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PROS Holdings, Inc. reports 441% CAPEX growth in 2020 and 0.83% Revenue growth

02/04/2021 • About PROS Holdings, Inc. ($PRO) • By InTwits

PROS Holdings, Inc. reported 2020 financial results today. Here are the key drivers of the company's long term financial model:
  • The company operates at negative EBITDA Margin: -16.0%
  • PROS Holdings, Inc. spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for 2016-2020 is 0.0%. Average EBITDA Margin for the same period was -21.2%
  • PROS Holdings, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.9%. At the same time it's in pair with industry average of 3.2%
  • CAPEX is quite volatile: $28m in 2020, $5m in 2019, $1m in 2018, $1m in 2017, $7m in 2016
  • The company has unprofitable business model: ROIC is -18.2%
  • It operates with high leverage: Net Debt/EBITDA is 26.9x while industry average is 18.4x
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 increased slightly on 0.83%. Revenue growth showed slowdown in 20Q4 - it was -8.0% YoY. During the last 5 years Revenue growth topped in 2019 at 27.1%. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased on 4.2 pp from -11.9% to -16.0% in 2020. EBITDA Margin followed a growing trend at 6.1 pp per annum in the last 5 years.

Gross Margin decreased slightly on 1.9 pp from 60.4% to 58.5% in 2020. During the last 5 years Gross Margin topped in 2018 at 60.8% and was declining since that time. SG&A as a % of Revenue showed almost no change in 2020. SG&A as a % of Revenue stuck to a declining trend at -3.4 pp per annum in the last 5 years.

Net Income margin decreased on 2.9 pp from -27.6% to -30.5% in 2020. Net Income margin followed a growing trend at 5.6 pp per annum in 2016-2020.

Investments (CAPEX, working capital and M&A)


In 2020 PROS Holdings, Inc. had CAPEX/Revenue of 11.3%. CAPEX/Revenue surged on 10.5 pp from 0.76% in 2017 to 11.3% in 2020. It's average CAPEX/Revenue for the last three years was 4.7%. During 2016-2020 CAPEX as a % of Revenue bottomed in 2018 at 0.75% and was growing since that time.

Return on investment


The company operates at negative ROIC (-18.2%) and ROE (-54.6%). ROIC decreased slightly on 0.75 pp from -17.5% to -18.2% in 2020. ROE increased on 8.2 pp from -62.8% to -54.6% in 2020. ROIC followed a growing trend at 8.1 pp per annum in 2016-2020.

Leverage (Debt)


Debt level is 26.9x Net Debt / EBITDA and Debt / EBITDA. Debt jumped on 91.1% while cash increased on 7.5%.

PROS Holdings, Inc. has no short term refinancing risk: cash is higher than short term debt (5,543.8%).

Management team


The company's CEO Andres D Reiner has spent 10 years with the company. The company's CFO Stefan B Schulz has spent 6 years with the company.

Financial and operational results


FY ended 12/31/2020

PROS Holdings, Inc. ($PRO) key annual financial indicators

mln. $201620172018201920202020/2019
P&L
Revenue153.3168.8197.0250.3252.40.8%
Gross Profit89.9100.2119.8151.2147.8-2.3%
SG&A102.5108.5113.3136.8138.31.1%
EBITDA-55.9-54.4-36.2-29.7-40.5
Net Income-75.2-77.9-64.2-69.1-77.0
Balance Sheet
Cash118.0160.5295.5306.1329.17.5%
Short Term Debt0.00.0136.57.25.9-17.2%
Long Term Debt122.3213.288.7133.1262.196.9%
Cash flow
Capex7.21.31.55.328.5440.6%
Ratios
Revenue growth-8.9%10.1%16.7%27.1%0.8%
EBITDA growth23.9%-2.6%-33.5%-17.9%36.4%
Gross Margin58.7%59.4%60.8%60.4%58.5%-1.9%
EBITDA Margin-36.5%-32.2%-18.4%-11.9%-16.0%-4.2%
SG&A, % of revenue66.9%64.2%57.5%54.6%54.8%0.1%
Net Income Margin-49.1%-46.2%-32.6%-27.6%-30.5%-2.9%
CAPEX, % of revenue4.7%0.8%0.7%2.1%11.3%9.2%
ROIC-44.7%-45.2%-22.0%-17.5%-18.2%-0.7%
ROE-62.8%-54.6%8.2%

PROS Holdings, Inc. ($PRO) key quoterly financial indicators

mln. $20Q120Q220Q320Q4 YoY change
P&L
Revenue66646261 18.1%-0.2%-4.1%-8.0%
EBITDA-18-12-13-10 ----
Net Income-23-17-19-18 ----
Balance Sheet
Cash252220322329 -7.6%-33.2%1.0%7.5%
Short Term Debt7756 -94.9%-72.5%-89.6%-17.2%
Long Term Debt134138250262 21.7%-36.5%88.8%96.9%
Ratios
Gross Margin56.7%59.3%59.9%58.4% -6.3%-3.8%1.1%1.3%
EBITDA Margin -27.0% -18.2% -20.3% -15.9% -12.7%-8.0%-9.6%-3.5%
Net Income Margin -34.3% -27.0% -30.7% -29.9% -4.1%0.4%-3.6%-3.7%

Peers in Application Software


Below you can find PROS Holdings, Inc. benchmarking vs. other companies in Application Software industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.

Top companies by Revenue growth, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
VirnetX Holding Corp ($VHC)--0.2%-95.9%34.9%355,942.4%
AudioEye, Inc. ($AEYE)-175.5%106.6%90.2%90.2%
Cloudera, Inc. ($CLDR)-57.2%42.6%28.9%65.5%
Integrated Ventures Inc ($INTV)----8.9%62.7%
Smartsheet Inc. ($SMAR)-64.3%66.1%59.7%52.4%
 
Median (92 companies)12.0%15.7%15.1%19.4%14.7%
PROS Holdings, Inc. ($PRO)-10.1%16.7%27.1%0.8%


Top companies by Gross margin, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
Aware, Inc. ($AWRE)90.3%94.6%92.3%89.7%92.8%
Alteryx, Inc. ($AYX)81.3%83.4%91.0%90.6%91.1%
Autodesk, Inc. ($ADSK)85.2%83.2%85.2%88.9%90.1%
Smith Micro Software, Inc. ($SMSI)73.2%77.9%83.5%90.9%89.9%
Cadence Design Systems, Inc. ($CDNS)85.9%87.8%87.9%88.6%88.6%
 
Median (89 companies)64.2%64.6%66.0%68.4%70.6%
PROS Holdings, Inc. ($PRO)58.7%59.4%60.8%60.4%58.5%


Top companies by EBITDA margin, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
VirnetX Holding Corp ($VHC)-1,837.2%-1,118.0%-40,379.4%-23,127.1%52.2%
j2 Global, Inc. ($JCOM)41.7%36.5%35.7%38.6%40.5%
Intelligent Systems Corporation ($INS)-5.4%-12.8%33.6%43.6%40.4%
Adobe Inc. ($ADBE)31.2%34.2%35.3%35.8%39.7%
SS&C Technologies Holdings, Inc. ($SSNC)34.9%37.9%27.7%38.2%38.3%
 
Median (89 companies)-4.7%-3.3%-3.3%4.5%7.7%
PROS Holdings, Inc. ($PRO)-36.5%-32.2%-18.4%-11.9%-16.0%


Top companies by CAPEX/Revenue, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
MicroStrategy Incorporated ($MSTR)0.5%0.8%1.4%2.1%234.8%
Integrated Ventures Inc ($INTV)--199.9%15.2%27.2%
Intelligent Systems Corporation ($INS)3.8%9.7%4.3%4.9%19.2%
LivePerson, Inc. ($LPSN)5.5%7.9%8.8%16.3%11.4%
Paycom Software, Inc. ($PAYC)13.3%13.7%10.6%12.6%11.2%
 
Median (87 companies)2.9%2.3%2.4%3.0%2.5%
PROS Holdings, Inc. ($PRO)4.7%0.8%0.7%2.1%11.3%


Top companies by ROIC, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
VirnetX Holding Corp ($VHC)-210.9%-256.8%-416.3%-247.2%137.3%
Manhattan Associates, Inc. ($MANH)99.3%102.5%80.9%71.7%53.4%
Citrix Systems, Inc. ($CTXS)16.1%16.7%25.2%29.8%33.5%
Sonic Foundry, Inc. ($SOFO)-18.1%-50.6%-786.4%-31.3%
Paycom Software, Inc. ($PAYC)75.4%51.1%47.5%47.5%28.7%
 
Median (92 companies)-9.2%-10.2%-9.8%-4.2%-1.8%
PROS Holdings, Inc. ($PRO)-44.7%-45.2%-22.0%-17.5%-18.2%


Top companies by Net Debt / EBITDA

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
Dropbox, Inc. ($DBX)--3.8x-2.4x1,341.0x
Avaya Holdings Corp. ($AVYA)--7.4x-77.9x
Alteryx, Inc. ($AYX)--2.5x6.1x32.2x
Five9, Inc. ($FIVN)-6.7x-8.6x7.3x5.3x17.6x
Synchronoss Technologies, Inc. ($SNCR)----11.6x
 
Median (54 companies)-0.9x-0.8x-0.7x0.4x0.2x


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