PROS Holdings, Inc. reports 16.7% revenue growth in 2018 and 13.9 pp EBITDA Margin growth from -32.2% to -18.4%
02/07/2019 • About PROS Holdings, Inc. (
$PRO) • By InTwits
PROS Holdings, Inc. reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- The company operates at negative EBITDA Margin: -18.4%
- PROS Holdings, Inc. spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for 2014-2018 is 0.0%. Average EBITDA Margin for the same period was -23.3%
- PROS Holdings, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.9%. At the same time it's in pair with industry average of 3.1%
- CAPEX is quite volatile: $1m in 2018, $1m in 2017, $7m in 2016, $7m in 2015, $7m in 2014
- The company has unprofitable business model: ROIC is -22.0%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue jumped on 16.7%. Revenue growth showed slowdown in 18Q4 - it was 13.5% YoY. During the last 5 years Revenue growth bottomed in 2015 at -9.5% and was accelerating since that time. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 0.71 pp from 2.2% to 2.9% in 2018. During 2014-2018 EBITDA Margin bottomed in 2016 at -36.5% and was growing since that time.
Gross Margin increased slightly on 1.4 pp from 59.4% to 60.8% in 2018. During the last 5 years Gross Margin bottomed in 2016 at 58.7% and was growing since that time. SG&A as a % of Revenue decreased on 6.7 pp from 64.2% to 57.5% in 2018. During 2014-2018 SG&A as a % of Revenue topped in 2015 at 67.0% and was declining since that time.
Net Income margin surged on 13.6 pp from -46.2% to -32.6% in 2018. During the last 5 years Net Income margin bottomed in 2016 at -49.1% and was growing since that time.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 0.75% in 2018. CAPEX/Revenue decreased on 3.3 pp from 4.0% in 2015 to 0.75% in 2018. It's average CAPEX/Revenue for the last three years was 2.1%. During 2014-2018 CAPEX as a % of Revenue topped in 2016 at 4.7% and was declining since that time.
Leverage (Debt)
Debt level is -2.4x Net Debt / EBITDA and Debt / EBITDA. Debt increased on 5.6% while cash jumped on 84.1%.
PROS Holdings, Inc. has no short term refinancing risk: cash is higher than short term debt (216.4%).
Management team
PROS Holdings, Inc.'s CEO is Andres D Reiner. Andres D Reiner is a founder and has 8 years tenure with the company. The company's CFO is Stefan B Schulz. Stefan B Schulz has 4 years tenure at the company.
Financial and operational results
FY ended 12/31/2018
PROS Holdings, Inc. ($PRO) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 185.8 | 168.2 | 153.3 | 168.8 | 197.0 | 16.7% |
| Gross Profit | 127.7 | 106.8 | 89.9 | 100.2 | 119.8 | 19.5% |
| SG&A | 99.9 | 112.7 | 102.5 | 108.5 | 113.3 | 4.5% |
| EBITDA | -12.0 | -45.1 | -55.9 | -54.4 | -36.2 | |
| Net Income | -36.6 | -65.8 | -75.2 | -77.9 | -64.2 | |
Balance Sheet
|
|---|
| Cash | 161.0 | 161.8 | 118.0 | 160.5 | 295.5 | 84.1% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 136.5 | |
| Long Term Debt | 110.4 | 116.4 | 122.3 | 213.2 | 88.7 | -58.4% |
Cash flow
|
|---|
| Capex | 7.5 | 6.8 | 7.2 | 1.3 | 1.5 | 14.7% |
Ratios
|
|---|
| Revenue growth | 28.3% | -9.5% | -8.9% | 10.1% | 16.7% | |
| EBITDA growth | -252.5% | 277.0% | 23.9% | -2.6% | -33.5% | |
|
|---|
| Gross Margin | 68.7% | 63.5% | 58.7% | 59.4% | 60.8% | 1.4% |
| EBITDA Margin | -6.4% | -26.8% | -36.5% | -32.2% | -18.4% | 13.9% |
| SG&A, % of revenue | 53.8% | 67.0% | 66.9% | 64.2% | 57.5% | -6.7% |
| Net Income Margin | -19.7% | -39.1% | -49.1% | -46.2% | -32.6% | 13.6% |
| CAPEX, % of revenue | 4.0% | 4.0% | 4.7% | 0.8% | 0.7% | -0.0% |
|
|---|
| ROIC | -14.4% | -29.0% | -44.7% | -45.2% | -22.0% | 23.3% |
| ROE | -34.8% | -85.2% | | | | |
PROS Holdings, Inc. ($PRO) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 48 | 47 | 49 | 53 | | 19.4% | 17.4% | 17.0% | 13.5% |
| EBITDA | -11 | -10 | -9 | -6 | | | | | |
| Net Income | -19 | -17 | -16 | -13 | | | | | |
Balance Sheet
|
|---|
| Cash | 148 | 142 | 282 | 295 | | 32.4% | -28.3% | 79.1% | 84.1% |
| Short Term Debt | 0 | 0 | 0 | 137 | | | | | |
| Long Term Debt | 216 | 219 | 222 | 89 | | 74.3% | 5.6% | 5.6% | -58.4% |
Ratios
|
|---|
| Gross Margin | 59.3% | 60.5% | 60.3% | 63.0% | | 0.6% | 0.3% | 2.6% | 2.2% |
| EBITDA Margin | -23.8% | -20.5% | -17.7% | -12.0% | | 15.2% | 15.9% | 17.3% | 8.1% |
| Net Income Margin | -39.4% | -35.5% | -32.2% | -24.3% | | 11.0% | 12.8% | 18.4% | 12.4% |
Peers in Application Software
Below we provide PROS Holdings, Inc. benchmarking against other companies in Application Software industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| nFusz Inc ($FUSZ) | | | | | 433.3% |
| CloudCommerce Inc ($CLWD) | | -38.1% | 247.6% | 40.9% | 301.1% |
| Seven Stars Cloud Group, Inc. ($SSC) | | 134.7% | 663.8% | 310.3% | 161.7% |
| Aurora Mobile Limited ($JG) | | | | 304.9% | 150.8% |
| Intelligent Systems Corporation ($INS) | | 14.2% | 71.0% | 12.2% | 119.0% |
| |
|---|
| Median (151 companies) | -43.3% | 14.0% | 14.3% | 15.7% | 15.2% |
|---|
| PROS Holdings, Inc. ($PRO) | | -9.5% | -8.9% | 10.1% | 16.7% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Skkynet Cloud Systems Inc ($SKKY) | 99.7% | 97.4% | 98.0% | 97.6% | 96.5% |
| hopTo Inc ($HPTO) | 91.8% | 87.8% | 95.9% | 98.2% | 95.4% |
| Aware, Inc. ($AWRE) | 75.4% | 87.2% | 90.3% | 94.6% | 92.3% |
| Alteryx, Inc. ($AYX) | 77.5% | 80.5% | 81.3% | 83.4% | 91.0% |
| Aspen Technology, Inc. ($AZPN) | 86.5% | 88.7% | 89.7% | 90.2% | 89.9% |
| |
|---|
| Median (150 companies) | 62.8% | 61.7% | 64.2% | 64.6% | 66.1% |
|---|
| PROS Holdings, Inc. ($PRO) | 68.7% | 63.5% | 58.7% | 59.4% | 60.8% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Aspen Technology, Inc. ($AZPN) | 34.5% | 42.2% | 46.0% | 45.2% | 43.3% |
| ANSYS, Inc. ($ANSS) | 45.9% | 45.8% | 45.1% | 41.9% | 41.4% |
| Paycom Software, Inc. ($PAYC) | 15.1% | 19.5% | 35.1% | 34.4% | 35.9% |
| j2 Global, Inc. ($JCOM) | 41.6% | 40.6% | 41.7% | 36.5% | 35.7% |
| Adobe Inc. ($ADBE) | 17.5% | 25.9% | 31.2% | 34.2% | 35.3% |
| |
|---|
| Median (152 companies) | -10.3% | -9.4% | -4.7% | -3.3% | -3.2% |
|---|
| PROS Holdings, Inc. ($PRO) | -6.4% | -26.8% | -36.5% | -32.2% | -18.4% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| TimefireVR Inc ($TFVR) | 0.0% | 350.5% | 4.3% | | 1,021.9% |
| MGT Capital Investments Inc ($MGTI) | 0.0% | 36.5% | 221.4% | 129.8% | 344.5% |
| Integrated Ventures Inc ($INTV) | | | | | 199.9% |
| ShotSpotter, Inc. ($SSTI) | | 18.3% | 28.9% | 27.1% | 24.3% |
| Ellie Mae, Inc. ($ELLI) | 12.3% | 20.6% | 16.7% | 21.1% | 19.4% |
| |
|---|
| Median (153 companies) | 2.8% | 2.7% | 2.9% | 2.3% | 2.4% |
|---|
| PROS Holdings, Inc. ($PRO) | 4.0% | 4.0% | 4.7% | 0.8% | 0.7% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| InsPro Technologies Corp ($ITCC) | -558.9% | | | | 127.4% |
| Manhattan Associates, Inc. ($MANH) | 64.8% | 78.7% | 99.3% | 102.5% | 80.9% |
| Intuit Inc. ($INTU) | 34.2% | 23.7% | 52.1% | 72.6% | 66.8% |
| Aspen Technology, Inc. ($AZPN) | 133.4% | | | | 58.1% |
| Paycom Software, Inc. ($PAYC) | 16.7% | 30.5% | 75.4% | 51.1% | 47.5% |
| |
|---|
| Median (179 companies) | -14.2% | -11.2% | -9.2% | -10.2% | -9.3% |
|---|
| PROS Holdings, Inc. ($PRO) | -14.4% | -29.0% | -44.7% | -45.2% | -22.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Upland Software, Inc. ($UPLD) | | | 16.4x | 115.6x | 16.7x |
| Nuance Communications, Inc. ($NUAN) | 7.9x | 5.7x | 5.3x | 7.1x | 15.2x |
| Asure Software Inc ($ASUR) | 3.4x | 4.5x | 3.6x | 9.5x | 14.5x |
| SS&C Technologies Holdings, Inc. ($SSNC) | 1.7x | 7.3x | 4.6x | 3.1x | 8.5x |
| Avaya Holdings Corp. ($AVYA) | | | | | 7.4x |
| |
|---|
| Median (70 companies) | -1.4x | -1.0x | -0.9x | -0.8x | -0.7x |
|---|
