10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

___________________________________________________________________________ 

FORM 10-Q

___________________________________________________________________________ 

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2020

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from      to .

Commission File Number: 001-33554

___________________________________________________________________________ 

PROS HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

__________________________________________________________________________ 

Delaware	76-0168604
(State of Incorporation)	(I.R.S. Employer Identification No.)

3100 Main Street, Suite 900				77002
Houston	TX
(Address of Principal Executive Offices)				(Zip Code)
		(713)	335-5151
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading symbol(s)	Name of each exchange on which registered
Common stock	$0.001 par value per share	PRO	New York Stock Exchange

Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ☒   No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated Filer	☐
Non-Accelerated Filer	☐ (do not check if a smaller reporting company)	Smaller Reporting Company	☐
Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ☐  No  ☒

The number of shares outstanding of the registrant's Common Stock, $0.001 par value, was 43,291,660 as of April 27, 2020.

PROS Holdings, Inc.

Form 10-Q

For the Quarterly Period Ended March 31, 2020

Table of Contents

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Interim Condensed Consolidated Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Comprehensive Income (Loss)	5
	Condensed Consolidated Statements of Cash Flows	6
	Condensed Consolidated Statements of Stockholders' Equity	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	22
Item 4.	Controls and Procedures	22
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	23
Item 1A.	Risk Factors	23
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24
Item 3.	Defaults Upon Senior Securities	24
Item 4.	Mine Safety Disclosure	24
Item 5.	Other Information	24
Item 6.	Exhibits	25
Signatures		26

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended ("Exchange Act"). All statements in this report other than historical facts are forward-looking and are based on current estimates, assumptions, trends, and projections. Statements which include the words "believes," "seeks," "expects," "may," "should," "intends," "likely," "targets," "plans," "anticipates," "estimates," or the negative version of those words and similar expressions are intended to identify forward-looking statements. Numerous important factors, risks and uncertainties affect our operating results, including, without limitation, those described in our Annual Report on Form 10-K and in this Quarterly Report on Form 10-Q, and could cause our actual results to differ materially, from the results implied by these or any other forward-looking statements made by us or on our behalf. You should pay particular attention to the important risk factors and cautionary statements described in the section of our Annual Report on Form 10-K entitled "Risk Factors" and the section of this Quarterly Report on Form 10-Q entitled "Risk Factors." You should also carefully review the cautionary statements described in the other documents we file with the Securities and Exchange Commission, specifically the Annual Report on Form 10-K, all Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

You should not rely on forward-looking statements as predictions of future events, as we cannot guarantee that future results, levels of activity, performance or achievements will meet expectations. The forward-looking statements made herein are only made as of the date hereof, and we undertake no obligation to publicly update such forward-looking statements for any reason.

                        3

PART I.     FINANCIAL INFORMATION

ITEM 1. INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

PROS Holdings, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share and per share amounts)

(Unaudited) 

	March 31, 2020			December 31, 2019
Assets:
Current assets:
Cash and cash equivalents	$	251,782		$	306,077
Trade and other receivables, net of allowance of $2,810 and $214, respectively	53,591			65,074
Deferred costs, current	5,829			5,756
Prepaid and other current assets	9,394			9,038
Total current assets	320,596			385,945
Property and equipment, net	26,703			14,794
Operating lease right-of-use assets	25,707			26,550
Deferred costs, noncurrent	14,642			15,478
Intangibles, net	12,954			14,605
Goodwill	48,912			49,104
Other assets, noncurrent	7,163			6,831
Total assets	$	456,677		$	513,307
Liabilities and Stockholders' Equity:
Current liabilities:
Accounts payable and other liabilities	$	12,757		$	9,098
Accrued liabilities	18,734			22,748
Accrued payroll and other employee benefits	12,604			32,656
Operating lease liabilities, current	7,383			7,173
Deferred revenue, current	126,325			124,459
Total current liabilities	177,803			196,134
Deferred revenue, noncurrent	13,915			17,801
Convertible debt, net	112,406			110,704
Operating lease liabilities, noncurrent	21,683			22,391
Other liabilities, noncurrent	1,260			1,281
Total liabilities	327,067			348,311
Commitments and contingencies (see Note 9)
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; 47,972,383 and 47,310,846 shares issued, respectively; 43,291,660 and 42,630,123 shares outstanding, respectively	48			47
Additional paid-in capital	548,014			560,496
Treasury stock, 4,680,723 common shares, at cost	(29,847		)	(29,847		)
Accumulated deficit	(384,524		)	(361,789		)
Accumulated other comprehensive loss	(4,081		)	(3,911		)
Total stockholders' equity	129,610			164,996
Total liabilities and stockholders' equity	$	456,677		$	513,307

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4

PROS Holdings, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(In thousands, except per share data)

(Unaudited) 

	Three Months Ended March 31,
	2020			2019
Revenue:
Subscription	$	43,170		$	30,921
Maintenance and support	12,523			15,327
Total subscription, maintenance and support	55,693			46,248
Services	10,618			9,883
Total revenue	66,311			56,131
Cost of revenue:
Subscription	12,864			9,786
Maintenance and support	2,790			2,802
Total cost of subscription, maintenance and support	15,654			12,588
Services	13,073			8,202
Total cost of revenue	28,727			20,790
Gross profit	37,584			35,341
Operating expenses:
Selling and marketing	24,920			21,485
General and administrative	14,880			11,667
Research and development	19,136			15,799
Loss from operations	(21,352		)	(13,610		)
Convertible debt interest and amortization	(2,062		)	(4,356		)
Other income, net	831			1,271
Loss before income tax provision	(22,583		)	(16,695		)
Income tax provision	152			222
Net loss	$	(22,735	)	$	(16,917	)
Net loss per share:
Basic and diluted	$	(0.53	)	$	(0.45	)
Weighted average number of shares:
Basic and diluted	43,102			37,623
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment	$	(170	)	$	(270	)
Other comprehensive income (loss), net of tax	(170		)	(270		)
Comprehensive loss	$	(22,905	)	$	(17,187	)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5

PROS Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Three Months Ended March 31,
	2020			2019
Operating activities:
Net loss	$	(22,735	)	$	(16,917	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	3,420			3,325
Amortization of debt discount and issuance costs	1,712			3,116
Share-based compensation	6,347			6,046
Provision for doubtful accounts	2,596			—
Changes in operating assets and liabilities:
Accounts and unbilled receivables	8,889			(3,773		)
Deferred costs	763			(893		)
Prepaid expenses and other assets	(701		)	(2,065		)
Accounts payable and other liabilities	1,447			565
Accrued liabilities	(3,840		)	2,634
Accrued payroll and other employee benefits	(20,055		)	(11,779		)
Deferred revenue	(2,016		)	11,646
Net cash used in operating activities	(24,173		)	(8,095		)
Investing activities:
Purchases of property and equipment	(10,993		)	(611		)
Capitalized internal-use software development costs	(412		)	(868		)
Purchase of intangible assets	—			(50		)
Net cash used in investing activities	(11,405		)	(1,529		)
Financing activities:
Proceeds from employee stock plans	1,364			943
Tax withholding related to net share settlement of stock awards	(20,172		)	(14,239		)
Net cash used in financing activities	(18,808		)	(13,296		)
Effect of foreign currency rates on cash	91			80
Net change in cash and cash equivalents	(54,295		)	(22,840		)
Cash and cash equivalents:
Beginning of period	306,077			295,476
End of period	$	251,782		$	272,636
Supplemental disclosure of cash flow information:
Noncash investing activities:
Purchase of property and equipment accrued but not paid	$	3,253		$	1,565

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

6

PROS Holdings, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands, except share data)

(Unaudited) 

	Three Months Ended March 31, 2020
	Common Stock			Additional Paid-In Capital			Treasury Stock				Accumulated (Deficit) Retained Earnings			Accumulated other comprehensive loss			Total Stockholders’ Equity
	Shares	Amount					Shares	Amount
Balance at December 31, 2019	42,630,123	$	47	$	560,496		4,680,723	$	(29,847	)	$	(361,789	)	$	(3,911	)	$	164,996
Stock awards net settlement	634,600	1		(20,173		)	—	—			—			—			(20,172		)
Proceeds from employee stock plans	26,774	—		1,364			—	—			—			—			1,364
Warrant exercise	163	—		—			—	—			—			—			—
Noncash share-based compensation	—	—		6,327			—	—			—			—			6,327
Other comprehensive income (loss)	—	—		—			—	—			—			(170		)	(170		)
Net loss	—	—		—			—	—			(22,735		)	—			(22,735		)
Balance at March 31, 2020	43,291,660	$	48	$	548,014		4,680,723	$	(29,847	)	$	(384,524	)	$	(4,081	)	$	129,610

	Three Months Ended March 31, 2019
	Common Stock			Additional Paid-In Capital			Treasury Stock				Accumulated (Deficit) Retained Earnings			Accumulated other comprehensive loss			Total Stockholders’ Equity
	Shares	Amount					Shares	Amount
Balance at December 31, 2018	37,155,906	$	42	$	364,877		4,417,585	$	(13,938	)	$	(292,708	)	$	(3,374	)	$	54,899
Stock awards net settlement	681,415	—		(14,239		)	—	—			—			—			(14,239		)
Proceeds from employee stock plans	35,340	—		943			—	—			—			—			943
Noncash share-based compensation	—	—		6,054			—	—			—			—			6,054
Other comprehensive income (loss)	—	—		—			—	—			—			(270		)	(270		)
Net loss	—	—		—			—	—			(16,917		)	—			(16,917		)
Balance at March 31, 2019	37,872,661	$	42	$	357,635		4,417,585	$	(13,938	)	$	(309,625	)	$	(3,644	)	$	30,470

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

7

PROS Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Organization and Nature of Operations

PROS Holdings, Inc., a Delaware corporation, through its operating subsidiaries (collectively, the "Company"), provides artificial intelligence ("AI") solutions that power commerce in the digital economy by providing fast, frictionless and personalized buying experiences. PROS solutions enable dynamic buying experiences for both business-to-business ("B2B") and business-to-consumer ("B2C") companies across industry verticals. Companies can use the Company's selling, pricing, revenue optimization and eCommerce solutions to assess their market environments in real time to deliver customized prices and offers. The Company's solutions enable buyers to move fluidly across its customers’ direct sales, online, mobile and partner channels with personalized experiences regardless of which channel those buyers choose. The Company's decades of data science and AI expertise are infused into its solutions and are designed to reduce time and complexity through actionable intelligence. The Company provides standard configurations of its software based on the industries it serves and offers professional services to configure these solutions to meet the specific needs of each customer.

2. Summary of Significant Accounting Policies

Basis of presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States ("GAAP") for interim financial reporting and applicable quarterly reporting regulations of the Securities and Exchange Commission ("SEC"). In management's opinion, the accompanying interim unaudited condensed consolidated financial statements include all adjustments necessary for a fair statement of the financial position of the Company as of March 31, 2020, the results of operations for the three months ended March 31, 2020 and 2019, cash flows for the three months ended March 31, 2020 and 2019, and stockholders' equity for the three months ended March 31, 2020 and 2019.

Certain information and disclosures normally included in the notes to the annual financial statements prepared in accordance with GAAP have been omitted from these interim unaudited condensed consolidated financial statements pursuant to the rules and regulations of the SEC. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019 ("Annual Report") filed with the SEC. The unaudited condensed consolidated balance sheet as of December 31, 2019 was derived from the Company's audited consolidated financial statements but does not include all disclosures required under GAAP.

Certain prior year amounts have been reclassified for consistency with the current year presentation. This reclassification had no effect on the reported results of operations. License revenue and license cost of revenue are now combined with subscription revenue and subscription cost of revenue, respectively.

Changes in accounting policies

There have been no material changes in the Company’s significant accounting policies and their application as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, except for the Company's adoption of certain accounting standards described in more detail under "Recently adopted accounting pronouncements" in this Note 2 below.

Fair value measurement

The Company's financial assets that are included in cash and cash equivalents and that are measured at fair value on a recurring basis consisted of $239.0 million and $273.1 million at March 31, 2020 and December 31, 2019, respectively, and were invested in treasury money market funds. The fair value of the treasury money market funds is determined based on quoted market prices, which represents level 1 in the fair value hierarchy as defined by ASC 820.

Trade and other receivables

Trade and other receivables are primarily comprised of trade receivables, net of allowance for doubtful accounts, contract assets and unbilled receivables. The Company records trade accounts receivable for its unconditional rights to consideration arising

8

from the Company's performance under contracts with customers. The Company's standard billing terms are that payment is due upon receipt of invoice, payable generally within thirty to sixty days. The carrying value of such receivables, net of the allowance for doubtful accounts, represents their estimated net realizable value. When developing its estimate of expected credit losses on trade and other receivables, the Company considers the available information relevant to assessing the collectability of cash flows, which includes a combination of both internal and external information relating to past events, current conditions, and future forecasts as well as relevant qualitative and quantitative factors that relate to the environment in which the Company operates.

Contract assets represent conditional rights to consideration that have been recognized as revenue in advance of billing the customer. Unbilled receivables represent unconditional rights to consideration arising from contingent revenue that have been recognized as revenue in advance of billing the customer.

There are no comparable recent events that provide guidance as to the effect of the spread of COVID-19 as a global pandemic. As a result, the impact of COVID-19 is highly uncertain and subject to change. The Company does not yet know the full extent of the impact from COVID-19 to the Company's business operations or the global economy as a whole; however, the impact could have an adverse effect on the Company's customers and inherently the related receivables.

Deferred costs

Sales commissions earned by the Company's sales representatives are considered incremental and recoverable costs of obtaining a customer contract. Sales commissions are deferred and amortized on a straight-line basis over the period of benefit, which the Company has determined to be five to eight years. The Company determined the period of benefit by taking into consideration its customer contracts, expected renewals of those customer contracts (as the Company currently does not pay an incremental sales commission), the Company's technology and other factors. The Company also defers amounts earned by employees other than sales representatives who earn incentive payments under compensation plans that are also tied to the value of customer contracts acquired. Deferred costs were $20.5 million and $21.2 million as of March 31, 2020 and December 31, 2019, respectively. Amortization expense for the deferred costs was $1.4 million and $1.1 million for the three months ended March 31, 2020 and 2019, respectively.

Deferred implementation costs

The Company capitalizes certain contract fulfillment costs, including personnel and other costs (such as hosting, employee salaries, benefits and payroll taxes), that are associated with arrangements where professional services are not distinct from other undelivered obligations in its customer contracts. The Company analyzes implementation costs and capitalizes those costs that are directly related to customer contracts, that are expected to be recoverable, and that enhance the resources which will be used to satisfy the undelivered performance obligations in those contracts. Deferred implementation costs are amortized ratably over the remaining contract term once the revenue recognition criteria for the respective performance obligation has been met and revenue recognition commences. Deferred implementation costs were $4.1 million and $4.4 million as of March 31, 2020 and December 31, 2019, respectively. Amortization expense for the deferred implementation costs was $0.5 million and $0.2 million for the three months ended March 31, 2020 and 2019, respectively. Deferred implementation costs are included in prepaid and other current assets and other assets, noncurrent in the unaudited condensed consolidated balance sheets. Amortization of deferred implementation costs is included in cost of subscription and cost of services revenues in the accompanying unaudited condensed consolidated statements of comprehensive income (loss).

Recently adopted accounting pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("Topic 326"), in order to improve financial reporting of expected credit losses on financial instruments and other commitments to extend credit. Topic 326 requires that an entity measure and recognize expected credit losses for financial assets held at amortized cost and replaces the incurred loss impairment methodology in current GAAP with a methodology that requires consideration of a broader range of information to estimate credit losses. The Company adopted Topic 326 as of January 1, 2020 using the modified retrospective method and there was no material impact on the Company's unaudited condensed consolidated financial statements as of the adoption date. The Company recognized a $2.6 million provision for credit losses in the first quarter of 2020 representing the Company’s estimate of additional allowance for doubtful accounts related to trade receivables due to increased credit risk from uncertain economic conditions caused by COVID-19.

9

Recently issued accounting pronouncements not yet adopted

With the exception of the new standards discussed above, there have been no other recent accounting pronouncements or changes in accounting pronouncements during the three months ended March 31, 2020, as compared to the recent accounting pronouncements described in the Company's Annual Report, that are of significance or potential significance to the Company.

3. Deferred Revenue and Performance Obligations

Deferred Revenue

For the three months ended March 31, 2020 and 2019, the Company recognized approximately $47.7 million and $38.3 million, respectively, in each case of revenue that was included in the deferred revenue balances at the beginning of the respective periods and primarily related to subscription services, maintenance and support, and services.

Performance Obligations

As of March 31, 2020, the Company expects to recognize approximately $391.0 million of revenue from remaining performance obligations. The Company expects, based on the terms of the related, underlying contractual arrangements, to recognize revenue on approximately $191.6 million of these performance obligations over the next 12 months, with the balance recognized thereafter. However, as a result of uncertain economic conditions caused by COVID-19, the amount of revenue recognized from the Company's contractual remaining performance obligations could vary and be less than what the Company expects as revenue recognized could be delayed or not occur depending on the ongoing impact of COVID-19.

4. Disaggregation of Revenue

Revenue by Geography

The geographic information in the table below is presented for the three months ended March 31, 2020 and 2019. The Company categorizes geographic revenues based on the location of the customer's headquarters. Because the Company's contracts are predominately denominated in U.S. dollars, it has limited exposure to foreign currency exchange risk as discussed under "Foreign Currency Exchange Risk" of Part I, Item 3 below.

	Three Months Ended March 31,
	2020				2019
(in thousands)	Revenue		Percent		Revenue		Percent
United States of America	$	21,800	33	%	$	19,780	35	%
Europe	19,930		30	%	17,287		31	%
The rest of the world	24,581		37	%	19,064		34	%
Total revenue	$	66,311	100	%	$	56,131	100	%

5. Leases

The Company has operating leases for data centers, computer infrastructure, corporate offices and certain equipment. These leases have remaining lease terms ranging from 1 year to 13 years. Some of these leases include options to extend for up to 15 years, and some include options to terminate within 1 year.

In February 2020, the Company entered into an agreement with a computer infrastructure vendor which resulted in future consideration to be paid by the Company for services provided. The Company accounted for this agreement as an operating lease and in result obtained a $1.5 million right-of-use asset in exchange for a new lease liability of the same amount at lease inception.

As of March 31, 2020, the Company did not have any finance leases.

Supplemental information related to leases was as follows (in thousands):

10

	Three Months Ended March 31,
	2020		2019
Cash paid for amounts included in the measurement of lease liability:
Operating cash flows from operating leases	$	1,627	$	1,016

As of March 31, 2020, maturities of lease liabilities were as follows (in thousands):

Year Ending December 31,	Amount
Remaining 2020	$	5,567
2021	9,080
2022	8,447
2023	4,880
2024	4,930
2025 and thereafter	34,072
Total operating lease payments	66,976
Less: Imputed interest	(23,703		)
Less: Anticipated lease incentive	(14,207		)
Total operating lease liabilities	$	29,066

6. Earnings per Share

The following table sets forth the computation of basic and diluted earnings per share for the three months ended March 31, 2020 and 2019:

	Three Months Ended March 31,
(in thousands, except per share data)	2020			2019
Numerator:
Net loss	$	(22,735	)	$	(16,917	)
Denominator:
Weighted average shares (basic)	43,102			37,623
Dilutive effect of potential common shares	—			—
Weighted average shares (diluted)	43,102			37,623
Basic loss per share	$	(0.53	)	$	(0.45	)
Diluted loss per share	$	(0.53	)	$	(0.45	)

Dilutive potential common shares consist of shares issuable upon the exercise of stock options, settlement of stock appreciation rights ("SARs"), and the vesting of restricted stock units ("RSUs") and market stock units ("MSUs"). Potential common shares determined to be antidilutive and excluded from diluted weighted average shares outstanding were approximately 1.6 million and 2.0 million for the three months ended March 31, 2020 and 2019, respectively. In addition, potential common shares related to the convertible notes determined to be antidilutive and excluded from diluted weighted average shares outstanding were 2.2 million for the three months ended March 31, 2020.

7. Noncash Share-based Compensation

The Company's 2017 Equity Incentive Plan (as amended and restated, the "2017 Stock Plan") was approved by stockholders in May 2017 and reserved an aggregate amount of 2,500,000 shares for issuance. In May 2019, the shareholders approved an amendment to the 2017 Stock Plan which increased the aggregate amount of shares for issuance to a total of 4,550,000. As of March 31, 2020, 2,010,087 shares remain available for issuance under the 2017 Stock Plan.

11

The following table presents the number of shares or units outstanding for each award type as of March 31, 2020 and December 31, 2019, respectively, (in thousands): 

Award type	March 31, 2020	December 31, 2019
Restricted stock units (time-based)	1,534	1,893
Restricted stock units (performance-based)	190	114
Stock appreciation rights	32	65
Market stock units	157	267

During the three months ended March 31, 2020, the Company granted 459,499 RSUs (time-based) with a weighted average grant-date fair value of $66.22 per share. The Company also granted 76,200 performance-based RSUs ("PRSUs") with a weighted average grant-date fair value of $54.23 to certain executive employees during the three months ended March 31, 2020. These PRSUs vest on January 13, 2023 and the actual number of PRSUs that will be eligible to vest is based upon achievement of certain internal performance metrics, as defined by each award's plan documents or individual award agreements. The maximum number of shares issuable upon vesting is 200% of the PRSUs initially granted. The Company did not grant any stock options, SARs or MSUs during the three months ended March 31, 2020.

Share-based compensation expense is allocated to expense categories on the unaudited condensed consolidated statements of comprehensive income (loss). The following table summarizes share-based compensation expense included in the Company's unaudited condensed consolidated statements of comprehensive income (loss) for the three months ended March 31, 2020 and 2019:

	Three Months Ended March 31,
	2020		2019
Share-based compensation:
Cost of revenue	$	524	$	538
Operating expenses:
Selling and marketing	1,866		1,400
General and administrative	2,450		2,812
Research and development	1,507		1,296
Total included in operating expenses	5,823		5,508
Total share-based compensation expense	$	6,347	$	6,046

At March 31, 2020, the Company had an estimated $62.9 million of total unrecognized compensation costs related to share-based compensation arrangements. These costs will be recognized over a weighted average period of 3.0 years.

The Company's Employee Stock Purchase Plan ("ESPP") provides for eligible employees to purchase shares on an after-tax basis in an amount between 1% and 10% of their annual pay: (i) on June 30 of each year at a 15% discount of the fair market value of the Company's common stock on January 1 or June 30, whichever is lower, and (ii) on December 31 of each year at a 15% discount of the fair market value of the Company's common stock on July 1 or December 31, whichever is lower. An employee may not purchase more than $5,000 in either of the six-month measurement periods described above or more than $10,000 annually. During the three months ended March 31, 2020, the Company issued 26,774 shares under the ESPP. As of March 31, 2020, 113,477 shares remain authorized and available for issuance under the ESPP. As of March 31, 2020, the Company held approximately $0.7 million on behalf of employees for future purchases under the ESPP, and this amount was recorded in accrued payroll and other employee benefits in the Company's unaudited condensed consolidated balance sheet.

8. Convertible Senior Notes

The following is a summary of the Company's convertible senior notes as of March 31, 2020 (in thousands):

	Date of Issuance	Unpaid Principal Balance		Net Carrying Amount				Contractual Interest Rates
				Current		Noncurrent
1% Convertible Notes due in 2024 ("2024 Notes")	May 2019	$	143,750	$	—	$	112,406	1%

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The 2024 Notes, along with the previously issued convertible notes with original due dates in 2019 and 2047 (the "2019 Notes" and "2047 Notes," and together with the 2024 Notes, collectively, the "Notes"), are general unsecured obligations and rank senior in right of payment to all of the Company's indebtedness that is expressly subordinated in right of payment to the Notes, rank equally in right of payment with all of the Company's existing and future liabilities that are not so subordinated, are effectively junior to any of the Company's secured indebtedness to the extent of the value of the assets securing such indebtedness and are structurally subordinated to all indebtedness and other liabilities of the Company's subsidiaries (including trade payables but excluding intercompany obligations owed to the Company or its subsidiaries). The 2019 Notes and 2047 Notes were settled as of December 31, 2019 and no longer remain outstanding.

Interest related to the 2024 Notes is payable semi-annually in arrears on May 15 and November 15 of each year, commencing on November 15, 2019. The 2024 Notes mature on May 15, 2024, unless redeemed or converted in accordance with their terms prior to such date.

Each $1,000 of principal of the 2024 Notes will initially be convertible into 15.1394 shares of the Company’s common stock, which is equivalent to an initial conversion price of approximately $66.05 per share. The initial conversion price for the 2024 Notes is subject to adjustment upon the occurrence of certain specified events.

As of March 31, 2020, the 2024 Notes are not yet convertible and their remaining term is approximately 49 months.

As of March 31, 2020 and December 31, 2019, the fair value of the principal amount of the 2024 Notes was $121.5 million and $163.2 million, respectively. The estimated fair value was determined based on inputs that are observable in the market or that could be derived from, or corroborated with, observable market data, including the Company's stock price and interest rates, which represents level 2 in the fair value hierarchy.

In accounting for the transaction costs for the 2024 Notes issuance, the Company allocated the costs incurred to the liability and equity components in proportion to the allocation of the proceeds from issuance to the liability and equity components. Issuance costs attributable to the liability component, totaling $3.4 million for the 2024 Notes are being amortized to expense over the expected life of the notes using the effective interest method. Issuance costs attributable to the equity component related to the conversion option, totaling $1.1 million for the 2024 Notes were netted with the equity component in stockholders' equity.

The 2024 Notes consist of the following (in thousands):

	March 31, 2020			December 31, 2019
Liability component:
Principal	$	143,750		$	143,750
Less: debt discount and issuance cost, net of amortization	(31,344		)	(33,046		)
Net carrying amount	$	112,406		$	110,704
Equity component(1)	$	32,883		$	32,883

(1) Recorded within additional paid-in capital in the unaudited condensed consolidated balance sheet. As of March 31, 2020 and December 31, 2019, it included $32.9 million related to the 2024 Notes, which was net of $1.1 million issuance cost in equity.

The following table sets forth total interest expense recognized related to the Notes (in thousands):

	Three Months Ended March 31,
	2020		2019
Coupon interest	$	360	$	1,250
Amortization of debt issuance costs	156		365
Amortization of debt discount	1,546		2,741
Total	$	2,062	$	4,356

Note Hedge and Warrant Transactions

Concurrently with the offering of the 2019 Notes, the Company entered into separate convertible note hedge (the "Note Hedge") and warrant (the "Warrant") transactions. Taken together, the purchase of the Note Hedge and the sale of the Warrant were intended to offset any actual dilution from the conversion of the 2019 Notes and to effectively increase the overall conversion

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price of the 2019 Notes from $33.79 to $45.48 per share. The Warrant was not part of the 2019 Notes or Note Hedge. Both the Note Hedge and Warrant were recorded as part of additional paid-in capital.

As of December 31, 2019, the Note Hedge was settled through certain note hedge termination agreements and exercise of any remaining Note Hedge. In 2019, the Company entered into certain warrant termination agreements which terminated certain of the Warrants that were entered into by the Company in connection with the offering of the 2019 Notes. The remaining Warrants expire in August 2020 and, if exercised, will settle on a net share basis.

Capped Call Transactions

In May 2019, in connection with the offering of the 2024 Notes, the Company entered into privately negotiated capped call transactions (collectively, the "Capped Call") with certain option counterparties. The Capped Call transactions cover, subject to customary anti-dilution adjustments, the number of shares of the Company’s common stock initially underlying the 2024 Notes, at a strike price that corresponds to the initial conversion price of the 2024 Notes, also subject to adjustment, and are exercisable upon conversion of the 2024 Notes. The Capped Call transactions are intended to reduce potential dilution of the Company's common stock and/or offset any cash payments the Company will be required to make in excess of the principal amount upon any conversion of 2024 Notes, and to effectively increase the overall conversion price of the 2024 Notes from $66.05 to $101.62 per share. As the Capped Call transactions meet certain accounting criteria, they are recorded in stockholders’ equity and are not accounted for as derivatives. The cost of the Capped Call was $16.4 million and was recorded as part of additional paid-in capital.

9. Commitments and Contingencies

Litigation

In the ordinary course of business, the Company regularly becomes involved in contract and other negotiations and, in more limited circumstances, becomes involved in legal proceedings, claims and litigation. The outcomes of these matters are inherently unpredictable. The Company is not currently involved in any outstanding litigation that it believes, individually or in the aggregate, will have a material adverse effect on its business, financial condition, results of operations or cash flows.

Purchase commitments

In the ordinary course of business, the Company enters into various purchase commitments for goods and services.

In March 2019, the Company entered into a noncancelable agreement with a computing infrastructure vendor that amended the existing agreement dated June 2017. The amended agreement expires in March 2022. The purchase commitment as of March 31, 2020 was $58.4 million for the remaining period through the expiration of the agreement.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The terms “we,” “us,” “PROS” and “our” refer to PROS Holdings, Inc. and all of its subsidiaries that are consolidated in conformity with generally accepted accounting principles in the United States.

This management's discussion and analysis of financial condition and results of operations should be read along with the unaudited condensed consolidated financial statements and unaudited notes to unaudited condensed consolidated financial statements included in Part I, Item 1 ("Interim Condensed Consolidated Financial Statements (Unaudited)"), as well as the audited consolidated financial statements and notes to consolidated financial statements and management's discussion and analysis of financial condition and results of operations set forth in our Annual Report.

Overview

PROS provides AI solutions that power commerce in the digital economy by providing fast, frictionless and personalized buying experiences. PROS solutions enable dynamic buying experiences for both B2B and B2C companies across industry verticals. Companies can use our selling, pricing, revenue optimization and eCommerce solutions to assess their market environments in real time to deliver customized prices and offers. Our solutions enable buyers to move fluidly across our customers’ direct sales, online, mobile and partner channels with personalized experiences regardless of which channel those buyers choose. Our decades of data science and AI expertise are infused into our solutions and are designed to reduce time and complexity through actionable intelligence. We provide standard configurations of our software based on the industries we serve and offer professional services to configure these solutions to meet the specific needs of each customer.

COVID-19 Impact

In March 2020, the World Health Organization declared the outbreak of the coronavirus ("COVID-19") a pandemic. COVID-19 continues to spread throughout the U.S. and the world and has resulted in governmental authorities implementing numerous measures to contain the virus, including travel bans and restrictions, quarantines, shelter-in-place orders and business limitations and shutdowns. Compliance with these measures by us and by our customers has impacted our business, as well as the businesses of our customers, suppliers and other counterparties, and this impact could last for an indefinite period of time. In particular, in the travel industry, our airline customers are managing historic declines in demand for travel globally. If a significant number of our customers are unable to continue as a going concern, this would have an adverse impact on our business and financial condition. There are no comparable recent events that provide guidance as to the effect the spread of COVID-19 as a global pandemic may have, and as a result, we are unable to predict the full impact that COVID-19 will have on our results from operations, financial condition, liquidity and cash flows due to numerous uncertainties, including the duration and severity of the pandemic and containment measures. For a full discussion on the ongoing impact of COVID-19 to our business, please see "We must successfully navigate the demand, supply and operational challenges associated with the ongoing coronavirus (COVID-19) pandemic" under Item 1A of this Quarterly Report on Form 10-Q.

Q1 2020 Financial Overview

In the first quarter of 2020, subscription revenue increased 40% as compared to the same period in 2019. Our continuing shift to a subscription-based revenue model also led to a growth of recurring revenue (which consists of subscription revenue and maintenance and support revenue) of 20% as compared to the first three months of 2019, and accounted for 84% of total revenue for the three months ended March 31, 2020.

Cash used in operating activities was $24.2 million for the three months ended March 31, 2020, as compared to $8.1 million for the three months ended March 31, 2019. The increase in net cash used in operating activities was primarily attributable to higher cash operating expenses driven mainly by an increase in headcount and higher annual incentive payment as compared to prior year and partially offset by an increase in sales and related cash collections. In addition, in response to the economic conditions caused by COVID-19, several customers delayed payments we expected to receive in the quarter which had an adverse impact on our reported net cash used in operating activities.

Free cash flow is another key metric to assess the strength of our business. We define free cash flow, a non-GAAP financial measure, as net cash provided by (used in) operating activities minus capital expenditures (excluding expenditures for our new headquarters), purchases of other (non-acquisition-related) intangible assets and capitalized internal-use software development costs. We believe free cash flow may be useful to investors and other users of our financial information in evaluating the amount of cash generated by our business operations. Free cash flow used during the three months ended March 31, 2020 was $25.5 million, compared to $9.6 million for the three months ended March 31, 2019. This increase was primarily attributable to a $16.1

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million increase in net cash used in operating activities primarily attributable to higher cash operating expenses driven mainly by an increase in headcount and higher annual incentive payment as compared to prior year and partially offset by an increase in sales and related cash collections. The following is a reconciliation of free cash flow to the most comparable GAAP measure, net cash used in operating activities (in thousands):

	Three Months Ended March 31,
	2020			2019
Net cash used in operating activities	$	(24,173	)	$	(8,095	)
Purchase of property and equipment (excluding new headquarters)	(957		)	(611		)
Purchase of intangible assets	—			(50		)
Capitalized internal-use software development costs	(412		)	(868		)
Free Cash Flow	$	(25,542	)	$	(9,624	)

Factors Affecting Our Performance

Key factors and trends that have affected, and we believe will continue to affect, our operating results include:

• COVID-19. The global economy has been significantly negatively impacted by COVID-19, and demand for some of our solutions, in particular our travel solutions, has been significantly reduced due to uncertainty and the economic impact of COVID-19. COVID-19 did not have a material adverse impact on our financial results for the first quarter of fiscal 2020, except for operating cash flow and bad debt expense recognized as a result of increased credit risk from uncertain economic conditions. We currently expect that new bookings and the related revenue and cash flows will be lower than initially anticipated as a result of decreased demand for new subscriptions and services and delays to projects during the COVID-19 pandemic. In addition, customers in certain of the industries most impacted by COVID-19, have requested, and we expect will continue to request, relief to existing contracts, and the impact of those is uncertain. For example, some customers and prospective customers are delaying projects while they address immediate financial crises in their operations due to COVID-19. In particular, in the travel industry, airlines are managing historic declines in travel demand by cutting their flight schedules, reducing personnel and managing their liquidity. Until travel demand improves, we expect that demand for certain of our airline travel solutions will be limited and that implementation projects will be delayed by current travel industry customers, both of which will negatively impact subscription revenue. To support the health and well-being of our employees, customers, partners and communities, our global workforce has been working remotely since March 16, 2020. In addition, many of our customers are working remotely, which may delay the timing of new business and implementations of our services. The duration and extent of the impact of COVID-19 is unknown at this time and could continue to impact the pace and timing of adoption and implementation of our solutions, cash flow from operations and customer churn.

• Buying Preferences Driving Technology Adoption. Corporate buyers are increasingly demanding the same type of digital buying experience that they enjoy as consumers. For example, buyers often prefer not to interact with a sales representative as their primary source of research, and increasingly prefer to buy online when they have already decided what to buy. In response, we believe that businesses are increasingly modernizing their sales process to compete in digital commerce by adopting technologies which provide fast, frictionless, and personalized buying experiences across sales channels. We believe we are uniquely positioned to help power these buying experiences with our AI-powered solutions that enable buyers to move fluidly across our customers’ direct sales, online, mobile and partner channels and have personalized experiences however they choose to buy. We believe that demand for our B2B solutions will be less impacted by COVID-19, particularly as social distancing has highlighted the importance of digital commerce.

• Continued Investments. We are focused on creating awareness for our solutions, expanding our customer base and growing our recurring revenues. While we incurred losses in the first quarter of 2020, we believe our market is large and underpenetrated and therefore we intend to continue investing in sales, marketing, customer success, cloud support, security, privacy, infrastructure and other long-term initiatives to expand our ability to sell and renew our subscription offerings globally. We also plan to continue investing in product development to enhance our existing technologies and develop new applications and technologies. In light of COVID-19, we are presently being measured in our investments and pursuing certain cost reduction efforts across our organization. While we continue to hire for certain strategic positions, we are slowing our rate of hiring for certain roles in reaction to the COVID-19 impact.

• Cloud Migrations. Sales of our cloud-based solutions have, and we expect future sales of our cloud-based solutions will continue to reduce our future maintenance and support revenue, as existing customers migrate from our licensed solutions to our cloud solutions.

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• Sales Mix Impacts Subscription Revenue Recognition Timing. The mix of subscription services and professional services can create revenue variability in given periods based on the nature and scope of services sold together. Professional services that are deemed to be distinct from the subscription services are accounted for as a separate performance obligation and revenue is recognized as the services are performed. If determined that the professional services are not considered distinct, the professional services and the subscription services are determined to be a single performance obligation and all revenue is recognized over the contractual term of the subscription beginning on the date that subscription services are made available to the customer, resulting in a deferral of revenue and revenue recognized over a shorter period of time, which would have a negative near-term financial impact.

Results of Operations

The following table sets forth certain items in our unaudited condensed consolidated statements of comprehensive income (loss) as a percentage of total revenues for the three months ended March 31, 2020 and 2019:

	Three Months Ended March 31,
	2020		2019
Revenue:
Subscription	65	%	55	%
Maintenance and support	19		27
Total subscription, maintenance and support	84		82
Services	16		18
Total revenue	100		100
Cost of revenue:
Subscription	19		17
Maintenance and support	4		5
Total cost of subscription, maintenance and support	24		22
Services	20		15
Total cost of revenue	43		37
Gross profit	57		63
Operating Expenses:
Selling and marketing	38		38
General and administrative	22		21
Research and development	29		28
Total operating expenses	89		87
Convertible debt interest and amortization	(3	)	(8	)
Other income net	1		2
Loss before income tax provision	(34	)	(30	)
Income tax provision	—		—
Net loss	(34	)%	(30	)%

Revenue:

	Three Months Ended March 31,				Variance
(Dollars in thousands)	2020		2019		$			%
Subscription	$	43,170	$	30,921	$	12,249		40	%
Maintenance and support	12,523		15,327		(2,804		)	(18	)%
Total subscription, maintenance and support	55,693		46,248		9,445			20	%
Services	10,618		9,883		735			7	%
Total revenue	$	66,311	$	56,131	$	10,180		18	%

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Subscription revenue. Subscription revenue increased primarily due to an increased number of customer contracts as compared to the prior year. Our ability to maintain consistent customer attrition rates will directly impact our ability to continue to grow our subscription revenue. Due to the uncertain economic conditions caused by COVID-19, we expect subscription revenue to grow at a slower pace.

Maintenance and support revenue. Maintenance and support revenue decreased primarily as result of migrating existing maintenance customers to our cloud solutions. We expect maintenance revenue to continue to decline over time as we migrate existing maintenance customers to our cloud solutions.

Services revenue. Services revenue increased primarily as a result of performing implementation services for a greater number of customers than in the prior year. Services revenue varies from period to period depending on different factors, including the level of professional services required to implement our solutions, the timing of services revenue recognition on certain subscription contracts and any additional professional services requested by our customers during a particular period. Due to the uncertain economic conditions caused by COVID-19, we expect some decline in services revenue.

Cost of revenue and gross profit:

	Three Months Ended March 31,				Variance
(Dollars in thousands)	2020		2019		$			%
Cost of subscription	$	12,864	$	9,786	$	3,078		31	%
Cost of maintenance and support	2,790		2,802		(12		)	—	%
Total cost of subscription, maintenance and support	15,654		12,588		3,066			24	%
Cost of services	13,073		8,202		4,871			59	%
Total cost of revenue	28,727		20,790		7,937			38	%
Gross profit	$	37,584	$	35,341	$	2,243		6	%

Cost of subscription. Cost of subscription increased primarily due to increased infrastructure costs to support our current subscription customer base, increased employee-related costs driven by higher headcount and increased amortization expense associated with our internal-use software. Our subscription gross profit percentage was 70% and 68% for the three months ended March 31, 2020 and 2019, respectively. The increase in gross profit percentage was primarily attributable to a 40% increase in subscription revenue combined with a smaller increase in cost of subscription driven by efficiencies we achieved in our cloud infrastructure.

Cost of maintenance and support. The cost of maintenance and support remained relatively unchanged over the period. Maintenance and support gross profit percentages for the three months ended March 31, 2020 and 2019, were 78% and 82%, respectively.

Cost of services. Cost of services increased primarily due to increased employee-related costs driven by higher headcount and third party system integrators to support our current customer implementations, other facility and overhead expenses. Services gross profit percentages for the years ended March 31, 2020 and 2019, were (23)% and 17%, respectively. The decrease in services gross profit percentages was primarily attributed to an increase in third party system integrators to support an increased number of customer implementations in 2020 as compared to 2019. Services gross profit percentages vary period to period depending on different factors, including the level of professional services required to implement our solutions, our effective man-day rates, our utilization of third party system integrators and the utilization of our professional services personnel.

Gross profit. The increase in overall gross profit for the three months ended March 31, 2020 was primarily attributable to an increase in total revenue of 18% as compared to the same period in 2019 mainly due to an increase in our subscription revenue. The decrease in gross profit percentage primarily related to the decrease in services gross profit percentage for the period.

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Operating expenses:

	Three Months Ended March 31,				Variance
(Dollars in thousands)	2020		2019		$		%
Selling and marketing	$	24,920	$	21,485	$	3,435	16	%
General and administrative	14,880		11,667		3,213		28	%
Research and development	19,136		15,799		3,337		21	%
Total operating expenses	$	58,936	$	48,951	$	9,985	20	%

Selling and marketing expenses. Sales and marketing expenses increased primarily due to an increase of $3.0 million in employee-related costs driven by higher headcount, as we continue to focus on adding new customers and increasing penetration within our existing customer base. In addition, there was an increase of $0.4 million in expenses for sales and marketing events.

General and administrative expenses. General and administrative expenses increased primarily due to a $2.6 million increase of bad debt expense recognized as a result of increased credit risk from uncertain economic conditions caused by COVID-19 in the first quarter of 2020 and a $0.6 million increase in employee-related costs driven by higher headcount.

Research and development expenses. Research and development expenses increased primarily due to a $2.9 million increase in employee-related costs driven by higher headcount, and a $0.4 million increase in facility and other overhead expenses.

Other income, net:

	Three Months Ended March 31,						Variance
(Dollars in thousands)	2020			2019			$			%
Convertible debt interest and amortization	$	(2,062	)	$	(4,356	)	$	2,294		(53	)%
Other income, net	$	831		$	1,271		$	(440	)	(35	)%

Convertible debt interest and amortization. The convertible debt expense for the three months ended March 31, 2020 and 2019 related to coupon interest and amortization of debt discount and issuance costs attributable to our Notes. Convertible debt interest and amortization decreased primarily as a result of our settlement of the 2019 Notes and 2047 Notes during 2019.

Other income, net. The decrease in other income, net for the three months ended March 31, 2020, primarily related to a decrease in interest income during the period.

Income tax provision:

	Three Months Ended March 31,						Variance
(Dollars in thousands)	2020			2019			$			%
Effective tax rate	(0.7		)%	(1.3		)%	n/a			n/a
Income tax provision	$	152		$	222		$	(70	)	(32	)%

Income tax provision. The tax provision for the three months ended March 31, 2020 included both foreign income and withholding taxes. No tax benefit was recognized on jurisdictions with a projected loss for the year due to the valuation allowances on our deferred tax assets.

Our effective tax rate was (0.7)% and (1.3)% for the three months ended March 31, 2020 and 2019, respectively. The income tax rate varies from the 21% federal statutory rate primarily due to the valuation allowances on our deferred tax assets and foreign and state taxes not based on income. While our expected tax rate would be 0% due to the full valuation on the deferred tax assets, the (0.7)% and (1.3)% for the three months ended March 31, 2020 and 2019, respectively, is due to foreign income taxes and state taxes not based on pre-tax income.

Jurisdictions with a projected loss for the year where no tax benefit can be recognized due to the valuation allowances on our deferred tax assets are excluded from the estimated annual federal effective tax rate. The impact of such an exclusion could result in a higher or lower effective tax rate during a particular quarter depending on the mix and timing of actual earnings versus annual projections.

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    We continue to monitor tax reform responses to COVID-19, and the resulting impact of those reforms to us. The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted by the United States on March 27, 2020.  We are continuing to analyze the CARES Act, but the CARES Act did not have a material impact on our provision for income taxes for the three months ended March 31, 2020.

Liquidity and Capital Resources

At March 31, 2020, we had $251.8 million of cash and cash equivalents and $142.8 million of working capital as compared to $306.1 million of cash and cash equivalents and $189.8 million of working capital at December 31, 2019.

Our principal sources of liquidity are our cash and cash equivalents, cash flows generated from operations and potential borrowings under our $50 million secured Credit Agreement ("Revolver") with the lenders party thereto and Wells Fargo Bank, National Association as agent for the lenders party thereto. The facility expires in July 2022. We issued the 2024 Notes in May 2019 to supplement our overall liquidity position. Our material drivers or variants of operating cash flow are net income (loss), noncash expenses (principally share-based compensation, intangible amortization and amortization of debt discount and issuance costs) and the timing of periodic invoicing and cash collections related to licenses, subscriptions and support for our software and related services. Our operating cash flows are also impacted by the timing of payments to our vendors, the payments of our other liabilities and customer relief. We generally pay our vendors and service providers in accordance with the invoice terms and conditions.

We believe our existing cash, cash equivalents, including funds available under our Revolver and our current estimates of future operating cash flows, will provide adequate liquidity and capital resources to meet our operational requirements, anticipated capital expenditures and coupon payments for our Notes for the next twelve months. Our future working capital requirements will depend on many factors, including the operations of our existing business, potential growth of our subscription services, future acquisitions we might undertake, expansion into complementary businesses, and the impact of COVID-19, including the pace and timing of adoption and implementation of our solutions, relief to existing contracts and customer churn. If such need arises, we may raise additional funds through equity or debt financings. However, the recent COVID-19 pandemic has caused disruption in the capital markets and it could make financing more difficult and/or expensive and we may not be able to obtain such financing on terms acceptable to us or at all. During the period of uncertainty and volatility related to COVID-19, we will continue to monitor our liquidity.

The following table presents key components of our unaudited condensed consolidated statements of cash flows for the three months ended March 31, 2020 and 2019:

 

	Three Months Ended March 31,
(Dollars in thousands)	2020			2019
Net cash used in operating activities	$	(24,173	)	$	(8,095	)
Net cash used in investing activities	(11,405		)	(1,529		)
Net cash used in financing activities	(18,808		)	(13,296		)
Cash and cash equivalents (beginning of period)	306,077			295,476
Cash and cash equivalents (end of period)	$	251,782		$	272,636

Operating Activities

Net cash used in operating activities for the three months ended March 31, 2020 was $24.2 million. The $16.1 million increase in cash used as compared to 2019 was primarily attributable to higher cash operating expenses driven mainly by an increase in headcount and higher annual incentive payment as compared to prior year and partially offset by an increase in sales and related cash collections. In addition, in response to the economic conditions caused by COVID-19, several customers delayed payments we expected to receive in the quarter which had an adverse impact on our reported net cash used in operating activities.

Investing Activities

Net cash used in investing activities for the three months ended March 31, 2020 was $11.4 million, which was primarily related to capital expenditures of $11.0 million, mainly attributable to the build out of our new headquarters, and $0.4 million related to capitalized internal-use software development costs on our subscription service solutions.

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Financing Activities

Net cash used in financing activities for the three months ended March 31, 2020 was $18.8 million, which was attributable to $20.2 million paid for tax withholdings on vesting of employee share-based awards, partially offset by proceeds from employee stock plans of $1.4 million.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material. We do not have any relationships with unconsolidated entities or financial partnerships, such as variable interest entities, that would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Contractual Obligations and Commitments

Other than changes described in Note 9 above, there have been no material changes to our contractual obligations and commitments disclosed in our Annual Report.

Credit facility

There were no outstanding borrowings under the Revolver as of March 31, 2020. As of March 31, 2020, we had $0.1 million of unamortized debt issuance costs related to the Revolver included in prepaids and other current assets and other long-term assets in the unaudited condensed consolidated balance sheets. For the three months ended March 31, 2020 and 2019, we recorded an immaterial amount of amortization of debt issuance cost which is included in other expense, net in the unaudited condensed consolidated statements of comprehensive income (loss).

Recent Accounting Pronouncements

See "Recently adopted accounting pronouncements" in Note 2 above for discussion of recent accounting pronouncements including the respective expected dates of adoption.

Critical accounting policies and estimates

Our consolidated financial statements are prepared in accordance with GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses, and related disclosures. Actual results could differ from those estimates. The complexity and judgment required in our estimation process, as well as issues related to the assumptions, risks and uncertainties inherent in determining the nature and timing of satisfaction of performance obligations and determining the standalone selling price of performance obligations, affect the amounts of revenue, expenses, unbilled receivables and deferred revenue. Estimates are also used for, but not limited to, receivables, allowance for doubtful accounts, operating lease right-of-use assets and operating lease liabilities, useful lives of assets, depreciation, income taxes and deferred tax asset valuation, valuation of stock options, other current liabilities and accrued liabilities. Numerous internal and external factors can affect estimates. Our critical accounting policies related to the estimates and judgments are discussed in our Annual Report under management's discussion and analysis of financial condition and results of operations.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign Currency Exchange Risk

Although our contracts are predominately denominated in U.S. dollars, we are exposed to foreign currency exchange risk because we also have some contracts denominated in foreign currencies. The effect of a hypothetical 10% adverse change in exchange rates on our foreign denominated receivables as of March 31, 2020 would result in a loss of approximately $0.3 million. We are also exposed to foreign currency risk due to our operating subsidiaries in France, United Kingdom, Canada, Germany, Ireland, Australia, Bulgaria and United Arab Emirates. A hypothetical 10% adverse change in the value of the U.S. dollar in relation to the euro, which is our single most significant foreign currency exposure, would have decreased revenue for the three months ended March 31, 2020 by approximately $0.4 million. However, due to the relatively low volume of payments made and received through our foreign subsidiaries, we do not believe that we have significant exposure to foreign currency exchange risks. Fluctuations in foreign currency exchange rates could harm our financial results in the future.

We currently do not use derivative financial instruments to mitigate foreign currency exchange risks. We continue to review this matter and may consider hedging certain foreign exchange risks through the use of currency futures or options in future years.

Interest Rate Risk

We are exposed to market risk for changes in interest rates related to the variable interest rate on borrowings under the Revolver. As of March 31, 2020, we had no borrowings under the Revolver.

As of March 31, 2020, we had outstanding principal amount of $143.8 million of the 2024 Notes which are fixed rate instruments. Therefore, our results of operations are not subject to fluctuations in interest rates. The fair value of the Notes may change when the market price of our stock fluctuates.

We believe that we do not have any material exposure to changes in the fair value as a result of changes in interest rates due to the short term nature of our cash equivalents.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act) as of March 31, 2020. Based on our evaluation of our disclosure controls and procedures as of March 31, 2020, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during the three months ended March 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We have not experienced any material impact to our internal controls over financial reporting despite the fact that our employees are working remotely due to COVID-19. We are continually monitoring and assessing the COVID-19 situation on our internal controls to minimize the impact on their design and operating effectiveness.

We implemented internal controls to ensure we adequately evaluated our provisions for credit losses in light of the adoption of Topic 326 on January 1, 2020. There were no significant changes to our internal control over financial reporting due to the adoption of Topic 326.

22

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we are a party to legal proceedings and claims arising in the ordinary course of business. We are not currently aware of any such proceedings or claims that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition, results of operations or cash flows.

ITEM 1A. RISK FACTORS

There have been no material changes in the Company's risk factors from those disclosed in Part I, Item 1A, of our Annual Report with the exception of the following additional risk factor:

We must successfully navigate the demand, supply and operational challenges associated with the ongoing coronavirus (COVID-19) pandemic.

In March 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic. COVID-19 continues to spread throughout the U.S. and the world and has resulted in governmental authorities across the globe implementing numerous measures to contain the virus, including travel bans and restrictions, quarantines, shelter-in-place orders and business limitations and shutdowns. Compliance with these measures by us and by our customers has impacted our business, as well as the businesses of our customers, suppliers and other counterparties, and this impact could last for an indefinite period of time. In particular, in the travel industry, our airline customers are managing historic declines in demand for travel globally. There are no comparable recent events that provide guidance as to the effect the spread of COVID-19 as a global pandemic may have and, as a result, we are unable to predict the full impact that COVID-19 will have on our results from operations, financial condition, liquidity and cash flows due to numerous uncertainties, including the duration and severity of the pandemic and containment measures.

To support the health and well-being of our employees, customers, partners and communities, our global workforce has been working remotely since March 16, 2020, and we have materially limited both in-office work and business travel. We believe these actions were reasonable and necessary, and we have not experienced any material interruptions in our operations; however, the disruptions caused by COVID-19 may result in inefficiencies, delays and additional costs in our product development, sales, marketing and customer service efforts that we cannot fully mitigate through remote work arrangements. Given the continued spread of COVID-19 and the resultant personal, economic and governmental reactions, we may have to take additional actions in the future that could further harm our business and financial performance.

Our business has also begun to be negatively affected by a range of external factors related to COVID-19 that are not within our control. For example, numerous measures have been implemented by governmental authorities across the globe to contain the virus, including travel bans and restrictions, quarantines, shelter-in-place orders and business limitations and shutdowns. Many of our customers’ businesses have been severely impacted by these measures and some have been required to reduce employee headcount as a result. If a significant number of our customers are unable to continue as a going concern, this would have an adverse impact on our business and financial condition. In addition, many of our customers are working remotely, which may delay the timing of new business and implementations of our services. If COVID-19 continues to have a substantial impact on our partners or customers, our results of operations and overall financial performance will be harmed.

The impacts of COVID-19 on our business, customers, partners, employees, markets and financial results and condition are uncertain, evolving and dependent on numerous unpredictable factors outside of our control, including:

• the spread, duration and severity of COVID-19 as a public health matter and its impact on governments, businesses and society generally and our clients, partners and our business more specifically;

• the measures being taken by governments, businesses and society in response to COVID-19 and the effectiveness of those measures;

• the scope and effectiveness of fiscal and monetary stimulus programs and other legislative and regulatory measures being implemented by federal, state and local governments in response to COVID-19;

• the duration and impact of the numerous measures implemented by governmental authorities throughout the country to contain COVID-19, including travel bans and restrictions, quarantines, shelter-in-place orders and business limitations and shutdowns;

• the increase in business failures among our customers and other businesses;

23

• the pace and extent to which our customers and other businesses reduce their number of employees and other compensated individuals;

• the possibility of failure of our operating facilities, computer systems or communication systems during a catastrophic event, including COVID-19;

• the willingness of current and prospective clients to invest in our products and services;

• the willingness of current and prospective clients to buy and install products and services remotely; and

• the satisfaction of customers with product and service remote delivery and support.

If we are not able to respond to and manage the impact of such events effectively, our business will be harmed.

At present, it is clear the global economy has been significantly negatively impacted by COVID-19, and demand for some of our solutions, in particular our travel solutions, has been significantly reduced due to uncertainty and the economic impact of COVID-19. COVID-19 did not have a material adverse impact on our financial results for the first quarter of fiscal 2020, except for operating cash flow. We currently expect that new bookings and the related revenue and cash flows will be lower than initially anticipated as a result of decreased demand for new subscriptions and services and delays to projects during the COVID-19 pandemic. In addition, customers in certain of the industries most impacted by COVID-19, have requested, and we expect will continue to request, relief to existing contracts, and the impact of those is uncertain. For example, some customers and prospective customers are delaying projects while they address immediate financial crises in their operations due to COVID-19. In particular, in the travel industry, airlines are managing historic declines in travel demand by cutting their flight schedules, reducing personnel and managing their liquidity. Until travel demand improves, we expect that demand for certain of our airline travel solutions will be limited and that implementation projects will be delayed by current travel industry customers, both of which will negatively impact subscription revenue. The duration and extent of the impact of COVID-19 is unknown at this time and could continue to impact the pace and timing of adoption and implementation of our solutions, cash flow from operations and customer churn.

More generally, COVID-19 raises the possibility of an extended global economic downturn and has caused volatility in financial markets, which could affect demand for our products and services and impact our results and financial condition even after the pandemic is contained and the containment measures are lifted. For example, we may be unable to collect receivables from or renew subscription agreements with those customers significantly impacted by COVID-19. Also, a decrease in orders in a given period could negatively affect our revenues in future periods, particularly if experienced on a sustained basis, because our subscription revenue is recognized over time. COVID-19 may also have the effect of heightening many of the other risks described in this “Risk Factors” section of our Annual Report on Form 10-K, including risks associated with our customers and supply chain. We will continue to evaluate the nature and extent of the impact of COVID-19 to our business. Although we expect that current cash and cash equivalent balances and cash flows that are generated from operations will be sufficient to meet our working capital needs and other capital and liquidity requirements for at least the next 12 months, if our access to capital is restricted or our borrowing costs increase, our operations and financial condition could be adversely impacted.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

We have an ongoing authorization from our board of directors to repurchase up to $15.0 million in shares of our common stock in the open market or through privately negotiated transactions. As of March 31, 2020, $10.0 million remained available for repurchase under the existing repurchase authorization. We did not make any purchases of our common stock under this program for the three months ended March 31, 2020.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURE

None.

ITEM 5. OTHER INFORMATION

24

None.

ITEM 6. EXHIBITS

Index to Exhibits
		Provided	Incorporated by Reference
Exhibit No.	Description	Herewith	Form	Filing Date
31.1	Certification of Chief Executive Officer Pursuant to Exchange Act Rule 13a-14(a)/15d-14(a).	X
31.2	Certification of Chief Financial Officer Pursuant to Exchange Act Rule 13a-14(a)/ 15d-14(a).	X
32.1*	Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350.	X
Exhibit No.	Description
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema Document.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.

*	This certification shall not be deemed “filed” for purposes of Section 18 of the Securities Act of 1934, or otherwise subject to the liability of that Section, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.
+	Indicates a management contract or compensatory plan or arrangement.

25

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		PROS HOLDINGS, INC.
May 5, 2020	By:	/s/ Andres Reiner
		Andres Reiner
		President and Chief Executive Officer (Principal Executive Officer)
May 5, 2020	By:	/s/ Stefan Schulz
		Stefan Schulz
		Executive Vice President and Chief Financial Officer (Principal Financial Officer)

26

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Andres Reiner, certify that:

1. I have reviewed this quarterly report on Form 10-Q of PROS Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

May 5, 2020	/s/ Andres Reiner
	Andres Reiner
	President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Stefan Schulz, certify that:

1. I have reviewed this quarterly report on Form 10-Q of PROS Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

May 5, 2020	/s/ Stefan Schulz
	Stefan Schulz
	Executive Vice President and Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Andres Reiner, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the quarterly report of PROS Holdings, Inc., on Form 10-Q for the period ended March 31, 2020 fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and the information contained in such Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of PROS Holdings, Inc.

May 5, 2020	/s/ Andres Reiner
	Andres Reiner
	President and Chief Executive Officer

I, Stefan Schulz, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the quarterly report of PROS Holdings, Inc., on Form 10-Q for the period ended March 31, 2020 fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and the information contained in such Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of PROS Holdings, Inc. 

May 5, 2020	/s/ Stefan Schulz
	Stefan Schulz
	Executive Vice President and Chief Financial Officer

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to PROS Holdings, Inc. and will be retained by PROS Holdings, Inc. and furnished to the Securities and Exchange Commission or its staff upon request. This certification "accompanies" the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.

XML

Noncash Share-based Compensation (Details)	3 Months Ended
	Mar. 31, 2020 USD ($) $ / shares shares
Noncash Share-based Compensation (Narrative) [Line Items]
Unrecognized compensation cost related to share-based compensation | $	$ 62,900,000
Weighted average period to recognize cost, in years	3 years
Share-based compensation arrangement by share-based payment, Minimum Employee Subscription rate	1.00%
Share-based Compensation Arrangement by Share-based Payment Award, Maximum Employee Subscription Rate	10.00%
Share-based Compensation Arrangement by Share-based Payment Award, Discount from Market Price, Offering Date	15.00%
Maximum Amount Contributable by employees under ESPP- Half yearly | $	$ 5,000
Maximum Amount Contributable By Employees Under ESPP- Annually | $	$ 10,000
Stock Issued During Period, Shares, Employee Stock Purchase Plans	26,774
ESPP contributions by Employees | $	$ 700,000
RSUs
Noncash Share-based Compensation (Narrative) [Line Items]
Awards, other than options, granted in period	459,499
Weighted average grant date fair value, per share, of awards granted in period | $ / shares	$ 66.22
Employee Stock [Member]
Noncash Share-based Compensation (Narrative) [Line Items]
Shares available for future grants	113,477
Performance Shares [Member]
Noncash Share-based Compensation (Narrative) [Line Items]
Awards, other than options, granted in period	76,200
Weighted average grant date fair value, per share, of awards granted in period | $ / shares	$ 54.23
2017 Equity Incentive Plan [Member] [Member]
Noncash Share-based Compensation (Narrative) [Line Items]
Shares reserved for issuance under Plan	2,500,000
Shares available for future grants	2,010,087
2017 Amended Equity Incentive Plan [Member]
Noncash Share-based Compensation (Narrative) [Line Items]
Shares reserved for issuance under Plan	4,550,000

XML

Commitments and Contingencies Purchase commitments (Details) $ in Millions	Mar. 31, 2020 USD ($)
Long-term Purchase Commitment [Line Items]
Purchase Obligation	$ 58.4

XML

Disaggregation of Revenue (Tables)

3 Months Ended

Mar. 31, 2020

Revenue by Geography [Abstract]

Schedule of Disaggregation Of Revenue [Table Text Block]

The geographic information in the table below is presented for the three months ended March 31, 2020 and 2019. The Company categorizes geographic revenues based on the location of the customer's headquarters. Because the Company's contracts are predominately denominated in U.S. dollars, it has limited exposure to foreign currency exchange risk as discussed under "Foreign Currency Exchange Risk" of Part I, Item 3 below.

	Three Months Ended March 31,
	2020				2019
(in thousands)	Revenue		Percent		Revenue		Percent
United States of America	$	21,800	33	%	$	19,780	35	%
Europe	19,930		30	%	17,287		31	%
The rest of the world	24,581		37	%	19,064		34	%
Total revenue	$	66,311	100	%	$	56,131	100	%

XML

Noncash Share-based Compensation (Note)

3 Months Ended

Mar. 31, 2020

Noncash Share-based Compensation [Abstract]

Noncash Share-based Compensation

Noncash Share-based Compensation

The Company's 2017 Equity Incentive Plan (as amended and restated, the "2017 Stock Plan") was approved by stockholders in May 2017 and reserved an aggregate amount of 2,500,000 shares for issuance. In May 2019, the shareholders approved an amendment to the 2017 Stock Plan which increased the aggregate amount of shares for issuance to a total of 4,550,000. As of March 31, 2020, 2,010,087 shares remain available for issuance under the 2017 Stock Plan.

The following table presents the number of shares or units outstanding for each award type as of March 31, 2020 and December 31, 2019, respectively, (in thousands): 

Award type	March 31, 2020	December 31, 2019
Restricted stock units (time-based)	1,534	1,893
Restricted stock units (performance-based)	190	114
Stock appreciation rights	32	65
Market stock units	157	267

During the three months ended March 31, 2020, the Company granted 459,499 RSUs (time-based) with a weighted average grant-date fair value of $66.22 per share. The Company also granted 76,200 performance-based RSUs ("PRSUs") with a weighted average grant-date fair value of $54.23 to certain executive employees during the three months ended March 31, 2020. These PRSUs vest on January 13, 2023 and the actual number of PRSUs that will be eligible to vest is based upon achievement of certain internal performance metrics, as defined by each award's plan documents or individual award agreements. The maximum number of shares issuable upon vesting is 200% of the PRSUs initially granted. The Company did not grant any stock options, SARs or MSUs during the three months ended March 31, 2020.

Share-based compensation expense is allocated to expense categories on the unaudited condensed consolidated statements of comprehensive income (loss). The following table summarizes share-based compensation expense included in the Company's unaudited condensed consolidated statements of comprehensive income (loss) for the three months ended March 31, 2020 and 2019:

	Three Months Ended March 31,
	2020		2019
Share-based compensation:
Cost of revenue	$	524	$	538
Operating expenses:
Selling and marketing	1,866		1,400
General and administrative	2,450		2,812
Research and development	1,507		1,296
Total included in operating expenses	5,823		5,508
Total share-based compensation expense	$	6,347	$	6,046

At March 31, 2020, the Company had an estimated $62.9 million of total unrecognized compensation costs related to share-based compensation arrangements. These costs will be recognized over a weighted average period of 3.0 years.

The Company's Employee Stock Purchase Plan ("ESPP") provides for eligible employees to purchase shares on an after-tax basis in an amount between 1% and 10% of their annual pay: (i) on June 30 of each year at a 15% discount of the fair market value of the Company's common stock on January 1 or June 30, whichever is lower, and (ii) on December 31 of each year at a 15% discount of the fair market value of the Company's common stock on July 1 or December 31, whichever is lower. An employee may not purchase more than $5,000 in either of the six-month measurement periods described above or more than $10,000 annually. During the three months ended March 31, 2020, the Company issued 26,774 shares under the ESPP. As of March 31, 2020, 113,477 shares remain authorized and available for issuance under the ESPP. As of March 31, 2020, the Company held approximately $0.7 million on behalf of employees for future purchases under the ESPP, and this amount was recorded in accrued payroll and other employee benefits in the Company's unaudited condensed consolidated balance sheet.

XML

Organization and Nature of Operations

3 Months Ended

Mar. 31, 2020

Organization and Nature of Operations [Abstract]

Organization and nature of operations

Organization and Nature of Operations

PROS Holdings, Inc., a Delaware corporation, through its operating subsidiaries (collectively, the "Company"), provides artificial intelligence ("AI") solutions that power commerce in the digital economy by providing fast, frictionless and personalized buying experiences. PROS solutions enable dynamic buying experiences for both business-to-business ("B2B") and business-to-consumer ("B2C") companies across industry verticals. Companies can use the Company's selling, pricing, revenue optimization and eCommerce solutions to assess their market environments in real time to deliver customized prices and offers. The Company's solutions enable buyers to move fluidly across its customers’ direct sales, online, mobile and partner channels with personalized experiences regardless of which channel those buyers choose. The Company's decades of data science and AI expertise are infused into its solutions and are designed to reduce time and complexity through actionable intelligence. The Company provides standard configurations of its software based on the industries it serves and offers professional services to configure these solutions to meet the specific needs of each customer.

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Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($)	Mar. 31, 2020	Dec. 31, 2019
Allowance for bad debts	$ 2,810,000	$ 214,000
Preferred stock - par value	$ 0.001	$ 0.001
Preferred stock - shares authorized	5,000,000	5,000,000
Preferred stock - shares issued	0	0
Common stock - par value	$ 0.001	$ 0.001
Common stock - shares authorized	75,000,000	75,000,000
Common stock - shares issued	47,972,383	47,310,846
Common stock - shares outstanding	43,291,660	42,630,123
Treasury stock - shares	4,680,723	4,680,723

XML

Earnings per Share Basis and Diluted (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Numerator
Net income (loss)	$ (22,735)	$ (16,917)
Denominator
Weighted average shares (basic)	43,102	37,623
Dilutive effect of potential common shares	0	0
Weighted average shares (diluted)	43,102	37,623
Basic Earnings Per Share	$ (0.53)	$ (0.45)
Diluted earnings per share	$ (0.53)	$ (0.45)

XML

Disaggregation of Revenue Revenue by Geography (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Revenues	$ 66,311	$ 56,131
Percentage of total revenue	100.00%	100.00%
UNITED STATES
Revenues	$ 21,800	$ 19,780
Percentage of total revenue	33.00%	35.00%
Europe [Member]
Revenues	$ 19,930	$ 17,287
Percentage of total revenue	30.00%	31.00%
The rest of the world [Member]
Revenues	$ 24,581	$ 19,064
Percentage of total revenue	37.00%	34.00%

XML

Convertible debt (Tables)

3 Months Ended

Mar. 31, 2020

Debt Disclosure [Abstract]

Schedule of Debt [Table Text Block]

The following is a summary of the Company's convertible senior notes as of March 31, 2020 (in thousands):

	Date of Issuance	Unpaid Principal Balance		Net Carrying Amount				Contractual Interest Rates
				Current		Noncurrent
1% Convertible Notes due in 2024 ("2024 Notes")	May 2019	$	143,750	$	—	$	112,406	1%

Convertible Debt [Table Text Block]

The 2024 Notes consist of the following (in thousands):

	March 31, 2020			December 31, 2019
Liability component:
Principal	$	143,750		$	143,750
Less: debt discount and issuance cost, net of amortization	(31,344		)	(33,046		)
Net carrying amount	$	112,406		$	110,704
Equity component(1)	$	32,883		$	32,883

(1) Recorded within additional paid-in capital in the unaudited condensed consolidated balance sheet. As of March 31, 2020 and December 31, 2019, it included $32.9 million related to the 2024 Notes, which was net of $1.1 million issuance cost in equity.

The following table sets forth total interest expense recognized related to the Notes (in thousands):

	Three Months Ended March 31,
	2020		2019
Coupon interest	$	360	$	1,250
Amortization of debt issuance costs	156		365
Amortization of debt discount	1,546		2,741
Total	$	2,062	$	4,356

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Deferred Revenue and Performance Obligation (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Deferred Revenue and Performance Obligation [Abstract]
Deferred Revenue, Revenue Recognized	$ 47.7	$ 38.3
Revenue, Remaining Performance Obligation, Amount	391.0
Revenue Remaining Performance Obligation, to be recognized within 12 months	$ 191.6

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Noncash Share-based Compensation (Tables)

3 Months Ended

Mar. 31, 2020

Noncash Share-based Compensation [Abstract]

Awards outstanding [Table Text Block]

The following table presents the number of shares or units outstanding for each award type as of March 31, 2020 and December 31, 2019, respectively, (in thousands): 

Award type	March 31, 2020	December 31, 2019
Restricted stock units (time-based)	1,534	1,893
Restricted stock units (performance-based)	190	114
Stock appreciation rights	32	65
Market stock units	157	267

Schedule of Share-based Compensation Expense

The following table summarizes share-based compensation expense included in the Company's unaudited condensed consolidated statements of comprehensive income (loss) for the three months ended March 31, 2020 and 2019:

	Three Months Ended March 31,
	2020		2019
Share-based compensation:
Cost of revenue	$	524	$	538
Operating expenses:
Selling and marketing	1,866		1,400
General and administrative	2,450		2,812
Research and development	1,507		1,296
Total included in operating expenses	5,823		5,508
Total share-based compensation expense	$	6,347	$	6,046

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Earnings per Share (Details) - shares shares in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Share-based Payment Arrangement [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive potential common shares excluded from computation of earnings per share	1.6	2.0
Convertible Debt Securities [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive potential common shares excluded from computation of earnings per share	2.2

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Noncash Share-based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation expense	$ 6,347	$ 6,046
Cost of Sales [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation expense	524	538
Selling and Marketing Expense [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation expense	1,866	1,400
General and Administrative Expense [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation expense	2,450	2,812
Research and development
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation expense	1,507	1,296
Operating Expense [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation expense	$ 5,823	$ 5,508

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2020

Accounting Policies [Abstract]

Basis of presentation

Basis of presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States ("GAAP") for interim financial reporting and applicable quarterly reporting regulations of the Securities and Exchange Commission ("SEC"). In management's opinion, the accompanying interim unaudited condensed consolidated financial statements include all adjustments necessary for a fair statement of the financial position of the Company as of March 31, 2020, the results of operations for the three months ended March 31, 2020 and 2019, cash flows for the three months ended March 31, 2020 and 2019, and stockholders' equity for the three months ended March 31, 2020 and 2019.

Certain information and disclosures normally included in the notes to the annual financial statements prepared in accordance with GAAP have been omitted from these interim unaudited condensed consolidated financial statements pursuant to the rules and regulations of the SEC. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019 ("Annual Report") filed with the SEC. The unaudited condensed consolidated balance sheet as of December 31, 2019 was derived from the Company's audited consolidated financial statements but does not include all disclosures required under GAAP.

Certain prior year amounts have been reclassified for consistency with the current year presentation. This reclassification had no effect on the reported results of operations. License revenue and license cost of revenue are now combined with subscription revenue and subscription cost of revenue, respectively.

Accounting Changes [Text Block]

Changes in accounting policies

There have been no material changes in the Company’s significant accounting policies and their application as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, except for the Company's adoption of certain accounting standards described in more detail under "Recently adopted accounting pronouncements" in this Note 2 below.

Fair value measurement

Fair value measurement

The Company's financial assets that are included in cash and cash equivalents and that are measured at fair value on a recurring basis consisted of $239.0 million and $273.1 million at March 31, 2020 and December 31, 2019, respectively, and were invested in treasury money market funds. The fair value of the treasury money market funds is determined based on quoted market prices, which represents level 1 in the fair value hierarchy as defined by ASC 820.

Trade and Other Accounts Receivable, Unbilled Receivables, Policy [Policy Text Block]

Trade and other receivables

Trade and other receivables are primarily comprised of trade receivables, net of allowance for doubtful accounts, contract assets and unbilled receivables. The Company records trade accounts receivable for its unconditional rights to consideration arising

from the Company's performance under contracts with customers. The Company's standard billing terms are that payment is due upon receipt of invoice, payable generally within thirty to sixty days. The carrying value of such receivables, net of the allowance for doubtful accounts, represents their estimated net realizable value. When developing its estimate of expected credit losses on trade and other receivables, the Company considers the available information relevant to assessing the collectability of cash flows, which includes a combination of both internal and external information relating to past events, current conditions, and future forecasts as well as relevant qualitative and quantitative factors that relate to the environment in which the Company operates.

Contract assets represent conditional rights to consideration that have been recognized as revenue in advance of billing the customer. Unbilled receivables represent unconditional rights to consideration arising from contingent revenue that have been recognized as revenue in advance of billing the customer.

There are no comparable recent events that provide guidance as to the effect of the spread of COVID-19 as a global pandemic. As a result, the impact of COVID-19 is highly uncertain and subject to change. The Company does not yet know the full extent of the impact from COVID-19 to the Company's business operations or the global economy as a whole; however, the impact could have an adverse effect on the Company's customers and inherently the related receivables.

Revenue Recognition, Customer Acquisitions [Policy Text Block]

Deferred costs

Sales commissions earned by the Company's sales representatives are considered incremental and recoverable costs of obtaining a customer contract. Sales commissions are deferred and amortized on a straight-line basis over the period of benefit, which the Company has determined to be five to eight years. The Company determined the period of benefit by taking into consideration its customer contracts, expected renewals of those customer contracts (as the Company currently does not pay an incremental sales commission), the Company's technology and other factors. The Company also defers amounts earned by employees other than sales representatives who earn incentive payments under compensation plans that are also tied to the value of customer contracts acquired. Deferred costs were $20.5 million and $21.2 million as of March 31, 2020 and December 31, 2019, respectively. Amortization expense for the deferred costs was $1.4 million and $1.1 million for the three months ended March 31, 2020 and 2019, respectively.

Deferred Charges, Policy [Policy Text Block]

Deferred implementation costs

The Company capitalizes certain contract fulfillment costs, including personnel and other costs (such as hosting, employee salaries, benefits and payroll taxes), that are associated with arrangements where professional services are not distinct from other undelivered obligations in its customer contracts. The Company analyzes implementation costs and capitalizes those costs that are directly related to customer contracts, that are expected to be recoverable, and that enhance the resources which will be used to satisfy the undelivered performance obligations in those contracts. Deferred implementation costs are amortized ratably over the remaining contract term once the revenue recognition criteria for the respective performance obligation has been met and revenue recognition commences. Deferred implementation costs were $4.1 million and $4.4 million as of March 31, 2020 and December 31, 2019, respectively. Amortization expense for the deferred implementation costs was $0.5 million and $0.2 million for the three months ended March 31, 2020 and 2019, respectively. Deferred implementation costs are included in prepaid and other current assets and other assets, noncurrent in the unaudited condensed consolidated balance sheets. Amortization of deferred implementation costs is included in cost of subscription and cost of services revenues in the accompanying unaudited condensed consolidated statements of comprehensive income (loss).

New Accounting Pronouncements, Policy [Policy Text Block]

Recently adopted accounting pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("Topic 326"), in order to improve financial reporting of expected credit losses on financial instruments and other commitments to extend credit. Topic 326 requires that an entity measure and recognize expected credit losses for financial assets held at amortized cost and replaces the incurred loss impairment methodology in current GAAP with a methodology that requires consideration of a broader range of information to estimate credit losses. The Company adopted Topic 326 as of January 1, 2020 using the modified retrospective method and there was no material impact on the Company's unaudited condensed consolidated financial statements as of the adoption date. The Company recognized a $2.6 million provision for credit losses in the first quarter of 2020 representing the Company’s estimate of additional allowance for doubtful accounts related to trade receivables due to increased credit risk from uncertain economic conditions caused by COVID-19.

Recently issued accounting pronouncements not yet adopted

With the exception of the new standards discussed above, there have been no other recent accounting pronouncements or changes in accounting pronouncements during the three months ended March 31, 2020, as compared to the recent accounting pronouncements described in the Company's Annual Report, that are of significance or potential significance to the Company.

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Earnings per Share (Note)

3 Months Ended

Mar. 31, 2020

Earnings Per Share [Abstract]

Earnings per Share

Earnings per Share

The following table sets forth the computation of basic and diluted earnings per share for the three months ended March 31, 2020 and 2019:

	Three Months Ended March 31,
(in thousands, except per share data)	2020			2019
Numerator:
Net loss	$	(22,735	)	$	(16,917	)
Denominator:
Weighted average shares (basic)	43,102			37,623
Dilutive effect of potential common shares	—			—
Weighted average shares (diluted)	43,102			37,623
Basic loss per share	$	(0.53	)	$	(0.45	)
Diluted loss per share	$	(0.53	)	$	(0.45	)

Dilutive potential common shares consist of shares issuable upon the exercise of stock options, settlement of stock appreciation rights ("SARs"), and the vesting of restricted stock units ("RSUs") and market stock units ("MSUs"). Potential common shares determined to be antidilutive and excluded from diluted weighted average shares outstanding were approximately 1.6 million and 2.0 million for the three months ended March 31, 2020 and 2019, respectively. In addition, potential common shares related to the convertible notes determined to be antidilutive and excluded from diluted weighted average shares outstanding were 2.2 million for the three months ended March 31, 2020.

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Condensed Consolidated Statement of Stockholders' Equity Statement - USD ($) $ in Thousands	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Treasury Stock [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income, net of tax [Member]
Common Stock, Shares, Outstanding, Beginning Balance at Dec. 31, 2018		37,155,906
Stockholders' Equity Attributable to Parent at Dec. 31, 2018	$ 54,899	$ 42	$ 364,877	$ (13,938)	$ (292,708)	$ (3,374)
Treasury Stock, Shares - Beginning Balance at Dec. 31, 2018				4,417,585
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures		681,415
Stock Issued During Period, Value, Restricted Stock Award, Gross	(14,239)	$ 0	(14,239)
Stock Issued During Period, Shares, Employee Stock Purchase Plans		35,340
Proceeds from Stock Plans	943		943
APIC, Share-based Payment Arrangement, Increase for Cost Recognition	6,054		6,054
Other Comprehensive Income (Loss), Net of Tax	(270)					(270)
Net Income (Loss) Attributable to Parent	(16,917)				(16,917)
Treasury Stock, Shares - Enging Balance at Mar. 31, 2019				4,417,585
Stockholders' Equity Attributable to Parent at Mar. 31, 2019	$ 30,470	$ 42	357,635	$ (13,938)	(309,625)	(3,644)
Common Stock, Shares, Outstanding, Ending Balance at Mar. 31, 2019		37,872,661
Common Stock, Shares, Outstanding, Beginning Balance at Dec. 31, 2019	42,630,123	42,630,123
Stockholders' Equity Attributable to Parent at Dec. 31, 2019	$ 164,996	$ 47	560,496	$ (29,847)	(361,789)	(3,911)
Treasury Stock, Shares - Beginning Balance at Dec. 31, 2019	4,680,723			4,680,723
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures		634,600
Stock Issued During Period, Value, Restricted Stock Award, Gross	$ (20,172)	$ 1	(20,173)
Stock Issued During Period, Shares, Employee Stock Purchase Plans	26,774	26,774
Proceeds from Stock Plans	$ 1,364		1,364
Warrant Exercise, Shares		163
Warrant Exercise, Value	0
APIC, Share-based Payment Arrangement, Increase for Cost Recognition	6,327		6,327
Other Comprehensive Income (Loss), Net of Tax	(170)					(170)
Net Income (Loss) Attributable to Parent	$ (22,735)				(22,735)
Treasury Stock, Shares - Enging Balance at Mar. 31, 2020	4,680,723			4,680,723
Stockholders' Equity Attributable to Parent at Mar. 31, 2020	$ 129,610	$ 48	$ 548,014	$ (29,847)	$ (384,524)	$ (4,081)
Common Stock, Shares, Outstanding, Ending Balance at Mar. 31, 2020	43,291,660	43,291,660

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Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Current assets:
Cash and cash equivalents	$ 251,782	$ 306,077
Trade and other receivables, net of allowance of $2,810 and $214, respectively	53,591	65,074
Deferred Costs, Current	5,829	5,756
Prepaid and other current assets	9,394	9,038
Total current assets	320,596	385,945
Property and equipment, net	26,703	14,794
Operating Lease, Right-of-Use Asset	25,707	26,550
Deferred Costs, Noncurrent	14,642	15,478
Intangible Assets, Net (Excluding Goodwill)	12,954	14,605
Goodwill	48,912	49,104
Other long term assets, net	7,163	6,831
Total assets	456,677	513,307
Current liabilities:
Accounts payable	12,757	9,098
Accrued liabilities	18,734	22,748
Accrued payroll and other employee benefits	12,604	32,656
Operating Lease, Liability, Current	7,383	7,173
Deferred Revenue, Current	126,325	124,459
Total current liabilities	177,803	196,134
Long-term deferred revenue	13,915	17,801
Convertible Debt, Noncurrent	112,406	110,704
Operating Lease, Liability, Noncurrent	21,683	22,391
Other Liabilities, Noncurrent	1,260	1,281
Total liabilities	327,067	348,311
Commitments and contingencies (see Note 9)
Stockholders' equity:
Preferred stock, $0.001 par value, 5,000,000 shares authorized; none issued	0	0
Common stock, $0.001 par value, 75,000,000 shares authorized; 47,972,383 and 47,310,846 shares issued, respectively; 43,291,660 and 42,630,123 shares outstanding, respectively	48	47
Additional paid-in capital	548,014	560,496
Treasury stock, 4,680,723 common shares, at cost	(29,847)	(29,847)
Retained Earnings (Accumulated Deficit)	(384,524)	(361,789)
Accumulated Other Comprehensive Income (Loss), Net of Tax	(4,081)	(3,911)
Total stockholders' equity	129,610	164,996
Total liabilities and stockholders' equity	$ 456,677	$ 513,307

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Leases (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Lessee, Lease, Description [Line Items]
Lessee, Operating Lease, Option to Renew	15 years
Lessee, Operating Lease, Termination Option	1 year
Right-of-use Asset Obtained in Exchange for Operating Lease Liability	$ 1,500
Operating Lease, Payments	$ 1,627	$ 1,016
Minimum [Member]
Lessee, Lease, Description [Line Items]
Lessee, Operating Lease, Term of Contract	1 year
Maximum [Member]
Lessee, Lease, Description [Line Items]
Lessee, Operating Lease, Term of Contract	13 years

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Summary of Significant Accounting Policies Significant Accounting Policies (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Summary of Significant Accounting Policies [Line Items]
Treasury money market funds, at fair value	$ 239.0		$ 273.1
Deferred Costs	20.5		21.2
Amortization of Deferred Charges	1.4	$ 1.1
Capitalized Contract Cost, Net	4.1		$ 4.4
Capitalized Contract Cost, Amortization	$ 0.5	$ 0.2

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Leases (Tables)

3 Months Ended

Mar. 31, 2020

Leases [Abstract]

Supplemental Lease Information [Table Text Block]

Supplemental information related to leases was as follows (in thousands):

	Three Months Ended March 31,
	2020		2019
Cash paid for amounts included in the measurement of lease liability:
Operating cash flows from operating leases	$	1,627	$	1,016

Lessee, Operating Lease, Liability, Maturity [Table Text Block]

As of March 31, 2020, maturities of lease liabilities were as follows (in thousands):

Year Ending December 31,	Amount
Remaining 2020	$	5,567
2021	9,080
2022	8,447
2023	4,880
2024	4,930
2025 and thereafter	34,072
Total operating lease payments	66,976
Less: Imputed interest	(23,703		)
Less: Anticipated lease incentive	(14,207		)
Total operating lease liabilities	$	29,066

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Convertible debt (Notes)

3 Months Ended

Mar. 31, 2020

Debt Disclosure [Abstract]

Long-term Debt [Text Block]

Convertible Senior Notes

The following is a summary of the Company's convertible senior notes as of March 31, 2020 (in thousands):

	Date of Issuance	Unpaid Principal Balance		Net Carrying Amount				Contractual Interest Rates
				Current		Noncurrent
1% Convertible Notes due in 2024 ("2024 Notes")	May 2019	$	143,750	$	—	$	112,406	1%

The 2024 Notes, along with the previously issued convertible notes with original due dates in 2019 and 2047 (the "2019 Notes" and "2047 Notes," and together with the 2024 Notes, collectively, the "Notes"), are general unsecured obligations and rank senior in right of payment to all of the Company's indebtedness that is expressly subordinated in right of payment to the Notes, rank equally in right of payment with all of the Company's existing and future liabilities that are not so subordinated, are effectively junior to any of the Company's secured indebtedness to the extent of the value of the assets securing such indebtedness and are structurally subordinated to all indebtedness and other liabilities of the Company's subsidiaries (including trade payables but excluding intercompany obligations owed to the Company or its subsidiaries). The 2019 Notes and 2047 Notes were settled as of December 31, 2019 and no longer remain outstanding.

Interest related to the 2024 Notes is payable semi-annually in arrears on May 15 and November 15 of each year, commencing on November 15, 2019. The 2024 Notes mature on May 15, 2024, unless redeemed or converted in accordance with their terms prior to such date.

Each $1,000 of principal of the 2024 Notes will initially be convertible into 15.1394 shares of the Company’s common stock, which is equivalent to an initial conversion price of approximately $66.05 per share. The initial conversion price for the 2024 Notes is subject to adjustment upon the occurrence of certain specified events.

As of March 31, 2020, the 2024 Notes are not yet convertible and their remaining term is approximately 49 months.

As of March 31, 2020 and December 31, 2019, the fair value of the principal amount of the 2024 Notes was $121.5 million and $163.2 million, respectively. The estimated fair value was determined based on inputs that are observable in the market or that could be derived from, or corroborated with, observable market data, including the Company's stock price and interest rates, which represents level 2 in the fair value hierarchy.

In accounting for the transaction costs for the 2024 Notes issuance, the Company allocated the costs incurred to the liability and equity components in proportion to the allocation of the proceeds from issuance to the liability and equity components. Issuance costs attributable to the liability component, totaling $3.4 million for the 2024 Notes are being amortized to expense over the expected life of the notes using the effective interest method. Issuance costs attributable to the equity component related to the conversion option, totaling $1.1 million for the 2024 Notes were netted with the equity component in stockholders' equity.

The 2024 Notes consist of the following (in thousands):

	March 31, 2020			December 31, 2019
Liability component:
Principal	$	143,750		$	143,750
Less: debt discount and issuance cost, net of amortization	(31,344		)	(33,046		)
Net carrying amount	$	112,406		$	110,704
Equity component(1)	$	32,883		$	32,883

(1) Recorded within additional paid-in capital in the unaudited condensed consolidated balance sheet. As of March 31, 2020 and December 31, 2019, it included $32.9 million related to the 2024 Notes, which was net of $1.1 million issuance cost in equity.

The following table sets forth total interest expense recognized related to the Notes (in thousands):

	Three Months Ended March 31,
	2020		2019
Coupon interest	$	360	$	1,250
Amortization of debt issuance costs	156		365
Amortization of debt discount	1,546		2,741
Total	$	2,062	$	4,356

Note Hedge and Warrant Transactions

Concurrently with the offering of the 2019 Notes, the Company entered into separate convertible note hedge (the "Note Hedge") and warrant (the "Warrant") transactions. Taken together, the purchase of the Note Hedge and the sale of the Warrant were intended to offset any actual dilution from the conversion of the 2019 Notes and to effectively increase the overall conversion

price of the 2019 Notes from $33.79 to $45.48 per share. The Warrant was not part of the 2019 Notes or Note Hedge. Both the Note Hedge and Warrant were recorded as part of additional paid-in capital.

As of December 31, 2019, the Note Hedge was settled through certain note hedge termination agreements and exercise of any remaining Note Hedge. In 2019, the Company entered into certain warrant termination agreements which terminated certain of the Warrants that were entered into by the Company in connection with the offering of the 2019 Notes. The remaining Warrants expire in August 2020 and, if exercised, will settle on a net share basis.

Capped Call Transactions

In May 2019, in connection with the offering of the 2024 Notes, the Company entered into privately negotiated capped call transactions (collectively, the "Capped Call") with certain option counterparties. The Capped Call transactions cover, subject to customary anti-dilution adjustments, the number of shares of the Company’s common stock initially underlying the 2024 Notes, at a strike price that corresponds to the initial conversion price of the 2024 Notes, also subject to adjustment, and are exercisable upon conversion of the 2024 Notes. The Capped Call transactions are intended to reduce potential dilution of the Company's common stock and/or offset any cash payments the Company will be required to make in excess of the principal amount upon any conversion of 2024 Notes, and to effectively increase the overall conversion price of the 2024 Notes from $66.05 to $101.62 per share. As the Capped Call transactions meet certain accounting criteria, they are recorded in stockholders’ equity and are not accounted for as derivatives. The cost of the Capped Call was $16.4 million and was recorded as part of additional paid-in capital.

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Disaggregation of Revenue (Notes)

3 Months Ended

Mar. 31, 2020

Disaggregation of Revenue [Abstract]

Disaggregation of Revenue [Text Block]

Disaggregation of Revenue

Revenue by Geography

The geographic information in the table below is presented for the three months ended March 31, 2020 and 2019. The Company categorizes geographic revenues based on the location of the customer's headquarters. Because the Company's contracts are predominately denominated in U.S. dollars, it has limited exposure to foreign currency exchange risk as discussed under "Foreign Currency Exchange Risk" of Part I, Item 3 below.

	Three Months Ended March 31,
	2020				2019
(in thousands)	Revenue		Percent		Revenue		Percent
United States of America	$	21,800	33	%	$	19,780	35	%
Europe	19,930		30	%	17,287		31	%
The rest of the world	24,581		37	%	19,064		34	%
Total revenue	$	66,311	100	%	$	56,131	100	%

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Convertible debt (Details) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2020 USD ($) $ / shares	Mar. 31, 2019 USD ($)	Dec. 31, 2019 USD ($)
Debt Instrument [Line Items]
Debt Instrument, Face Amount	$ 143,750		$ 143,750
Convertible Debt, Noncurrent	112,406		110,704
Debt Instrument, Unamortized Discount (Premium) and Debt Issuance Costs, Net	31,344		33,046
Convertible Debt	112,406		110,704
Debt Instrument, Convertible, Carrying Amount of Equity Component	32,883		32,883
Debt Instrument, Periodic Payment, Interest	360	$ 1,250
Amortization of Financing Costs	156	365
Amortization of Debt Discount (Premium)	1,546	2,741
Interest Expense, Debt	2,062	$ 4,356
Debt Instrument, Fair Value Disclosure	121,500		$ 163,200
Purchase of convertible bond hedge	$ 16,400
Notes due 2019 [Member]
Debt Instrument [Line Items]
Debt Instrument, Convertible, Stock Price Trigger | $ / shares	$ 33.79
Investment Warrants, Exercise Price | $ / shares	$ 45.48
Notes due 2024 [Member]
Debt Instrument [Line Items]
Debt Issuance Cost	$ 3,400
Convertible debt, issuance cost, equity component	$ 1,100
Debt Instrument, Convertible, Conversion Ratio	15.1394
Debt Instrument, Convertible, Stock Price Trigger | $ / shares	$ 66.05
Debt Instrument, Convertible, Conversion Price | $ / shares	$ 101.62
Debt Instrument, Face Amount	$ 143,750
Convertible Debt, Current	0
Convertible Debt, Noncurrent	112,406
Debt Instrument, Convertible, Carrying Amount of Equity Component	$ 32,900
Debt Instrument, Convertible, Remaining Discount Amortization Period	49 months
Debt Instrument, Interest Rate, Stated Percentage	1.00%

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Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Total subscription, maintenance and support revenue	$ 55,693	$ 46,248
Total revenue	66,311	56,131
Cost of Goods and Services Sold	28,727	20,790
Cost of subscription, maintenance and support	15,654	12,588
Gross profit	37,584	35,341
Operating Expenses
Selling and Marketing Expense	24,920	21,485
General and Administrative Expense	14,880	11,667
Research and development	19,136	15,799
Income from operations	(21,352)	(13,610)
Other income (expense):
Convertible debt interest and amortization	(2,062)	(4,356)
Other Nonoperating Income (Expense)	831	1,271
Loss before income tax provision	(22,583)	(16,695)
Income tax provision (benefit)	152	222
Net income (loss)	$ (22,735)	$ (16,917)
Earnings Per Share, Basic	$ (0.53)	$ (0.45)
Net earnings (loss) per share:
Earnings Per Share, Basic and Diluted	(0.53)	(0.45)
Earnings Per Share, Diluted	$ (0.53)	$ (0.45)
Weighted average number of shares:
Weighted Average Number of Shares Outstanding, Basic and Diluted	43,102	37,623
Weighted Average Number of Shares Outstanding, Basic	43,102	37,623
Other comprehensive income, net of tax:
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax	$ (170)	$ (270)
Other comprehensive income	(170)	(270)
Comprehensive income (loss)	(22,905)	(17,187)
Subscription and Circulation [Member]
Revenue from Contract with Customer, Including Assessed Tax	43,170	30,921
Cost of Goods and Services Sold	12,864	9,786
Maintenance [Member]
Revenue from Contract with Customer, Including Assessed Tax	12,523	15,327
Cost of Goods and Services Sold	2,790	2,802
Service [Member]
Revenue from Contract with Customer, Including Assessed Tax	10,618	9,883
Cost of Goods and Services Sold	$ 13,073	$ 8,202

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Summary of Significant Accounting Policies (Notes)

3 Months Ended

Mar. 31, 2020

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

2. Summary of Significant Accounting Policies

Basis of presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States ("GAAP") for interim financial reporting and applicable quarterly reporting regulations of the Securities and Exchange Commission ("SEC"). In management's opinion, the accompanying interim unaudited condensed consolidated financial statements include all adjustments necessary for a fair statement of the financial position of the Company as of March 31, 2020, the results of operations for the three months ended March 31, 2020 and 2019, cash flows for the three months ended March 31, 2020 and 2019, and stockholders' equity for the three months ended March 31, 2020 and 2019.

Certain information and disclosures normally included in the notes to the annual financial statements prepared in accordance with GAAP have been omitted from these interim unaudited condensed consolidated financial statements pursuant to the rules and regulations of the SEC. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019 ("Annual Report") filed with the SEC. The unaudited condensed consolidated balance sheet as of December 31, 2019 was derived from the Company's audited consolidated financial statements but does not include all disclosures required under GAAP.

Certain prior year amounts have been reclassified for consistency with the current year presentation. This reclassification had no effect on the reported results of operations. License revenue and license cost of revenue are now combined with subscription revenue and subscription cost of revenue, respectively.

Changes in accounting policies

There have been no material changes in the Company’s significant accounting policies and their application as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, except for the Company's adoption of certain accounting standards described in more detail under "Recently adopted accounting pronouncements" in this Note 2 below.

Fair value measurement

The Company's financial assets that are included in cash and cash equivalents and that are measured at fair value on a recurring basis consisted of $239.0 million and $273.1 million at March 31, 2020 and December 31, 2019, respectively, and were invested in treasury money market funds. The fair value of the treasury money market funds is determined based on quoted market prices, which represents level 1 in the fair value hierarchy as defined by ASC 820.

Trade and other receivables

Trade and other receivables are primarily comprised of trade receivables, net of allowance for doubtful accounts, contract assets and unbilled receivables. The Company records trade accounts receivable for its unconditional rights to consideration arising

from the Company's performance under contracts with customers. The Company's standard billing terms are that payment is due upon receipt of invoice, payable generally within thirty to sixty days. The carrying value of such receivables, net of the allowance for doubtful accounts, represents their estimated net realizable value. When developing its estimate of expected credit losses on trade and other receivables, the Company considers the available information relevant to assessing the collectability of cash flows, which includes a combination of both internal and external information relating to past events, current conditions, and future forecasts as well as relevant qualitative and quantitative factors that relate to the environment in which the Company operates.

Contract assets represent conditional rights to consideration that have been recognized as revenue in advance of billing the customer. Unbilled receivables represent unconditional rights to consideration arising from contingent revenue that have been recognized as revenue in advance of billing the customer.

There are no comparable recent events that provide guidance as to the effect of the spread of COVID-19 as a global pandemic. As a result, the impact of COVID-19 is highly uncertain and subject to change. The Company does not yet know the full extent of the impact from COVID-19 to the Company's business operations or the global economy as a whole; however, the impact could have an adverse effect on the Company's customers and inherently the related receivables.

Deferred costs

Sales commissions earned by the Company's sales representatives are considered incremental and recoverable costs of obtaining a customer contract. Sales commissions are deferred and amortized on a straight-line basis over the period of benefit, which the Company has determined to be five to eight years. The Company determined the period of benefit by taking into consideration its customer contracts, expected renewals of those customer contracts (as the Company currently does not pay an incremental sales commission), the Company's technology and other factors. The Company also defers amounts earned by employees other than sales representatives who earn incentive payments under compensation plans that are also tied to the value of customer contracts acquired. Deferred costs were $20.5 million and $21.2 million as of March 31, 2020 and December 31, 2019, respectively. Amortization expense for the deferred costs was $1.4 million and $1.1 million for the three months ended March 31, 2020 and 2019, respectively.

Deferred implementation costs

The Company capitalizes certain contract fulfillment costs, including personnel and other costs (such as hosting, employee salaries, benefits and payroll taxes), that are associated with arrangements where professional services are not distinct from other undelivered obligations in its customer contracts. The Company analyzes implementation costs and capitalizes those costs that are directly related to customer contracts, that are expected to be recoverable, and that enhance the resources which will be used to satisfy the undelivered performance obligations in those contracts. Deferred implementation costs are amortized ratably over the remaining contract term once the revenue recognition criteria for the respective performance obligation has been met and revenue recognition commences. Deferred implementation costs were $4.1 million and $4.4 million as of March 31, 2020 and December 31, 2019, respectively. Amortization expense for the deferred implementation costs was $0.5 million and $0.2 million for the three months ended March 31, 2020 and 2019, respectively. Deferred implementation costs are included in prepaid and other current assets and other assets, noncurrent in the unaudited condensed consolidated balance sheets. Amortization of deferred implementation costs is included in cost of subscription and cost of services revenues in the accompanying unaudited condensed consolidated statements of comprehensive income (loss).

Recently adopted accounting pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("Topic 326"), in order to improve financial reporting of expected credit losses on financial instruments and other commitments to extend credit. Topic 326 requires that an entity measure and recognize expected credit losses for financial assets held at amortized cost and replaces the incurred loss impairment methodology in current GAAP with a methodology that requires consideration of a broader range of information to estimate credit losses. The Company adopted Topic 326 as of January 1, 2020 using the modified retrospective method and there was no material impact on the Company's unaudited condensed consolidated financial statements as of the adoption date. The Company recognized a $2.6 million provision for credit losses in the first quarter of 2020 representing the Company’s estimate of additional allowance for doubtful accounts related to trade receivables due to increased credit risk from uncertain economic conditions caused by COVID-19.

Recently issued accounting pronouncements not yet adopted

With the exception of the new standards discussed above, there have been no other recent accounting pronouncements or changes in accounting pronouncements during the three months ended March 31, 2020, as compared to the recent accounting pronouncements described in the Company's Annual Report, that are of significance or potential significance to the Company.

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2020

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Litigation

In the ordinary course of business, the Company regularly becomes involved in contract and other negotiations and, in more limited circumstances, becomes involved in legal proceedings, claims and litigation. The outcomes of these matters are inherently unpredictable. The Company is not currently involved in any outstanding litigation that it believes, individually or in the aggregate, will have a material adverse effect on its business, financial condition, results of operations or cash flows.

Purchase commitments

In the ordinary course of business, the Company enters into various purchase commitments for goods and services.

In March 2019, the Company entered into a noncancelable agreement with a computing infrastructure vendor that amended the existing agreement dated June 2017. The amended agreement expires in March 2022. The purchase commitment as of March 31, 2020 was $58.4 million for the remaining period through the expiration of the agreement.

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Leases (Notes)

3 Months Ended

Mar. 31, 2020

Leases [Abstract]

Lessee, Operating Leases [Text Block]

Leases

The Company has operating leases for data centers, computer infrastructure, corporate offices and certain equipment. These leases have remaining lease terms ranging from 1 year to 13 years. Some of these leases include options to extend for up to 15 years, and some include options to terminate within 1 year.

In February 2020, the Company entered into an agreement with a computer infrastructure vendor which resulted in future consideration to be paid by the Company for services provided. The Company accounted for this agreement as an operating lease and in result obtained a $1.5 million right-of-use asset in exchange for a new lease liability of the same amount at lease inception.

As of March 31, 2020, the Company did not have any finance leases.

Supplemental information related to leases was as follows (in thousands):

	Three Months Ended March 31,
	2020		2019
Cash paid for amounts included in the measurement of lease liability:
Operating cash flows from operating leases	$	1,627	$	1,016

As of March 31, 2020, maturities of lease liabilities were as follows (in thousands):

Year Ending December 31,	Amount
Remaining 2020	$	5,567
2021	9,080
2022	8,447
2023	4,880
2024	4,930
2025 and thereafter	34,072
Total operating lease payments	66,976
Less: Imputed interest	(23,703		)
Less: Anticipated lease incentive	(14,207		)
Total operating lease liabilities	$	29,066

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Earnings per Share (Table)

3 Months Ended

Mar. 31, 2020

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

The following table sets forth the computation of basic and diluted earnings per share for the three months ended March 31, 2020 and 2019:

	Three Months Ended March 31,
(in thousands, except per share data)	2020			2019
Numerator:
Net loss	$	(22,735	)	$	(16,917	)
Denominator:
Weighted average shares (basic)	43,102			37,623
Dilutive effect of potential common shares	—			—
Weighted average shares (diluted)	43,102			37,623
Basic loss per share	$	(0.53	)	$	(0.45	)
Diluted loss per share	$	(0.53	)	$	(0.45	)

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Noncash Share-based Compensation Awards outstanding (Details) - shares shares in Thousands	Mar. 31, 2020	Dec. 31, 2019
Restricted Stock Unit - time based [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding, Number	1,534	1,893
Performance Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding, Number	190	114
Stock Appreciation Rights (SARs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding, Number	32	65
Market Share Units (MSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding, Number	157	267

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Deferred Revenue and Performance Obligation (Notes)

3 Months Ended

Mar. 31, 2020

Deferred Revenue and Performance Obligation [Abstract]

Deferred revenue and performance obligation [Text Block]

Deferred Revenue and Performance Obligations

Deferred Revenue

For the three months ended March 31, 2020 and 2019, the Company recognized approximately $47.7 million and $38.3 million, respectively, in each case of revenue that was included in the deferred revenue balances at the beginning of the respective periods and primarily related to subscription services, maintenance and support, and services.

Performance Obligations

As of March 31, 2020, the Company expects to recognize approximately $391.0 million of revenue from remaining performance obligations. The Company expects, based on the terms of the related, underlying contractual arrangements, to recognize revenue on approximately $191.6 million of these performance obligations over the next 12 months, with the balance recognized thereafter. However, as a result of uncertain economic conditions caused by COVID-19, the amount of revenue recognized from the Company's contractual remaining performance obligations could vary and be less than what the Company expects as revenue recognized could be delayed or not occur depending on the ongoing impact of COVID-19.

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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Operating activities:
Net income (loss)	$ (22,735)	$ (16,917)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, Depletion and Amortization	3,420	3,325
Amortization of Financing Costs and Discounts	1,712	3,116
Share-based compensation	6,347	6,046
Provision for doubtful accounts	2,596	0
Changes in operating assets and liabilities:
Accounts and unbilled receivables	8,889	(3,773)
Increase (Decrease) in Deferred Costs	763	(893)
Prepaid expenses and other assets	(701)	(2,065)
Accounts payable	1,447	565
Accrued liabilities	(3,840)	2,634
Accrued payroll and other employee benefits	(20,055)	(11,779)
Deferred revenue	(2,016)	11,646
Net cash provided by (used in) operating activities	(24,173)	(8,095)
Investing activities:
Purchases of property and equipment	(10,993)	(611)
Internal-use software development costs capitalized	(412)	(868)
Payments to Acquire Intangible Assets	0	(50)
Net cash provided by (used in) investing activities	(11,405)	(1,529)
Financing activities:
Proceeds from Stock Plans	1,364	943
Tax withholding related to net share settlement of restricted stock units	(20,172)	(14,239)
Net cash provided by (used in) financing activities	(18,808)	(13,296)
Effect of Exchange Rate on Cash and Cash Equivalents	91	80
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Period Increase (Decrease), Including Exchange Rate Effect	(54,295)	(22,840)
Cash and cash equivalents:
Beginning of period	306,077	295,476
End of period	251,782	272,636
Capital Expenditures Incurred but Not yet Paid	$ 3,253	$ 1,565

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Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2020	Apr. 27, 2020
Entity Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2020
Document Transition Report	false
Entity File Number	001-33554
Entity Registrant Name	PROS HOLDINGS, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	76-0168604
Entity Address, Address Line One	3100 Main Street, Suite 900
Entity Address, City or Town	Houston
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	77002
City Area Code	(713)
Local Phone Number	335-5151
Title of 12(b) Security	Common stock
Trading Symbol	PRO
Security Exchange Name	NYSE
Entity Central Index Key	0001392972
Amendment Flag	false
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q1
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		43,291,660

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Leases Schedule of lease liability maturities (Details) $ in Thousands	Mar. 31, 2020 USD ($)
Lessee, Operating Lease, Liability, Payment, Due [Abstract]
Remaining 2019	$ 5,567
2020	9,080
2021	8,447
2022	4,880
2023	4,930
2024 and thereafter	34,072
Operating Leases, Payments Due	66,976
Lessee, Operating Lease, Liability, Undiscounted Excess Amount	(23,703)
Lessee, Operating Lease, Anticipated Incentives	(14,207)
Operating Lease, Liability	$ 29,066

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Summary of Significant Accounting Policies New Accounting Pronouncements (Details) $ in Millions	Mar. 31, 2020 USD ($)
Accounting Standards Update 2016-13 [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Accounts Receivable, Allowance for Credit Loss	$ 2.6