EXHIBIT 99.1

proslogoa03a02a01a17.jpg

PROS HOLDINGS, INC. REPORTS THIRD QUARTER 2018 FINANCIAL RESULTS

Subscription revenue up 51% year-over-year.
Total revenue up 17% year-over-year.
Free cash flow improvement of $7.2 million year-over-year.

HOUSTON – October 25, 2018 — PROS Holdings, Inc. (NYSE: PRO), a provider of AI-powered solutions that optimize selling in the digital economy, today announced financial results for the third quarter ended September 30, 2018.

CEO Andres Reiner stated, “We have strong momentum in our business and, in the first nine months of the year, we increased our deal volume by 34% as we continue to execute on our land-and-expand strategy.  As companies across industries put commerce at the heart of their digital transformation strategies, we have an exceptional opportunity to grow and scale our business. We are seeing the market embrace our AI solutions, which contributed to our Q3 outperformance and gives us confidence to once again improve our growth outlook for the year.”

Third Quarter 2018 Financial Highlights

Key financial results for the third quarter 2018 are shown below. Throughout this press release, all dollar figures are in millions, except net loss per share. Unless otherwise noted, all results are on a reported basis and are compared with the prior-year period.
 
GAAP
 
Non-GAAP
 
Q3 2018
 
Q3 2017
 
% Change
 
Q3 2018
 
Q3 2017
 
% Change
Revenue:
 
 
 
 
 
 
 
 
 
 
 
  Total Revenue
49.1

 
41.9

 
17
%
 
n/a

 
n/a

 
n/a

  Subscription Revenue
23.9

 
15.8

 
51
%
 
n/a

 
n/a

 
n/a

  Subscription and Maintenance Revenue
40.1

 
32.9

 
22
%
 
n/a

 
n/a

 
n/a

Profitability:
 
 
 
 
 
 
 
 
 
 
 
  Gross Profit
29.6

 
24.2

 
22
%
 
31.2

 
25.7

 
21
%
  Operating Loss
(11.9
)
 
(17.8
)
 
nm

 
(5.1
)
 
(9.9
)
 
nm

  Net Loss
(15.8
)
 
(21.2
)
 
nm

 
(4.6
)
 
(6.9
)
 
nm

  Net Loss Per Share
(0.44
)
 
(0.67
)
 
nm

 
(0.13
)
 
(0.22
)
 
nm

  Adjusted EBITDA
n/a

 
n/a

 
n/a

 
(4.9
)
 
(9.2
)
 
nm

Cash:
 
 
 
 
 
 
 
 
 
 
 
  Net Cash Used in Operating Activities
(1.2
)
 
(8.5
)
 
nm

 
n/a

 
n/a

 
n/a

  Free Cash Flow
n/a

 
n/a

 
n/a

 
(2.6
)
 
(9.8
)
 
nm


The attached tables provide a summary of PROS results for the period, including a reconciliation of GAAP to non-GAAP metrics.

Recent Business Highlights

Completed a follow-on public offering of 4,370,000 primary shares of common stock generating $142 million in net proceeds.

Earned third consecutive placement to the prestigious Constellation ShortList™ for Configure, Price, Quote Solutions.

Showcased PROS incredible talent and technical acumen at the Grace Hopper Conference for Women in Computing, with five PROS employees delivering presentations or moderating panels on topics including user experience and product architecture.


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Awarded prominent speaking and presentation positions at several prestigious events, including Dreamforce, the London Aviation Festival, the Mega Asia-Pacific Ancillary & Loyalty Conference, Microsoft Envision and Inspire, SAP Customer Experience LIVE, the T2RL New Architectures in Airline Passenger Systems Conference and TIACA’s International Air Cargo Forum and Exhibition.

Released findings of the global study, “The Future is Now: Technologies Shaping Commerce”, conducted by Hanover Research on behalf of PROS, which examines the expectations and digital initiatives of more than 700 B2B decision makers across industries.

Launched a roadshow series held across Microsoft Technology Centers where PROS, Microsoft and Adobe are partnering to bring together regional industry leaders to educate them on how to use AI to drive their business revenue growth.

Financial Outlook

PROS anticipates the following based on an estimated 37.2 million basic weighted average shares outstanding for the fourth quarter of 2018 and a 22% non-GAAP estimated tax rate for the fourth quarter and full year 2018:
 
Q4 2018 Guidance
 
v. Q4 2017 at Mid-Point
 
Full Year 2018 Guidance
 
v. Prior Year at Mid-Point
Total Revenue
$50.0 to $51.0
 
9%
 
$194.4 to $195.4
 
15%
Subscription Revenue
$26.25 to $26.75
 
39%
 
$93.1 to $93.6
 
54%
ARR
n/a
 
n/a
 
$187.0 to $190.0
 
17%
Non-GAAP Loss Per Share
$(0.14) to $(0.12)
 
nm
 
n/a
 
n/a
Adjusted EBITDA
$(5.0) to $(4.0)
 
$0.4
 
$(22.0) to $(21.0)
 
$12.2
Free Cash Flow
n/a
 
n/a
 
$(5.0) to $(2.0)
 
$26.0
Conference Call
In conjunction with this announcement, PROS Holdings, Inc. will host a conference call on Thursday, October 25, 2018, at 4:45 p.m. ET to discuss the Company’s financial results and business outlook. To access this call, dial 1-877-407-9039 (toll-free) or 1-201-689-8470. The live webcast of the conference call can be accessed under the “Investor Relations” section of the Company’s website at www.pros.com.

A telephone replay will be available until Thursday, November 8, 2018, at 1-844-512-2921 (toll-free) or 1-412-317-6671 using the pass code 13684013. An archived webcast of this conference call will also be available in the “Investor Relations” section of the Company’s website at www.pros.com.

About PROS

PROS Holdings, Inc. (NYSE: PRO) provides AI solutions that power commerce in the digital economy. PROS solutions bring intelligence to commerce by providing companies with predictive and prescriptive guidance that enables them to dynamically price, configure and sell their products and services across all channels with speed, precision and consistency. To learn more, visit www.pros.com.

Forward-looking Statements

This press release contains forward-looking statements, including statements about our future financial performance; positioning; management's confidence and optimism; customer successes; demand for enterprise revenue, profit realization and modern commerce software solutions; business expansion; business predictability; ARR; revenue; adjusted EBITDA; free cash flow; shares outstanding and effective tax rate. The forward-looking statements contained in this press release are based upon our historical performance and our current plans, estimates and expectations and are not a representation that such plans, estimates or expectations will be achieved. Factors that could cause actual results to differ materially from those described herein include risks related to: (a) our ability to execute on our cloud strategy, (b) reduced revenue and cash flow resulting from our transition to a cloud strategy, (c) threats to the security of our or our customer’s data, (d) potential business or service disruptions from our third party data centers, cloud platform providers or other unrelated service providers, (e) market acceptance of our new products and product enhancements,

2


(f) the risk that the markets for our software do not grow as anticipated, (g) the length of our sales cycles, (h) the risk that we will not be able to maintain historical maintenance, support and subscription renewal rates, (i) competition from vendors of sales, pricing, revenue management and configure-price-quote solutions as well as from companies internally developing their own solutions, (j) potential unauthorized or improper actions of our personnel, (k) the risk that acquisitions we have and may enter into in the future may be difficult to integrate, fail to achieve our objectives, disrupt our business, dilute stockholder value or divert management attention, (l) any downturn in sales to our target markets, (m) potential delays or other challenges related to the implementation of our solutions, (n) the difficulties of making accurate estimates necessary to complete a project and recognize revenue, (o) personnel risks associated with growing a business generally, (p) the impact that a slowdown in the world or any particular economy has on our business sales cycles, prospects’ and customers’ spending decisions, timing of implementation decisions, payment and renewal decision, (q) our debt repayment obligations, (r) the impact of currency fluctuations on our results of operations, and (s) civil and political unrest in geographic regions in which we operate. Additional information relating to the uncertainty affecting PROS’ business is contained in our filings with the Securities and Exchange Commission. These forward-looking statements represent PROS’ expectations as of the date of this press release. Subsequent events may cause these expectations to change, and PROS disclaims any obligations to update or alter these forward-looking statements in the future, whether as a result of new information, future events or otherwise.

Non-GAAP Financial Measures

PROS has provided in this release certain financial information that has not been prepared in accordance with GAAP. This information includes non-GAAP income (loss) from operations, annual recurring revenue, adjusted EBITDA, free cash flow, tax rate, net income (loss) and diluted earnings (loss) per share. PROS uses these non-GAAP financial measures internally in analyzing its financial results and believes they are useful to investors, as a supplement to GAAP measures, in evaluating PROS’ ongoing operational performance and cloud-first transition.

Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measure as detailed above. A reconciliation of GAAP to the non-GAAP financial measures has been provided in the tables included as part of this press release, and can be found, along with other financial information, in the investor relations portion of our website. PROS' use of non-GAAP financial measures may not be consistent with the presentations by similar companies in PROS' industry. PROS has also provided in this release certain forward-looking non-GAAP financial measures, including non-GAAP income (loss) from operations, annual recurring revenue, adjusted EBITDA, free cash flow and non-GAAP tax rates (collectively the "non-GAAP financial measures") as follows:

Non-GAAP income (loss) from operations: Non-GAAP income (loss) from operations excludes the impact of stock-based compensation, amortization of acquisition-related intangibles, acquisition-related expenses, amortization of debt discount and issuance costs, and related taxes. Non-GAAP income (loss) from operations excludes the following items from non-GAAP estimates:
Share-Based Compensation:  Although share-based compensation is an important aspect of compensation for our employees and executives, our share-based compensation expense can vary because of changes in our stock price and market conditions at the time of grant, varying valuation methodologies, and the variety of award types. Since share-based compensation expense can vary for reasons that are generally unrelated to our performance during any particular period, we believe this could make it difficult for investors to compare our current financial results to previous and future periods. Therefore, we believe it is useful to exclude share-based compensation in order to better understand our business performance and allow investors to compare our operating results with peer companies.
Amortization of Acquisition-Related Intangibles:  We view amortization of acquisition-related intangible assets, such as the amortization of the cost associated with an acquired company's research and development efforts, trade names, customer lists and customer relationships, as items arising from pre-acquisition activities determined at the time of an acquisition. While these intangible assets are continually evaluated for impairment, amortization of the cost of purchased intangibles is a static expense, one that is not typically affected by operations during any particular period.
Acquisition-Related Expenses: Acquisition-related expenses include integration costs and other one-time direct costs associated with our acquisitions. These amounts are unrelated to our core performance during any particular period and are impacted by the timing and size of the acquisitions. We exclude acquisition-related expenses to provide investors a method to compare our operating results to prior periods and to peer companies because such amounts can vary significantly based on the frequency of acquisitions and magnitude of acquisition expenses.
Amortization of Debt Discount and Issuance Costs: Amortization of debt discount and issuance costs are related to our convertible notes. These amounts are unrelated to our core performance during any particular period, and therefore, we

3


believe it is useful to exclude these amounts in order to better understand our business performance and allow investors to compare our results with peer companies.
Taxes: We exclude the tax consequences associated with non-GAAP items to provide investors with a useful comparison of our operating results to prior periods and to our peer companies because such amounts can vary significantly. In the fourth quarter of 2014, we concluded that it is more likely than not that we will be unable to fully realize our deferred tax assets and accordingly, established a valuation allowance against those assets. The ongoing impact of the valuation allowance on our non-GAAP effective tax rate has been eliminated to allow investors to better understand our business performance and compare our operating results with peer companies.
Annual Recurring Revenue: Annual Recurring Revenue ("ARR") is used to assess the trajectory of our cloud business. ARR means, as of a specified date, the contracted recurring revenue, including contracts with a future start date, together with annualized overage fees incurred above contracted minimum transactions, and excluding perpetual and term license agreements recognized as license revenue in accordance with GAAP. ARR should be viewed independently of revenue and any other GAAP measure.
Non-GAAP Tax Rate: The estimated non-GAAP effective tax rate adjusts the tax effect to quantify the impact of the excluded non-GAAP items.
Adjusted EBITDA: Adjusted EBITDA is defined as GAAP net income (loss) before interest expense, provision for income taxes, depreciation and amortization, as adjusted to eliminate the effect of stock-based compensation cost, amortization of acquisition-related intangibles, depreciation and amortization, integration costs and other one-time direct costs associated with our acquisitions, and capitalized internal-use software development costs. Adjusted EBITDA should not be considered as an alternative to net income (loss) as an indicator of our operating performance.
Free Cash Flow: Free cash flow is a non-GAAP financial measure which is defined as net cash provided by (used in) operating activities, less additions to property, plant and equipment, purchases of other (non-acquisition-related) intangible assets and capitalized internal-use software development costs.
Calculated Billings: Calculated billings is defined as total subscription, maintenance and support revenue plus the change in recurring deferred revenue in a given period.
These non-GAAP estimates are not measurements of financial performance prepared in accordance with GAAP, and we are unable to reconcile these forward-looking non-GAAP financial measures to their directly comparable GAAP financial measures because the information described above which is needed to complete a reconciliation is unavailable at this time without unreasonable effort.


Investor Contact:
PROS Investor Relations
Shannon Tatz
713-335-5932
ir@pros.com

Media Contact:
James Garber
617-960-9875
pros@marchcomms.com



4



PROS Holdings, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except share and per share amounts)
(Unaudited)

 
 
September 30, 2018
 
December 31, 2017
Assets:
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
281,889

 
$
160,505

Trade and other receivables, net of allowance of $981 and $760, respectively
 
46,170

 
32,484

Deferred costs
 
3,413

 
3,137

Prepaid and other current assets
 
7,123

 
5,930

Total current assets
 
338,595

 
202,056

Property and equipment, net
 
14,855

 
14,007

Long-term deferred costs
 
11,481

 
3,194

Intangibles, net
 
21,229

 
26,929

Goodwill
 
38,373

 
38,458

Other long-term assets
 
4,643

 
4,039

Total assets
 
$
429,176

 
$
288,683

Liabilities and Stockholders’ Equity:
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable and other liabilities
 
$
5,542

 
$
2,976

Accrued liabilities
 
6,313

 
6,733

Accrued payroll and other employee benefits
 
16,375

 
16,712

Deferred revenue
 
100,504

 
75,604

Total current liabilities
 
128,734

 
102,025

Long-term deferred revenue
 
14,492

 
19,591

Convertible debt, net
 
222,124

 
213,203

Other long-term liabilities
 
815

 
843

Total liabilities
 
366,165

 
335,662

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; 41,556,620
and 36,356,760 shares issued, respectively; 37,139,035 and 31,939,175 shares outstanding, respectively
 
42

 
36

Additional paid-in capital
 
360,021

 
207,924

Treasury stock, 4,417,585 common shares, at cost
 
(13,938
)
 
(13,938
)
Accumulated deficit
 
(279,948
)
 
(238,185
)
Accumulated other comprehensive loss
 
(3,166
)
 
(2,816
)
Total stockholders’ equity
 
63,011

 
(46,979
)
Total liabilities and stockholders’ equity
 
$
429,176

 
$
288,683


5


PROS Holdings, Inc.
Condensed Consolidated Statements of Income (Loss)
(In thousands, except per share data)
(Unaudited) 

 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2018
 
2017
 
2018
 
2017
Revenue:
 
 
 
 
 
 
 
 
Subscription
 
$
23,888

 
$
15,809

 
$
66,876

 
$
41,457

Maintenance and support
 
16,238

 
17,124

 
49,037

 
52,332

Total subscription, maintenance and support
 
40,126

 
32,933

 
115,913

 
93,789

License
 
1,093

 
603

 
2,854

 
3,883

Services
 
7,856

 
8,401

 
25,644

 
24,800

Total revenue
 
49,075

 
41,937

 
144,411

 
122,472

Cost of revenue:
 
 
 
 
 
 
 
 
Subscription
 
9,053

 
7,868

 
26,308

 
19,605

Maintenance and support
 
2,852

 
2,859

 
8,762

 
8,886

Total cost of subscription, maintenance and support
 
11,905

 
10,727

 
35,070

 
28,491

License
 
63

 
73

 
200

 
210

Services
 
7,508

 
6,924

 
22,451

 
21,718

Total cost of revenue
 
19,476

 
17,724

 
57,721

 
50,419

Gross profit
 
29,599

 
24,213

 
86,690

 
72,053

Operating expenses:
 
 
 
 
 
 
 
 
Selling and marketing
 
17,513

 
16,980

 
53,671

 
50,625

General and administrative
 
10,179

 
10,324

 
31,013

 
30,514

Research and development
 
13,773

 
14,046

 
41,517

 
42,429

Acquisition-related
 

 
613

 
95

 
613

Loss from operations
 
(11,866
)
 
(17,750
)
 
(39,606
)
 
(52,128
)
Convertible debt interest and amortization
 
(4,266
)
 
(4,094
)
 
(12,671
)
 
(9,078
)
Other income, net
 
521

 
347

 
967

 
315

Loss before income tax provision (benefit)
 
(15,611
)
 
(21,497
)
 
(51,310
)
 
(60,891
)
Income tax provision (benefit)
 
175

 
(271
)
 
176

 
55

Net loss
 
$
(15,786
)
 
$
(21,226
)
 
$
(51,486
)
 
$
(60,946
)
 
 
 
 
 
 
 
 
 
Net loss per share:
 
 
 
 
 
 
 
 
Basic and diluted
 
$
(0.44
)
 
$
(0.67
)
 
$
(1.53
)
 
$
(1.93
)
Weighted average number of shares:
 
 
 
 
 
 
 
 
Basic and diluted
 
35,676

 
31,867

 
33,568

 
31,527


6


PROS Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2018
 
2017
 
2018
 
2017
Operating activities:
 
 
 
 
 
 
 
 
Net loss
 
$
(15,786
)
 
$
(21,226
)
 
$
(51,486
)
 
$
(60,946
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
 
 
 
 
 
Depreciation and amortization
 
3,165

 
3,042

 
9,785

 
7,047

Amortization of debt discount and issuance costs
 
3,029

 
2,853

 
8,958

 
6,363

Share-based compensation
 
4,957

 
5,571

 
16,355

 
17,665

Deferred income tax, net
 

 
(486
)
 
(252
)
 
(453
)
Provision for doubtful accounts
 

 

 
215

 

Loss on disposal of assets
 

 

 
37

 

Changes in operating assets and liabilities:
 
 
 
 
 
 
 
 
Accounts and unbilled receivables
 
(6,796
)
 
(278
)
 
(13,898
)
 
(141
)
Deferred costs
 
(875
)
 

 
(1,517
)
 

Prepaid expenses and other assets
 
(1,822
)
 
(5,320
)
 
(1,884
)
 
(6,301
)
Accounts payable and other liabilities
 
840

 
(1,104
)
 
2,569

 
1,734

Accrued liabilities
 
(2,647
)
 
(760
)
 
(533
)
 
(473
)
Accrued payroll and other employee benefits
 
3,985

 
2,879

 
(342
)
 
(5,722
)
Deferred revenue
 
10,775

 
6,290

 
22,508

 
11,379

Net cash used in operating activities
 
(1,175
)
 
(8,539
)
 
(9,485
)
 
(29,848
)
Investing activities:
 
 
 
 
 
 
 
 
Purchases of property and equipment
 
(219
)
 
(540
)
 
(1,406
)
 
(1,235
)
Acquisition of Vayant, net of cash acquired
 

 
(34,130
)
 

 
(34,130
)
Capitalized internal-use software development costs
 
(1,202
)
 
(688
)
 
(3,686
)
 
(1,996
)
Purchase of intangible asset
 

 
(75
)
 

 
(75
)
Proceeds from maturities of short-term investments
 

 
6,009

 

 
15,992

Net cash used in investing activities
 
(1,421
)
 
(29,424
)
 
(5,092
)
 
(21,444
)
Financing activities:
 
 
 
 
 
 
 
 
Exercise of stock options
 
(59
)
 
1,071

 
1,142

 
6,347

Proceeds from employee stock plans
 
886

 
759

 
1,720

 
1,535

Tax withholding related to net share settlement of stock awards
 
(185
)
 
(1,489
)
 
(9,153
)
 
(7,243
)
Proceeds from Secondary Offering, net
 
141,954

 

 
141,954

 

Payments of notes payable
 
1

 

 
(54
)
 
(155
)
Debt issuance costs related to Revolver
 

 
(25
)
 

 
(150
)
Debt issuance costs related to convertible debt
 

 
(2,673
)
 

 
(2,673
)
Proceeds from issuance of convertible debt, net
 

 

 

 
93,500

Net cash provided by (used in) financing activities
 
142,597

 
(2,357
)
 
135,609

 
91,161

Effect of foreign currency rates on cash
 
21

 
(290
)
 
352

 
(549
)
Net change in cash and cash equivalents
 
140,022

 
(40,610
)
 
121,384

 
39,320

Cash and cash equivalents:
 
 
 
 
 
 
 
 
Beginning of period
 
141,867

 
197,969

 
160,505

 
118,039

End of period
 
$
281,889

 
$
157,359

 
$
281,889

 
$
157,359


7


PROS Holdings, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share data)
(Unaudited)
We use these non-GAAP financial measures to assist in the management of the Company because we believe that this information provides a more consistent and complete understanding of the underlying results and trends of the ongoing business due to the uniqueness of these charges.
See breakdown of the reconciling line items on page 9.
 
 
 
 
Three Months Ended September 30,
 
Quarter over Quarter
 
Nine Months Ended September 30,
 
Year over Year
 
 
 
 
2018
 
2017
 
% change
 
2018
 
2017
 
% change
GAAP gross profit
 
$
29,599

 
$
24,213

 
22
 %
 
$
86,690

 
$
72,053

 
20
 %
 
Non-GAAP adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of acquisition-related intangibles
 
1,125

 
1,055

 
 
 
3,547

 
2,017

 
 
 
Share-based compensation
 
445

 
479

 
 
 
1,325

 
1,569

 
 
Non-GAAP gross profit
 
$
31,169

 
$
25,747

 
21
 %
 
$
91,562

 
$
75,639

 
21
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP gross margin
 
63.5
 %
 
61.4
 %
 
 
 
63.4
 %
 
61.8
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP loss from operations
 
$
(11,866
)
 
$
(17,750
)
 
(33
)%
 
$
(39,606
)
 
$
(52,128
)
 
(24
)%
 
Non-GAAP adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquisition-related expenses
 

 
613

 
 
 
95

 
613

 
 
 
Amortization of acquisition-related intangibles
 
1,790

 
1,713

 
 
 
5,702

 
3,062

 
 
 
Share-based compensation
 
4,957

 
5,571

 
 
 
16,355

 
17,665

 
 
 
Total Non-GAAP adjustments
 
6,747


7,897

 
 
 
22,152


21,340

 
 
Non-GAAP loss from operations
 
$
(5,119
)
 
$
(9,853
)
 
(48
)%
 
$
(17,454
)
 
$
(30,788
)
 
(43
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP loss from operations % of total revenue
 
(10.4
)%
 
(23.5
)%
 
 
 
(12.1
)%
 
(25.1
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP net loss
 
$
(15,786
)
 
$
(21,226
)
 
(26
)%
 
$
(51,486
)
 
$
(60,946
)
 
(16
)%
 
Non-GAAP adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Non-GAAP adjustments affecting loss from operations
 
6,747

 
7,897

 
 
 
22,152

 
21,340

 
 
 
Amortization of debt discount and issuance costs
 
3,016

 
2,844

 
 
 
8,921

 
6,337

 
 
 
Tax impact related to non-GAAP adjustments
 
1,461

 
3,602

 
 
 
4,628

 
12,012

 
 
Non-GAAP net loss
 
$
(4,562
)
 
$
(6,883
)
 
(34
)%
 
$
(15,785
)
 
$
(21,257
)
 
(26
)%
 
 
 


 


 
 
 
 
 
 
 
 
Non-GAAP diluted loss per share
 
$
(0.13
)
 
$
(0.22
)
 
 
 
$
(0.47
)
 
$
(0.67
)
 


 
 
 
 
 
 
 
 
 
 
 
 
 
Shares used in computing non-GAAP loss per share
 
35,676

 
31,867

 
 
 
33,568

 
31,527

 
 

8


PROS Holdings, Inc.
Supplemental Schedule of Non-GAAP Financial Measures
Increase (Decrease) in GAAP Amounts Reported
(In thousands)
(Unaudited)

 
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
 
2018
 
2017
 
2018
 
2017
Cost of Subscription Items
 
 
 
 
 
 
 
 
 
Amortization of acquisition-related intangibles
 
947

 
874

 
2,997

 
1,504

 
Share-based compensation
 
77

 
58

 
165

 
187

 
Total cost of subscription items
 
$
1,024

 
$
932

 
$
3,162

 
$
1,691

 
 
 
 
 
 
 
 
 
 
Cost of Maintenance Items
 
 
 
 
 
 
 
 
 
Amortization of acquisition-related intangibles
 
168

 
170

 
517

 
482

 
Share-based compensation
 
53

 
45

 
185

 
218

 
Total cost of maintenance items
 
$
221

 
$
215

 
$
702

 
$
700

 
 
 
 
 
 
 
 
 
 
Cost of License Items
 


 
 
 
 
 
 
 
Amortization of acquisition-related intangibles
 
10

 
11

 
33

 
31

 
Total cost of license items
 
$
10

 
$
11

 
$
33

 
$
31

 
 
 
 
 
 


 


Cost of Services Items
 
 
 
 
 
 
 
 
 
Share-based compensation
 
315

 
376

 
975

 
1,164

 
Total cost of services items
 
$
315

 
$
376

 
$
975

 
$
1,164

 
 
 
 
 
 
 
 
 
 
Sales and Marketing Items
 


 


 


 


 
Amortization of acquisition-related intangibles
 
665

 
658

 
2,155

 
1,045

 
Share-based compensation
 
779

 
909

 
3,347

 
3,313

 
Total sales and marketing items
 
$
1,444

 
$
1,567

 
$
5,502

 
$
4,358

 
 
 
 
 
 
 
 
 
General and Administrative Items
 
 
 
 
 
 
 
 
 
Share-based compensation
 
2,635

 
2,864

 
8,202

 
8,546

 
Total general and administrative items
 
$
2,635

 
$
2,864

 
$
8,202

 
$
8,546

 
 
 
 
 
 
 
 
 
Research and Development Items
 
 
 
 
 
 
 
 
 
Share-based compensation
 
1,098

 
1,319

 
3,481

 
4,237

 
Total research and development items
 
$
1,098

 
$
1,319

 
$
3,481

 
$
4,237

 
 
 
 
 
 
 
 
 
 
 
 
 
Acquisition-related expenses
 
$

 
$
613

 
$
95

 
$
613


9


PROS Holdings, Inc.
Supplemental Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands)
(Unaudited)

 
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
 
2018
 
2017
 
2018
 
2017
Adjusted EBITDA
 
 
 
 
 
 
 
 
 
GAAP Loss from Operations
 
$
(11,866
)
 
$
(17,750
)
 
$
(39,606
)
 
$
(52,128
)
 
Acquisition-related expenses
 

 
613

 
95

 
613

 
Amortization of acquisition-related intangibles
 
1,790

 
1,713

 
5,702

 
3,062

 
Share-based compensation
 
4,957

 
5,571

 
16,355

 
17,665

 
Depreciation
 
1,375

 
1,329

 
4,083

 
3,985

 
Capitalized internal-use software development costs
 
(1,202
)
 
(688
)
 
(3,686
)
 
(1,996
)
 
Adjusted EBITDA
 
$
(4,946
)
 
$
(9,212
)
 
$
(17,057
)
 
$
(28,799
)
 
 
 
 
 
 
 
 
 
 
Free Cash Flow
 
 
 
 
 
 
 
 
 
Net cash used in operating activities
 
$
(1,175
)
 
$
(8,539
)
 
$
(9,485
)
 
$
(29,848
)
 
Purchase of property and equipment
 
(219
)
 
(540
)
 
(1,406
)
 
(1,235
)
 
Purchase of intangible asset
 

 
(75
)
 

 
(75
)
 
Capitalized internal-use software development costs
 
(1,202
)
 
(688
)
 
(3,686
)
 
(1,996
)
 
Free Cash Flow
 
$
(2,596
)
 
$
(9,842
)
 
$
(14,577
)
 
$
(33,154
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Guidance
 
Q4 2018 Guidance
 
Full Year 2018 Guidance
 
 
Low
 
High
 
Low
 
High
Adjusted EBITDA
 
 
 
 
 
 
 
 
 
GAAP Loss from Operations
 
$
(12,300
)
 
$
(11,300
)
 
$
(51,800
)
 
$
(50,800
)
 
Amortization of acquisition-related intangibles
 
1,700

 
1,700

 
7,400

 
7,400

 
Share-based compensation
 
5,300

 
5,300

 
21,700

 
21,700

 
Depreciation
 
1,500

 
1,500

 
5,600

 
5,600

 
Capitalized internal-use software development costs
 
(1,200
)
 
(1,200
)
 
(4,900
)
 
(4,900
)
 
Adjusted EBITDA
 
$
(5,000
)
 
$
(4,000
)
 
$
(22,000
)
 
$
(21,000
)





10

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