Delaware | ||||
(State or Other Jurisdiction of Incorporation) | ||||
001-33554 | 76-0168604 | |||
(Commission File Number) | (IRS Employer Identification No.) |
3100 Main Street, Suite 900 Houston TX | 77002 | |||||||
(Address of Principal Executive Offices) | (Zip Code) | |||||||
Registrant’s telephone number, including area code | (713) 335-5151 | |||||||
(Former Name or Former Address, if Changed Since Last Report) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
PROS HOLDINGS, INC. | ||
Date:November 4, 2013 | ||
/s/ Charles H. Murphy Charles H. Murphy | ||
Chief Financial Officer and Executive Vice President |
• | 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. |
• | 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. |
• | 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. |
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 |
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 |
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 |
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 | ||||||||||||||||