PROS Holdings (NYSE:PRO) reported robust third-quarter results, exceeding its guidance ranges across all metrics. The company witnessed a 16% YoY growth in subscription revenue, a 10% YoY growth in total revenue, and delivered $5.6 million in positive adjusted EBITDA, a $7.8 million YoY improvement. As the market increasingly embraces AI, PROS' long-term trajectory is strengthening. The company's customers have experienced significant revenue and margin improvements, with publicly traded customers outperforming the Dow and S&P 500 by over 15 percentage points between 2022 and Q3 2023.
Key takeaways from the call:
- PROS continues to land new customers and expand its offerings, recent examples include Genesis Energy (NYSE:GEL), Trivium Packaging (NYSE:PKG), JetSMART, GOL Airlines, and SKS Airways.
- PROS raised its outlook for the year, with increased subscription and total revenue guidance, and expects positive free cash flow for the full year.
- The company expects Q4 subscription revenue to be between $60 million and $60.5 million, and total revenue to be between $76 million and $77 million.
- PROS anticipates a sequential decline in services revenue due to the holidays.
- The company expressed satisfaction with its performance in the travel sector, stating that it had a strong quarter and saw demand recovery in the second half of the year as expected.
- The company is focused on executing its goal of being a Rule of 40 company by 2026 and believes it is in a strong market position.
During the call, the company attributed the decline in revenue from Q2 to Q3 to the company's outperform event, which required a significant allocation of resources. However, the company expects the numbers to rebound in the future. The company also discussed the decline in their RPO metric, a result of their land realize and expand strategy, and expects this metric to normalize by the middle of next year.
PROS Holdings reported that it has not seen any significant impact on consumer demand or customer conversations due to the ongoing conflict in the Middle East. They continue to see good demand across industries and geographies, with the top of the sales funnel growing well. In terms of the travel industry, the company has seen a return in demand and believes that its market position is strengthening.
CEO Andres Reiner expressed optimism about the recovery in the travel industry, stating that Q3 showed progress towards 2019 volumes, and he expects this trend to continue into Q4 and next year. He highlighted that airlines are starting to invest in areas that PROS has innovated, such as continuous pricing, and mentioned Lufthansa (ETR:LHAG)'s success with PROS' solutions.
PROS Holdings (NYSE:PRO) did not comment on rumors of a potential sale. The company will be attending various conferences and events in the coming months.
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