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

November 09, 2009 | About:

10qk

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PROS Holdings Inc. (PRO) filed Quarterly Report for the period ended 2009-09-30.

PROS HoldingsInc. a world leader in Pricing and Revenue Optimization Softwaretoday announced that the underwriters of its initial public offering have exercised in full their over-allotment option. PROS is a leading provider of pricing and revenue optimization software productsspecializing in price analyticsprice executionand price optimization. By using PROS' software productscompanies gain insight into their pricing strategiesidentify pricing-based profit leaksoptimize their pricing decision making and improve their business processes and financial performance. PROS' software products implement advanced pricing sciencewhich includes operations researchforecasting and statistics. PROS also provides a range of services that include analyzing a company's current pricing processes and implementing software products to improve pricing performance Pros Holdings Inc. has a market cap of $231.9 million; its shares were traded at around $9.02 with a P/E ratio of 29.1 and P/S ratio of 3.07.

Highlight of Business Operations:

Maintenance and support. Maintenance and support revenue increased $0.6 million to $6.2 million for the three months ended September 30, 2009 from $5.6 million for the three months ended September 30, 2008, representing an 11% increase. The increase in maintenance and support revenue is primarily the result of the completion of a number of implementations of our software products following which we recognize maintenance and support revenue partially offset by $0.2 million of temporary reductions.

Cost of license and implementation. Cost of license and implementation decreased $0.7 million to $3.1 million for the three months ended September 30, 2009 from $3.8 million for the three months ended September 30, 2008, representing a 20% decrease. The decrease in cost of license and implementation is primarily attributable to a $0.4 million beneficial change in foreign currency exchange and a $0.4 million decrease in personnel and other costs. These decreases were partially offset by a $0.1 million increase in stock-based compensation expense. License and implementation gross margins were 70% for the three months ended September 30, 2009 as compared to 72% for the three months ended September 30, 2008. The reduction in license and implementation gross margins was primarily due to a decrease in license and implementation revenue of $3.4 million partially offset by a $0.7 million reduction of license and implementation costs for the three months ended September 30, 2009. License and implementation gross margins vary from period to period depending on the amount of implementation services required to deploy our products relative to the total value of contracts for which implementation services were provided during the quarter.

Gross profit. Gross profit decreased $2.2 million to $12.2 million for the three months ended September 30, 2009 from $14.4 million for the three months ended September 30, 2008, representing a 15% decrease. The decrease in gross profit was primarily attributed to the 25% decrease in license and implementation revenues.

Selling, general and administrative expenses. Selling, general and administrative expenses increased by $0.2 million to $6.0 million for the three months ended September 30, 2009 from $5.8 million for the three months ended September 30, 2008, representing a 3% increase. The increase was attributed to an increase in sales personnel expenses of $0.3 million over 2008, an increase of $0.2 million of stock-based compensation expense and an increase of $0.1 million of travel expense associated with sales activities. These increases were partially offset by decreases of $0.3 million in bad debt expense as a result of an increase in our allowance for doubtful accounts during the third quarter of 2008 and $0.1 million of other expenses.

Research and development expenses. Research and development expenses decreased by $0.1 million for the three months ended September 30, 2009 as compared to the same period in 2008, representing a 1% decrease. The modest decrease of $0.1 million was attributed to a decrease of $0.2 million of other expenses, partially offset by an increase of $0.1 million of stock-based compensation expense.

Maintenance and support. Maintenance and support revenue increased $2.5 million to $18.5 million for the nine months ended September 30, 2009 from $15.9 million for the nine months ended September 30, 2008, representing a 16% increase. The increase in maintenance and support revenue is primarily the result of the completion of a number of implementations of our software products following which we recognize maintenance and support revenue partially offset by $0.5 million of temporary reductions.

Read the The complete Report

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