Yahoo Finance Pros Holdings Inc (PRO) (Q1 2024) Earnings Call Transcript Highlights: Strong Revenue Growth ...
Subscription Revenue: $64.3 million, up 15% year-over-year.
Total Revenue: $80.7 million, up 10% year-over-year.
Adjusted EBITDA: $4.6 million, nearly 300% improvement year-over-year.
Non-GAAP Subscription Gross Margin: 79%, improved by over 140 basis points year-over-year.
Non-GAAP Services Gross Margin: 9%, improved by over 1,500 basis points year-over-year.
Overall Non-GAAP Gross Margin: 67%, improved by 315 basis points year-over-year.
Free Cash Flow: Burn of $4.9 million, roughly in line with the previous year.
Non-GAAP Earnings Per Share (EPS): $0.04 per share, exceeding guidance.
Q2 Guidance - Subscription Revenue: Expected to be between $64 to $64.5 million.
Q2 Guidance - Total Revenue: Expected to be between $80.5 million to $81.5 million.
Q2 Guidance - Adjusted EBITDA: Expected to be between $1 million and $2 million.
Full Year Guidance - Subscription Revenue: Raised to $263.5 million to $265.5 million.
Full Year Guidance - Total Revenue: Raised to $332.5 million to $334.5 million.
Full Year Guidance - Adjusted EBITDA: Expected to be between $17 million to $20 million.
Release Date: May 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Subscription revenue increased by 15% year over year, and total revenue grew by 10%, both exceeding guidance ranges.
Adjusted EBITDA improved nearly 300% year over year, reflecting strong operational efficiency and focus on profitability.
Non-GAAP subscription gross margin improved by over 140 basis points year over year, contributing to an overall non-GAAP gross margin increase of 315 basis points.
Strong customer wins and expansions across various industries, including new customers like Air India and expansions with companies like Hyatt and Air Baltic.
Successful launch of PROS copilot for sales plug-in in partnership with Microsoft, enhancing the PROS platform's integration and functionality.
Negative Points
Calculated billings in the first quarter increased only 3% year over year, showing modest growth.
Expectation of flat services revenue in Q2 due to outsized growth in the same quarter of the previous year, impacting total revenue growth rate.
Free cash flow burn in the first quarter was $4.9 million, roughly in line with the previous year, indicating ongoing cash burn.
Guidance for Q2 adjusted EBITDA shows only a slight improvement year over year, suggesting modest profitability growth.
Concerns about the back-end loaded nature of the fiscal year, with stronger performance expected in the latter half, which may introduce variability and uncertainty in financial performance.
Q & A Highlights
Q: Hi, everyone, and congrats on the nice quarter and like through the profitability improvements done nice steady year over year trend there. Andreas, I wanted to ask a question. I actually feel kind of weird about I'm asking is it's on your new copilot functionality that you that you announced. It's only where it because I want to ask you how you monetize AI, or how you plan to monetize new AI technology, Knowing that you've been monetizing the eye for obviously a couple of decades now, but how should we think about this innovation being infused into the platform, is there an opportunity to step up your RPU per customers and costs are or is it really more about embedding that functionality to create further differentiation in the front? A: Yes, great question, Scott. Look, we're very excited about the sales scope, quality innovation because I think Microsoft is changing the way that sales reps will work in the future and bringing this type of technology really brings them the best AI possible to continuously respond to customers. So for us to be embedded into these workflows and then being able to help reps quickly respond to prospects with the right e-mail response with the right quotes powered by PROS creates a significant differentiation in the market. So I think this of one and four months it adds a lot of differentiation for our platform and the ability to now extend our, you know, e-mail threats all the way through being able to dynamically create a quote, powered by PROS and in a lot more adoption of our solution in the market. So see anybody that buys sales copilot can now embed Pro CPQ and have a high-powered deals right there in their fingerprints. So we see this as a big opportunity to continue to innovate with Microsoft and something that helps us drive our strategy of landing more deals and realizing value and driving more expansions.
Q: This is Matthew Kikkert for Parker. Thank you for taking my questions. First, the last call you mentioned a 28% reduction in new logo sales cycle times for B2B. Are you continuing to see improvements in that metric? And what do you believe is driving that? A: Yes. So I would say it's been consistent. So we're continuing to see, you know, the improvement remain the same. So no changes, you know. And so right now, no real changes from what we're seeing. We're seeing them continue to maintain.
Q: Hey, guys. Thanks for taking my question. I guess maybe starting off on travel. I think last quarter you called out you have started to see some nice momentum in that business, and it seems like that's continued this quarter. Could you maybe frame how the recovery path has trended relative to expectations? And then when looking at the rest of the year how are you thinking about the contribution from new logos versus existing customer expansion? A: Yes, great questions. So I would say, look, as travel continues to drive improvements, I would say you know, typically in the year, you know, early on it, travel tends to be more back-end loaded or loaded in the year, but we are seeing good wins both in net new and existing spent expansions, but we're still seeing B2B drive that growth. So make no mistake about that. B2B is continuing to drive the growth. Travel is continuing to improve, but we expect that similar to last year back end, it's stronger than the front end overall in terms of our sales cycle times in travel, they're still not back to the pre-COVID years. But from a deal growth, we're seeing very good deal of growth in B2B. We're seeing better improvement on deal cycle times and continuing to see that as a main growth driver for the business.
Q: Yes, hi. Thanks for taking my questions today. Andres. Can you talk a little bit more just about the sales productivity and Dom bookings that you had in Q1. You know, it does look like the year is a little bit more back-end loaded than it was when you gave guidance three months ago? And Dom, maybe if you can just provide a little insight into the productivity in Q1? A: Yes. So overall, we're seeing pretty consistent on sales cycle times. I did say we've seen some improvement from a B2B perspective, but overall, it's remained on, you know, pretty pretty similar in terms of how the year is turning out is turning out pretty much how we expected side. I wouldn't say we've always been a back-end loaded. You know, back half of the year is stronger than the front half of the year. The year is turning out exactly how we predicted. So no changes there. And overall, in terms of our efficiencies and you know, in our win rates continue to improve.
Q: Hi, Andreas and Stefan. Thanks for taking my questions and congrats on a solid quarter again. Maybe first on a I can give us some color on how your Gen four AI. has been resonating with customers and what's the adoption rate right now? And then more broadly, how should we think about whether generative I would change the playing field. Obviously, you've now integrated with copilot, and you've talked a lot about we are the opportunities with Microsoft copilot for sales. How should I think about maybe future plans on leveraging Genesis AI capabilities in into your portfolio? A: Yes. Great questions. So in terms of Gen four AI, I think has been transformative for the market. I would tell you that all the deals we're winning, where there's less fraud or we're seeing an expansion at cargo lux or any of the deals I talked about, you know, the Gen four technology is a very big leap compared to or Gen three technology, and it's resonating really well, especially in these type of markets where you have high volatility, you can't go with that typical segmentation based on pure historical data and as many companies have in the marketplace. So that continues to play a big role. Generative AI. one of the really transformative parts of or AI platform is our ability to and fumble multiple algorithms and L. and lands in Q2, including our you know, the OpenEye technology that we're using with Microsoft. It allows us to leverage those for the right use cases. So think of a sales, assistant type of technology, pricing, assistant type of technology, those are where we're leveraging LLM.'s technology and we'll continue to do so as well as many aspects of our business. But it's a combination of many types of algorithms that we're bringing to bring a higher level of intelligence as to our solution and continue to transform our, you know, the AI space. So I think we're very excited about being able to leverage all of these different types of AI algorithms for the right problem areas, and we'll continue to innovate very closely with Microsoft, especially on the generative AI front.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
