On November 30, 2021, we acquired EveryMundo LLC ("EveryMundo"), a privately held company based in Miami, Florida. EveryMundo is a cloud software company poweringdigital offer marketing pioneer that enables brands to broaden their digital reach and deepen customer engagement, pulling a brand's customers into the shiftbrand's direct selling channels to modern commerce by helping companieshelp create personalizedsuperior brand experiences and frictionless buying experiences for their customers. Fueled by artificial intelligence, machine learningfoster brand loyalty over time.

PROS digital offer marketing solutions provide performance content management and search engine marketing tools that enable businesses in the travel industry to drive their customers directly into their direct selling channels, helping create superior brand experiences and foster customer journey using richloyalty. These solutions also reduce our customer's dependency and costs associated with transactions routed through third-party intermediaries. PROS digital offer marketing solutions include:

We offer ongoingCustomers maintaining implementations under on-premises licenses that were purchased prior to our cloud transition may purchase, at their discretion, maintenance and support services for our software solutions using a global model to support our customers across major geographies.services. Maintenance enrollment entitles a customer to solicit support through a web-based interface which allows the customer to submit and track issues, access our online knowledge base, and receive unspecified upgrades, maintenance releases and bug fixes during the term of the support period on a when-and-if-available basis. In addition, our customer support personnel responds to customer issues using an escalation process that prioritizes reported issues based on a defined set of severity levels, as well as assists customers in deploying our standard releases for each software solution by providing release web seminars and documentation. Maintenance fees are an important source of recurring revenue, and we invest significant resources in providing these services.period. Revenue from maintenance and support services comprised 41%, 45%, and 38%has continued to decline as a percentage of our total revenue in 2017, 2016since we transitioned to our cloud strategy and 2015, respectively.sold fewer on-premises licenses to our software. We expect our maintenance revenue willto continue to decrease over time as a result ofmore existing customers migratingmigrate from our on-premiselegacy on-premises solutions to our cloud solutions and customers purchasing fewer licenses to our software as a result of our cloud strategy.solutions.

Our success and ability to compete is dependent, in part, on our ability to develop and maintain the proprietary aspects of our technology and operate without infringing upon the proprietary rights of others. Due to the rapidly changing nature of applicable technologies and current limitations in U.S. patent law, we believe that for the improvement of existing solutions and development of new solutions, reliance upon trade secrets and unpatented proprietary know-how are generally more advantageous for us than patent and trademark protection. We also rely onprotect our intellectual property with a combination of trade secrets, confidentiality procedures, contractual provisions, patents, trademarks, copyrights and other similar measuresmeasures. We believe that reliance upon trade secrets and unpatented proprietary know-how are generally the most advantageous methods for us to protect our proprietary information.

We employ data scientists, mostmany of whom are Ph.D.s,Ph.D.'s, to advance sales, pricing and revenue management technology and its implementation in our software solutions. These scientists have specialties including, but not limited to, AI, machine learning, operations research, management science, statistics, econometrics and computational methods. Our data scientists regularly interact with our customers, product development, sales, marketing and professional services staffteams to help keep our science efforts relevant to real-world demands.

Our human resources management philosophy goes beyond traditional compensation and benefits. We design our total rewards to meet the needs of the whole person, not experienced anyjust the employee, recognizing that life events and circumstances that occur outside of work stoppagesmay impact what happens at work. For example, we provide a trusted time off approach in the U.S. to give employees more flexibility and considercontrol over their schedules. Our investments in employee mental health and wellness programs are also cornerstones of this philosophy. In response to the multitude of work and personal challenges presented by the COVID-19 pandemic and as we transition to the future of work, we added specific employee well-being initiatives which are discussed below.

We strive to maintain a working environment that celebrates diverse perspectives, cultures and experiences and invest in programs to engage our employees, including diversity, inclusion and harassment training. We have a heritage of fostering inclusion and belonging, awareness and education, and social interaction and camaraderie through our employee relationsresource groups. Sponsored and funded by PROS, these employee-led groups are open to be good.any interested employee and create spaces for our people to connect from all walks of life, grow together and build relationships and community. We are proud of what we have accomplished to advance DEIB, but we recognize we still have work to do, including how we approach the future of work.

We operate in a dynamic environment that involves numerous risks and uncertainties. The following section describes some of the risks that may adversely affect our business, financial condition or results of operations, and the trading price of our common stock; these risks are categories and not necessarily listed in terms of their importance or level of risk.

Our solutions and services involve the storage, and to a more limited extent, the transmission of our customers’ proprietary information. Despiteinformation, including personal and other sensitive data. We have incurred, and expect to continue to incur, significant costs to maintain security measures designed to prevent, eliminate or alleviate known security vulnerabilities, data theft, data corruption, data loss, computer viruses, ransomware or malicious software programs or code, cyber attacks, including advanced persistent threat intrusions, by third parties and similar disruptive events (each a "Security Incident"). Given the novel and sophisticated ways that hackers and other cyber criminals engage in cyber attacks, it is reasonable to expect that despite the implementation of security measures, our security measures and the security measures of third-party security attestations,providers on which we rely would not be sufficient to prevent our systems from being compromised. If these systems may still be vulnerablemeasures are breached or are insufficient to data theft, computer viruses, malicious software programs, programming errors,prevent or mitigate a cyber attack, whether as a result of third-party action, employee error or misconduct, design or deployment defects, or otherwise, we could experience a Security Incident. Moreover, because the scale and number of cyber attacks by third parties or similar disruptive problems,continue to grow and could result in someone obtaining unauthorized access to our customers’ data or our data, including our intellectual property and other confidential business information, or our IT systems. Because thebecause techniques used to compromise systems change frequently and may not be recognized until launched or for an extended period of time thereafter, we may be unable to anticipate these techniques or to implement adequate preventative measures. In addition,or remediation measures in a timely manner, if at all, even when a vulnerability is known. We and the costs to prevent, eliminate or alleviate security vulnerabilities, computer viruses, malicious software programs, and other attacks by third parties are significant. Our efforts to address these problemsthird-party providers on which we rely may not be successfulable to address such vulnerability prior to experiencing a Security Incident. Our risk is heightened given the increase in remote work due to the COVID-19 pandemic. Additionally, during the ongoing COVID-19 pandemic, and potentially beyond as remote work and resource access expand, there is an increased risk of cybersecurity-related events such as COVID-19 themed phishing attacks, exploitation of any cybersecurity flaws that may exist, an increase in the number of

Security Incidents could result in interruptions, delays, cessation of service and loss of existing or potential customers. We cannot predict the extent, frequency or impact of these problems on us. Any security breach could result in acustomers, as well as loss of confidence in the security of our solutions and services, damage to our reputation, negativelynegative impact to our future sales, disruptdisruption of our business, increaseincreases to our information security costs, unauthorized access to, and leadtheft, loss or disclosure of, our and our customers’ proprietary and confidential information, including personal information, litigation, governmental investigations and enforcement actions, including fines or other actions, increased stock price volatility, significant costs related to indemnity obligations, legal liability and other costs.expenses, and material harm to our business, financial condition and results of operations. We cannot ensure that our commercial insurance will be available or sufficient to compensate us for all costs we may incur as a result of a Security Incident, and if we were to incur significant costs, our ability to obtain comparable insurance in the future may be impaired or only available at significantly increased cost.

Our cloud products are dependent upon third-party hardware, software and cloud hosting vendors, including Microsoft Azure, and IBM Softlayer and Amazon Web Services, all of which must inter-operate for end users to achieve their computing goals. We utilize third-party data center hosting facilities, cloud platform providers, and other service providers to host and

Furthermore, certainCertain of our applications are essential to our customers’ ability to quote, price, and/or sell their products orand services. Any interruptionInterruption in our service may affect the availability, accuracy or timeliness of quotes, pricing or other information and as a result could require us to issue service credits to our customers, damage our reputation, cause our customers to terminate their use of our solutions, require us to issue service credits to our customers, require us to indemnify our customers against certain losses, and prevent us from gaining additional business from current or future customers. In addition, certain of our applications require access to our customer’s data which may be held by third parties, some of whom are, or may become, our competitors. For example, many of our travel industry products rely upon access to airline data held by large airline IT providers which compete against certain of our airline products. Certain of these competitors have in the past, and may again in the future, make it difficult for our airline customers to access their data in a timely and/or cost-effective manner.

We providehave experienced substantial growth in the number of customers and data volumes serviced by our cloud infrastructure in recent years. While we have designed our cloud infrastructure to meet the current and anticipated future performance and accessibility needs of our customers, we must manage our cloud operations to handle changes in hardware and software solutions globally, includingparameters, spikes in countries thatcustomer usage and new versions of our software. We have more stringent regulations thanexperienced, and may in the U.S., including regulations relating to data privacyfuture experience, system disruptions, outages and the unauthorized use of, or access to, and retention of commercial and personal information.other cloud infrastructure performance problems. These data protection lawsproblems may be inconsistent across jurisdictions,caused by a variety of factors, including infrastructure changes, human or software errors, viruses, security attacks (internal or external), fraud, spikes in customer usage, denial of service issues and are subjectother Security Incidents. In some instances, we may not be able to interpretation, particularly inidentify the EU, where the regulatory frameworkcause or causes of these performance problems within an acceptable period of time. Our customer agreements typically provide service level commitments on a monthly basis and for privacy is actively evolving and is likely to remain uncertain for the

In addition, we may incur debt, acquisition-related costs and expenses, restructuring charges and write-offs as a result of acquisitions. Acquisitions may also result in goodwill and other intangible assets that are subject to impairment tests, which may continue for longer thancould result in future impairment charges. In addition, we expect.

Our operations outside the U.S. are subject to risks inherent in doing business internationally, requiring resources and management attention, and may subject us to new or larger levels of regulatory, economic, foreign currency exchange, tax and political risks.risks, which may be amplified by the COVID-19 pandemic. We have customers in over 5560 countries internationally, which we service through our operations in the U.S. as well as from the, Australia, Bulgaria, Canada, France, Germany, Ireland, United Arab Emirates, United Kingdom France, Bulgaria, Germany, Canada, Ireland and Australia (through wholly-owned subsidiaries).Singapore. We expect our international operations to continue to grow. AmongIn addition to navigating the riskschallenges related to the ongoing COVID-19 pandemic in foreign jurisdictions, we believe are most likely to affect usface other risks with respect to our international sales and operations, are:including:

If we continue to expand our business globally, our success will depend, in large part, on our ability to anticipate and effectively manage these and other risks associated with our international operations. Our failure to manage any of these risks successfully could harm our international operations and reduce our international sales, adversely affecting our business, operating results and financial condition.

While ourOur sales cycle times have improved since we shifted to a cloud strategy in 2015 relative to our prior historical averages, our sales cyclecycles may take several monthsa month to over a year. To sellyear for large enterprise customers. A large enterprise customer’s decision to use our solutions successfullytypically involves a number of internal approvals, and obtain an executed contract, we often havesales to educate our potentialthose prospective customers generally require us to provide greater levels of education about the benefits and features of our solutions. We expend substantial resources during our sales cycles with no assurance that a sale may ultimately result. The length of each individual sales cycle depends on many factors, a number of which we cannot control, including the prospective customer's internal evaluation and approval process requirements, as well as the prospective customer's budget and/or resource constraints. In addition, as a result of the ongoing COVID-19 pandemic, many local governments as well as enterprises have limited travel and in-person meetings and implemented other restrictions making the sales process more lengthy and difficult, particularly for new customers. Any unexpected lengthening of the sales cycle or failure to secure anticipated orders could negatively affect our revenue. Furthermore, a delay in our ability to obtain a signed agreement or to complete certain contract requirements in a particular quarter could materially reduce our bookings in that quarter. Any significant failure to generate revenue or delays in recognizing revenuesales after incurring costs related to our sales or services process could also have a material adverse effect on our business, financial condition, cash flows, and results of operations.

If we are unable to provide enhancements and new features for our existing software solutions or fluctuate as a resultnew solutions that achieve market acceptance or to integrate technology, products and services that we acquire into our platform, our business,

The sales,markets for enterprise software applications for CPQ, pricing optimization and management, airline revenue managementoptimization, airline distribution and configure-price-quote software market isretail, and digital offer marketing are competitive, fragmented and rapidly evolving. Our software solutions compete with both solutions developed internally by businesses as well as those solutions offered by competitors. We believe our principal competition consists of sales, pricing, revenue management and configure-price-quote software vendors, including a number of vendors that provide portions of such software for specific industries; as well as large enterprise application providers that have developed offerings that include sales, pricing, revenue management and configure-price-quote functionality.

Competition could seriously impede our ability to sell our software solutions and services on terms favorable to us. We do not know how our competition could set prices for their products. Businesses may internally develop solutions, rather than invest in commercially-available solutions. Our current and potential competitors may develop and market new technologies that render our existing or future solutions obsolete, unmarketable or less competitive. In addition, if these competitors develop solutions with similar or superior functionality to our solutions, or if they offer solutions with similar functionality at a substantially lower priceprices than our solutions, we may need to decrease the prices for our solutions in order to remain competitive. In addition, our competitors have and may in the future, offer their products and services at a lower price, or, particularly during the ongoing COVID-19 pandemic, offer price concessions, delay payment terms, or provide financing or other terms and conditions that are more enticing to potential customers. If we are unable to maintain our current solutions, services and maintenance pricing due to competitive pressures, our margins could be reduced and our operating results could be adversely affected. We cannot provide assurance thatIf we would be able todo not compete successfully against current or future competitors, or that competitive pressures could not materially and adversely affect our business, financial condition, cash flows, and operating results.

The recognition of our revenue depends on, among other things, the terms negotiated in our contracts with our customers. Our personnel may act outside of their authority and negotiate additional terms without our knowledge. We have implemented policies to help prevent and discourage such conduct, but there can be no assurance that such policies wouldwill be followed. For instance, in the event that our sales personnel negotiate terms that do not appear in the contract and of which we are unaware, whether such additional terms are written or verbal, we could be prevented from recognizing revenue in accordance with our plans. Furthermore, depending on when we learn of unauthorized actions and the size of the transactions involved, we may have to restate revenue for a previously reported period, which could seriously harm our business, operating results, and financial condition.

Our industry is characterized by the existence of a large number of patents, trademarks and copyrights, and by frequent litigation based on allegations of infringement or other violations of intellectual property rights. A third-party may assert that our technology violates its intellectual property rights, or we may become the subject of a material intellectual property dispute. Sales,Selling improvement (including CPQ), pricing, configure-price-quote,airline revenue management,optimization (including revenue management) and airline eCommerce (including shopping, merchandising and merchandisingretail, and digital offer marketing) solutions may become increasingly subject to infringement claims as the number of such commercially available solutions increases and the functionality of these solutions overlaps. In addition, changes in patent laws in the U.S. may affect the scope, strength and

Any licenses required as a result of litigation under any patent may not be made available on commercially acceptable terms, if at all. In addition, some licenses may be nonexclusive, and therefore our competitors may have access to the same technology licensed to us. If we fail to obtain a required license or are unable to design around a patent, we may be unable to effectively develop or market our solutions, which could limit our ability to generate revenue or maintain profitability.

ContractOur contract terms generally obligate us to defendindemnify and hold our customers harmless and to a lesser extent to indemnifyfrom certain costs arising from third-party claims brought against our customers for theiralleging that the use of the intellectual property associated with our software or for other third-party products that are incorporated into our solutions and that infringe the intellectual property rights of others. If we are unable to resolve our legal obligations by settling or paying an infringement claim, or a related indemnification claim as described above, we may be required to compensate our customers under the contractual arrangement with such customers. Our intellectual property defense and indemnification obligations are generally contractually either capped at a very high amount or not capped at all.

We use open source software in our solutions and may use more open source software in the future.solutions. From time to time, there have been claims challenging the ownership of open source software against companies that incorporate open source software into their products. As a result, we could be subject to lawsuits by parties claiming ownership of what we believe to be open source software. Some open source licenses contain requirements that we make available source code for modifications or derivative works we create based upon the open source software and that we license such modifications or derivative works under the terms of a particular open source license or other license granting third parties certain rights of further use. If we combine our proprietary software solutions with open source software in a certain manner, we could, under certain of the open source licenses, be required to release the source code of our proprietary software solutions. In addition to risks related to license requirements, usage of open source software can lead to greater risks than use of third-party commercial software, as open source licensors generally do not provide warranties or controls on origin of the software. In addition, open source license terms may be ambiguous and many of the risks associated with usage of open source cannot be eliminated, and could, if not properly addressed, negatively affect our business. If we were found to have inappropriately used open source software, we may be required to seek licenses from third parties in order to continue offering our software, to re-engineer our solutions, to discontinue the sale of our solutions in the event re-engineering cannot be accomplished on a timely basis or take other remedial action that may divert resources away from our development efforts, any of which could adversely affect our business, operating results, cash flows, and financial condition.

Our software solutions are complex and may contain undetected defects or errors. Several of our solutions have recently been developed and may therefore be more likely to contain undetected defects or errors. In addition, we frequently develop enhancements to our software solutions that may contain defects. We utilize third-partyhave not suffered significant harm from any defects or errors to date. We have in the past issued, and may in the future need to issue, corrective releases of our solutions to correct defects or errors. The occurrence of any defects or errors could result in:

Our agreements with our customers typically contain provisions designed to limit our liability for defects and errors in our software solutions and impaired relationsdamages relating to such defects and errors, but these provisions may not be enforced by a court or otherwise effectively protect us from legal claims. Our liability insurance may not be adequate to cover all of the costs resulting from these legal claims. Moreover, we cannot provide assurance that our current liability insurance coverage would continue to be available on acceptable terms. In addition, the insurer may deny coverage on any future claims. The successful assertion against us of one or more large claims that exceeds available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have a material adverse effect on our business and operating results. Furthermore, even if we prevail in any litigation, we are likely to incur substantial costs and our management’s attention may be diverted from our operations.

We expect our expenses to continue to exceed our revenues in the near term as we continue to make investments as part of our cloud strategy, particularly in new product development, sales, marketing, security, privacy and cloud operations. In addition, the impact of COVID-19 on our business contributed to our losses over the past two years and extended our timeline of achieving profitability. Our ability to return to profitability depends on our ability to: continue to drive subscription sales, enhance our existing products and develop new products, scale our sales and marketing and product development organizations, successfully execute our marketing and sales strategies, renew our subscription agreements with existing customers, and manage our expenses. If we are not able to execute on these third parties, defectsactions, our business may not grow as we anticipate, our operating results could be adversely affected and we may continue to incur net losses in third-party software or a third party’s inability or failurethe future. Additionally, our new initiatives may not generate sufficient revenue and cash flows to enhance their software over timerecoup our investments in them. If any of these events were to occur, it could adversely affect our operating performancebusiness, results of operations and financial condition.

We generally recognize revenue from customers ratably over the terms of their subscription agreements. As a result, most of the revenue we report in each quarter is the result of agreements entered into during prior quarters. Consequently, a decline in new or renewed subscriptions in any quarter may not be reflected in our revenue for that quarter, but will negatively affect our revenue in future quarters. Accordingly, the effect of significant downturns in sales, our failure to achieve our internal sales targets, a decline in the market demand of our services or decreases in our retention rate may not be fully reflected in our operating results until future periods. For example, the effect of the COVID-19 pandemic may not be fully reflected in our results of operations until future periods. Our subscription model also makes it difficult for us to rapidly increase our revenue through additional sales in any period, as subscription revenue from additional sales must be recognized over the applicable subscription term. We may be unable to timely adjust our cost structure to reflect changes in revenues. In addition, a significant majority of our costs are expensed as incurred, while subscription revenues are recognized over the term of the customer agreement. As a result, increased sales growth could result in our recognition of more costs than revenues in the earlier periods of the terms of our agreements. In addition, we expect to continue to invest the appropriate levels of resources in their products and services to maintain and enhance the capabilities of their software.

Customers with on-premises licenses for our legacy software need to migrate to our current cloud solutions to take advantage of our latest features, functionality and security which are only available via the PROS cloud. When considering whether to migrate, these customers may evaluate alternative solutions due to the additional change management and implementation costs associated with migrating to cloud-based applications. When on-premises software customers delay or decline to migrate to our cloud solutions, our internal development and customer support teams find it increasingly difficult and costly to support a declining number of on-premises customers. In addition, if our legacy on-premises license customers delay or decline to migrate to our cloud solutions, choose alternative solutions or otherwise choose to not continue doing business with us by, for example, canceling maintenance, our future revenue will be affected.

Under GAAP, we review our goodwill and amortizable intangible assets for impairment when events or changes in circumstances indicate the Sarbanes-Oxley Actcarrying value may not be recoverable. GAAP requires our managementus to assesstest for goodwill impairment at least annually. Factors that may be considered a change in circumstances indicating that the effectivenesscarrying value of our internal control overgoodwill or amortizable intangible assets may not be recoverable include declines in stock price, market capitalization or cash flows and slower growth rates in our industry. We could be required to record a significant charge to earnings in our financial reporting and to provide a report by our registered independent public accounting firm addressingstatements during the effectivenessperiod in which any impairment of our internal control over financial reporting.  If we are unable to continue to assert thatgoodwill or amortizable intangible assets were determined, negatively impacting our internal controls over financial reporting are effective, or if a material weakness is identified in our internal controls over financial reporting, or if we are unable to implement internal controls over financial reporting for our acquisitions, our financial results may be adversely affected and we could lose investor confidence in the reliability of our financial statements.  Accordingly failure to maintain effective controls over financial reporting may have an adverse effect on the market price of our common stock.operations.

The market price for our common stock, and the software industry generally, has been and is likely to continue to be volatile. Volatility could make it difficult to trade shares of our common stock at predictable prices or times. Many factors could cause the market price of our common stock to be volatile, including the following:

In the past, securities class action litigation often has been initiated against a company following a period of volatility in the market price of the company’s securities. If class action litigation is initiated against us, we may incur substantial costs and our management’s attention could be diverted from our operations. All of these factors could cause the market price of our stock to decline, and you may lose some or all of your investment.

Our Certificate of Incorporation and Bylaws and Section 203 of the Delaware General Corporation Law contain provisions that might enable our management to resist a takeover of our company. These provisions include the following:

In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which limits the ability of stockholders owning in excess of 15% of our outstanding voting stock to merge or combine with us. Although we believe these provisions collectively provide for an opportunity to obtain higher bids by requiring potential acquirors to negotiate with our board of directors, they would apply even if an offer were

We do not currently anticipate paying any cash dividends on our common stock in the foreseeable future. We currently anticipate that we will retain all of our available cash, if any, for use as working capital, repayment of debt and for other general corporate purposes. Any paymentConsequently, stockholders must rely on sales of future dividends would be at the discretion of our board of directors and would depend upon, among other things, our earnings, financial condition, capital requirements, level of indebtedness, statutory and contractual restrictions applying to the payment of dividends and other considerations that the board of directors deems relevant. 

In the ordinary course of our business, we may be involved in various legal proceedings and claims. The outcomes of these matters are inherently unpredictable. We are not currently involved in any outstanding litigation that we believe, individually or in the aggregate, will have a material adverse effect on our business, results of operations or financial condition.

The following performance graph and related information shall not be deemed "soliciting material" or to be "filed" with the SEC, nor shall such information beor incorporated by reference into any future filing under the Securities Act or Exchange Act, except to the extent that we specifically incorporate it by reference into such filing.

The graph below presents a five-year comparison of the relative investment performance of our common stock, the Standard & Poor’s 500 Stock Index ("S&P 500"), and the Russell 2000 Index for the period commencing on December 31, 2012,2016, and ending December 31, 2017.2021. The graph is presented pursuant to the SEC rules and is not meant to be an indication of our future performance.

On August 25, 2008, we announced that the Board of Directors authorized a stock repurchase program for the purchase of up to $15.0 million of our common stock. Under the board-approvedBoard-approved repurchase program, share purchases may be made from time to time in the open market or through privately negotiated transactions depending on market conditions, share price, trading volume and other factors, and such purchases, if any, will be made in accordance with applicable insider trading and other securities laws and regulations. These repurchases may be commenced or suspended at any time or from time to time without prior notice.

During 2017,2021, we did not make any purchases of our common stock under this program. As of December 31, 2017,2021, $10.0 million remains available under the stock repurchase program.

There were no unregistered sales of equity securities for the year ended December 31, 2017.2021.