• Subscription Revenue Growth: 14% year-over-year for Q4 and full year 2024.
• Total Revenue Growth: 10% year-over-year for Q4 and 9% for the full year 2024.
• Adjusted EBITDA: $10.9 million in Q4 and $30 million for the full year 2024, a $24 million improvement compared to 2023.
• Free Cash Flow Margin: Expanded by 4 percentage points year-over-year, achieving 8% for the year.
• Non-GAAP Subscription Gross Margin: 81% in Q4, a record high.
• Non-GAAP Total Gross Margin: 70% in Q4 and 68% for the full year, up from 65% in 2023.
• Free Cash Flow: $23.5 million in Q4 and $26.2 million for the full year, a $14.8 million improvement compared to last year.
• Cash and Investments: $172 million at year-end.
• Non-GAAP Earnings Per Share: $0.16 for Q4 and $0.41 for the full year 2024.
• Subscription ARR: $283.7 million, a 10% increase year-over-year on a constant currency basis.
• Recurring Revenue: 85% of total revenue for Q4 and full year, up from 84% last year.

• Warning! GuruFocus has detected 2 Warning Signs with PRO.

Release Date: February 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Pros Holdings Inc (NYSE:PRO) achieved a 14% growth in subscription revenue and a 10% growth in total revenue for Q4 2024.
• The company reported a significant improvement in adjusted EBITDA, reaching approximately $30 million, a 400% increase compared to 2023.
• Pros Holdings Inc expanded its free cash flow margin by 4 percentage points year over year, achieving an 8% margin for 2024.
• The company achieved a record high non-GAAP subscription gross margin of 81% in Q4 2024.
• Pros Holdings Inc was recognized as a leader in the Gartner Magic Quadrant for Configure Price Quote applications and received high customer satisfaction ratings in the IDC Marketscape.

Negative Points

• The strengthening US dollar negatively impacted subscription ARR by about a percentage point.
• Despite strong Q4 performance, the guidance for Q1 2025 indicates a deceleration in subscription revenue growth to 9.5%.
• Currency fluctuations have been a challenge, affecting financial results and projections.
• The company is facing ongoing challenges in the travel sector, although improvements are expected in 2025.
• There is uncertainty regarding the search for a new CEO, which could impact strategic direction and leadership stability.

Q & A Highlights

Q: Can you provide more details on the growth prospects for the travel side of the business and the health of the airline industry? A: Stefan Schulz, CFO, mentioned that the travel business showed signs of solid improvement in Q4, and they expect this to continue in 2025. They anticipate subscription growth to accelerate throughout the year, driven by travel bookings. Andres Reiner, CEO, added that airlines are focusing on offer optimization to capture revenue growth, especially with strong passenger volumes and capacity constraints.

Q: How is the sales strategy evolving under the new leadership, and what changes are being implemented? A: Andres Reiner, CEO, stated that the sales leadership has executed well with a regional focus and closer customer engagement. They are making surgical changes this year, including expanding the customer success team's role to include quota ownership for expansion. They are also focusing on accelerating their partner channel with key partners to drive growth.

Q: What is the strategy for integrating AI-powered solutions like Fair Finder Genie into the platform, and how will they be monetized? A: Andres Reiner, CEO, explained that AI is embedded across the platform to add significant value, such as revenue uplift or efficiency gains. These AI capabilities are integrated into core product solutions and are sold as individual SKUs, providing tangible value to customers and creating opportunities for expansion.

Q: Can you explain the discrepancy between the subscription revenue growth guidance and the ARR growth rate? A: Stefan Schulz, CFO, clarified that while ARR growth was 10% on a constant currency basis, subscription revenue growth is expected to be 11% due to revenue recognition from previous bookings and currency impacts. The subscription revenue will respond positively throughout the year based on strong bookings.

Q: How has the company's position in the Gartner Magic Quadrant for CPQ applications changed, and what drove this improvement? A: Andres Reiner, CEO, highlighted that PROS is now a leader in the Gartner Magic Quadrant, moving from the challenger bucket. This improvement is due to significant product innovation in their CPQ solution, including digital collaboration and embedded AI capabilities, as well as strong market momentum and customer wins.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.