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Pros Holdings (PRO)
NYSE:PRO
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PROS Holdings
(NYSE:PRO)
55Neutral
Positive Factors
Financial Performance
PROS reported solid 4Q results, with beats across the board driven by continued sales execution through the company's Land, Realize, Expand motion and stable B2B trends.
Profitability
The company's adjusted EBITDA was above guidance, indicating better than expected profitability.
Negative Factors
Leadership Changes
The big news of the day was the announced resignation of long-time CEO Andres Reiner, who will stay on until a successor is found and through a one-year advisor period.
Leadership Stability
The announcement of CEO Andres Reiner's retirement brings some uncertainty as the search for a successor is ongoing.
PROS Holdings (PRO) vs. S&P 500 (SPY)
Market Cap
$979.89M
Dividend YieldN/A
Average Volume (3M)447.91K
Price to Earnings (P/E)―
Beta (1Y)1.43
Revenue Growth8.78%
EPS Growth64.31%
CountryUS
Employees1,501
SectorTechnology
Sector Strength51
IndustrySoftware - Application
Share Statistics
EPS (TTM)-0.44
Shares Outstanding47,567,580
10 Day Avg. Volume474,830
30 Day Avg. Volume447,912
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)2.97
Price to Cash Flow (P/CF)10.20
P/FCF Ratio9.60
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$31.67Price Target Upside49.67% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering7
PROS Holdings Business Overview & Revenue Model
Company DescriptionPROS Holdings, Inc. is a leading provider of AI-powered solutions that optimize selling in the digital economy. The company operates primarily in the software industry, offering a suite of products that include pricing and revenue management software, sales optimization, and eCommerce solutions. These products are designed to help businesses in various sectors, such as travel, healthcare, and manufacturing, to improve their pricing strategies, enhance sales effectiveness, and drive profitable growth.
How the Company Makes MoneyPROS Holdings makes money primarily through the sale of its software solutions, which are offered via a Software-as-a-Service (SaaS) model. The company generates revenue through subscription fees for its cloud-based products, which provide businesses with dynamic pricing, revenue management, and sales optimization capabilities. Additionally, PROS earns income from professional services, which include consulting, implementation, and training to help clients effectively integrate and utilize their software solutions. Key revenue streams include recurring subscription revenues and non-recurring services revenue. The company also leverages strategic partnerships and collaborations to expand its market reach and enhance its product offerings, further contributing to its earnings.
PROS Holdings Financial Statement Overview
Summary
PROS Holdings shows strong revenue growth and improved cash flow, but faces profitability challenges and financial instability due to negative equity and high leverage.Income Statement
PROS Holdings has shown consistent revenue growth, with a revenue increase from $303.7M in 2023 to $330.4M in TTM (Trailing-Twelve-Months), resulting in a revenue growth rate of 8.77%. The gross profit margin is strong at 65.7% TTM, but the company is still facing challenges with profitability as evidenced by a negative net profit margin of -6.2% and EBIT margin of -5.8%. Although EBITDA margin improved to -2.8%, the company continues to operate at a loss.65
Positive
Balance Sheet
The balance sheet of PROS Holdings shows a concerning negative stockholders' equity of -$68.7M, resulting in a negative equity ratio. The company's high leverage is highlighted by a debt-to-equity ratio that cannot be calculated due to negative equity. This indicates financial instability and potential risk, despite improvements in total debt levels compared to previous years. Return on Equity cannot be calculated due to negative equity.45
Neutral
Cash Flow
The company has demonstrated strong cash flow management with a significant increase in operating cash flow from $9.9M in 2023 to $27.4M TTM. The free cash flow growth rate is impressive at 259.72%, suggesting positive cash generation capabilities. The operating cash flow to net income ratio is strong, indicating efficient conversion of earnings to cash flow. However, high financing outflows persist, which may impact long-term cash sustainability.70
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 330.37M | 303.71M | 276.14M | 251.42M | 252.42M | Gross Profit |
| 217.04M | 188.40M | 166.06M | 146.50M | 147.79M | EBIT |
| -19.02M | -50.60M | -76.54M | -71.96M | -66.08M | EBITDA |
| -4.78M | -39.57M | -61.53M | -60.77M | -51.58M | Net Income Common Stockholders |
| -20.48M | -56.35M | -82.25M | -81.21M | -76.98M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 161.98M | 168.75M | 203.63M | 227.55M | 329.13M | Total Assets |
| 419.90M | 421.83M | 452.95M | 494.48M | 539.97M | Total Debt |
| 300.89M | 324.76M | 325.63M | 334.78M | 268.06M | Net Debt |
| 138.91M | 156.02M | 122.00M | 107.22M | -61.07M | Total Liabilities |
| 488.61M | 499.71M | 488.43M | 490.90M | 422.93M | Stockholders Equity |
| -68.70M | -77.87M | -35.47M | 3.58M | 117.04M |
| Cash Flow | Free Cash Flow | |||
| 26.22M | 7.29M | -24.77M | -21.35M | -79.57M | Operating Cash Flow |
| 27.38M | 9.88M | -23.91M | -18.55M | -49.39M | Investing Cash Flow |
| -1.22M | -2.70M | -1.14M | -85.17M | -30.46M | Financing Cash Flow |
| -32.34M | -32.36M | 1.07M | 2.47M | 102.91M |
PROS Holdings Technical Analysis
Negative
21.16
Price Trends
23.79
Negative
23.25
Negative
22.52
Negative
Market Momentum
-1.09
Positive
39.36
Neutral
43.95
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PRO, the sentiment is Negative. The current price of 21.16 is below the 20-day moving average (MA) of 22.39, below the 50-day MA of 23.79, and below the 200-day MA of 22.52, indicating a bearish trend. The MACD of -1.09 indicates Positive momentum. The RSI at 39.36 is Neutral, neither overbought nor oversold. The STOCH value of 43.95 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for PRO.
PROS Holdings Risk Analysis
PROS Holdings disclosed 34 risk factors in its most recent earnings report. PROS Holdings reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
PROS Holdings Peers Comparison
Overall Rating
UnderperformOutperform
Sector (58)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
71 Outperform | $4.92B | 66.52 | 10.12% | ― | 18.78% | 15.01% | |
67 Neutral | $31.62B | 7,306.53 | 0.29% | ― | 21.07% | ― | |
66 Neutral | $3.16B | 22.59 | 45.56% | ― | 10.74% | 200.08% | |
58 Neutral | $22.11B | 10.47 | -17.86% | 2.40% | 4.75% | -24.81% | |
55 Neutral | $979.89M | ― | 29.80% | ― | 8.78% | 64.31% |
* Technology Sector Average
Performance Comparison
PRO
PROS Holdings
21.18
-13.55
-39.02%
SPSC
SPS Commerce
135.31
-45.39
-25.12%
HUBS
HubSpot
626.90
-5.13
-0.81%
BL
BlackLine
50.29
-12.04
-19.32%
PROS Holdings Earnings Call Summary
Earnings Call Date: Feb 6, 2025 | % Change Since: -15.09% | Next Earnings Date: May 6, 2025
Earnings Call Sentiment Positive
The earnings call reflects a strong performance by PROS Holdings, with notable revenue growth, improved margins, and strategic customer wins. Despite this, there are challenges including currency impacts, slower projected growth, and ongoing leadership transitions. The company's strategic focus on AI, innovation, and market leadership positions it well for future growth.Highlights
Strong Revenue Growth
PROS Holdings reported a 14% increase in subscription revenue and a 10% increase in total revenue year-over-year for Q4 2024. For the full year, subscription revenue grew by 14% and total revenue by 9%.
Significant Improvement in Adjusted EBITDA
The company reported approximately $30 million in adjusted EBITDA for the year, representing a 400% improvement compared to 2023.
High Subscription Gross Margin
Achieved a record high non-GAAP subscription gross margin of 81% in Q4 2024.
Recognition and Leadership in CPQ Market
PROS Holdings was named a leader in the latest Gartner Magic Quadrant and IDC Marketscape for Configure Price Quote applications.
Strong Customer Wins and Expansions
New customer acquisitions in Q4 included Brady+, HBK, and Werner Electric, with notable expansions from Air Canada and Lufthansa.
Positive Cash Flow and Investment Position
Generated $23.5 million in free cash flow in Q4 2024 and exited the year with $172 million in cash and investments.
Lowlights
Currency Impact on ARR
Subscription ARR was negatively impacted by about a percentage point due to the strengthening US dollar.
Deceleration in Subscription Revenue Growth
Projected subscription revenue growth for Q1 2025 is 10%, a deceleration from the 14% growth reported in Q4 2024.
Operational and Personnel Challenges in Travel Industry
While improvement was noted, operational and personnel challenges in the travel industry were highlighted as factors impacting performance.
Leadership Transition
Ongoing search for a new CEO, with no significant updates provided on the progress of this transition.
Company Guidance
During the PROS Holdings Fourth Quarter 2024 Earnings Conference Call, the company reported a robust performance with key metrics reflecting strong financial health and growth. Subscription revenue grew by 14% year-over-year in Q4, contributing to a 14% increase for the entire year. Total revenue saw a 10% rise in Q4, culminating in a 9% growth for the year. Adjusted EBITDA reached approximately $30 million, marking a significant 400% increase from the previous year. The company also achieved a record high non-GAAP subscription gross margin of 81% in Q4 and expanded its free cash flow margin by four percentage points year-over-year to 8%. The guidance for 2025 projects continued double-digit subscription growth and further profitability, with subscription ARR expected to grow by 10% and total revenue by 9%. These strong figures underscore PROS Holdings' strategic focus on AI-driven innovation and its effective land, realize, and expand strategy, with notable advancements in its AI capabilities and product offerings, including the launch of over 560 new features in 2024.PROS Holdings Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
PROS Holdings Appoints Katie May to Board
Positive
Mar 18, 2025
On March 18, 2025, PROS Holdings announced the appointment of Katie May to its Board of Directors as an independent director. May brings over 20 years of experience in SaaS, digital commerce, and high-growth marketplaces, having successfully scaled multiple companies to exits, including an IPO and strategic acquisitions. Her addition is expected to enhance PROS’s strategic direction as it continues to focus on AI, pricing, and commerce, aiming to drive long-term success and value for shareholders.
Financial Disclosures
PROS Holdings Reports Strong 2024 Financial Results
Positive
Feb 6, 2025
On February 6, 2025, PROS Holdings announced its financial results for Q4 and full year 2024, showcasing a 10% increase in total revenue and a 14% rise in subscription revenue year-over-year. The company also reported significant improvements in profitability, with a 73% increase in operating cash flow and a 400% improvement in adjusted EBITDA, positioning them for continued growth in 2025.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.