PRO - Earnings call transcript Q2 2022

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Operator

Greetings and welcome to the PROS Holding Second Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference call over to Belinda Overdeput, Director of Investor Relations. ma'am. you, Thank

your begin this time. You presentation may at

Belinda Overdeput

and you, joining for Good everyone operator. afternoon, thank us. you Thank

Our earnings Relations press today’s release, SEC filings, and be website pros.com. in our call a found the of Investor section at can replay of

and Financial is note will some available about the include our Chief once Our could prospects our our of Schulz, following on forward-looking available. Stefan be by future results materially With website those will Actual and Executive and differ which strategy, transcript, and Officer. call on the forecast. limitation, financial prepared from that Please me and guidance. also statements official commentary call projections Andres includes immediately and market opportunities, will statements today replaced remarks Officer, including, our Reiner, be President and the participant business without Chief today's questions, such

our assumes forward-looking more please described refer to the circumstances. reflect update any factors risk to PROS SEC in statements events or obligation For filings. future to information, no

effort, earnings the reminder, that, over extent and measure available turn metrics. non-GAAP between Reconciliations comparable a will you, without discuss to our With the call non-GAAP As most available unreasonable which Andres. measure, in to each directly to press GAAP the release. the we call are I'll during

Andres Reiner

XX% QX. by we by total in We grew subscription today’s you, metrics, strong Thank had and for guidance XX% year-over-year. you exceeded second the Belinda. range year-over-year grew Good of afternoon, delivered our a call. momentum all building thank us on the everyone, revenue revenue joining across and quarter, high-end on We

this momentum of count macroeconomic business. more current doubled all XXXX for far more our year half deal the we As In than we previously in have the of booking so did our dynamics XXXX. than deals we first growth, are said, creating

The market strategies as climate and costs. shortages, geopolitical shortages, to driving chains. efficiency in resonating offset has world labor digitization. Businesses optimization are today extreme profit businesses supply through and pressures facing of put by the on material Our implementing solutions look and rising are the pressure cost supply economic

thrive, into visibility their actionable business businesses all forward, For factors bottom need quickly. line drive that to impacting insights and they

market-leading price, of demand, and based Platform on product algorithms PROS data can library forecast powering optimize Our the revenue, AI real-time feeds. cost, mix

driving increasingly market, it the revenue migrate to carrier the acceleration like to or platform. with revenue levels. cargo world, quote-to-agreement digital management profitable customers drive team supply made and of cargo better and continues can services, companies In price and to opportunity Airlines on PROS six air the air CPQ I'm we’re travel to Our countries growth. optimization we’re Qatar, through and average the contract latest the our processes them. drive In directly inflation negotiations. our arm to to with points greater new basis and and revenue security and our serve process overall airlines international digital profitable with rates Aurora to than more Automotive, and selected of facing volatility margin engage any a uplift. solutions. PROS platform superior and one travel more helping willingness greater with Turkish partnership in airline shipping automotive drive high Based in a optimized their profitable market sales in on automates to we’re Airways, fuel industry with Whether expanded Airlines, complexity empowering optimization to journey and parts value efficiencies decision-making who outperforming size carrier, embrace compare a solutions. With power leading Celeste than is cloud, win serves the experiences, air in international educated Auto data jet and increased with many and services Securitas fueling profitable PROS, coming delivers while as shopping the offers QX, of heavy-duty airlines driving efficiency demonstrates at streamlined pleased their selling buyers growth choosing gain, a driven reported that all customers of now profitable QX, fuel PROS revenue any front recovery channels, of their largest reaching sales XX% the dynamic relevant automotive improvement, any Digitization management airline new amidst these XXX industry PROS customers. BXB pricing pressure, with higher improve sizes that the pricing coupled solutions carriers revenue chose to like will space, a international to across empower on PROS helping rates In and we chain cargo remanufacturers, to and price three of In drive Securitas, ability capitalize X% of top International so CPQ pricing fluidity an we and space, has welcomed high PROS chain more others growth. companies to assessment revenue XXX inflationary customers of With to of pre-pandemic adopted in Parts, efficiency provider growth. completed, PROS carriers Despite adopt solutions, leading has equipment, customer has growth. in carriers Qatar by the our with distributor solutions. leading recovery, levels supply our and routes space, several buying to the and the abroad. phase BORG real-time through all Europe’s XXXX prices, platform their at Both world’s online. a they our the experiences. PROS pricing share travel, This agreement In the with

the XX% of the recession reach XX%. will by the the revenues significant upgrade of fears now a previous December XXXX, of of XXXX XXXX in their travel impacted projection projecting past IATA end While industry have from is negatively a industry,

fast they cut the the industry-wide the airline seeing they industry be customers XXXX. of Airways, is within deliver accelerate streamline as invest example policies has complexity process expanded the the With to group who e-commerce power pricing, bookings, reach chose management end PROS centralize pace in with will IATA QX cloud Japan, their of revenue adopt and experiences Optimizer, sales now from Sales willingness in travel the in is airlines group agents confidence and profitability to for to to look the selling optimization. recovery partnership group further new, ANA and recovery. expects of when solution we’re Giving One Nippon All to us losses. latest our their PROS buying to self-service largest contracts and Additionally, Group innovative customers. for

using our go with shopping its is Airlines. an Emirates engagement perfect airline example more to is now PROS most recent while pricing Another with and customers PROS with through to all build innovating of Emirates costs. direct live is example power channels. Emirates the reducing their

help We’re part service and new their forward of continuing live them their proud to revenue drive this as of launch with have to look growth. Emirates go offering premium to economy on partnered

are demonstrate some our share close, revenue Before to how that stories I solutions amazing want profitable our growth fueling I customers. for

generated margins, margins, to high-tech PROS. because and to scenario points XX-year the record our in I of Their year. the pressures This customer and improvement that’s revenue, with parallel, fortune margins company’s and discussed increase been recorded to in approximately remarks actually our customers, last optimize PROS has expanded a a my that AI-powered One capabilities in were, this history first prepared costs reported able inflationary quarter. XXX is using basis of distributor, had feature level testing is last time us in XXX of words we’ve our

We’re more. so success proud drive our many and customer see this to record for innovations

years adopt has a Additionally, our mentioned In PROS cargo over recovery these June, as profits customer they who level well announced accurate cargo air XX Qatar for I key cost achieved growth citing networks, in enable of strong solution Airways, control record of years. and passenger operation, QX, been results. to their global XX drivers for Qatar that in as as forecasting chose for

even to no team drive that market, their this best-kept with outperforming their It's we’re their each supporting coincidence proud look because strong of We’re extremely our for in for journey. and them next of passion the success. are to phase and for execution customers forward secret their our thank drive profitable customers I Qatar want and to our growth. PROS partnership success more helping other

certified being quarter Last incredible is by of and environment Practice created Workplace, we’ve Our PROS, culture ownership, the their of another of proud team grow by Loved together. as focus environment core and our our creating the A core reach values so potential. can recognition employee a an innovation, every Best Institute. we I’m backed of received care, Most embodies at where ours full and

want to thank to financial performance I and With support outlook. for shareholders turn customers, call their Finally, also of cover over partners our the like Stefan I’d PROS. and that, continued to to our

Stefan Schulz

Thank everyone. you, Andres and afternoon, good

exceeded quarter, Our across team guidance which the high-end delivered another our range all strong of metrics.

facing disruptions over For with industries supply many and massive the years, in challenges businesses time costs. first chain are across increasing XX

businesses. providing but not As to Andres unprecedented results with to deal comments, obstacles, mentioned our in deliver with are customers respective these their we his tools only the in

businesses revenue both revenue capabilities, market we’re the important platform are a custom cost best simultaneously, ever and game the is drive for an more growth, with We seeing materialize than platform in and and that only CFO’s changer for as today’s the PROS. profitable provider businesses not optimize native Today, opportunities absolute to friend. environment, to and code, in PROS look in

$XX.X the total year-over-year. $XX.X results. million, XX% our highlighting year-over-year Subscription quarter revenue was was second in million, quarter up XX% second up revenue and Now,

Our XX% from the ago. gross year of revenue. XX% subscription second Non-GAAP were was XX% total quarter revenue quarter, for margins a recurring improving

testament gross been last subscription for mentioned margin quarter, the we to we in and this progress a have realized innovation our a focus focus improving primary area. team, As and is our has

second retention revenue Our gross the above quarter XX%. remained in rates

retention continues customers value to solutions. the demonstrate Our our rate best-in-class with our revenue drive

exceeding in million. was on million, $X Our keeping to free Similarly, track the adjusted flow EBITDA cash in our our second was loss and achieve quarter us quarter guidance. guidance $X.X the our annual burn second

cash usual, second $XXX.X cash slight free burn to with the of the exited million. we of We year. half the quarter the anticipate improvement second a flow As in

$X.XX loss per per share. was non-GAAP share Our

expect the second This year. to number for at count, a demonstrating expectations for quota-carrying end year. calculated year-over-year quarter. which we XX than the the saw Our exceeding months, approximately XX% quarter lower in the XXXX, we ended is by billings be is the in goal the the We strength and we XX slightly trailing XX mainly quarter increased with earlier of our and X% the and communicated personnel,

productivity rep strong team goals execute confident are for on focus our and We in and our building are to increasing XXXX we beyond. are the

turning Now now to guidance.

We XX% expect $XX in quarter to representing $XX.X at be midpoint. range subscription year-over-year growth to the the revenue third of million million,

revenue Using total XX.X million shares And loss quarter million tax $X.X third loss quarter million to million. rate be and to per we expect third we and adjusted range in $X.XX share million. between We on quarter between expect $X.XX third anticipate outstanding. $X.X an $XX per of the be XX%, EBITDA estimated to estimated share of based of non-GAAP non-GAAP $XX an

to we Accordingly, revenues $XXX.X significant are are dollars. in revenue year, of total million to the revenues be million U.S. experienced $XXX.X guidance $XXX.X range revenue our of revenue and due in contracted and subscription be More full the the to the strengthening of to of have to a U.S. million, million. in range dollar. XX% impact raising the we $XXX.X to than expect For our not

currency guidance is to For the full year, of and our less million, that this negative we provided. revenue into than total a updated impact just our $X we anticipate factored

In for like our free continued customers adjusted would to and employees support. thank flow. passion We are and our maintaining ARR, EBITDA and annual for I their cash guidance closing,

Operator? of now upcoming also will you turn over for continued call speaking for your our operator events. I with We to the the support at we and to PROS, questions. back thank you look forward

Operator

of first Our Craig-Hallum. from comes Instructions] the Chad Bennett question line [Operator from

You proceed question. your with may

Chad Bennett

Nice my the very environment. taking is up in question. clean and pretty guide job Looks for this good unique and in Thanks the Great. quarter. in

kudos. So

maybe just for questions couple a So, Andres. first

previously help update revenue of to travel there? revenue, would last us -- relative booking bookings you of brand in from be just time here talked that of of you recoveries new might terms ahead modified than us the progressed plan to kind talked of comeback the that to travel in and kind an future. has that standpoint, or us guess, in Just more the Can in give hit could since I how a

Andres Reiner

pleased on we did so very double Chad, a tell the year-to-date, we look, BXB From than more deal Yeah. you, execution, performance, to booked sales and very continue growth overall travel. pleased we year. improve. I side we I'm the both all with last that we're deals would and

Now, tell customers accounts. existing new that, XX growth, about expansions would deal I within you of and that XX

So, where like the we overall mix, it's be. to really

those we're very, with So, very pleased results.

terms terms see of said, this year. concessions, we on much of travel, what see in In will we -- that track of as into the but off we more see won't of with in year. it. a little next of actually We're of that we expected, We'll revenue

Stefan Schulz

XXXX. come that, or we to we months so up like million that going follow into $X to just said, ago Chad, on felt Yeah. six had about probably was

see that As that, to we're happen. it related track on definitely to

to seeing say next feel next maybe track for next to be that and even on track like Andres indicators revenue. But though, above we're next be your we We than this likely leading point, might to to be year? point, more I'd that are of year on that'll track that, think I yes. year. question, for at get

Chad Bennett

rest candor for mean, you then for Got you. is there? Thanks. sequentially it's guys, really And big believe anything I Subscription I in Stefan. pretty gross this or sustainable look and one year-over-year. the a of color, for year? there appreciate margins the you for unique sequential the in it. strong, do improvement kind the Was of maybe especially

Stefan Schulz

Yeah.

something on quite working we've bit. It's for been a noticing, Chad. thanks So,

done and teams of running. really make more on we're And so, to to engineering have efficient, are things the our notably, that, that stringent our operations over happening, make job teams there's our hard but our several and calculations last the tremendous working compute And that a less cloud deployments use that. of the most they've been years of algorithms couple

be think words, And getting So, be it'll take something this with we it's go you're subscription and view the but next seeing would Ideally, beyond that other we we think, to XX%, And you, next a benefits as a this take as going step, sustainable. Those I can take level, is because profitability, We really to a of that kind starts it out into step. and we of one to where be do step XX%, have take beyond year model while I honest margins. to a do be that's what place as we to our next and gross do breakeven it need that. this in to tier. with before to plans process in XX%, intend that.

Chad Bennett

one Maybe for I sorry. one, But it. Stefan. Got apologize. last

Stefan Schulz

right. All

Chad Bennett

in flow EBITDA step half. that like and margins subscription improve it With was better up cash free in and seems will actually the gross second

can EBITDA In a business a operating or timeline terms maybe margin for that? when of or and line free cash positive, flow of even the of margin, the give you company kind turns site marker for us to

Stefan Schulz

make to digit point improvement where flow is and free to Yeah. breakeven breakeven. point. targeted we year And don't burn the we're cash single year are this XXXX next thinking a a significant a higher be quote approaching I at we I i.e. to get think call going is there's thinking perspective, from where mid what We've

then and actually say year cross I that point. we'll will that approaching XXXX, next to think level is what'll get happen we

point is and being to get very, XXXX where XXXX, getting I very XXXX the actually the year. close. So, territory And XXXX with being would but plus we in breakeven break say, somewhere we between the

Chad Bennett

Nice much. Got Thanks it. work.

Andres Reiner

you. Thank

Operator

Lane line comes with of Our next question the Stifel. Parker to

with You question. your may proceed

Parker Lane

the Yeah. Hi. taking question. for Thanks

supply the are, in that when decisions? what momentum. of you is on in their business You guys what to year, in the is year, just Curious to lot talk they disruption on expectations chain a to how and that informs new investment catalyzing really chain customers fact timeframe, curious when maybe with supply disruption XXXX that hear your maybe that you later to their expect the sharing they're alluded of and dissipate, the some earlier

Andres Reiner

about what the would is But of factors a if disrupt that's you, I seeing the supply great Yeah. question. chain customers affecting. is -- think just No are they're volatility. number tell I if Parker, fluctuation, currency disruption the this think about changes is of And look, seeing here themes. extreme to you think our one inflation, volatility I they that think And you realize stay. of one that's

And are customers understand what revenue to business to proactively how guidance digital better this two say is business allow more theme through is drive those and business profitable prescriptive channels. need make their will them what and digitization, would The factors actions driving real-time, growth. to seeing. through really other movement is in what's They continuously I happening drive our to that

you would general. tell think is question They customers any in supply of I expect predicting do chain that your when what terms to yet. disruption stopping? So, of don't are see see they in still that volatility of our I

think and is thrive they to volatile they this and be need a manage feel in to environment. equipped I that here stay, better to

Parker Lane

And it. end the reps year. Got the then Understood. quota-carrying of I by around Stefan, appreciate sales the commentary

the you I in of number? you context offered that sequential those decline think color provide XX, on you some the could comments said in

Stefan Schulz

Yeah.

we efficient. I We commented the be as as for have there's to year, -- feel some second opportunities well of half like the more

kind companies lot that's the of tech these think a theme days. of of I

first looking we're reps We've is the we're of are the bookings saw half at half number And the bookings higher to in increase of of productivity. the first of we've amount to an very year. it contrast that looked what deliver so, one scrutiny that placed strong -- starker happy those a results And those report And weren't. quite done year. we're the for. our for of a we've looking participation to the things on that in seen very the actually the and providing that of contributing actually that that frankly, of the drove reps We've are in we

as made reps. scrutiny back hire place of higher in made that on some And to to the the result, -- a some then so, productive reps more looking and decisions we've those we're And we're going year. a half remove those of

we're than of in feel to really said ready being getting Even XX, second do the my number covers adequate to prepared what I about is in the the more half remarks, year. that for XXXX. As with XX we looking

Parker Lane

Appreciate congrats and quarter. questions Makes taking the the on sense.

Stefan Schulz

Thank you.

Andres Reiner

Thank you.

Operator

Our the Baird. Oliver next question comes to Rob of line with

with question. You may your proceed

Rob Oliver

Great. Good for evening, Andres, start. you guys. one questions. Thanks for taking my to

you some had sort see like that guys actually not So, great environment, were guys. you that And suggested last playing of -- of some this looks it indeed is that you many the quarter this, companies that benefit to starting could of albeit for out.

activity, if were pandemic. up? you timing, contribution seeing deal speed to couple you're any I'd changes about bit emerging And deal wondering one any then cycles Are a you Just the deals things partners. from maybe moving also slowly, little the more the love from sizes, sales bit talk hear could a about around change those seeing a there, that to

then, well. Stefan bunch. as they're now? really a area. towards obviously Are this And guys then is to move for And that's as them? wondering some serving environment I an where working I I'm just this really meaningful follow-up had probably a right what's have quick catalyst realize And a in for -- You in looking partners

Andres Reiner

thank no, it. we're Great would you. question. I very activity. No, overall, strong tell results show you, Yeah. the look Obviously, seeing

speed, changes. of no terms deal In major

quickly time components very kudos point our of those adopt ROI. fast scrutiny changes. the team more helped you, our deal the I what's more I stable. well including it's mind measurable know very us that -- QX are We've it's that pain in of our well those to has executing in of give would But I having size, challenging ramp companies, and done what ready, think we're technology get and In scrutiny kudos three when to And to tell think seen to to kudos definitely to is terms so compelling and us major no the to scrutiny been three would top very customers that it But I also team. value. They one, the now environment. signature, seen for on of value Europe, need contracts top the impact of ways in business. they're I a our on deals seeing started true a the and year-to-date, even has mind. is And how execute vectors. terms sales you across definitely on team. of far I But get there's fairly the tell because level European for well lot -- in we're there's have but a seeing signature definitely final to lot get in not

terms good that like partners quarter the very EY deal global the signed like our of of partners, continue their support say on this we're many Microsoft. with in paper. pleased, a Accenture I progress and size see will In Accenture, from was to and ISVs [ph] we

now have agreement on deal there and reseller is which sold a a that paper, Accenture actually see. by them, to great their We closed was with

the momentum improve overall, So, well. on side is continuing as partner to the

Rob Oliver

for And free guys that? just the midpoint, beat very implies on a full next you expected I'm quick looking conservatism the back great much. for to one profitability And But bit or whether be specifically I of at for the And that sort Thank appreciate but color. into kind this profile would if the million on of $X.X then just lower. so, EBITDA of just guidance, you years reiterated be the That's year relative whether wondering half quarter, what one that, two. the out reason to or you. cash commentary then Andres. -- Okay. year and profitability, your Appreciate Stefan, the the flow

Stefan Schulz

Yeah.

focus can. going as as continued it's be to we Rob, being efficient a So, on

additions with -- at we're the in doing So, we're employees across all earlier, on placing looking we'll and the terms -- as of of reps adds of and commented higher being I same bringing thing we're scrutiny the board our kind company. into that the quota-carrying we're on the

has to it. good justification a So, for very there be

And so that's there's needed. a higher level of approval

of that as thing be to are and as place, scrutiny we're We're sure driving frugal looking we're investing been we EBITDA we can, make as the as we sure in programs. higher at improvement for put that that out. on time, discretionary spend, travel, going as put that also can to So, a other we kind we much sure opportunities make laying profitability we've possibly the all still same to be that making

I think Andres' -- really our to there's challenging comments us opportunity provide a is in that market the remarks is. get help that for way for and capability his lot the we of this through them good as customers can prepared market exists in speak because that it. a that, The it's

growth. really line as things not doing for possibly any sure making can. the sure as of At efficient that that as So, opportunities we're efficiently out we're fine same walking we losing time, we're in the making

Rob Oliver

you Thanks. helpful. you. with to guys. Appreciate opportunity Thank the speak That's

Andres Reiner

you. Thank

Stefan Schulz

you. Thank

Operator

with Our Needham. next Berg question comes to of line Scott

with You your may proceed question.

Unidentified Analyst

and the that recovery This region is recovery on [ph] important how this travel APAC about Josh to this the guys. for year? year Hey, we world versus is of Scott. job quarter at the here. the point? And relative should the of both the in rest think subscription Nice next rest on into How world air for

Andres Reiner

sentiment, would quarter In quarter, buy. And had I Yeah. question. they had to in talked about new sign this you, XXXX. signaled the from QX. seen a industry Josh, ANA XX% activity airline had the is I XX% end I at prediction number, that and improved great of interest, projection Overall, say IATA we that their it seeing is end we and tell great the get customers last was recovery proven would will of we're the by XXXX. the like

travel light sentiment tell the overall, overall, the in in what I I general, They positive to various and overall, when think people as So, fact just the -- is is at the see geographies demand tunnel. across of expected. they the want airline I see end that you in would we trended, see

Unidentified Analyst

domestically little on seeing Okay. point? this, specifically difference cycles, Great. any commentary this already bit a And you sales then the gave on but international at are you of versus

Andres Reiner

theme seeing we're the -- not consistent on deal. the We're definitely is scrutiny

So, environment, you to I get time this able need think be of I to quickly. in think to value type

I think front. in think I to you to we've ROI well need demonstrate able through be to be executed able. And that

been but sales we of there's scrutiny, have seen not lengthening the cycles. So, definitely

Unidentified Analyst

All you right. very Thank much.

Andres Reiner

Thank you.

Operator

next Our line of the Capital with Jason Instructions] comes [Operator to Celino question KeyBanc Market.

You may your question. with proceed

Jason Celino

Hey, Andres. me Hey, for Stefan. in. Thanks fitting

Andres Reiner

Jason. Hi,

Stefan Schulz

Hi, Jason.

Jason Celino

deal The encouraging. pretty that's momentum,

seeing environment both the As continues terms business win travel of what rates, improve, and your in are BXB? to you in

Andres Reiner

continues changed. be general, strong, In not to Yeah. has

tell So, overall, major I would said, you, deal no I or win changes. like rate, from a timeline, ASP

more Just volume.

Jason Celino

on then And Perfect. Stefan, one Perfect. just a guidance. quick the

of forecasting second in are terms macro, to what any assuming than half, The changes you the process different prior periods?

Stefan Schulz

I think no, speaking, no. generally

wiser days little we we -- think a XX ago. today than I I'm think were we're as more think though, specifically, I

we into -- I that that factored for all been a think, the reasons environment our are difficult we're we're realizing has that all macro that of aware in guidance. and the

assumed seeing. you any already will, sort haven't So, improvement, we beyond are what we of if

not we're quite any there's terms or change inflation in the in assuming the For threats of of any space, example, or currency. recession of sort travel improvement in frankly,

we've essentially today So, that to in rest year. is assumed throughout what we're of this going continue the

Jason Celino

Perfect. Thanks that. for clarifying

Andres Reiner

you. Thank

Operator

turn we Overdeput and remarks. today's of reached like to call closing session. for this question-and-answer I back the Ladies to over have would end gentlemen, Belinda

Belinda Overdeput

quarter. you you this listening events speaking look conferences Thank to to for with at and call. forward We today's

August Leadership the Forum the Communications August Virtual on Oppenheimer Internet, and Xth Technology, be and will KeyBanc Conference We XXth. on Technology attending

If you have any and questions following today's call, you please ir@pros.com. contact us Thank goodbye. at

Operator

conference. today’s concludes This

time. your this day. of lines your disconnect you Thank may your You participation. for the at rest Enjoy

PROS (PRO) 29 Jul 222022 Q2 Earnings call transcript