PRO Q3 2012 Earnings Release
Exhibit 99.1
PROS HOLDINGS, INC. REPORTS THIRD QUARTER 2012 FINANCIAL RESULTS
| |
• | Third quarter revenue of $29.9 million, exceeding the high end of guidance, an increase of 19% over the third quarter of 2011. |
| |
• | GAAP operating income of $1.8 million for the third quarter. |
| |
• | Non-GAAP operating income for the third quarter was $4.3 million. |
| |
• | GAAP earnings per share for the third quarter of $0.05, and non-GAAP earnings per share of $0.11. |
HOUSTON, Texas – November 1, 2012 — PROS Holdings, Inc. (NYSE: PRO), a world leader in pricing and revenue management software, today announced financial results for the third quarter ended September 30, 2012.
Total revenue for the third quarter of 2012 was $29.9 million and represented an increase of 19% over the third quarter of 2011, exceeding the high end of our guided range.
CEO Andres Reiner stated, “Our results this quarter exceeded expectations as the market increasingly recognizes our ability to improve sales effectiveness through our big data applications. We have successfully extended our big data science expertise to more than 30 sub-industries, resulting in an expanding set of customers looking to PROS to increase sales performance. The strong momentum we are seeing in our business is enabling us to raise our guidance for the full year.”
For the quarter ended September 30, 2012, GAAP operating income was $1.8 million, compared with $2.7 million in the third quarter of 2011. GAAP net income in the quarter was $1.4 million, or $0.05 per share, compared with $1.9 million, or $0.07 per share, in the third quarter of 2011.
For the quarters ended September 30, 2012 and 2011, non-GAAP operating income was $4.3 million, respectively. Non-GAAP net income for the third quarter of 2012 was $3.2 million, or $0.11 per share, compared with $3.0 million, or $0.11 per share, in the third quarter of 2011.
Recent Business Highlights
| |
• | Signed new customers across several industries, such as Hewlett Packard, Ecolab, Nexidia and Zimmer, among others. |
| |
• | Continued to set the pace of innovation in big data software with new capabilities that help companies improve sales effectiveness, such as intelligent quoting for large bid and tender deals. |
| |
• | Achieved another level of product certifications from SAP for integration of PROS Pricing Solution Suite with SAP ERP and SAP CRM, continuing to provide the most complete and seamless integration experience. |
Executive Vice President and Chief Financial Officer Charles Murphy stated, “We are pleased with our third quarter performance with revenue increasing 19% period over period and non-GAAP EPS of 11 cents. Our strong performance, especially given the challenging macroeconomic environment, was the result of continued execution of our growth strategies which also provides us with confidence to slightly increase our revenue expectations for the full year to the range of $116.5 to $117.1 million, which represents approximately 21% growth from 2011 at the midpoint. Our balance sheet remains strong with $72.6 million in cash and continued positive cash flow. We also plan to continue on our stated path of investing in support of the growth of the business in order to capture the opportunity we see in front of us while continuing to deliver solid profitability.”
The attached table provides a reconciliation of GAAP to non-GAAP income from operations and net income as well as net income per share available to common stockholders for the quarter and nine months ended September 30, 2012 and 2011.
Financial Outlook
Based on information as of today, PROS anticipates the following:
| |
• | Total revenue for the fourth quarter of 2012 in the range of $31.4 million to $32.0 million and total revenue for the full year ending December 31, 2012 in the range of $116.5 million to $117.1 million |
| |
• | GAAP income from operations of $1.5 million to $2.0 million and GAAP earnings per share of $0.02 to $0.03 for the fourth quarter of 2012 |
| |
• | Non-GAAP income from operations of $4.2 million to $4.7 million and non-GAAP earnings per share of $0.09 to $0.10, which exclude estimated non-cash share-based compensation charges of approximately $2.7 million for the fourth quarter of 2012 |
| |
• | GAAP and non-GAAP estimated tax rate of approximately 45% and 35%, respectively, for the fourth quarter of 2012 |
| |
• | Estimated weighted average of 28.8 million diluted shares outstanding for the fourth quarter of 2012 |
Conference Call
In conjunction with this announcement, PROS Holdings, Inc. will host a conference call on November 1, 2012, at 4:30 p.m. (ET) to discuss the company’s financial results. To access this call, dial (866) 831-6272 (domestic) or (617) 213-8859 (international). The pass code for the call is 86324529. Additionally, a live webcast of the conference call will be available in the “Investor Relations” section of the Company’s web site at www.prospricing.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 97602711. An archived web cast of this conference call will also be available in the “Investor Relations” section of the Company’s web site at www.prospricing.com.
About PROS
PROS Holdings, Inc. (NYSE: PRO) is a leading provider of prescriptive pricing and revenue management software for companies in the manufacturing, distribution, services and travel industries. PROS gives customers far greater confidence and agility in their pricing strategies by providing data-driven insights into transaction profitability, forecasting demand, recommending optimal prices for each product and deal, and streamlining pricing processes with enhanced controls and compliance. With more than $460 billion in revenues under management, PROS has implemented more than 500 solutions in more than 50 countries. The PROS team comprises more than 600 professionals, including 100 with advanced degrees and 25 with Ph.D.s. To learn more, visit www.prospricing.com.
Forward-looking Statements
This press release contains forward-looking statements, including statements about PROS’ momentum and future financial performance, positioning of PROS, in the enterprise and mid-market sectors, the confidence and optimism of PROS management, customer successes, the growth and reach of PROS’ reseller network, awareness of PROS pricing optimization solutions, the demands for PROS solutions, the predictability of the PROS business and PROS’ effective tax rate and the continued reinstatement of the R&E tax credit. 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 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, (b) the challenges associated with PROS’ selling its solutions and successfully installing and delivering the products and services, (c) the difficulties and risks associated with developing and selling complex new products
and enhancements with the technical specifications and functionality desired by customers, (d) the risk that the market for PROS’ pricing and margin optimization software does not grow as anticipated, (e) 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, (f) the risk that PROS’ will not be able to maintain historical maintenance renewal rates, (g) personnel and other risks associated with growing a business generally (h) the risk that modification or negotiation of contractual arrangements will be necessary during PROS’ implementations of its solutions, (i) the impact of currency fluctuations on PROS’ results of operations, (j) the risk that reseller and other relationships do not increase sales of PROS’ solutions and (k) civil and political unrest in regions in which PROS’ operate. 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
646-277-1200
Staci.Mortenson@icrinc.com
Media Contact:
PROS Public Relations
Yvonne Donaldson
713-335-5310
ydonaldson@prospricing.com
PROS Holdings, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except share amounts)
(Unaudited)
|
| | | | | | | |
| September 30, 2012 | | December 31, 2011 |
Assets: | | | |
Current assets: | | | |
Cash and cash equivalents | $ | 72,644 |
| | $ | 68,457 |
|
Accounts and unbilled receivables, net of allowance of $860 and $1,130, respectively | 46,953 |
| | 33,864 |
|
Prepaid and other current assets | 4,816 |
| | 8,353 |
|
Total current assets | 124,413 |
| | 110,674 |
|
Restricted cash | 329 |
| | 329 |
|
Property and equipment, net | 10,698 |
| | 4,703 |
|
Other long term assets, net | 5,708 |
| | 5,553 |
|
Total assets | $ | 141,148 |
| | $ | 121,259 |
|
Liabilities and Stockholders’ Equity: | | | |
Current liabilities: | | | |
Accounts payable | $ | 5,931 |
| | $ | 4,915 |
|
Accrued liabilities | 3,881 |
| | 1,667 |
|
Accrued payroll and other employee benefits | 5,913 |
| | 4,790 |
|
Deferred revenue | 37,957 |
| | 33,094 |
|
Total current liabilities | 53,682 |
| | 44,466 |
|
Long-term deferred revenue | 2,774 |
| | 2,850 |
|
Total liabilities | 56,456 |
| | 47,316 |
|
Stockholders' equity: | | | |
Preferred stock, $0.001 par value, 5,000,000 shares authorized none issued | — |
| | — |
|
Common stock, $0.001 par value, 75,000,000 shares authorized; 31,872,766 and 31,432,430 shares issued, respectively; 27,455,181 and 27,014,845 shares outstanding, respectively | 32 |
| | 31 |
|
Additional paid-in capital | 85,139 |
| | 77,934 |
|
Treasury stock, 4,417,585 common shares, at cost | (13,938 | ) | | (13,938 | ) |
Accumulated other comprehensive loss | (11 | ) | | (11 | ) |
Retained earnings | 13,470 |
| | 9,927 |
|
Total stockholders’ equity | 84,692 |
| | 73,943 |
|
Total liabilities and stockholders’ equity | $ | 141,148 |
| | $ | 121,259 |
|
PROS Holdings, Inc.
Condensed Consolidated Statements of Comprehensive Income
(In thousands, except share and per share data)
(Unaudited)
|
| | | | | | | | | | | | | | | |
| For the Three Months Ended September 30, | | For the Nine Months Ended September 30, |
| 2012 | | 2011 | | 2012 | | 2011 |
Revenue: | | | | | | | |
License and implementation | $ | 19,494 |
| | $ | 16,560 |
| | $ | 55,466 |
| | $ | 45,435 |
|
Maintenance and support | 10,419 |
| | 8,648 |
| | 29,602 |
| | 24,964 |
|
Total revenue | 29,913 |
| | 25,208 |
| | 85,068 |
| | 70,399 |
|
Cost of revenue: | | | | | | | |
License and implementation | 6,547 |
| | 4,755 |
| | 18,090 |
| | 14,221 |
|
Maintenance and support | 2,122 |
| | 1,578 |
| | 6,017 |
| | 4,931 |
|
Total cost of revenue | 8,669 |
| | 6,333 |
| | 24,107 |
| | 19,152 |
|
Gross profit | 21,244 |
| | 18,875 |
| | 60,961 |
| | 51,247 |
|
Operating expenses: | | | | | | | |
Selling, marketing, general and administrative | 12,383 |
| | 9,352 |
| | 34,524 |
| | 26,320 |
|
Research and development | 7,049 |
| | 6,843 |
| | 20,518 |
| | 18,952 |
|
Income from operations | 1,812 |
| | 2,680 |
| | 5,919 |
| | 5,975 |
|
Other (expense) income, net | (15 | ) | | (90 | ) | | (121 | ) | | (33 | ) |
Income before income tax provision | 1,797 |
| | 2,590 |
| | 5,798 |
| | 5,942 |
|
Income tax provision | 441 |
| | 658 |
| | 2,256 |
| | 1,713 |
|
Net income | $ | 1,356 |
| | $ | 1,932 |
| | $ | 3,542 |
| | $ | 4,229 |
|
Net earnings per share: | | | | | | | |
Basic | $ | 0.05 |
| | $ | 0.07 |
| | $ | 0.13 |
| | $ | 0.16 |
|
Diluted | $ | 0.05 |
| | $ | 0.07 |
| | $ | 0.13 |
| | $ | 0.15 |
|
Weighted average number of shares: | | | | | | | |
Basic | 27,426,269 |
| | 26,928,195 |
| | 27,322,940 |
| | 26,783,812 |
|
Diluted | 28,362,582 |
| | 27,842,057 |
| | 28,320,181 |
| | 27,689,804 |
|
PROS Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
|
| | | | | | | |
| For the Nine Months Ended September 30, |
| 2012 | | 2011 |
Operating activities: | | | |
Net income | $ | 3,542 |
| | $ | 4,229 |
|
Adjustments to reconcile net income to net | | | |
cash provided by operating activities: | | | |
Depreciation and amortization | 1,546 |
| | 1,189 |
|
Share-based compensation | 6,962 |
| | 5,008 |
|
Excess tax benefits on share-based compensation | (1,715 | ) | | (1,241 | ) |
Tax benefit from share-based compensation | 1,621 |
| | 1,210 |
|
Deferred income tax | 344 |
| | (521 | ) |
Provision for doubtful accounts | (257 | ) | | (2 | ) |
Changes in operating assets and liabilities: | | | |
Accounts and unbilled receivables | (12,832 | ) | | (336 | ) |
Prepaid expenses and other assets | 3,276 |
| | (2,027 | ) |
Accounts payable | 137 |
| | 2,087 |
|
Accrued liabilities | 2,334 |
| | 326 |
|
Accrued payroll and other employee benefits | 1,123 |
| | 1,875 |
|
Deferred revenue | 4,788 |
| | (712 | ) |
Net cash provided by operating activities | 10,869 |
| | 11,085 |
|
Investing activities: | | | |
Purchases of property and equipment | (6,769 | ) | | (1,932 | ) |
Increase in restricted cash | — |
| | (36 | ) |
Increase in short-term investment | — |
| | 73 |
|
Net cash used in investing activities | (6,769 | ) | | (1,895 | ) |
Financing activities: | | | |
Exercise of stock options | 1,033 |
| | 1,737 |
|
Excess tax benefits on share-based compensation | 1,715 |
| | 1,241 |
|
Tax withholding related to net share settlement of restricted stock units | (2,411 | ) | | (1,610 | ) |
Debt issuance costs related to credit facility | (250 | ) | | — |
|
Net cash provided by financing activities | 87 |
| | 1,368 |
|
Net increase in cash and cash equivalents | 4,187 |
| | 10,558 |
|
Cash and cash equivalents: | | | |
Beginning of period | 68,457 |
| | 55,845 |
|
End of period | $ | 72,644 |
| | $ | 66,403 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
PROS HOLDINGS, INC. |
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES |
(Dollars and shares in thousands, except per share data) |
(Unaudited) |
| | | | | | | | | | | | | | | | |
We use these non-GAAP financial measures to assist in the management of the Company because we believe that this information provides a more consistent and complete understanding of the underlying results and trends of the ongoing business due to the uniqueness of these charges. |
| | | | | | | | | | | | | | | | |
| | | | | | For the Three Months | | Quarter over | | For the Nine Months | | Year over |
| | | | | | Ended September 30, | | Quarter | | Ended September 30, | | Year |
| | | | | | 2012 | | 2011 | | % change | | 2012 | | 2011 | | % change |
GAAP gross profit | | $ | 21,244 |
| | $ | 18,875 |
| | 13 | % | | $ | 60,961 |
| | $ | 51,247 |
| | 19 | % |
| Non-GAAP adjustment: | | | | | | | | | | | | |
| | GAAP share-based compensation | | 335 |
| | 282 |
| | | | 966 |
| | 894 |
| | |
Non-GAAP gross profit | | $ | 21,579 |
| | $ | 19,157 |
| | 13 | % | | $ | 61,927 |
| | $ | 52,141 |
| | 19 | % |
Non-GAAP gross margin | | 72.1 | % | | 76.0 | % | | | | 72.8 | % | | 74.1 | % | | |
| | | | | | | | | | | | | | | | |
GAAP selling, marketing, general and administrative | | $ | 12,383 |
| | $ | 9,352 |
| | 32 | % | | $ | 34,524 |
| | $ | 26,320 |
| | 31 | % |
| Non-GAAP adjustment: | | | | | | | | | | | | |
| | GAAP share-based compensation | | 1,662 |
| | 967 |
| | | | 4,565 |
| | 2,971 |
| | |
Non-GAAP selling, marketing, general and administrative | | $ | 10,721 |
| | $ | 8,385 |
| | 28 | % | | $ | 29,959 |
| | $ | 23,349 |
| | 28 | % |
| | | | | | | | | | | | | | | | |
GAAP research and development | | $ | 7,049 |
| | $ | 6,843 |
| | 3 | % | | $ | 20,518 |
| | $ | 18,952 |
| | 8 | % |
| Non-GAAP adjustment: | | | | | | | | | | | | |
| | GAAP share-based compensation | | 493 |
| | 398 |
| | | | 1,431 |
| | 1,143 |
| | |
Non-GAAP research and development | | $ | 6,556 |
| | $ | 6,445 |
| | 2 | % | | $ | 19,087 |
| | $ | 17,809 |
| | 7 | % |
| | | | | | | | | | | | | | | | |
Income from operations | | $ | 1,812 |
| | $ | 2,680 |
| | (32 | )% | | $ | 5,919 |
| | $ | 5,975 |
| | (1 | )% |
| Non-GAAP adjustment: | | | | | | | | | | | | |
| | GAAP share-based compensation | | 2,490 |
| | 1,647 |
| | | | 6,962 |
| | 5,008 |
| | |
Non-GAAP income from operations | | $ | 4,302 |
| | $ | 4,327 |
| | (1 | )% | | $ | 12,881 |
| | $ | 10,983 |
| | 17 | % |
Non-GAAP income from operations % of total revenue | | 14.4 | % | | 17.2 | % | | | | 15.1 | % | | 15.6 | % | | |
| | | | | | | | | | | | | | | | |
GAAP net income | | $ | 1,356 |
| | $ | 1,932 |
| | (30 | )% | | $ | 3,542 |
| | $ | 4,229 |
| | (16 | )% |
| Non-GAAP adjustment: | | | | | | | | | | | | |
| | GAAP share-based compensation | | 2,490 |
| | 1,647 |
| | | | 6,962 |
| | 5,008 |
| | |
| | Tax impact related to non-GAAP adjustments | | (691 | ) | | (550 | ) | | | | (1,840 | ) | | (1,695 | ) | | |
Non-GAAP net income | | $ | 3,155 |
| | $ | 3,029 |
| | 4 | % | | $ | 8,664 |
| | $ | 7,542 |
| | 15 | % |
| | | | | | | | | | | | | | | | |
Non-GAAP diluted earnings per share | | $ | 0.11 |
| | $ | 0.11 |
| | | | $ | 0.31 |
| | $ | 0.27 |
| | |
| | | | | | | | | | | | | | | | |
Shares used in computing non-GAAP earnings per share | | 28,363 |
| | 27,842 |
| | | | 28,320 |
| | 27,690 |
| | |
| | | | | | | | | | | | | | | | |
Detail of GAAP share-based compensation expense: | | | | | | | | | | | | |
| | Cost of revenue | | $ | 335 |
| | $ | 282 |
| | | | $ | 966 |
| | $ | 894 |
| | |
| | Selling, marketing, general and administrative | | 1,662 |
| | 967 |
| | | | 4,565 |
| | 2,971 |
| | |
| | Research and development | | 493 |
| | 398 |
| | | | 1,431 |
| | 1,143 |
| | |
| Total share-based compensation expense | | $ | 2,490 |
| | $ | 1,647 |
| | | | $ | 6,962 |
| | $ | 5,008 |
| | |
