PROS Holdings, Inc. (PRO) Q1 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call presents a positive outlook with strong financial performance, exceeding guidance in several metrics, and optimistic guidance for the year. Despite macroeconomic uncertainties and competitive pressures, the company reports increased demand and successful customer engagement, particularly in the travel sector. The Q&A section reveals no significant demand pattern changes, and management focuses on efficiency improvements. The only concern is the unclear response on guidance reiteration, but overall, the positive financial results and optimistic guidance outweigh this, leading to a positive stock price prediction.
Key Financial Performance
Subscription Revenue $70.8 million, up 10% year-over-year, exceeding guidance.
Total Revenue $86.3 million, up 7% year-over-year, exceeding guidance.
Recurring Revenue 85% of total revenue, an increase from 84% reported in Q1 of last year.
Recurring Calculated Billings Increased 17% year-over-year and 14% for the trailing 12 months, exceeding expectations.
Non-GAAP Subscription Gross Margin 81%, an improvement of over 160 basis points year-over-year.
Non-GAAP Services Gross Margin 13%, an improvement of over 460 basis points year-over-year.
Overall Non-GAAP Gross Margin 70%, an improvement of over 270 basis points.
Adjusted EBITDA $8.7 million, a 90% improvement over last year, exceeding guidance.
Free Cash Flow $1.1 million, an improvement of $6 million over last year.
Cash and Investments $170 million at the end of Q1.
Non-GAAP Earnings Per Share $0.13 per share, exceeding guidance.
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Operating Highlights
New Product Wins: A Fortune 500 chemicals company selected PROS Smart CPQ to fuel AI-driven sales transformation, streamlining pricing and sales across global operations. Softcat, a leading IT services provider, selected PROS Smart CPQ to increase sales efficiency and support their growth strategy. Grundfos selected PROS Smart price optimization and management to transform global pricing and future-proof their commercial strategy.
AI Innovations: PROS will showcase its latest AI innovations at the upcoming Outperform conference, including the PRO sales agent and PRO rebate agent.
Market Expansion: Digi-Key is expanding their use of PROS by adopting smart price optimization. ADI Global Distribution is enhancing its omnichannel pricing strategy by leveraging advanced capabilities including Gen IV price optimization. PROS saw strong demand in travel, including wins at two of the top seven US carriers by domestic market share.
Operational Efficiency: Free cash flow improved by 123% year-over-year, reaching $1.1 million. Sales cycle times reduced by over 10% year-over-year. Non-GAAP gross margin increased to 70%, an improvement of over 270 basis points.
Leadership Transition: Jeff Cotten will join PROS as the new President and CEO on June 2, succeeding Andres Reiner.
Strategic Focus: PROS is focusing on AI-powered solutions to enhance customer experience and operational efficiency.
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Risk or Challenges
Macroeconomic Uncertainty: The broader macroeconomic uncertainty has contributed to a complex selling environment, impacting business operations.
Market Volatility: Ongoing market volatility, amplified by tariff announcements, evolving trade policies, supply chain disruptions, changing customer demand patterns, and currency fluctuations, poses risks to business stability.
Competitive Pressures: The need for businesses to adapt to market volatility increases competitive pressures, as companies seek to leverage AI-powered solutions to maintain an edge.
Regulatory Issues: The evolving trade policies and tariffs may introduce regulatory challenges that could affect operational costs and market access.
Supply Chain Challenges: Supply chain disruptions are highlighted as a significant risk factor that can impact product availability and pricing strategies.
Economic Factors: Economic factors, including currency fluctuations and changing customer demand patterns, are noted as risks that could affect revenue and profitability.
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Guidance & Outlook
Market Leadership Recognition: PROS was named a leader in the Forrester Wave for configure price quote solutions, receiving high scores across most evaluation criteria.
Customer Wins: New customer wins include a Fortune 500 chemicals company, Softcat, and Grundfos, all selecting PROS solutions to enhance sales efficiency and pricing strategies.
AI-Powered Solutions Adoption: Accelerating adoption of AI-powered pricing and selling solutions is a key momentum driver, with PROS positioned as a leader in this market.
Upcoming Outperform Conference: PROS will showcase its latest AI innovations at the Outperform conference, highlighting the integration of AI in driving business outcomes.
Leadership Transition: Jeff Cotten will join PROS as the new President and CEO on June 2, 2025, ensuring continuity in leadership and strategy.
Q2 Subscription Revenue Guidance: Expected to be in the range of $72 million to $72.5 million, representing 10% growth year-over-year.
Q2 Total Revenue Guidance: Expected to be in the range of $87 million to $88 million, representing 7% growth year-over-year.
Full Year Subscription ARR Guidance: Maintaining guidance of $308 million to $311 million, representing 10% growth year-over-year.
Full Year Total Revenue Guidance: Expected to be in the range of $360 million to $362 million, representing 9% growth year-over-year.
Full Year Free Cash Flow Guidance: Expected in the range of $40 million to $44 million, an improvement of $15.8 million year-over-year.
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Shareholder Return Plan
Free Cash Flow: $1.1 million in Q1 2025, a $6 million improvement year-over-year.
Total Revenue Guidance: Expected to be in the range of $360 million to $362 million for the full year 2025.
Free Cash Flow Guidance: Expected to be in the range of $40 million to $44 million for the full year 2025.
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Key Q&A
Q:What are you seeing in the travel side here? How far away are you from a normal bookings environment in that segment?
A:We've continued to see improvements in travel Q3, Q4 and Q1 again. We're seeing that the areas that we've been innovating around the future of offer optimization is truly resonating. Airlines are moving more to ensuring they're marketing the right offers and driving demand through their digital channels. Q1 was very strong performance on the travel side, winning two of the top seven U.S. carriers.
Q:How is the current macro helping or hindering your business? Are you seeing similar traction?
A:This is a complex selling environment. Our solutions are mission-critical, and we're seeing companies accelerating initiatives. The level of volatility has increased, and companies are realizing that. We haven't seen any impact on demand, and we saw an increase in inbound demand and SBR-based meetings booked.
Q:Can you talk about the efficiencies that are driving the better gross margin?
A:Our cloud and engineering teams have worked on making our solutions more efficient. We've eliminated redundancies in compute usage, which has helped reduce costs. On the services side, we've focused on automation and AI to improve efficiency.
Q:Are you seeing any customers delaying implementations or not landing as big as expected?
A:We haven't seen any demand pattern changes. Companies are looking to accelerate implementations, and we have seen strong demand on the CPQ side.
Q:Can you break down the split between net new customers and expansion for the 2025 guidance?
A:We're averaging about a 40-60 split, with 40% new customers and 60% existing. We expect this to continue.
Q:What changes to the go-to-market strategy are contributing to the improved bookings?
A:We're focused on sales execution, improving sales cycle times, and driving productivity among reps. Marketing and demand generation improvements are also contributing.
Q:Why is the guidance for Q2 showing a decline in adjusted EBITDA despite an increase in revenue?
A:The second quarter is typically a high spend quarter due to our Outperform conference, which impacts EBITDA. We expect relief on expenses in Q3 and Q4.
Q:Review of Unclear Management Responses
A:Management appeared to avoid giving a direct answer when asked about the specific reasons for reiterating full year guidance despite positive demand indicators. Their response lacked clarity on the exact factors influencing this decision.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
ADI Global
AI outcome
AI pricing
Digi Key
Global Distribution
Overdeput Senior
PROS AI
PROS agent
PROS airline
Senior Director
action
adoption AI
approach
capability
carrier
culture
demand pattern
driver
industry recognition
market adoption
market leader
market volatility
momentum
omnichannel
optimization pricing
passion
people
position
precision
price optimization
recognition PROS
sale agent
self
trust
volatility PROS
PRO Transcript
PROS Holdings, Inc. (PRO) Q2 2025 Earnings Call Transcript
Positive8-1
The earnings call summary and Q&A reveal strong financial performance, strategic partnerships, and positive industry trends, particularly in the airline sector. Despite some macroeconomic challenges, management's focus on AI innovation, strategic partnerships, and a new leadership transition contribute to a positive outlook. The lack of raised EBITDA guidance is offset by reinvestment plans for long-term growth. Overall, the sentiment is positive, likely leading to a 2% to 8% stock price increase in the short term.
PROS Holdings, Inc. (PRO) Q1 2025 Earnings Call Transcript
Positive5-1
The earnings call presents a positive outlook with strong financial performance, exceeding guidance in several metrics, and optimistic guidance for the year. Despite macroeconomic uncertainties and competitive pressures, the company reports increased demand and successful customer engagement, particularly in the travel sector. The Q&A section reveals no significant demand pattern changes, and management focuses on efficiency improvements. The only concern is the unclear response on guidance reiteration, but overall, the positive financial results and optimistic guidance outweigh this, leading to a positive stock price prediction.
PROS Holdings, Inc. (PRO) Q3 2024 Earnings Call Transcript
Positive10-29
The earnings call summary shows strong financial performance with significant improvements in revenue, EBITDA, and cash flow. The guidance is optimistic, especially with raised subscription revenue and EBITDA projections. Although there are risks like geopolitical uncertainties and competitive pressures, the company's strategic initiatives and AI-driven efficiencies are promising. The Q&A section reflects confidence in the business outlook, despite some management evasiveness. Overall, the strong financial metrics and optimistic guidance suggest a positive stock price movement.
PROS Holdings, Inc. (PRO) Q2 2024 Earnings Call Transcript
Positive7-31
The earnings call highlights strong financial performance, including record revenue, improved margins, and positive cash flow. The partnership with Microsoft and strategic customer expansions are promising. However, cautiousness in the travel sector and unclear future growth expectations introduce some uncertainty. Overall, the positive financial metrics and raised guidance outweigh these concerns, suggesting a positive stock price movement in the short term.
PRO Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
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No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
