PROS Holdings, Inc. - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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8-K - FORM 8-K - PROS Holdings, Inc.	form8-kearningreleaseleadx.htm

Exhibit 99.1

PROS HOLDINGS, INC. REPORTS THIRD QUARTER 2016 FINANCIAL RESULTS


•	Subscription revenue of $9.9 million, up 43% year-over-year.


•	ARR of $114.8 million as of September 30, 2016, up 22% year-over-year.


•	ACV bookings up 25% year-over-year for the third quarter, and up 35% year-to-date.

HOUSTON – November 1, 2016 — PROS Holdings, Inc. (NYSE: PRO), a revenue and profit realization company, today announced financial results for the third quarter ended September 30, 2016.

CEO Andres Reiner stated, “With another solid performance in the third quarter, we are pleased to see that our innovation and cloud strategies continue to help us drive growth and deliver great value to our customers. This has been a breakthrough year for PROS as we have passed several key milestones in our cloud transformation, reflected in our momentum in subscription revenue and annual recurring revenue. We are excited to see our strategic vision unfold as PROS solutions empower our customers to outperform in this era of modern commerce.”

Third Quarter 2016 Financial Highlights

Key financial results for the fiscal third quarter are shown below. Throughout this press release, all dollar figures are in millions, except net loss per share. Unless otherwise noted, all results are on a reported basis and are compared to the prior-year period.



	GAAP								Non-GAAP
	Q3 2016			Q3 2015			% Change		Q3 2016			Q3 2015			% Change
Revenue and Bookings:
Revenue	$	38.4		$	40.9		(6	)%	$	38.4		$	41.7		(8	)%
Subscription Revenue	9.9			6.9			43	%	9.9			6.9			43	%
Annual Recurring Revenue ("ARR")	n/a			n/a			n/a		114.8			93.8			22	%
Annual Contract Value ("ACV") bookings	n/a			n/a			n/a		5.6			4.5			25	%
Profitability:
Operating Loss	(13.1		)	(15.9		)	nm		(8.1		)	(6.4		)	nm
Net Loss	(15.7		)	(18.2		)	nm		(5.7		)	(4.7		)	nm
Net Loss Per Share	(0.52		)	(0.61		)	nm		(0.19		)	(0.16		)	nm
Adjusted EBITDA	n/a			n/a			n/a		(6.9		)	(5.0		)	nm
Cash:
Net cash provided by operating activities	2.2			4.8			(54	)%	2.2			4.8			(54	)%
Free Cash Flow	n/a			n/a			n/a		$	0.5		$	1.8		(72	)%

The attached tables provide a summary of PROS results for the period, including a reconciliation of GAAP to non-GAAP revenue, gross profit, income (loss) from operations, and net income (loss), as well as earnings (loss) per share.

Recent Business Highlights


•	Released new innovations that enable modern commerce such as data-science driven cross-sell recommendations in PROS Smart CPQ, opportunity detection and guidance for B2B sales reps, and cloud analytics for airline group bookings.


•	Showcased as data science innovator at Microsoft Ignite during keynote presentation, and strengthened position within Microsoft Dynamics CRM ecosystem with the addition of PROS Smart CPQ in the Microsoft AppSource, the marketplace for Azure-based applications.


•	Recognized by Computerworld for powering BRF (formerly Brasil Foods) use of data insights and guidance to drive profitability, helping BRF win a Computerworld Data+ Editor’s Choice award.


•	Won four silver Stevie Awards for PROS Smart CPQ for Microsoft Dynamics and Salesforce.com in the category of best B2B software and cloud applications in the Americas and International markets.


•	Launched the Future of Revenue Management thought leadership website to help airlines around the world with management best practices and modern commerce case studies.

Financial Outlook

PROS anticipates the following for the fourth quarter and full year 2016, based on an estimated 30.6 and 30.4 million basic weighted average shares outstanding, respectively, and a 36% non-GAAP estimated tax rate:



	Q4 2016 Guidance	v. Q4 2015 at Mid-Point	Full Year 2016 Guidance	v. Prior Year at Mid-Point
Total Revenue	$37 to $38.5	(12)%	$150.3 to $151.8	(12)%
Subscription Revenue	$10.3 to $10.5	30%	$37.5 to $37.7	29%
ARR	n/a	n/a	$119 to $121	22%
ACV Bookings	$6.1 to $8.1	11%	$26.5 to $28.5	28%
Non-GAAP Loss Per Share	$(0.27) to $(0.24)	n/a	n/a	n/a
Adjusted EBITDA	$(11) to $(9.5)	n/a	$(37.8) to $(36.3)	n/a
Free Cash Flow	n/a	n/a	$(32.5) to $(30.5)	n/a

Conference Call

In conjunction with this announcement, PROS Holdings, Inc. will host a conference call on Tuesday, November 1, 2016, at 4:45 p.m. EDT 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 webcast of the conference call can be accessed under the “Investor Relations” section of the Company’s website at www.pros.com.

Following the call, an archived webcast will be available in the “Investor Relations” section of the Company’s website at www.pros.com. A telephone replay will be available until Tuesday, November 8, 2016, at 1-877-870-5176 (toll-free) or 1-858-384-5517 using the pass code 13645374. An archived webcast of this conference call will also be available in the “Investor Relations” section of the Company’s website at www.pros.com.

Analyst Day

PROS Holdings, Inc. will host an analyst day on Thursday, November 10, 2016, at the Sofitel New York. Registration will begin at 10:00 a.m. EST, and the presentation will begin at 10:30 a.m. EST. The Company’s executive management team will discuss strategy, performance, and the cloud transformation. Guests can register for the live webcast or to attend in-person in the “Investor Relations” section of the Company’s website at www.pros.com.

About PROS

PROS Holdings, Inc. (NYSE: PRO) is a revenue and profit realization company that helps customers realize their potential through the blend of simplicity and data science. PROS offers solutions to help accelerate sales, formulate winning pricing strategies and

align product, demand and availability. PROS revenue and profit realization solutions are designed to allow customers to experience meaningful revenue growth, sustained profitability and modernized business processes. To learn more, visit www.pros.com.

Forward-looking Statements

This press release contains forward-looking statements, including statements about our future financial performance; positioning; management's confidence and optimism; customer successes; demand for enterprise revenue and profit realization software solutions; business expansion; business predictability; ARR; ACV bookings; revenue; 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 risks related to: (a) our ability to execute on our cloud-first strategy, (b) reduced revenue and cash flow resulting from our transition to a cloud-first strategy, (c) threats to the security of our or our customer’s data, (d) potential business or service disruptions from our third party data centers, cloud platform providers or other unrelated service providers, (e) market acceptance of our new products and product enhancements, (f) the risk that the markets for our software does not grow as anticipated, (g) the length of our sales cycles, (h) the risk that we will not be able to maintain historical maintenance, support and subscription renewal rates, (i) competition from vendors of sales, pricing, revenue management and configure-price-quote solutions as well as from companies internally developing their own solutions, (j) potential unauthorized or improper actions of our personnel, (k) the risk that acquisitions we have and may enter into in the future may be difficult to integrate, fail to achieve our objectives, disrupt our business, dilute stockholder value or divert management attention, (l) any downturn in sales to our target markets, (m) potential delays or other challenges related to the implementation of our solutions, (n) the difficulties of making accurate estimates necessary to complete a project and recognize revenue, (o) personnel risks associated with growing a business generally, (p) the impact that a slowdown in the world or any particular economy has on our business sales cycles, prospects’ and customers’ spending decisions, timing of implementation decisions, payment and renewal decision, (q) our debt repayment obligations, (r) the impact of currency fluctuations on our results of operations, and (s) civil and political unrest in geographic regions in which we operate. Additional information relating to the uncertainty affecting PROS’ business is contained in our 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 (loss) income from operations, annual recurring revenue, annual contract value bookings, total contract value bookings, adjusted EBITDA margin, amortization of convertible debt discount and debt issue costs, tax rate, 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 and cloud-first transition.

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 revenue, non-GAAP (loss) income from operations, annual recurring revenue, total contract value bookings, annual contract value bookings, and non-GAAP tax rates (collectively the "non-GAAP financial measures") as follows:

Non-GAAP revenue: Business combination accounting principles under GAAP require us to recognize the fair value of software subscription, maintenance and professional services contracts assumed in our acquisitions of SignalDemand, Inc. and Cameleon Software SA. A portion of these software subscription and professional services are deferred and typically recognized over the term of the software subscription contract, so our GAAP revenues during the term of the contract after the acquisition do not reflect the full amount of revenues that would have been reported if the acquired deferred software subscription and professional services revenues were not written down to fair value. The revenue for maintenance is deferred and typically recognized over a one-year period, so our GAAP revenues for the one-year period after the acquisition do not reflect the full amount of revenues that would have been reported if the acquired deferred maintenance revenue was not written down to fair value. The non-GAAP revenue

adjustments eliminate the effect of the deferred revenue write-down and include the costs associated with the revenue adjustment. We believe these adjustments to the revenue from these contracts and to the associated costs are useful to investors as an additional means to reflect revenue trends of our business.

Non-GAAP income from operations: Non-GAAP (loss) income from operations includes the non-GAAP revenue discussed above and also excludes the impact of stock-based compensation, amortization of acquisition-related intangibles, amortization of debt discount and issuance costs, recovery of bankruptcy claims, severance, as well as the tax consequences associated with stock-based compensation costs arising from our acquisitions. Non-GAAP (loss) income 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.

•

Amortization of Debt Discount and Issuance Costs: Amortization of debt discount and issuance costs are related to our Senior Notes due 2019. 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 which includes both subscription and maintenance contracts, and excludes perpetual license, term license and service agreements, which are current and contracted with a future start date. ARR should be viewed independently of revenue and any other GAAP measure.

Annual Contract Value Bookings: Annual Contract Value ("ACV") bookings are comprised of the estimated annual value of our Total Contract Value ("TCV") bookings. ACV bookings are comprised of annual maintenance and subscriptions, one seventh of the license TCV, and excludes services and subscription renewals. ACV should be viewed independently of revenue and any other GAAP measure. TCV bookings are comprised of the total value of new customer contracts closed during a specified period, excluding maintenance in excess of one year, and including license, maintenance, services, term license and subscription renewals, that we believe to be firm commitments to provide our software solutions and related services. Bookings by their nature are significantly based on estimates and judgments that we make regarding total contract values, and our bookings growth projections are not meant as a substitute measure for revenue in accordance with GAAP. We believe our bookings growth projection is useful to investors as an additional means to evaluate our business performance.

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 (loss) income before interest expense, provision for income taxes, depreciation and amortization, as adjusted to eliminate the effect of the deferred revenue write-down from our acquisitions of SignalDemand, Inc. and Cameleon Software SA, tax consequences associated with the stock-based compensation costs arising from our acquisitions, amortization of acquisition-related intangibles, depreciation and amortization, impairment of internal-use software

and capitalized internal-use software development costs. Adjusted EBITDA should not be considered as an alternative to net (loss) income 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 operating activities, less additions to property, plant and equipment and capitalized internal-use software development costs.

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.

Investor Contact:

PROS Investor Relations
Tim Girgenti

713-335-5879

ir@pros.com

Media Contact:

PROS Public Relations
Yvonne Donaldson

713-335-5310

ydonaldson@pros.com

PROS Holdings, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share and per share amounts)

(Unaudited)



	September 30, 2016			December 31, 2015
Assets:
Current assets:
Cash and cash equivalents	$	95,208		$	161,770
Short-term investments	50,952			2,500
Accounts and unbilled receivables, net of allowance of $360 and $586, respectively	26,443			39,115
Prepaid and other current assets	6,710			7,540
Total current assets	179,313			210,925
Property and equipment, net	15,456			15,777
Intangibles, net	12,114			14,191
Goodwill	20,718			20,445
Other long-term assets	3,359			1,873
Total assets	$	230,960		$	263,211
Liabilities and Stockholders’ Equity:
Current liabilities:
Accounts payable and other liabilities	$	3,406		$	8,273
Accrued liabilities	5,235			4,333
Accrued payroll and other employee benefits	13,791			13,084
Deferred revenue	67,275			60,664
Total current liabilities	89,707			86,354
Long-term deferred revenue	9,939			4,665
Convertible debt, net	120,647			115,860
Other long-term liabilities	687			918
Total liabilities	220,980			207,797
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; 34,938,021 and 34,156,561 shares issued, respectively; 30,520,436 and 29,738,976 shares outstanding, respectively	35			34
Additional paid-in capital	169,395			158,674
Treasury stock, 4,417,585 common shares, at cost	(13,938		)	(13,938		)
Accumulated deficit	(141,746		)	(85,034		)
Accumulated other comprehensive loss	(3,766		)	(4,322		)
Total stockholders’ equity	9,980			55,414
Total liabilities and stockholders’ equity	$	230,960		$	263,211

PROS Holdings, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(In thousands, except per share data)

(Unaudited)



	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Revenue:
License	$	2,419		$	5,980		$	8,178		$	26,564
Services	8,447			12,273			26,873			32,100
Subscription	9,852			6,886			27,196			20,966
Total license, services and subscription	20,718			25,139			62,247			79,630
Maintenance and support	17,666			15,727			51,103			46,604
Total revenue	38,384			40,866			113,350			126,234
Cost of revenue:
License	38			51			199			242
Services	7,380			9,138			24,594			27,064
Subscription	4,808			3,105			12,342			9,330
Total license, services and subscription	12,226			12,294			37,135			36,636
Maintenance and support	3,416			2,972			10,266			9,361
Total cost of revenue	15,642			15,266			47,401			45,997
Gross profit	22,742			25,600			65,949			80,237
Operating expenses:
Selling and marketing	13,641			19,639			47,725			55,810
General and administrative	9,253			9,626			27,910			29,786
Research and development	12,964			12,201			39,454			35,098
Loss from operations	(13,116		)	(15,866		)	(49,140		)	(40,457		)
Convertible debt interest and amortization	(2,339		)	(2,234		)	(6,943		)	(6,642		)
Other expense, net	(26		)	(152		)	(139		)	(571		)
Loss before income tax provision (benefit)	(15,481		)	(18,252		)	(56,222		)	(47,670		)
Income tax provision (benefit)	227			(70		)	490			410
Net loss	$	(15,708	)	$	(18,182	)	$	(56,712	)	$	(48,080	)
Net loss per share:
Basic and diluted	$	(0.52	)	$	(0.61	)	$	(1.87	)	$	(1.63	)
Weighted average number of shares:
Basic and diluted	30,469			29,649			30,341			29,530

PROS Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)



	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Operating activities:
Net loss	$	(15,708	)	$	(18,182	)	$	(56,712	)	$	(48,080	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	2,423			3,152			7,396			7,923
Amortization of debt discount and issuance costs	1,620			1,514			4,786			4,485
Share-based compensation	3,192			6,631			14,445			21,381
Deferred income tax, net	22			22			64			138
Provision for doubtful accounts	(87		)	66			(226		)	132
Changes in operating assets and liabilities:
Accounts and unbilled receivables	10,419			9,657			12,899			20,474
Prepaid expenses and other assets	58			(1,891		)	(746		)	(383		)
Accounts payable and other liabilities	(1,092		)	(1,615		)	(2,546		)	(3,330		)
Accrued liabilities	247			235			887			364
Accrued payroll and other employee benefits	2,955			1,415			709			(4,909		)
Deferred revenue	(1,836		)	3,823			11,885			8,609
Net cash provided by (used in) operating activities	2,213			4,827			(7,159		)	6,804
Investing activities:
Purchases of property and equipment	(1,185		)	(3,006		)	(6,524		)	(4,856		)
Capitalized internal-use software development costs	(497		)	—			(569		)	(233		)
Purchases of short-term investments	(56,006		)	(23,976		)	(144,934		)	(55,176		)
Proceeds from maturities of short-term investments	47,000			12,700			96,500			32,700
Net cash used in investing activities	(10,688		)	(14,282		)	(55,527		)	(27,565		)
Financing activities:
Exercise of stock options	406			(334		)	420			433
Proceeds from employee stock plans	620			457			1,090			839
Tax withholding related to net share settlement of stock awards	(405		)	(238		)	(5,244		)	(4,966		)
Payment of contingent consideration for PROS France	—			(1,304		)	—			(1,304		)
Payments of notes payable	(105		)	(53		)	(196		)	(212		)
Debt issuance costs related to convertible debt	—			—			—			(408		)
Net cash provided by (used in) financing activities	516			(1,472		)	(3,930		)	(5,618		)
Effect of foreign currency rates on cash	16			44			54			308
Net change in cash and cash equivalents	(7,943		)	(10,883		)	(66,562		)	(26,071		)
Cash and cash equivalents:
Beginning of period	103,151			145,831			161,770			161,019
End of period	$	95,208		$	134,948		$	95,208		$	134,948

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 10.



		Three Months Ended September 30,		Quarter over Quarter	Nine Months Ended September 30,		Year over Year
		2016	2015	% change	2016	2015	% change
GAAP revenue		$38,384	$40,866	(6)%	$113,350	$126,234	(10)%
	Non-GAAP adjustment:
	Acquisition-related deferred revenue write-down	—	868		—	3,065
Non-GAAP revenue		$38,384	$41,734	(8)%	$113,350	$129,299	(12)%

GAAP gross profit		$22,742	$25,600	(11)%	$65,949	$80,237	(18)%
	Non-GAAP adjustments:
	Acquisition-related deferred revenue write-down, net of cost of revenue	—	328		—	1,167
	Amortization of intangible assets	490	553		1,476	1,659
	Share-based compensation	544	852		1,720	2,896
Non-GAAP gross profit		$23,776	$27,333	(13)%	$69,145	$85,959	(20)%

Non-GAAP gross margin		61.9%	65.5%		61.0%	66.5%

GAAP loss from operations		$(13,116)	$(15,866)	(17)%	$(49,140)	$(40,457)	21%
	Non-GAAP adjustments:
	Acquisition-related deferred revenue write-down, net of cost of revenue	—	328		—	1,167
	Amortization of intangible assets	737	1,703		2,288	3,866
	Accretion expense for acquisition-related contingent consideration	—	—		—	22
	Recovery of bankruptcy claim	—	—		—	(626)
	Severance	1,070	756		1,070	756
	Share-based compensation	3,192	6,631		14,445	21,381
	Total Non-GAAP adjustments	$4,999	$9,418		$17,803	$26,566
Non-GAAP loss from operations		$(8,117)	$(6,448)	26%	$(31,337)	$(13,891)	126%

Non-GAAP loss from operations % of total revenue		(21.1)%	(15.5)%		(27.6)%	(10.7)%

GAAP net loss		$(15,708)	$(18,182)	(14)%	$(56,712)	$(48,080)	18%
	Non-GAAP adjustments:
	Total Non-GAAP adjustments affecting loss from operations	4,999	9,418		17,803	26,566
	Amortization of debt discount and issuance costs	1,620	1,514		4,786	4,485
	Tax impact related to non-GAAP adjustments	3,418	2,566		12,598	6,376
Non-GAAP net loss		$(5,671)	$(4,684)	21%	$(21,525)	$(10,653)	102%

Non-GAAP diluted loss per share		$(0.19)	$(0.16)		$(0.71)	$(0.36)

Shares used in computing non-GAAP loss per share		30,469	29,649		30,341	29,530

PROS Holdings, Inc.

Supplemental Schedule of Non-GAAP Financial Measures

Increase (Decrease) in GAAP Amounts Reported

(In thousands)

(Unaudited)



		Three Months Ended September 30,						Nine Months Ended September 30,
		2016			2015			2016		2015
Revenue Items
	Acquisition-related deferred revenue write-down - service revenue	—			823			—		2,766
	Acquisition-related deferred revenue write-down - subscription revenue	—			20			—		224
	Acquisition-related deferred revenue write-down - maintenance revenue	—			25			—		75
	Total revenue items	$	—		$	868		$	—	$	3,065

Cost of License Items
	Amortization of intangible assets	10			10			31		31
	Total cost of license items	$	10		$	10		$	31	$	31

Cost of Services Items
	Acquisition-related deferred cost write-down	—			(540		)	—		(1,898		)
	Share-based compensation	424			754			1,289		2,505
	Total cost of services items	$	424		$	214		$	1,289	$	607

Cost of Subscription Items
	Amortization of intangible assets	319			382			962		1,145
	Share-based compensation	31			35			185		200
	Total cost of subscription items	$	350		$	417		$	1,147	$	1,345

Cost of Maintenance Items
	Amortization of intangible assets	161			161			483		483
	Share-based compensation	89			63			246		191
	Total cost of maintenance items	$	250		$	224		$	729	$	674

Sales and Marketing Items
	Amortization of intangible assets	247			1,067			806		1,956
	Severance	1,070			342			1,070		342
	Share-based compensation	(918		)	2,229			2,559		6,541
	Total sales and marketing items	$	399		$	3,638		$	4,435	$	8,839

General and Administrative Items
	Accretion expense for acquisition-related contingent consideration	—			—			—		22
	Amortization of intangible assets	—			83			6		251
	Recovery of bankruptcy claim	—			—			—		(626		)
	Share-based compensation	2,235			2,280			6,267		8,000
	Total general and administrative items	$	2,235		$	2,363		$	6,273	$	7,647

Research and Development Items
	Severance	—			414			—		414
	Share-based compensation	1,331			1,270			3,899		3,944
	Total research and development items	$	1,331		$	1,684		$	3,899	$	4,358

PROS Holdings, Inc.

Supplemental Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands)

(Unaudited)



		Three Months Ended September 30,						Nine Months Ended September 30,
		2016			2015			2016			2015
Adjusted EBITDA
	GAAP Loss from Operations	$	(13,116	)	$	(15,866	)	$	(49,140	)	$	(40,457	)
	Acquisition-related deferred revenue write-down, net of cost of revenue	—			328			—			1,167
	Amortization of intangible assets	737			1,703			2,288			3,866
	Accretion expense for acquisition-related contingent consideration	—			—			—			22
	Recovery of bankruptcy claim	—			—			—			(626		)
	Severance	1,070			756			1,070			756
	Share-based compensation	3,192			6,631			14,445			21,381
	Depreciation	1,686			1,449			5,108			4,057
	Capitalized internal-use software development costs	(497		)	—			(569		)	(233		)
	Adjusted EBITDA	$	(6,928	)	$	(4,999	)	$	(26,798	)	$	(10,067	)

Free Cash Flow
	Net cash provided by (used in) operating activities	$	2,213		$	4,827		$	(7,159	)	$	6,804
	Purchase of property and equipment	(1,185		)	(3,006		)	(6,524		)	(4,856		)
	Capitalized internal-use software development costs	(497		)	—			(569		)	(233		)
	Free Cash Flow	$	531		$	1,821		$	(14,252	)	$	1,715


Guidance		Q4 2016 Guidance						Full Year 2016 Guidance
		Low			High			Low			High
Adjusted EBITDA
	GAAP Loss from Operations	$	(18,850	)	$	(17,350	)	$	(67,915	)	$	(66,415	)
	Amortization of intangible assets	700			700			2,950			2,950
	Severance	—			—			1,070			1,070
	Share-based compensation	6,250			6,250			20,695			20,695
	Depreciation	1,400			1,400			6,500			6,500
	Capitalized internal-use software development costs	(500		)	(500		)	(1,100		)	(1,100		)
	Adjusted EBITDA	$	(11,000	)	$	(9,500	)	$	(37,800	)	$	(36,300	)

PROS Holdings, Inc. - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - November 1, 2016

Attached files

PROS Holdings, Inc. Reports