PROS Q1 2025 Earnings Report

PROS EPS Results

• Actual EPS: $0.13
• Consensus EPS: $0.12
• Beat/Miss: Beat by +$0.01
• One Year Ago EPS: $0.04

PROS Revenue Results

• Actual Revenue: $86.32 million
• Expected Revenue: $85.69 million
• Beat/Miss: Beat by +$628.00 thousand
• YoY Revenue Growth: +7.00%

PROS Announcement Details

• Quarter: Q1 2025
• Date: 5/1/2025
• Time: After Market Closes
• Conference Call Date: Thursday, May 1, 2025
• Conference Call Time: 4:45PM ET

PROS (NYSE:PRO) (NYSE:PRO) is a global software company specializing in AI-driven solutions for pricing optimization, sales guidance and revenue management. The company’s flagship platform leverages advanced analytics and machine learning to help businesses set dynamic prices, streamline quoting processes and improve margin performance. PROS solutions also support e-commerce initiatives by enabling personalized pricing and real-time inventory management.

Founded in 1985 and headquartered in Houston, Texas, PROS has expanded its footprint across North America, Europe and the Asia-Pacific region. Its customer base spans multiple industries, including airlines, manufacturing, distribution, high-tech and services, where the ability to rapidly adjust to market fluctuations and competitive pressures is critical. PROS has established itself as a trusted partner for both large enterprises and mid-market companies seeking to modernize their revenue operations.

In 2014, PROS completed its initial public offering and began trading on the New York Stock Exchange under the ticker symbol PRO. Since then, the company has continued to invest in research and development to enhance its AI capabilities and broaden its product suite. Key offerings include price optimization, sales configuration and CPQ (configure, price, quote) solutions, all delivered via scalable cloud architecture.

PROS is led by Chief Executive Officer Francisco Andres Reiner, who joined the company in 2016, and a leadership team with deep experience in enterprise software, data analytics and revenue management. Under their guidance, PROS has focused on driving innovation in pricing science to help clients increase revenue, improve profitability and deliver superior customer experiences.

PROS Q1 2025 Earnings Call Transcript

Key Takeaways

• Our team exceeded the high end of Q1 guidance with 14% YoY growth in trailing twelve month recurring calculated billings and a 123% improvement in free cash flow.
• PROS was named a leader in the Forrester Wave for CPQ and holds leader rankings in the Gartner Magic Quadrant and IDC MarketScape, underscoring our market leadership.
• Significant customer wins in Q1 span a Fortune 500 chemicals firm, Softcat, Grundfos, DigiKey, ADI Global Distribution, and two of the top seven US airlines, highlighting strong adoption across B2B and travel.
• Efficiency initiatives drove non-GAAP subscription gross margin up 160 bps to 81% and services gross margin up 460 bps to 13%, lifting overall gross margin to 70%.
• The company maintained full-year guidance, targeting 9% total revenue growth, $42–44 million in adjusted EBITDA, and $40–44 million in free cash flow.

Presentation

[Operator]

Welcome to the PROS Holdings first quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference call over to Belinda Overdeput, Senior Director of Investor Relations.

[Belinda Overdeput, Senior Director of Investor Relations at PROS Holdings]

Thank you, Operator. Good afternoon, everyone, and thank you for joining us. Our earnings press release, SEC filings, and a replay of today's call can be found on the Investor Relations section of our website at PROS.com. Our prepared remarks are also available on our website and will be replaced by the official transcript, which includes participant questions once available. With me on today's call is Andres Reiner, President and Chief Executive Officer, and Stefan Schulz, Chief Financial Officer. Please note that some of the commentary today will include forward-looking statements, including without limitation, those about our strategy, future business PROSpects and market opportunities, and our financial projections and guidance. Actual results could differ materially from such statements in our forecast. For more information, please refer to the risk factors described in our SEC filings. PROS assumes no obligation to update any forward-looking statements to reflect future events or circumstances.

[Belinda Overdeput, Senior Director of Investor Relations at PROS Holdings]

As a reminder, during the call, we will discuss non-GAAP metrics. Reconciliations between each non-GAAP measure and the most directly comparable GAAP measure to the extent available without unreasonable effort are available in our earnings press release. With that, I'll turn the call over to you, Andres.

[Andres Reiner, President and CEO at PROS Holdings]

Thank you, Belinda. Good afternoon, everyone, and thank you for joining us on today's call. I'm proud to share that our team delivered a strong start to 2025. The broader macroeconomic uncertainty has contributed to a complex selling environment, and our team has executed well through this. We exceeded the high end of our guidance ranges across all metrics, with sales performing ahead of our expectation across B2B and travel. Our trailing 12-month recurring calculated billings grew 14% year-over-year, our strongest performance on this metric in 10 quarters. At the same time, our team continued to focus on driving greater efficiency, resulting in an impressive 123% improvement in free cash flow year-over-year. Three key factors are fueling our momentum. First, the ongoing recognition of PROS as a market leader.

[Andres Reiner, President and CEO at PROS Holdings]

Second, the proven value of PROS solutions made even more critical by the need for visibility and adaptability in volatile markets. Third, accelerating adoption of AI-powered pricing and selling solutions. First, ongoing industry recognition continues to reinforce PROS' leadership position in the market. In Q1, we were named a leader in the Forrester Wave for configured price quote solutions, earning the highest possible scores across most of the evaluation criteria. This designation came on the heels of PROS receiving leader rankings in the Gartner Magic Quadrant and the IDC MarketScape for CPQ. Recognition from all three major analyst firms underscores our relentless passion for innovation that drives profitable growth for our customers. This continued industry recognition is reflected in the trust global enterprises are placing in PROS. I highlight three examples of new customer wins from Q1, among many others.

[Andres Reiner, President and CEO at PROS Holdings]

A Fortune 500 chemicals company selected PROS Smart CPQ to fuel AI-driven sales transformation, streamlining pricing and sales across global operations to enhance the omnichannel customer experience. Softcat, a leading IT services provider, selected PROS Smart CPQ with agreements to increase sales efficiency and support their growth strategy. Grundfos selected PROS Smart Price Optimization and Management to transform global pricing and future-proof their commercial strategy. The second driver of our momentum is continued market volatility. Volatility has been amplified by tariff announcements and evolving trade policies, which are on top of supply chain disruptions, changing customer demand patterns, and currency fluctuation. More and more businesses are realizing market volatility is here to stay, and that PROS' AI-powered pricing and selling solutions are mission-critical to mitigate risk and outperform the market. Our expansions in Q1 with Digi-Key and ADI Global Distribution are great examples of how companies are taking action.

[Andres Reiner, President and CEO at PROS Holdings]

Digi-Key is expanding their use of PROS by adopting Smart Price Optimization. Digi-Key's VP of Strategic Pricing, Stephane Bratu, said, and I quote, "PROS has been a strategic partner to us for many years. Now, as we adopt PROS' AI-powered price optimization, it's clear that real-time data-driven decisions are no longer a nice-to-have. They're business-critical. In a market defined by volatility, PROS helps us move faster, adapt with confidence, and lead with precision." ADI Global Distribution is enhancing its omnichannel pricing strategy by leveraging advanced capabilities, including our Gen IV Price Optimization, to deliver accurate real-time pricing as well as increased self-service conversion. In the airline industry, PROS empowers carriers to move from reactive to predictive. By identifying demand pattern changes a year in advance, PROS enables airlines to respond proactively and capture new revenue opportunities, which is critical in today's volatile market.

[Andres Reiner, President and CEO at PROS Holdings]

As airlines prioritize offer optimization and customer experience, the PROS platform delivers the comprehensive capabilities needed to create tailored offers and win in ever-changing market dynamics. We saw strong demand in Q1 in travel, including wins at two of the top seven U.S. carriers by domestic market share, among many others. Southwest Airlines selected PROS Offer Marketing to amplify brand visibility and capture more demand through enriched web experiences. Another domestic carrier expanded its partnership with PROS by selecting PROS Revenue Management Advantage, powered by our market-leading AI. PROS will enable this airline to improve demand forecast accuracy and drive a dynamic commercial strategy, positioning them to outperform in this market. The final key momentum driver I'll discuss is the market accelerating adoption of AI-powered solutions. As a pioneer and leader in AI, we're not just keeping pace with the market.

[Andres Reiner, President and CEO at PROS Holdings]

We're extending our leadership position by advancing autonomous AI to help organizations execute faster, smarter, and with greater precision. True to our long-standing principles, PROS takes a responsible approach to AI innovation, prioritizing transparency, ethics, compliance, and trust. By combining agentic AI with our predictive and prescriptive capabilities, we're enabling intelligent self-directed systems that augment employee productivity and improve customer experience. This unified approach positions PROS at the forefront of a market rapidly shifting towards AI-driven outcomes and towards a future where AI and people work in seamless synergy. We'll be bringing our vision to life at our upcoming Outperform Conference, where we'll showcase our latest AI innovations and demonstrate how the combination of agentic, predictive, and prescriptive AI can drive measurable business outcomes. Two of many examples are PROS Sales Agent and PROS Rebate Agent.

[Andres Reiner, President and CEO at PROS Holdings]

The PROS Sales Agent assists sales reps in finding the right products for the right customers by serving up tailored product recommendations based on conversational input, while also keeping deals moving forward with real-time actions to overcome stalled moments in the sales process. PROS Rebate Agent uses AI to autonomously create powerful incentives that drive optimized product mix and volumes while improving customer experience. Before I close, I'd like to share an update on my planned retirement. On behalf of the board, I'm excited to announce that Jeff Cotten will join PROS on June 2nd as our next President and CEO. Jeff is a high-impact leader with a proven track record of driving growth and operational excellence at scale and fostering strong customer-centric cultures. His people-first mindset, passion for innovation, and deep commitment to customer value align seamlessly with our strategy and the culture we've built at PROS.

[Andres Reiner, President and CEO at PROS Holdings]

I've enjoyed getting to know Jeff, and I'm confident the future of PROS under his leadership. We have an amazing experienced leadership team, the best people in technology, and our value proposition has never been more relevant. We're well-positioned to capitalize on our large market opportunity, and I look forward to supporting Jeff on a successful transition. Finally, I would like to thank our global team for their passion and dedication to PROS, our customers, and our communities. I'd also like to thank our customers, partners, and shareholders for their continued support of PROS. With that, I will now turn the call over to Stefan to cover our financial performance and outlook.

[Stefan Schulz, CFO at PROS Holdings]

Thank you, Andres, and good afternoon, everyone. I'm also very proud of how well our team is executing, and this is reflected in our first quarter results. We saw continued momentum in our go-to-market functions, including improved bookings linearity for the third consecutive quarter and a year-over-year reduction in sales cycle times of over 10%. Also, as Andres mentioned, our product teams continue to deliver new innovations while also improving our overall efficiency. We delivered positive free cash flow of $1.1 million in the quarter, a $6 million improvement, despite Q1 typically being our seasonally high cash use quarter. We are continuing to make progress towards our long-term goals. With that, I'll provide more detail on our results for the first quarter. Subscription revenue was $70.8 million, up 10% year-over-year, and total revenue was $86.3 million, up 7% year-over-year, both exceeding the guidance ranges.

[Stefan Schulz, CFO at PROS Holdings]

Our first quarter recurring revenue was 85% of total revenue, an increase from 84% reported in Q1 of last year. Our trailing 12-month gross revenue retention continues to be better than 93%. Recurring calculated billings in the first quarter increased 17% year-over-year and 14% for the trailing 12 months, exceeding our expectations. We focus primarily on our trailing 12-month quarterly calculated billings metric, as the quarterly metric can vary due to the timing of billings. For the year, we expect Q1 and Q3 to be our stronger billings quarters. Our non-GAAP subscription gross margin was 81% in the first quarter, an improvement of over 160 basis points year-over-year. We also delivered 13% non-GAAP services gross margin in the first quarter, an improvement of over 460 basis points year-over-year. With these improvements, our overall non-GAAP gross margin increased to 70%, an improvement of over 270 basis points.

[Stefan Schulz, CFO at PROS Holdings]

Our teams continue to find ways to optimize our costs, and this increased efficiency is reflected in the progress we have made to our gross margins over the last several quarters. Our adjusted EBITDA was $8.7 million in the first quarter, exceeding guidance and a 90% improvement over last year. Our free cash flow was $1.1 million, an improvement of $6 million over last year. From a balance sheet perspective, we exited the first quarter with $170 million of cash and investments. Our first quarter non-GAAP earnings per share was $0.13 per share, also exceeding guidance. Now, turning to our forward-looking guidance, for the second quarter, we expect subscription revenue to be in the range of $72 million-$72.5 million, representing 10% growth year-over-year at the midpoint. We expect total revenue to be in the range of $87 million-$88 million, representing 7% growth year-over-year at the midpoint.

[Stefan Schulz, CFO at PROS Holdings]

We expect adjusted EBITDA of between $4 million and $5 million. As planned, we are increasing investments in selling and marketing in the second quarter, including our upcoming Outperform Conference. Using our non-GAAP estimated tax rate of 22%, we anticipate non-GAAP earnings per share to be in the range of $0.04-$0.06 per share based on an estimated 48.2 million diluted weighted average shares outstanding. For the full year, we are maintaining all of our existing guidance ranges. We expect subscription ARR of between $308 million-$311 million, representing 10% growth year-over-year. We anticipate subscription revenue to be in the range of $294 million-$296 million, representing 11% growth year-over-year. We expect total revenue to be in the range of $360 million-$362 million, representing 9% growth year-over-year.

[Stefan Schulz, CFO at PROS Holdings]

We expect adjusted EBITDA to be in the range of $42-$44 million, representing an improvement of $13 million year-over-year, and free cash flow in the range of $40-$44 million, an improvement of $15.8 million year-over-year. As I noted last quarter, we continue to see accelerating growth in subscription revenue for the rest of the year from deals that were previously booked. In addition, we see a similar trend for services revenue in the second half of 2025. In closing, I would like to thank our global team and our customers for their continued support of PROS. We also thank you, our shareholders, for your support, and we look forward to speaking with you at our upcoming events. I will now turn the call back over to the operator for questions. Operator.

[Operator]

Thank you. At this time, we will be conducting a question-and-answer session. If you would like to ask a question, please press Star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing these star keys. One moment, please, while we pull for questions. Our first question comes from the line of Scott Berg with Needham & Company. Please proceed with your questions.

[Scott Berg, Senior Analyst at Needham & Company]

Hi, everyone. Nice quarter. Andres, congrats on, I guess, what's your last full quarter as a public company CEO of PROS. Nice results here.

[Andres Reiner, President and CEO at PROS Holdings]

Thank you, Scott.

[Scott Berg, Senior Analyst at Needham & Company]

Yeah. Both yourself and Stefan certainly kind of spoke and alluded to a better bookings environment here the last couple of quarters. It seems like it's been increasing or at least improving on a couple of different levels. I guess if you break that down, B2B has been reasonably strong anyways over the last couple of years. What are you all seeing in the travel side here as you kind of proclaimed it was back last quarter? Help us understand where that momentum is and how far away are you from a kind of normal bookings environment in that segment.

[Andres Reiner, President and CEO at PROS Holdings]

Yeah, Scott, great question. I would say, look, we've continued to see improvements in travel, Q3, Q4, and Q1 again. We're seeing that the areas that we've been innovating around the future of offer optimization is truly resonating. I think airlines, as you know, are moving more to ensuring they're marketing the right offers and driving demand through their digital channels and improving those digital experiences. We've been very laser-focused on those innovations, and we're seeing them resonate. I would say Q1 was very strong performance on the travel side. I mentioned that we won two of the top seven US carriers, and we're seeing overall continued momentum. We feel travel will definitely contribute this year. It was good to see increasingly improvement Q3 to Q4, now to Q1. Overall, B2B continues to perform very well.

[Andres Reiner, President and CEO at PROS Holdings]

I would say from a sales execution, we're executing very, very well, our bookings linearity and how we're driving better rep productivity and continued improvements to our sales cycle times. I'm very excited to see how we're doing.

[Scott Berg, Senior Analyst at Needham & Company]

Understood. Helpful. As you think of the macro today, it's changed a lot since last time. I think you and I spoke, Andres, in late February. How is the current macro helping or hindering your business? Historically, dynamic changes have been helpful, especially at least on your B2B side. Are you seeing similar traction, or are customers actually kind of maybe stopping and reevaluating in this environment?

[Andres Reiner, President and CEO at PROS Holdings]

Yeah. That's a great question. I would tell you, look, there is no doubt this is a complex selling environment. I will say that our solutions are really mission-critical for these types of environments. What we're seeing is a lot of companies really accelerating initiatives, both on the B2B and on the travel. A lot is the dynamics of the market. As I talked about in my prepared remarks, the level of volatility has increased right to the highest level we've seen it. I talked about this a lot, that in my view, volatility is here to stay, and a lot of companies are realizing that. The nature of having a real-time AI-powered platform to better understand how demand patterns are changing and how you're driving a more self-serve buying motion and selling motion is really critical.

[Andres Reiner, President and CEO at PROS Holdings]

I would say overall, we're very pleased with the demand. So far, we haven't seen any impact. I would say I spoke in the call. We felt Q1, we exceeded our expectation both in travel and B2B, but are cognizant of the environment and making sure that customers understand the value and why now the risk that we help support and how we help them drive better efficiency and better precision in execution. I will tell you that from a demand perspective, we saw an increase in inbound demand and definitely a significant increase in SDR-based meetings booked, which actually yielded to some of our results in Q1.

[Scott Berg, Senior Analyst at Needham & Company]

Excellent. Congrats on the quarter, and looking forward to seeing it at the conference in a couple of weeks.

[Andres Reiner, President and CEO at PROS Holdings]

Look forward to it, Scott. Thank you.

[Operator]

Thank you. Our next question comes from the line of Zane Meehan with KeyBanc Capital Markets. Please proceed with your question.

[Zane Meehan, Associate Analyst of Equity Research at KeyBanc Capital Markets Inc.]

Great. Thank you for taking my question. I'm on for Jason Salino today. Stefan, you talked about the improvement that you've seen in gross margins and pointed to efficiencies that you all have been able to obtain. Maybe you can talk about what those efficiencies are and how that's driving the better gross margin.

[Stefan Schulz, CFO at PROS Holdings]

Yeah, sure. Zane, I think I'll start with subscription because that's obviously the biggest driver. Our cloud team and our engineering teams have really worked over the last couple of three years, actually, on how our solutions can be more efficient at providing the outcomes that our customers are looking for. They've been very successful at doing that. One of the things that we offer is real-time results. Historically, that has been a big consumer of compute. They've been able to work on ways to deliver that real-time nature of a response by using less compute. Historically, we would have redundancies that we've now been able to eliminate and therefore save the cost. That's what's helped a significant amount among a number of other initiatives that the cloud team has undertaken.

[Stefan Schulz, CFO at PROS Holdings]

Similarly, on the services side, one of the areas that we've been focusing on is a lot of automation. Andres talks a lot about AI and how AI is one of our three strategic pillars. Our services team has really been on the forefront of using AI to help with the implementation, to help with data gathering and data sorting. That's been a big driver for our efficiency and our benefits on the services side.

[Zane Meehan, Associate Analyst of Equity Research at KeyBanc Capital Markets Inc.]

Okay. Awesome. Makes sense. Following up on Scott's question on macro, I mean, obviously seeing that volatility in real time, and just curious if you're seeing any customers that are maybe delaying implementations as a result or maybe not landing as big as you would have expected, just kind of anything you can speak to on demand and customer behavior. If you could break out between B2B and travel.

[Andres Reiner, President and CEO at PROS Holdings]

Yeah. Great question. I would say in general, we haven't seen any demand pattern changes. Whether it be on the ASB, we haven't seen any change, whereas ASBs have been fairly consistent. Overall, I would say, look, if anything, we're seeing companies that want to drive acceleration of implementations. We have seen very strong demand on the CPQ side as well. I think a lot of companies are leaning into automating and self-serve of commerce and having real precision to market changes in real time, where before they didn't have that visibility. So far, I would tell you, haven't seen any changes. We're continuing to see strong market demand.

[Zane Meehan, Associate Analyst of Equity Research at KeyBanc Capital Markets Inc.]

Great. Thanks for taking my question. Andres, congrats on retirement.

[Andres Reiner, President and CEO at PROS Holdings]

Thank you.

[Operator]

Thank you. Our next question comes from the line of Parker Lane with Stifel. Please proceed with your question.

[Matthew Kickert, Equity Research Associate at Stifel]

Hi, this is Matthew Kickert for Parker. Thank you for taking my questions. Congrats again to Andres on the retirement and the new successor. I want to talk.

[Andres Reiner, President and CEO at PROS Holdings]

Thank you, Matthew.

[Matthew Kickert, Equity Research Associate at Stifel]

You're welcome. I want to talk a little bit about the revenue guidance. If you could break down the split between the net new customers and expansion between current customers for the 2025 guidance, and then also more broadly what that looks like on your path to the rule of 40.

[Stefan Schulz, CFO at PROS Holdings]

Yeah. I'll take that, Matthew. If you look at the last, call it, 12 months or so, we're averaging about a 40/60 split of 40 new to 60 existing. We really don't feel like that's going to change materially going forward. We feel like that's going to be a fairly consistent mix somewhere between 50/50, 40/60. Here lately, it's been more 40/60. We expect that to continue. I think having a healthy balance is very important. Being able to go out and earn new customers is an important muscle to keep and retain, as is learning how to and doing a good job of staying with your customers and expanding that relationship is also very important. We really work hard to make sure we're able to do both.

[Stefan Schulz, CFO at PROS Holdings]

I think where you're seeing it to a little bit of a degree of having a little bit of an impact is our services, at least in the first half of this year, have been a little lower than what we would have seen in the past. We think that's a good thing because that's indicative of the efficiencies that our services team have driven, as I mentioned on the previous question. It is a big driver for time to value for our customers. That's kind of how we're seeing the rest of the year play out as we look forward to 2025.

[Matthew Kickert, Equity Research Associate at Stifel]

Okay. Thank you. Secondly, the bookings number continues to trend in the right direction. This comes on the heels of making go-to-market changes over the past 12 months. Are there any specific changes to the go-to-market that you think are maybe contributing to that? What have you learned so far after making those go-to-market changes?

[Andres Reiner, President and CEO at PROS Holdings]

Yeah. Overall, we've continued to see, as I talked about, a real focus is on sales execution and ensuring that we have more reps executing every quarter. I would say every metric that you look at, whether it's sales cycle time, has improved. If you look at number of reps driving productivity in a quarter, it's improved. If you look at linearity, monthly linearity within a quarter, those areas have improved. I'll also say there's been a lot of focus on driving improvements in our marketing function and demand gen, and we're also seeing improvements in those areas. I think all of the programs that have been put in place, they're continuing to drive improvement. We're also driving higher tenure within our sales team, which we expect will continue to drive improvement. Really proud of the team, how they're executing.

[Andres Reiner, President and CEO at PROS Holdings]

We expect the programs that we put in place mid-last year are definitely paying dividends, and we expect those to continue to drive success this year.

[Matthew Kickert, Equity Research Associate at Stifel]

Terrific. Thank you.

[Andres Reiner, President and CEO at PROS Holdings]

Great.

[Operator]

Thank you. Our next question comes from the line of Nehal Chokshi with Northland Capital Markets. Please proceed with your question.

[Nehal Chokshi, Senior Research Analyst at Northland Capital Markets]

Thank you. Congratulations, Andres, on your planned retirement.

[Andres Reiner, President and CEO at PROS Holdings]

Thank you.

[Nehal Chokshi, Senior Research Analyst at Northland Capital Markets]

You're welcome. As well as, it sounds like a good quarter here, relative to expectations, so that's great as well. A couple of questions here to try to bridge between the positive commentary regarding demand and guidance, one on a quarterly basis and one on a full-year basis. Let's start with the full-year basis. Given the highlighted demand drivers of industry recognition and market volatility being positive drivers for PROS, why is, and what sounds like, third quarter in a row of improved linearity, improved sales cycle times, all these are positive vectors, but it's just leading to a reiteration of full-year guidance. Can you help bridge why that is here?

[Andres Reiner, President and CEO at PROS Holdings]

Yeah.

[Stefan Schulz, CFO at PROS Holdings]

Go ahead. Go ahead, Andres.

[Andres Reiner, President and CEO at PROS Holdings]

Yeah. Just in general, I would tell you, look, the way that we approach guidance hasn't changed, but we have to understand what everyone else is seeing in the market, and we don't want to get ahead of ourselves. What I would tell you is we have more confidence in the full-year guidance through Q1, and we have confidence how we're executing. Given the overall macro risk, we have to take that into consideration with our guidance. We feel very good about the guidance that we provided and the confidence that we have in executing to it. We felt it was prudent to drive guidance the way we approached it.

[Nehal Chokshi, Senior Research Analyst at Northland Capital Markets]

Okay. Great. Then zooming in on the quarter here, Stefan, why are you guiding to a $4 million Q to Q with just a bit of decline on a $2.5 million Q to Q revenue increase? Typically, just a bit improves Q to Q going into the June quarter. Your insight here would be helpful.

[Stefan Schulz, CFO at PROS Holdings]

Yeah, sure. First of all, the second quarter is a typically high-spend quarter for us. We do have our Outperform conference, and that does represent a bit of a drag on the second quarter. We do not see those types of expenses as we go throughout the rest of the year. We do see a bit of relief on expenses in Q3 and Q4. We did see a sequential improvement a year ago, to your point, from Q1 to Q2 from an EBITDA perspective. We had some benefits from some incentive comp that actually drove some of that a year ago. You may recall our first half of last year was not as strong because of some of the challenges in travel that Andres talked about earlier. We are seeing the exact opposite of that now.

[Stefan Schulz, CFO at PROS Holdings]

We're not seeing some of the relief in our expense structure this year that we did last year, but I would say that's a very good thing. That's a bit unique to what happened last year. This year is more reflective of what we would typically see from an EBITDA perspective. As the high spend from the second quarter dissipates and we get into the second half of the year, you'll see that EBITDA expand again like you did last year.

[Nehal Chokshi, Senior Research Analyst at Northland Capital Markets]

That's great. Thank you very much, Stefan. Congrats, everybody.

[Andres Reiner, President and CEO at PROS Holdings]

Thank you.

[Operator]

Thank you. Ladies and gentlemen, we have reached the end of the question and answer session. I would like to turn the call back to Belinda Overdeput for closing remarks.

[Belinda Overdeput, Senior Director of Investor Relations at PROS Holdings]

Thank you for listening to today's call. We look forward to speaking with you at conferences and events this quarter. We will be attending the virtual Needham Technology Media and Consumer Conference on May 8th, the Craig Hallum Institutional Investor Conference on May 28th in Minneapolis, the Stifel Cross-Sector 101 Conference on June 3rd in Boston, and the Baird Consumer Tech and Services Conference on June 4th in New York City. I'd also like to remind investors that we are hosting an investor Q&A session on May 14th at our upcoming Outperform with PROS 2025 conference at the Cosmopolitan in Las Vegas. In-person registration for the entire conference is available at PROS.com/outperform. A live webcast of the investor session will be available for virtual attendees via the investor relations section of our website at PROS.com. If you have any questions following today's call, please contact us at ir@PROS.com.

[Belinda Overdeput, Senior Director of Investor Relations at PROS Holdings]

Thank you and goodbye.

[Operator]

Ladies and gentlemen, this concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.

Participants

Executives

• Andres Reiner, President and CEO
• Stefan Schulz, CFO
• Belinda Overdeput, Senior Director of Investor Relations

Analysts

• Nehal Chokshi, Senior Research Analyst at Northland Capital Markets
• Matthew Kickert, Equity Research Associate at Stifel
• Scott Berg, Senior Analyst at Needham & Company
• Zane Meehan, Associate Analyst of Equity Research at KeyBanc Capital Markets Inc.