our performance reflects our continued execution against our stated long-term growth strategies of accelerating awareness and adoption of our solutions, extending our product leadership position, and increasing our global reach and scale. We believe PROS is in a strong position to capitalize on the market opportunity ahead, and our planned acquisition of Cameleon Software will only make us stronger.”
For the quarter ended September 30, 2013, GAAP operating income was $1.4 million, compared with $1.8 million in the third quarter of 2012. GAAP net income for the third quarter was $1.0 million, or $0.03 per share, compared with $1.4 million, or $0.05 per share, in the third quarter of 2012.
For the quarter ended September 30, 2013, non-GAAP operating income was $6.3 million, compared with $4.3 million in the third quarter of 2012. Non-GAAP net income for the third quarter of 2013 was $4.6 million, or $0.15 per share, compared with $3.2 million, or $0.11 per share, in the third quarter of 2012.
Recent Business Highlights
• | Announced plans to acquire Cameleon Software, a market-leading configure, price and quote software provider headquartered in Toulouse, France. |
• | Continued to scale across a diverse range of industries with new customers such as Air Berlin, B.W. Rogers, and Unify (formerly known as Siemens Enterprise Communications), among others. |
• | Introduced PROS Availability Server, designed to help airlines improve revenue and reduce costs by providing a real-time dynamic pricing engine direct to the airline’s distribution channels. |
• | Announced addition of Eric Allen as General Manager of EMEA, strengthening the leadership team and go-to-market strategies in Europe. |
• | Achieved powered-by HANA certification by SAP for PROS B2B solution, continuing PROS longstanding commitment to provide the most complete and seamless big data application for pricing and sales effectiveness in the SAP community. |
Executive Vice President and Chief Financial Officer Charles Murphy stated, “We are pleased with our third quarter performance with revenue increasing 23% period over period. We also saw strong operating profit growth while continuing to invest in the
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business. We continue to have a strong balance sheet with cash of approximately $91 million and no bank debt. Our global pipeline of opportunities remains strong, and we remain confident in our ability to achieve full year revenue growth of 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 nine months ended September 30, 2013 and 2012.
Financial Outlook
Based on information as of today, PROS anticipates the following:
• | Total revenue for the fourth quarter of 2013 in the range of $38.3 million to $38.9 million and total revenue for the full year ending December 31, 2013, in the range of $144.3 million and $144.9 million. |
• | GAAP income from operations of $0.3 million and break even GAAP earnings per share for the fourth quarter of 2013. |
• | Non-GAAP income from operations of $5.3 million to $5.9 million and non-GAAP earnings per share of $0.12 to $0.14 for the fourth quarter of 2013, which excludes estimated non-cash share-based compensation charges of approximately $4.4 million and estimated acquisition-related expenses of approximately $1.3 million. |
• | GAAP and non-GAAP estimated tax rate of approximately 30% and 27%, respectively, for the fourth quarter of 2013. |
• | Estimated weighted average of 30.4 million diluted shares outstanding for the fourth quarter of 2013. |
Conference Call
In conjunction with this announcement, PROS Holdings, Inc. will host a conference call on November 4, 2013, at 4:30 p.m. (ET) to discuss the company’s financial results. To access this call, dial (800) 510-9691 (domestic) or (617) 614-3453 (international). The pass code for the call is 36343579. 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 76792426. 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; the success of our planned acquisition of Cameleon Software; 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
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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 operates 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.
Investor Contact:PROS Investor Relations
Staci Strauss-Mortenson
Staci Strauss-Mortenson
646-277-1200
Staci.Mortenson@icrinc.com
Staci.Mortenson@icrinc.com
Media Contact:PROS Public Relations
Yvonne Donaldson
Yvonne Donaldson
713-335-5310
ydonaldson@pros.com
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PROS Holdings, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except share amounts)
(Unaudited)
September 30, 2013 | December 31, 2012 | |||||||
Assets: | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 90,774 | $ | 83,558 | ||||
Accounts and unbilled receivables, net of allowance of $720 and $760, respectively | 44,627 | 38,801 | ||||||
Prepaid and other current assets | 6,406 | 5,067 | ||||||
Total current assets | 141,807 | 127,426 | ||||||
Restricted cash | — | 329 | ||||||
Property and equipment, net | 14,911 | 12,788 | ||||||
Other long term assets, net | 5,319 | 5,936 | ||||||
Total assets | $ | 162,037 | $ | 146,479 | ||||
Liabilities and Stockholders’ Equity: | ||||||||
Current liabilities: | ||||||||
Accounts payable and other liabilities | $ | 6,012 | $ | 3,775 | ||||
Accrued liabilities | 5,065 | 3,258 | ||||||
Accrued payroll and other employee benefits | 6,858 | 7,669 | ||||||
Deferred revenue | 35,788 | 39,774 | ||||||
Total current liabilities | 53,723 | 54,476 | ||||||
Long-term deferred revenue | 2,787 | 2,007 | ||||||
Other long-term liabilities | 970 | 1,327 | ||||||
Total liabilities | 57,480 | 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; 32,535,983 and 31,966,432 shares issued, respectively; 28,118,398 and 27,548,847 shares outstanding, respectively | 33 | 32 | ||||||
Additional paid-in capital | 100,273 | 87,693 | ||||||
Treasury stock, 4,417,585 common shares, at cost | (13,938 | ) | (13,938 | ) | ||||
Retained earnings | 18,189 | 14,882 | ||||||
Total stockholders’ equity | 104,557 | 88,669 | ||||||
Total liabilities and stockholders’ equity | $ | 162,037 | $ | 146,479 | ||||
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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, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Revenue: | ||||||||||||||||
License and implementation | $ | 25,085 | $ | 19,494 | $ | 71,847 | $ | 55,466 | ||||||||
Maintenance and support | 11,728 | 10,419 | 34,119 | 29,602 | ||||||||||||
Total revenue | 36,813 | 29,913 | 105,966 | 85,068 | ||||||||||||
Cost of revenue: | ||||||||||||||||
License and implementation | 9,008 | 6,547 | 26,287 | 18,090 | ||||||||||||
Maintenance and support | 2,018 | 2,122 | 6,079 | 6,017 | ||||||||||||
Total cost of revenue | 11,026 | 8,669 | 32,366 | 24,107 | ||||||||||||
Gross profit | 25,787 | 21,244 | 73,600 | 60,961 | ||||||||||||
Operating expenses: | ||||||||||||||||
Selling, marketing, general and administrative | 15,714 | 12,383 | 45,936 | 34,524 | ||||||||||||
Research and development | 8,001 | 7,049 | 24,122 | 20,518 | ||||||||||||
Acquisition-related | 677 | — | 677 | — | ||||||||||||
Income from operations | 1,395 | 1,812 | 2,865 | 5,919 | ||||||||||||
Other income (expense), net | 83 | (15 | ) | (150 | ) | (121 | ) | |||||||||
Income before income tax provision | 1,478 | 1,797 | 2,715 | 5,798 | ||||||||||||
Income tax provision (benefit) | 485 | 441 | (592 | ) | 2,256 | |||||||||||
Net income | $ | 993 | $ | 1,356 | $ | 3,307 | $ | 3,542 | ||||||||
Net earnings per share: | ||||||||||||||||
Basic | $ | 0.04 | $ | 0.05 | $ | 0.12 | $ | 0.13 | ||||||||
Diluted | $ | 0.03 | $ | 0.05 | $ | 0.11 | $ | 0.13 | ||||||||
Weighted average number of shares: | ||||||||||||||||
Basic | 28,096,333 | 27,426,269 | 27,953,416 | 27,322,940 | ||||||||||||
Diluted | 30,315,499 | 28,362,582 | 29,935,756 | 28,320,181 | ||||||||||||
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PROS Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
For the Nine Months Ended September 30, | ||||||||
2013 | 2012 | |||||||
Operating activities: | ||||||||
Net income | $ | 3,307 | $ | 3,542 | ||||
Adjustments to reconcile net income to net | ||||||||
cash provided by operating activities: | ||||||||
Depreciation and amortization | 3,080 | 1,546 | ||||||
Share-based compensation | 11,822 | 6,962 | ||||||
Excess tax benefits on share-based compensation | — | (1,715 | ) | |||||
Tax (shortfall)/benefit from share-based compensation | (9 | ) | 1,621 | |||||
Deferred income tax, net | 654 | 344 | ||||||
Provision for doubtful accounts | (40 | ) | (257 | ) | ||||
Changes in operating assets and liabilities: | ||||||||
Accounts and unbilled receivables | (5,787 | ) | (12,832 | ) | ||||
Prepaid expenses and other assets | (1,413 | ) | 3,276 | |||||
Accounts payable and other liabilities | 2,191 | 137 | ||||||
Accrued liabilities | 1,371 | 2,334 | ||||||
Accrued payroll and other employee benefits | (811 | ) | 1,123 | |||||
Deferred revenue | (3,206 | ) | 4,788 | |||||
Net cash provided by operating activities | 11,159 | 10,869 | ||||||
Investing activities: | ||||||||
Purchases of property and equipment | (2,636 | ) | (5,391 | ) | ||||
Capitalized internal-use software development costs | (2,265 | ) | (1,378 | ) | ||||
Decrease in restricted cash | 329 | — | ||||||
Net cash used in investing activities | (4,572 | ) | (6,769 | ) | ||||
Financing activities: | ||||||||
Exercise of stock options | 3,079 | 1,033 | ||||||
Excess tax benefits on share-based compensation | — | 1,715 | ||||||
Tax withholding related to net share settlement of restricted stock units | (2,450 | ) | (2,411 | ) | ||||
Debt issuance costs related to credit facility | — | (250 | ) | |||||
Net cash provided by financing activities | 629 | 87 | ||||||
Net increase in cash and cash equivalents | 7,216 | 4,187 | ||||||
Cash and cash equivalents: | ||||||||
Beginning of period | 83,558 | 68,457 | ||||||
End of period | $ | 90,774 | $ | 72,644 | ||||
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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 over Quarter | Year over Year | |||||||||||||||||||||||
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||||||||||
2013 | 2012 | % change | 2013 | 2012 | % change | |||||||||||||||||||
GAAP gross profit | $ | 25,787 | $ | 21,244 | 21% | $ | 73,600 | $ | 60,961 | 21% | ||||||||||||||
Non-GAAP adjustment: | ||||||||||||||||||||||||
GAAP share-based compensation | 536 | 335 | 1,531 | 966 | ||||||||||||||||||||
Non-GAAP gross profit | $ | 26,323 | $ | 21,579 | 22% | $ | 75,131 | $ | 61,927 | 21% | ||||||||||||||
Non-GAAP gross margin | 71.5 | % | 72.1 | % | 70.9 | % | 72.8 | % | ||||||||||||||||
GAAP selling, marketing, general and administrative | $ | 15,714 | $ | 12,383 | 27% | $ | 45,936 | $ | 34,524 | 33% | ||||||||||||||
Non-GAAP adjustment: | ||||||||||||||||||||||||
GAAP share-based compensation | 2,940 | 1,662 | 8,000 | 4,565 | ||||||||||||||||||||
Non-GAAP selling, marketing, general and administrative | $ | 12,774 | $ | 10,721 | 19% | $ | 37,936 | $ | 29,959 | 27% | ||||||||||||||
GAAP research and development | $ | 8,001 | $ | 7,049 | 14% | $ | 24,122 | $ | 20,518 | 18% | ||||||||||||||
Non-GAAP adjustment: | ||||||||||||||||||||||||
GAAP share-based compensation | 788 | 493 | 2,291 | 1,431 | ||||||||||||||||||||
Non-GAAP research and development | $ | 7,213 | $ | 6,556 | 10% | $ | 21,831 | $ | 19,087 | 14% | ||||||||||||||
Income from operations | $ | 1,395 | $ | 1,812 | (23)% | $ | 2,865 | $ | 5,919 | (52)% | ||||||||||||||
Non-GAAP adjustment: | ||||||||||||||||||||||||
GAAP share-based compensation | 4,264 | 2,490 | 11,822 | 6,962 | ||||||||||||||||||||
GAAP acquisition-related expenses | 677 | — | 677 | — | ||||||||||||||||||||
Non-GAAP income from operations | $ | 6,336 | $ | 4,302 | 47% | $ | 15,364 | $ | 12,881 | 19% | ||||||||||||||
Non-GAAP income from operations % of total revenue | 17.2 | % | 14.4 | % | 14.5 | % | 15.1 | % | ||||||||||||||||
GAAP net income | 993 | 1,356 | (27)% | 3,307 | 3,542 | (7)% | ||||||||||||||||||
Non-GAAP adjustment: | ||||||||||||||||||||||||
GAAP share-based compensation | 4,264 | 2,490 | 11,822 | 6,962 | ||||||||||||||||||||
GAAP acquisition-related expenses | 677 | — | 677 | — | ||||||||||||||||||||
Tax impact related to non-GAAP adjustments | (1,296 | ) | (691 | ) | (3,346 | ) | (1,840 | ) | ||||||||||||||||
Non-GAAP net income | $ | 4,638 | 3,155 | 47% | 12,460 | 8,664 | 44% | |||||||||||||||||
Non-GAAP diluted earnings per share | $ | 0.15 | $ | 0.11 | $ | 0.42 | $ | 0.31 | ||||||||||||||||
Shares used in computing non-GAAP earnings per share | 30,315 | 28,363 | 29,936 | 28,320 | ||||||||||||||||||||
Detail of non-GAAP share-based compensation expense: | ||||||||||||||||||||||||
Cost of revenue | $ | 536 | $ | 335 | $ | 1,531 | $ | 966 | ||||||||||||||||
Selling, marketing, general and administrative | 2,940 | 1,662 | 8,000 | 4,565 | ||||||||||||||||||||
Research and development | 788 | 493 | 2,291 | 1,431 | ||||||||||||||||||||
Total share-based compensation expense | $ | 4,264 | $ | 2,490 | $ | 11,822 | $ | 6,962 | ||||||||||||||||
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