(State or Other Jurisdiction of Incorporation) | ||||||||||||||
(Commission File Number) | (IRS Employer Identification No.) |
(Address of Principal Executive Offices) | (Zip Code) | |||||||||||||||||||||||||
Registrant’s telephone number, including area code | ||||||||||||||||||||||||||
(Former Name or Former Address, if Changed Since Last Report) |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||||||||||||
Item 2.02. | Results of Operations and Financial Condition. |
Item 7.01. | Regulation FD Disclosure. |
Item 9.01. | Financial Statements and Exhibits. |
Exhibit No. | Exhibit Description | |||||||
99.1 | ||||||||
99.2 | ||||||||
104 | The cover page from this Current Report on Form 8-K, formatted in Inline XBRL (included as Exhibit 101). |
PROS HOLDINGS, INC. | ||||||||
July 30, 2024 | /s/ Stefan Schulz | |||||||
Stefan Schulz | ||||||||
Executive Vice President and Chief Financial Officer |
GAAP | Non-GAAP | ||||||||||||||||||||||||||||||||||
Q2 2024 | Q2 2023 | Change | Q2 2024 | Q2 2023 | Change | ||||||||||||||||||||||||||||||
Revenue: | |||||||||||||||||||||||||||||||||||
Total Revenue | $82.0 | $75.8 | 8% | n/a | n/a | n/a | |||||||||||||||||||||||||||||
Subscription Revenue | $65.6 | $57.3 | 14% | n/a | n/a | n/a | |||||||||||||||||||||||||||||
Subscription and Maintenance Revenue | $69.0 | $62.4 | 11% | n/a | n/a | n/a | |||||||||||||||||||||||||||||
Profitability: | |||||||||||||||||||||||||||||||||||
Gross Profit | $53.2 | $47.2 | 13% | $55.3 | $49.4 | 12% | |||||||||||||||||||||||||||||
Operating (Loss) Income | $(7.2) | $(13.4) | $6.2 | $4.4 | $(1.0) | $5.3 | |||||||||||||||||||||||||||||
Net (Loss) Income | $(7.4) | $(13.3) | $5.9 | $3.3 | $(0.3) | $3.6 | |||||||||||||||||||||||||||||
Net (Loss) Earnings Per Share | $(0.16) | $(0.29) | $0.13 | $0.07 | $(0.01) | $0.08 | |||||||||||||||||||||||||||||
Adjusted EBITDA | n/a | n/a | n/a | $5.2 | $0.1 | $5.1 | |||||||||||||||||||||||||||||
Cash: | |||||||||||||||||||||||||||||||||||
Net Cash Provided by (Used in) Operating Activities | $6.4 | $(6.5) | $13.0 | n/a | n/a | n/a | |||||||||||||||||||||||||||||
Free Cash Flow | n/a | n/a | n/a | $6.2 | $(6.2) | $12.4 |
Q3 2024 Guidance | v. Q3 2023 at Mid-Point | Full Year 2024 Guidance | v. Prior Year at Mid-Point | ||||||||||||||||||||
Total Revenue | $81.5 to $82.5 | 6% | $329.0 to $331.0 | 9% | |||||||||||||||||||
Subscription Revenue | $65.8 to $66.3 | 10% | $263.5 to $265.5 | 13% | |||||||||||||||||||
Subscription ARR | n/a | n/a | $280.0 to $284.0 | 9% | |||||||||||||||||||
Non-GAAP Earnings Per Share | $0.08 to $0.10 | $— | n/a | n/a | |||||||||||||||||||
Adjusted EBITDA | $6.5 to $7.5 | $1.4 | $21.0 to $24.0 | $16.5 | |||||||||||||||||||
Free Cash Flow | n/a | n/a | $20.0 to $24.0 | $10.6 |
June 30, 2024 | December 31, 2023 | |||||||||||||
Assets: | ||||||||||||||
Current assets: | ||||||||||||||
Cash and cash equivalents | $ | 139,086 | $ | 168,747 | ||||||||||
Trade and other receivables, net of allowance of $801 and $574, respectively | 47,714 | 49,058 | ||||||||||||
Deferred costs, current | 4,433 | 4,856 | ||||||||||||
Prepaid and other current assets | 11,816 | 12,013 | ||||||||||||
Total current assets | 203,049 | 234,674 | ||||||||||||
Restricted cash | 10,000 | 10,000 | ||||||||||||
Property and equipment, net | 20,892 | 23,051 | ||||||||||||
Operating lease right-of-use assets | 14,663 | 14,801 | ||||||||||||
Deferred costs, noncurrent | 10,143 | 10,292 | ||||||||||||
Intangibles, net | 9,078 | 11,678 | ||||||||||||
Goodwill | 107,572 | 107,860 | ||||||||||||
Other assets, noncurrent | 9,503 | 9,477 | ||||||||||||
Total assets | $ | 384,900 | $ | 421,833 | ||||||||||
Liabilities and Stockholders’ (Deficit) Equity: | ||||||||||||||
Current liabilities: | ||||||||||||||
Accounts payable and other liabilities | $ | 6,992 | $ | 3,034 | ||||||||||
Accrued liabilities | 14,760 | 13,257 | ||||||||||||
Accrued payroll and other employee benefits | 19,259 | 32,762 | ||||||||||||
Operating lease liabilities, current | 4,232 | 5,655 | ||||||||||||
Deferred revenue, current | 121,628 | 120,955 | ||||||||||||
Current portion of convertible debt, net | — | 21,668 | ||||||||||||
Total current liabilities | 166,871 | 197,331 | ||||||||||||
Deferred revenue, noncurrent | 3,302 | 3,669 | ||||||||||||
Convertible debt, net, noncurrent | 271,553 | 272,324 | ||||||||||||
Operating lease liabilities, noncurrent | 25,032 | 25,118 | ||||||||||||
Other liabilities, noncurrent | 1,182 | 1,264 | ||||||||||||
Total liabilities | 467,940 | 499,706 | ||||||||||||
Stockholders' (deficit) 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; 51,810,281 and 51,184,584 shares issued, respectively; 47,129,558 and 46,503,861 shares outstanding, respectively | 52 | 51 | ||||||||||||
Additional paid-in capital | 617,894 | 604,084 | ||||||||||||
Treasury stock, 4,680,723 common shares, at cost | (29,847) | (29,847) | ||||||||||||
Accumulated deficit | (665,995) | (647,252) | ||||||||||||
Accumulated other comprehensive loss | (5,144) | (4,909) | ||||||||||||
Total stockholders’ (deficit) equity | (83,040) | (77,873) | ||||||||||||
Total liabilities and stockholders’ (deficit) equity | $ | 384,900 | $ | 421,833 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||
Revenue: | ||||||||||||||||||||||||||
Subscription | $ | 65,600 | $ | 57,304 | $ | 129,949 | $ | 113,273 | ||||||||||||||||||
Maintenance and support | 3,385 | 5,093 | 6,980 | 10,805 | ||||||||||||||||||||||
Total subscription, maintenance and support | 68,985 | 62,397 | 136,929 | 124,078 | ||||||||||||||||||||||
Services | 13,028 | 13,395 | 25,772 | 24,896 | ||||||||||||||||||||||
Total revenue | 82,013 | 75,792 | 162,701 | 148,974 | ||||||||||||||||||||||
Cost of revenue: | ||||||||||||||||||||||||||
Subscription | 14,570 | 14,059 | 29,183 | 28,152 | ||||||||||||||||||||||
Maintenance and support | 1,751 | 1,876 | 3,613 | 4,158 | ||||||||||||||||||||||
Total cost of subscription, maintenance and support | 16,321 | 15,935 | 32,796 | 32,310 | ||||||||||||||||||||||
Services | 12,498 | 12,636 | 24,856 | 25,803 | ||||||||||||||||||||||
Total cost of revenue | 28,819 | 28,571 | 57,652 | 58,113 | ||||||||||||||||||||||
Gross profit | 53,194 | 47,221 | 105,049 | 90,861 | ||||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||
Selling and marketing | 23,537 | 24,880 | 46,219 | 50,890 | ||||||||||||||||||||||
Research and development | 21,786 | 21,847 | 46,199 | 44,138 | ||||||||||||||||||||||
General and administrative | 15,055 | 13,849 | 30,117 | 27,984 | ||||||||||||||||||||||
Loss from operations | (7,184) | (13,355) | (17,486) | (32,151) | ||||||||||||||||||||||
Convertible debt interest and amortization | (1,148) | (1,576) | (2,350) | (3,152) | ||||||||||||||||||||||
Other income, net | 1,323 | 1,791 | 1,781 | 3,242 | ||||||||||||||||||||||
Loss before income tax provision | (7,009) | (13,140) | (18,055) | (32,061) | ||||||||||||||||||||||
Income tax provision | 377 | 149 | 688 | 230 | ||||||||||||||||||||||
Net loss | $ | (7,386) | $ | (13,289) | $ | (18,743) | $ | (32,291) | ||||||||||||||||||
Net loss per share: | ||||||||||||||||||||||||||
Basic and diluted | $ | (0.16) | $ | (0.29) | $ | (0.40) | $ | (0.70) | ||||||||||||||||||
Weighted average number of shares: | ||||||||||||||||||||||||||
Basic and diluted | 47,068 | 46,101 | 46,942 | 46,013 | ||||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||
Operating activities: | ||||||||||||||||||||||||||
Net loss | $ | (7,386) | $ | (13,289) | $ | (18,743) | $ | (32,291) | ||||||||||||||||||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||||||||||||||||||||
Depreciation and amortization | 2,191 | 2,751 | 4,395 | 5,752 | ||||||||||||||||||||||
Amortization of debt premium and issuance costs | (302) | 373 | (586) | 746 | ||||||||||||||||||||||
Share-based compensation | 10,248 | 10,752 | 22,948 | 20,656 | ||||||||||||||||||||||
Provision for credit losses | 11 | (20) | 160 | 88 | ||||||||||||||||||||||
Gain on lease modification | — | — | (697) | — | ||||||||||||||||||||||
Loss on disposal of assets | — | — | 774 | 35 | ||||||||||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||||||||||||
Accounts and unbilled receivables | 3,271 | (8,309) | 1,173 | (6,070) | ||||||||||||||||||||||
Deferred costs | (34) | (84) | 572 | 341 | ||||||||||||||||||||||
Prepaid expenses and other assets | (896) | 1,056 | 174 | (1,449) | ||||||||||||||||||||||
Operating lease right-of-use assets and liabilities | (668) | (646) | (1,516) | (1,237) | ||||||||||||||||||||||
Accounts payable and other liabilities | 4,522 | 2,541 | 3,885 | (1,252) | ||||||||||||||||||||||
Accrued liabilities | 91 | 573 | 2,418 | 1,077 | ||||||||||||||||||||||
Accrued payroll and other employee benefits | 3,100 | 4,486 | (13,511) | (3,688) | ||||||||||||||||||||||
Deferred revenue | (7,728) | (6,726) | 330 | 4,607 | ||||||||||||||||||||||
Net cash provided by (used in) operating activities | 6,420 | (6,542) | 1,776 | (12,685) | ||||||||||||||||||||||
Investing activities: | ||||||||||||||||||||||||||
Purchases of property and equipment | (215) | (277) | (438) | (1,823) | ||||||||||||||||||||||
Capitalized internal-use software development costs | (41) | — | (58) | — | ||||||||||||||||||||||
Investment in equity securities | — | — | (113) | — | ||||||||||||||||||||||
Net cash used in investing activities | (256) | (277) | (609) | (1,823) | ||||||||||||||||||||||
Financing activities: | ||||||||||||||||||||||||||
Proceeds from employee stock plans | — | — | 1,024 | 1,137 | ||||||||||||||||||||||
Tax withholding related to net share settlement of stock awards | (1,823) | (958) | (10,161) | (5,668) | ||||||||||||||||||||||
Settlement of convertible debt | (21,713) | — | (21,713) | — | ||||||||||||||||||||||
Net cash used in financing activities | (23,536) | (958) | (30,850) | (4,531) | ||||||||||||||||||||||
Effect of foreign currency rates on cash | 35 | (32) | 22 | (21) | ||||||||||||||||||||||
Net change in cash, cash equivalents and restricted cash | (17,337) | (7,809) | (29,661) | (19,060) | ||||||||||||||||||||||
Cash, cash equivalents and restricted cash: | ||||||||||||||||||||||||||
Beginning of period | 166,423 | 192,376 | 178,747 | 203,627 | ||||||||||||||||||||||
End of period | $ | 149,086 | $ | 184,567 | $ | 149,086 | $ | 184,567 | ||||||||||||||||||
Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheets | ||||||||||||||||||||||||||
Cash and cash equivalents | $ | 139,086 | $ | 184,567 | $ | 139,086 | $ | 184,567 | ||||||||||||||||||
Restricted cash | 10,000 | — | 10,000 | — | ||||||||||||||||||||||
Total cash, cash equivalents and restricted cash | $ | 149,086 | $ | 184,567 | $ | 149,086 | $ | 184,567 |
Three Months Ended June 30, | Quarter over Quarter | Six Months Ended June 30, | Year over Year | ||||||||||||||||||||||||||||||||||||||
2024 | 2023 | % change | 2024 | 2023 | % change | ||||||||||||||||||||||||||||||||||||
GAAP gross profit | $ | 53,194 | $ | 47,221 | 13 | % | $ | 105,049 | $ | 90,861 | 16 | % | |||||||||||||||||||||||||||||
Non-GAAP adjustments: | |||||||||||||||||||||||||||||||||||||||||
Amortization of acquisition-related intangibles | 953 | 1,243 | 1,906 | 2,580 | |||||||||||||||||||||||||||||||||||||
Severance | — | — | — | 749 | |||||||||||||||||||||||||||||||||||||
Share-based compensation | 1,151 | 985 | 2,219 | 1,817 | |||||||||||||||||||||||||||||||||||||
Non-GAAP gross profit | $ | 55,298 | $ | 49,449 | 12 | % | $ | 109,174 | $ | 96,007 | 14 | % | |||||||||||||||||||||||||||||
Non-GAAP gross margin | 67.4 | % | 65.2 | % | 67.1 | % | 64.4 | % | |||||||||||||||||||||||||||||||||
GAAP loss from operations | $ | (7,184) | $ | (13,355) | (46) | % | $ | (17,486) | $ | (32,151) | (46) | % | |||||||||||||||||||||||||||||
Non-GAAP adjustments: | |||||||||||||||||||||||||||||||||||||||||
Amortization of acquisition-related intangibles | 1,300 | 1,620 | 2,601 | 3,426 | |||||||||||||||||||||||||||||||||||||
Severance | — | — | — | 3,586 | |||||||||||||||||||||||||||||||||||||
Share-based compensation | 10,248 | 10,752 | 22,948 | 20,656 | |||||||||||||||||||||||||||||||||||||
Total non-GAAP adjustments | 11,548 | 12,372 | 25,549 | 27,668 | |||||||||||||||||||||||||||||||||||||
Non-GAAP income (loss) from operations | $ | 4,364 | $ | (983) | (544) | % | $ | 8,063 | $ | (4,483) | (280) | % | |||||||||||||||||||||||||||||
Non-GAAP income (loss) from operations % of total revenue | 5.3 | % | (1.3) | % | 5.0 | % | (3.0) | % | |||||||||||||||||||||||||||||||||
GAAP net loss | $ | (7,386) | $ | (13,289) | (44) | % | $ | (18,743) | $ | (32,291) | (42) | % | |||||||||||||||||||||||||||||
Non-GAAP adjustments: | |||||||||||||||||||||||||||||||||||||||||
Total non-GAAP adjustments affecting income (loss) from operations | 11,548 | 12,372 | 25,549 | 27,668 | |||||||||||||||||||||||||||||||||||||
Amortization of debt premium and issuance costs | (372) | 373 | (725) | 746 | |||||||||||||||||||||||||||||||||||||
Tax impact related to non-GAAP adjustments | (539) | 235 | (801) | 1,032 | |||||||||||||||||||||||||||||||||||||
Non-GAAP net income (loss) | $ | 3,251 | $ | (309) | (1,152) | % | $ | 5,280 | $ | (2,845) | (286) | % | |||||||||||||||||||||||||||||
Non-GAAP earnings (loss) per share | $ | 0.07 | $ | (0.01) | $ | 0.11 | $ | (0.06) | |||||||||||||||||||||||||||||||||
Shares used in computing non-GAAP earnings (loss) per share | 47,657 | 46,101 | 47,732 | 46,013 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||||||||||||
Cost of Subscription Items | |||||||||||||||||||||||||||||||||||
Amortization of acquisition-related intangibles | 953 | 1,243 | 1,906 | 2,580 | |||||||||||||||||||||||||||||||
Severance | — | — | — | 125 | |||||||||||||||||||||||||||||||
Share-based compensation | 235 | 169 | 437 | 294 | |||||||||||||||||||||||||||||||
Total cost of subscription items | $ | 1,188 | $ | 1,412 | $ | 2,343 | $ | 2,999 | |||||||||||||||||||||||||||
Cost of Maintenance Items | |||||||||||||||||||||||||||||||||||
Severance | — | — | — | 307 | |||||||||||||||||||||||||||||||
Share-based compensation | 96 | 98 | 233 | 178 | |||||||||||||||||||||||||||||||
Total cost of maintenance items | $ | 96 | $ | 98 | $ | 233 | $ | 485 | |||||||||||||||||||||||||||
Cost of Services Items | |||||||||||||||||||||||||||||||||||
Severance | — | — | — | 317 | |||||||||||||||||||||||||||||||
Share-based compensation | 820 | 718 | 1,549 | 1,345 | |||||||||||||||||||||||||||||||
Total cost of services items | $ | 820 | $ | 718 | $ | 1,549 | $ | 1,662 | |||||||||||||||||||||||||||
Sales and Marketing Items | |||||||||||||||||||||||||||||||||||
Amortization of acquisition-related intangibles | 347 | 377 | 695 | 846 | |||||||||||||||||||||||||||||||
Severance | — | — | — | 1,595 | |||||||||||||||||||||||||||||||
Share-based compensation | 2,437 | 3,103 | 6,065 | 6,031 | |||||||||||||||||||||||||||||||
Total sales and marketing items | $ | 2,784 | $ | 3,480 | $ | 6,760 | $ | 8,472 | |||||||||||||||||||||||||||
Research and Development Items | |||||||||||||||||||||||||||||||||||
Severance | — | — | — | 1,008 | |||||||||||||||||||||||||||||||
Share-based compensation | 2,114 | 2,673 | 5,645 | 5,023 | |||||||||||||||||||||||||||||||
Total research and development items | $ | 2,114 | $ | 2,673 | $ | 5,645 | $ | 6,031 | |||||||||||||||||||||||||||
General and Administrative Items | |||||||||||||||||||||||||||||||||||
Severance | — | — | — | 234 | |||||||||||||||||||||||||||||||
Share-based compensation | 4,546 | 3,991 | 9,019 | 7,785 | |||||||||||||||||||||||||||||||
Total general and administrative items | $ | 4,546 | $ | 3,991 | $ | 9,019 | $ | 8,019 | |||||||||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||||||||||||
Adjusted EBITDA | |||||||||||||||||||||||||||||||||||
GAAP Loss from Operations | $ | (7,184) | $ | (13,355) | $ | (17,486) | $ | (32,151) | |||||||||||||||||||||||||||
Amortization of acquisition-related intangibles | 1,300 | 1,620 | 2,601 | 3,426 | |||||||||||||||||||||||||||||||
Severance | — | — | — | 3,586 | |||||||||||||||||||||||||||||||
Share-based compensation | 10,248 | 10,752 | 22,948 | 20,656 | |||||||||||||||||||||||||||||||
Depreciation and other amortization | 891 | 1,131 | 1,794 | 2,326 | |||||||||||||||||||||||||||||||
Capitalized internal-use software development costs | (41) | — | (58) | — | |||||||||||||||||||||||||||||||
Adjusted EBITDA | $ | 5,214 | $ | 148 | $ | 9,799 | $ | (2,157) | |||||||||||||||||||||||||||
Net Cash Provided by (Used in) Operating Activities | $ | 6,420 | $ | (6,542) | $ | 1,776 | $ | (12,685) | |||||||||||||||||||||||||||
Severance | — | 579 | — | 3,749 | |||||||||||||||||||||||||||||||
Purchase of property and equipment | (215) | (277) | (438) | (1,823) | |||||||||||||||||||||||||||||||
Capitalized internal-use software development costs | (41) | — | (58) | — | |||||||||||||||||||||||||||||||
Free Cash Flow | $ | 6,164 | $ | (6,240) | $ | 1,280 | $ | (10,759) | |||||||||||||||||||||||||||
Guidance | |||||||||||||||||||||||||||||||||||
Q3 2024 Guidance | Full Year 2024 Guidance | ||||||||||||||||||||||||||||||||||
Low | High | Low | High | ||||||||||||||||||||||||||||||||
Adjusted EBITDA | |||||||||||||||||||||||||||||||||||
GAAP Loss from Operations | $ | (6,000) | $ | (5,000) | $ | (31,200) | $ | (28,200) | |||||||||||||||||||||||||||
Amortization of acquisition-related intangibles | 1,100 | 1,100 | 4,400 | 4,400 | |||||||||||||||||||||||||||||||
Share-based compensation | 10,500 | 10,500 | 44,200 | 44,200 | |||||||||||||||||||||||||||||||
Depreciation and other amortization | 900 | 900 | 3,600 | 3,600 | |||||||||||||||||||||||||||||||
Adjusted EBITDA | $ | 6,500 | $ | 7,500 | $ | 21,000 | $ | 24,000 |
Three Months Ended June 30, | Quarter over Quarter | Six Months Ended June 30, | Year over Year | ||||||||||||||||||||||||||||||||||||||
2024 | 2023 | % change | 2024 | 2023 | % change | ||||||||||||||||||||||||||||||||||||
GAAP subscription gross profit | $ | 51,030 | $ | 43,245 | 18 | % | $ | 100,766 | $ | 85,121 | 18 | % | |||||||||||||||||||||||||||||
Non-GAAP adjustments: | |||||||||||||||||||||||||||||||||||||||||
Amortization of acquisition-related intangibles | 953 | 1,243 | 1,906 | 2,580 | |||||||||||||||||||||||||||||||||||||
Severance | — | — | — | 125 | |||||||||||||||||||||||||||||||||||||
Share-based compensation | 235 | 169 | 437 | 294 | |||||||||||||||||||||||||||||||||||||
Non-GAAP subscription gross profit | $ | 52,218 | $ | 44,657 | 17 | % | $ | 103,109 | $ | 88,120 | 17 | % | |||||||||||||||||||||||||||||
Non-GAAP subscription gross margin | 79.6 | % | 77.9 | % | 79.3 | % | 77.8 | % |
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