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PROS Holdings Inc. Reports Operating Results (10-Q)

August 05, 2010 | About:
10qk

10qk

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PROS Holdings Inc. (PRO) filed Quarterly Report for the period ended 2010-06-30.

Pros Holdings Inc. has a market cap of $184.7 million; its shares were traded at around $7.1 with a P/E ratio of 47.3 and P/S ratio of 2.6. PRO is in the portfolios of Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

Cost of license and implementation. Cost of license and implementation decreased $0.4 million to $3.4 million for the three months ended June 30, 2010 from $3.8 million for the three months ended June 30, 2009, representing a 9% decrease. The decrease in cost of license and implementation is principally attributable to a decrease of $0.7 million in personnel costs primarily resulting from the reassignment of personnel with specific technical expertise that are no longer assisting with implementation tasks. In addition, there was a decrease of $0.1 million of third party deployment software expense and $0.1 million in amortization costs related to limited term license contracts. These decreases were partially offset by a $0.2 million unfavorable change in foreign currency exchange, $0.1 million of third party system integrator expense, $0.1 million of travel expense and $0.1 million of share-based compensation expense as a result of additional grants of restricted stock units and stock appreciation rights. License and implementation gross margins were 67% for the three months ended June 30, 2010 as compared to 66% for the three months ended June 30, 2009. License and implementation costs may vary from period to period depending on factors, including the amount of implementation services required to deploy our products relative to the total contract price.

Cost of maintenance and support. Cost of maintenance and support increased $0.2 million to $1.4 million for the three months ended June 30, 2010 from $1.2 million for the three months ended June 30, 2009, representing a 21% increase. The increase in cost of maintenance and support is principally attributable to the increased levels of effort required to support our expanding installed customer base. Maintenance and support gross margins for the three months ended June 30, 2010 and 2009 were 81%, respectively.

Gross profit. Gross profit increased $0.6 million to $13.0 million for the three months ended June 30, 2010 from $12.4 million for the three months ended June 30, 2009, representing a 5% increase. The increase in gross profit was principally attributed to the increase in overall revenue and the improvement in our license and implementation revenue gross margins.

Selling, general and administrative expenses. Selling, general and administrative expenses increased $3.0 million to $8.5 million for the three months ended June 30, 2010 from $5.5 million for the three months ended June 30, 2009, representing a 53% increase. The increase was principally attributed to $1.0 million of litigation expense. In addition as part of our increased investment in sales and marketing, there was an increase of $0.4 million of sales personnel expense, $0.3 million of marketing expense, $0.3 million of travel expense and $0.2 million of recruiting expense. Also, there was an increase of $0.5 million of share-based compensation expense as a result of additional grants of restricted stock units and stock appreciation rights and the acceleration of share-based compensation expense related to a severance agreement of $0.3 million.

Research and development expenses. Research and development expenses increased $0.7 million to $5.5 million for the three months ended June 30, 2010 from $4.8 million for the three months ended June 30, 2009, representing a 15% increase. The increase was principally attributed to an increase of $0.6 million of personnel expense of which $0.3 million was a result of the continued investment in our software products and $0.3 million resulting from the reassignment of personnel with specific technical expertise that are no longer assisting with implementation tasks.

Income tax provision (benefit). Our income tax provision decreased $0.9 million to an income tax benefit of $0.3 million for the three months ended June 30, 2010 from an income tax provision of $0.6 million for the three months ended June 30, 2009. The effective tax rate was a 34% tax benefit and a 28% tax provision for the three months ended June 30, 2010 and 2009, respectively.

Read the The complete Report

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