PROS Holdings, Inc. Reports Fourth Quarter and Full Year 2011 Financial Results

• Record fourth quarter revenue of $26.2 million increased 30% year-over-year, exceeding guidance.

• Record 2011 revenue of $96.6 million.

• GAAP operating income of $2.7 million for the fourth quarter, exceeding guidance, and $8.6 million for 2011.

• Non-GAAP operating income for the fourth quarter was $4.5 million, exceeding guidance.  Non-GAAP operating
  income for the full year 2011 was $15.4 million, an increase of 62% year over year.

• GAAP net income for the fourth quarter of $0.08 per share, and non-GAAP net income of $0.11 per share.
• GAAP net income for the full year 2011 of $0.23 per share, and non-GAAP net income of $0.39 per share

HOUSTON, February 9, 2012 — PROS Holdings, Inc. (NYSE: PRO), a world leader in pricing and revenue management software, today announced financial results for the fourth quarter and full year ended December 31, 2011.

Total GAAP revenue for the fourth quarter of 2011 was $26.2 million, which was above the high end of the Company’s revenue guidance for the quarter, and represented an increase of 30% over the fourth quarter 2010.

CEO Andres Reiner stated, “We are excited to announce a record performance in the fourth quarter, capping off an excellent year.  Our strong results reflect the investments we have made to accelerate awareness and adoption, extend our product leadership, and increase our global reach and scale.  We enter 2012 with great confidence as PROS is well positioned to help companies compete and win in their markets by turning pricing into a strategic advantage.”

For the quarter ended December 31, 2011, GAAP operating income was $2.7 million, compared with an operating loss of $0.3million in the fourth quarter of 2010.  GAAP net income in the quarter was $2.1 million, or $0.08 per share, compared with $0.6 million, or $0.02 per share, in the fourth quarter of 2010.

For the quarter ended December 31, 2011, non-GAAP operating income was $4.5 million, which exceeded the high end of the guidance for the quarter and represents a 56% increase, compared with $2.9 million in the fourth quarter of 2010.  Non-GAAP net income for the fourth quarter of 2011 was $3.2 million, or $0.11 per share, compared with $2.2 million, or $0.08 per share, in the fourth quarter of 2010.

CEO Andres Reiner stated, “In addition to the record performance in the fourth quarter we are pleased with our full year performance with record revenue, a non-GAAP operating income increase of 62% over the prior year, and our sales momentum.”

For the year ended December 31, 2011, GAAP revenue was $96.6 million, above the high end of the guidance for the year, compared with GAAP revenue of $71.0 million in 2010 and non-GAAP revenue of $74.2 million in 2010, a 30% increase over prior year non-GAAP revenue.  GAAP operating income was $8.6 million for 2011, compared with an operating loss of $4.3 million in 2010.  GAAP net income for 2011 was $6.4 million, or $0.23 per share, compared with a net loss of $1.9 million, or $0.07 per share in 2010.

For the year ended December 31, 2011, non-GAAP operating income was $15.4 million, a 62% increase, compared with $9.5 million in 2010.  Non-GAAP net income for the 2011 was $10.7 million, or $0.39 per share, compared with $6.8 million, or $0.25 per share in 2010.

Backlog was $124.1 million as of December 31, 2011, as compared with backlog of $107.0 million as of December 31, 2010. The portion of backlog as of December 31, 2011 reasonably expected to be recognized as revenue within the next twelve months is estimated to be $85.8 million.

Fourth Quarter and 2011 Business Highlights

• Selected by new customers such as Autodesk, Air Europa, Coates Hire , Kemira, Novozymes and Sunoco , among others
• Awarded strategic 2011 Vendor of the Year by 3663 , a leading food service distributor in the United Kingdom
• Awarded a top rating of “Strong Positive” in Gartner MarketScope report on pricing optimization software
• Launched enterprise software resellers program with partners in Brazil , China , Portugal , and Spain
• Participated in key global marketing events in Beijing , Shanghai , São Paulo, Madrid , and Barcelona
• Increased headcount by 111, or 26%, to end the year with 540 people, reflecting investments across the company to drive long-term growth

Executive Vice President and Chief Financial Officer Charles Murphy stated, “We are pleased with our performance for the quarter and full year as the strength of our revenue drove operating profit and earnings per share above the high end of our guidance. We are also pleased with our strong balance sheet, with $68.5 million in cash and no debt.  With our strong backlog entering 2012, we are confident in our ability to grow full year revenue approximately 20%.  We also plan to continue on our stated path of investing in support of the growth of the business in order to capture the opportunity we see in front of us while continuing to deliver solid profitability.”

The attached table provides a reconciliation of GAAP to non-GAAP income from operations and net income as well as net income per share available to common stockholders for the quarter and full year ended December 31, 2011 and 2010.

Financial Outlook

Based on information as of today, PROS anticipates the following performance for the first quarter of 2012:

• Total revenue in the range of $26.6 million to $27.1 million

• GAAP income from operations of $2.1 million to $2.6 million and GAAP earnings per share of $0.05 to $0.06

• Non-GAAP income from operations of $3.7 million to $4.2 million and non-GAAP earnings per share of $0.09 to $0.10,
  which exclude estimated non-cash share-based compensation charges of approximately $1.6 million

• GAAP and non-GAAP estimated tax rate of approximately 36% and 35%, respectively

• Estimated weighted average of 28.2 million diluted shares outstanding

Conference Call

In conjunction with this announcement, PROS Holdings, Inc. will host a conference call on February 9, 2012, at 4:30 p.m. (ET) to discuss the company’s financial results.  To access this call, dial (866) 203-2528 (domestic) or (617) 213-8847 (international).  The pass code for the call is 67165872.  Additionally, a live webcast of the conference call will be available in the “Investor Relations” section of the Company’s web site at www.prospricing.com.

Following the conference call, a replay will be available at (888) 286-8010 (domestic) or (617) 801-6888 (international).  The replay pass code is 63972510.  An archived web cast of this conference call will also be available in the “Investor Relations” section of the Company’s web site at www.prospricing.com.