PROS Holdings Exceeds Guidance, Strong Start to 2025

PROS Holdings ((PRO)) has held its Q1 earnings call. Read on for the main highlights of the call.

PROS Holdings’ recent earnings call painted a picture of a strong start to 2025, with the company surpassing its guidance expectations and showing significant improvements in key financial metrics. The sentiment during the call was overwhelmingly positive, driven by strong demand in both the B2B and travel sectors, as well as industry recognition and new customer acquisitions. However, challenges such as macroeconomic uncertainties and anticipated high spending in the upcoming quarter were acknowledged, yet the overall outlook remains optimistic.

Strong Start to 2025 with Exceeded Guidance

PROS Holdings kicked off 2025 on a high note by exceeding the high end of their guidance ranges across all metrics. Sales outperformed expectations in both the B2B and travel segments, contributing to a 14% year-over-year growth in trailing 12-month recurring calculated billings. This marks the strongest performance in this metric over the past 10 quarters.

Significant Improvement in Free Cash Flow

The company reported a remarkable 123% year-over-year improvement in free cash flow, achieving a positive cash flow of $1.1 million in the first quarter. This is a notable achievement given that Q1 is typically a seasonally high cash use period, reflecting a $6 million improvement.

Industry Recognition and New Customer Wins

PROS Holdings received significant industry recognition, being named a leader in the Forrester Wave for configure price quote solutions, and earning leader rankings in the Gartner Magic Quadrant and IDC MarketScape for CPQ. The company also secured notable customer wins, including a Fortune 500 chemicals company, Softcat, and Grundfos.

Strong Demand in Travel Segment

The travel segment experienced robust demand in the first quarter, highlighted by wins at two of the top seven US carriers by domestic market share. Notably, Southwest Airlines selected PROS offer marketing to enhance brand visibility and capture more demand.

Improved Non-GAAP Gross Margins

PROS Holdings reported an improvement in non-GAAP subscription gross margins, which rose to 81%, a year-over-year increase of over 160 basis points. Overall non-GAAP gross margin also improved to 70%, marking an increase of over 270 basis points.

Macroeconomic Uncertainty

Despite broader macroeconomic uncertainties contributing to a complex selling environment, PROS Holdings has managed to navigate these challenges effectively, maintaining strong execution and performance.

High Spend Quarter Expected

The second quarter is anticipated to be a high spend period due to the Outperform conference, which is expected to impact adjusted EBITDA despite an overall increase in revenue.

Forward-Looking Guidance

Looking ahead, PROS Holdings has provided optimistic guidance. The company expects subscription revenue for the second quarter to range between $72 million to $72.5 million, with total revenue projected between $87 million and $88 million. For the full year, total revenue is expected to be between $360 million and $362 million, representing a 9% year-over-year growth. Adjusted EBITDA for the year is forecasted to be between $42 million and $44 million, with a free cash flow improvement of $15.8 million year-over-year.

In conclusion, PROS Holdings’ earnings call reflects a positive start to 2025, with exceeded guidance and strong performance across key metrics. While macroeconomic uncertainties and high spending in the upcoming quarter pose challenges, the company’s strong demand, industry recognition, and strategic customer wins provide a solid foundation for continued growth.