PROS Holdings, Inc. Q4 FY2024 earnings call

• Achieved 14% subscription revenue growth and 10% total revenue growth in Q4, with 14% subscription and 9% total revenue growth for the year. Adjusted EBITDA was $30 million for the year, a 400% improvement from 2023, and free cash flow margin was 8% for the year.
• AI-driven approach: Embedded AI in operations, released over 560 new features in 2024, including Fare Finder Genie. This solution offers a tailored flight search experience.
• Recognized as leader in Gartner Magic Quadrant for Configure Price Quote applications and IDC Marketscape for Worldwide Configure Price Quote applications.
• New customers in Q4: Brady+, HBK, Werner Electric, Fastjet, etc.
• 2025 focus: Land, realize, expand strategy; close collaboration with partner ecosystem; doubling down on AI as a transformative force.

In the fourth quarter, subscription revenue was $69.3 million, up 14% year-over-year, and total revenue was $85 million, up 10% year-over-year. For the full year, subscription revenue grew 14% to $266.3 million, and total revenue grew 9% to $330.4 million. Adjusted EBITDA for the year was approximately $30 million, a 400% improvement from 2023. Free cash flow margin was 8% for the year. Non-GAAP subscription gross margin was 81% in Q4 and 80% for the year. Non-GAAP services gross margin was 16% in Q4 and 11% for the year. Total non-GAAP gross margin was 70% in Q4 and 68% for the year.

• Full year 2025: Subscription ARR expected to be $308 million to $311 million (10% growth year-over-year), subscription revenue expected to be $294 million to $296 million (11% growth year-over-year), total revenue expected to be $360 million to $362 million (9% growth year-over-year), adjusted EBITDA expected to be between $42 million and $44 million, free cash flow expected to be between $40 million and $44 million.
• Q1 2025: Subscription revenue expected to be $70.25 million to $70.75 million (10% growth year-over-year), total revenue expected to be $85 million to $86 million (6% growth year-over-year), adjusted EBITDA expected to be between $7.5 million and $8.5 million.

• Geopolitical risks and uncertainties that could impact the macroeconomic environment.

Q: Jeff Van Reeve asked about travel business growth rates and airline industry health.

A: Stefan Schulz and Andres Reiner discussed travel business improvement, growth rates, and airline industry environment.

Q: Jeff Van Reeve asked about sales leadership transition.

A: Andres Reiner talked about sales leadership programs, customer success organization focusing on expansion, and partner channel acceleration.

Q: Robert Morelli asked about operational environment in travel and CEO search.

A: Andres Reiner discussed travel operational improvement and CEO search progress.

Q: Parker Lane asked about AI-powered solutions monetization.

A: Andres Reiner spoke about embedding AI core to capabilities for significant value and selling as individual SKUs.

Q: Jason Celino asked about subscription growth deceleration and B2B spending habits.

A: Stefan Schulz and Andres Reiner discussed booking deferral, currency impact, and B2B spending need due to volatility.

Q: Robert Oliver asked about AI solutions in travel and subscription revenue growth.

A: Andres Reiner and Stefan Schulz talked about travel pipeline improvement and subscription revenue growth confidence.

Q: Victor Cheng asked about Gartner ranking change and travel technology adoption.

A: Andres Reiner discussed product innovation and market momentum driving Gartner ranking change, and travel technology adoption potential.

Q: Nehal Chokshi asked about ARR growth, sales and marketing investment, and subscription revenue beat.

A: Stefan Schulz and Andres Reiner answered on ARR growth, sales and marketing investment focus, and factors behind subscription revenue beat.

Q: Brian Schwartz asked about AI monetization path.

A: Andres Reiner explained AI-driven capabilities as sellable SKUs for incremental value to end customers.