UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

___________________________________________________________________________

FORM 10-Q

~~___________________________________________________________________________~~_________________________________________________________________________


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June 30, 2022~~March 31, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number: 001-33554

___________________________________________________________________________

PROS HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

__________________________________________________________________________


Delaware						76-0168604
(State of Incorporation)						(I.R.S. Employer Identification No.)

3200 Kirby Drive, Suite 600 77098
Houston TX
(Address of Principal Executive Offices) (Zip Code)
(713) 335-5151
(Registrant's telephone number, including area code)
0 0 0 0
(Former address, if changed since last report)

3200 Kirby Drive, Suite 600

77098

Houston

(Address of Principal Executive Offices)

(Zip Code)

(713)

335-5151

(Registrant's telephone number, including area code)

(Former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Common stock $0.001 par value per share

PRO

New York Stock Exchange

Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer", "smaller reporting company", and ~~"smaller reporting~~"emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated Filer	☐
Non-Accelerated Filer	☐ ~~(do not check if a smaller reporting company)~~	Smaller Reporting Company	☐
Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the registrant's Common Stock, $0.001 par value, was ~~45,305,508~~46,044,260 as of ~~July~~April 25, ~~2022.~~2023.

Table of Contents

PROS Holdings, Inc.

Form 10-Q

For the Quarterly Period Ended ~~June 30, 2022~~March 31, 2023

Table of Contents


		Page
PART I. FINANCIAL INFORMATION
Item 1.	Interim Condensed Consolidated Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Comprehensive Loss	5
	Condensed Consolidated Statements of Cash Flows	6
	Condensed Consolidated Statements of Stockholders' (Deficit) Equity	7
	Notes to Condensed Consolidated Financial Statements	98
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	1815
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	2522
Item 4.	Controls and Procedures	2522

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	2623
Item 1A.	Risk Factors	2623
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2723
Item 3.	Defaults Upon Senior Securities	2723
Item 4.	Mine Safety Disclosure	2723
Item 5.	Other Information	2723
Item 6.	Exhibits	2823
Signatures		2925

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended ("Exchange Act"). All statements in this report other than historical facts are forward-looking and are based on current estimates, assumptions, trends, and projections. Statements which include the words "believes," "seeks," "expects," "may," "should," "intends," "likely," "targets," "plans," "anticipates," "estimates," or the negative version of those words and similar expressions are intended to identify forward-looking statements. Numerous important factors, risks and uncertainties affect our operating results, including, without limitation, those described in our Annual Report on Form 10-K and in this Quarterly Report on Form 10-Q, and could cause our actual results to differ materially, from the results implied by these or any other forward-looking statements made by us or on our behalf. You should pay particular attention to the important risk factors and cautionary statements described in the section of our Annual Report on Form 10-K entitled "Risk Factors" and the section of this Quarterly Report on Form 10-Q entitled "Risk Factors." You should also carefully review the cautionary statements described in the other documents we file with the Securities and Exchange Commission, specifically the Annual Report on Form 10-K, all Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

You should not rely on forward-looking statements as predictions of future events, as we cannot guarantee that future results, levels of activity, performance or achievements will meet expectations. The forward-looking statements made herein are only made as of the date hereof, and we undertake no obligation to publicly update such forward-looking statements for any reason.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

PROS Holdings, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share and per share amounts)

(Unaudited)


		June 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Assets:	Assets:					Assets:
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	215,178	$	227,553	Cash and cash equivalents	$	192,376	$	203,627

Trade and other receivables, net of allowance of $1,044 and $1,206, respectively		34,415		40,581
Trade and other receivables, net of allowance of $722 and $609, respectively						Trade and other receivables, net of allowance of $722 and $609, respectively	45,787		48,178
Deferred costs, current	Deferred costs, current	5,961		5,772		Deferred costs, current	6,433		6,032
Prepaid and other current assets	Prepaid and other current assets	11,935		9,623		Prepaid and other current assets	12,149		9,441

Total current assets	Total current assets	267,489		283,529		Total current assets	256,745		267,278

Property and equipment, net	Property and equipment, net	27,341		30,958		Property and equipment, net	25,442		25,012
Operating lease right-of-use assets	Operating lease right-of-use assets	20,195		25,732		Operating lease right-of-use assets	14,797		17,474
Deferred costs, noncurrent	Deferred costs, noncurrent	9,189		9,510		Deferred costs, noncurrent	7,938		8,764
Intangibles, net	Intangibles, net	22,046		27,618		Intangibles, net	16,046		17,851
Goodwill	Goodwill	107,334		108,133		Goodwill	107,717		107,561

Other assets, noncurrent	Other assets, noncurrent	8,156		9,003		Other assets, noncurrent	8,872		9,012
Total assets	Total assets	$	461,750	$	494,483	Total assets	$	437,557	$	452,952
Liabilities and Stockholders' (Deficit) Equity:	Liabilities and Stockholders' (Deficit) Equity:					Liabilities and Stockholders' (Deficit) Equity:
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable and other liabilities	Accounts payable and other liabilities	$	5,978	$	4,034	Accounts payable and other liabilities	$	4,197	$	7,964
Accrued liabilities	Accrued liabilities	12,697		12,631		Accrued liabilities	13,356		12,854
Accrued payroll and other employee benefits	Accrued payroll and other employee benefits	22,862		31,994		Accrued payroll and other employee benefits	15,624		23,797
Operating lease liabilities, current	Operating lease liabilities, current	7,393		8,457		Operating lease liabilities, current	5,461		7,662
Deferred revenue, current	Deferred revenue, current	108,207		97,713		Deferred revenue, current	122,192		108,659

Total current liabilities	Total current liabilities	157,137		154,829		Total current liabilities	160,830		160,936
Deferred revenue, noncurrent	Deferred revenue, noncurrent	7,278		8,553		Deferred revenue, noncurrent	6,161		8,298
Convertible debt, net	Convertible debt, net	289,033		288,287		Convertible debt, net	290,152		289,779
Operating lease liabilities, noncurrent	Operating lease liabilities, noncurrent	32,327		38,034		Operating lease liabilities, noncurrent	27,135		28,184
Other liabilities, noncurrent	Other liabilities, noncurrent	1,065		1,196		Other liabilities, noncurrent	1,247		1,228
Total liabilities	Total liabilities	486,840		490,899		Total liabilities	485,525		488,425
Commitments and contingencies (see Note 10)		0
Commitments and contingencies (see Note 9)						Commitments and contingencies (see Note 9)
Stockholders' (deficit) equity:	Stockholders' (deficit) equity:					Stockholders' (deficit) equity:
Preferred stock, $0.001 par value, 5,000,000 shares authorized; none issued	Preferred stock, $0.001 par value, 5,000,000 shares authorized; none issued	—		—		Preferred stock, $0.001 par value, 5,000,000 shares authorized; none issued	—		—
Common stock, $0.001 par value, 75,000,000 shares authorized; 49,928,002 and 49,201,265 shares issued, respectively; 45,247,279 and 44,520,542 shares outstanding, respectively		50		49
Common stock, $0.001 par value, 75,000,000 shares authorized; 50,711,964 and 50,318,726 shares issued, respectively; 46,031,241 and 45,638,003 shares outstanding, respectively						Common stock, $0.001 par value, 75,000,000 shares authorized; 50,711,964 and 50,318,726 shares issued, respectively; 46,031,241 and 45,638,003 shares outstanding, respectively	51		50
Additional paid-in capital	Additional paid-in capital	569,914		546,693		Additional paid-in capital	596,805		590,475
Treasury stock, 4,680,723 common shares, at cost	Treasury stock, 4,680,723 common shares, at cost	(29,847)		(29,847)		Treasury stock, 4,680,723 common shares, at cost	(29,847)		(29,847)
Accumulated deficit	Accumulated deficit	(559,698)		(508,652)		Accumulated deficit	(609,900)		(590,898)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(5,509)		(4,659)		Accumulated other comprehensive loss	(5,077)		(5,253)

Total stockholders' (deficit) equity	Total stockholders' (deficit) equity	(25,090)		3,584		Total stockholders' (deficit) equity	(47,968)		(35,473)
Total liabilities and stockholders' (deficit) equity	Total liabilities and stockholders' (deficit) equity	$	461,750	$	494,483	Total liabilities and stockholders' (deficit) equity	$	437,557	$	452,952

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

PROS Holdings, Inc.

Condensed Consolidated Statements of Comprehensive Loss

(In thousands, except per share data)

(Unaudited)


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2022		2021		2022		2021				2023		2022
Revenue:	Revenue:									Revenue:
Subscription	Subscription	$	50,386	$	44,224	$	99,151	$	86,872	Subscription		$	55,969	$	48,765
Maintenance and support	Maintenance and support	7,249		8,570		15,104		18,244		Maintenance and support		5,712		7,855
Total subscription, maintenance and support	Total subscription, maintenance and support	57,635		52,794		114,255		105,116		Total subscription, maintenance and support		61,681		56,620

Services	Services	10,727		9,607		20,599		18,663		Services		11,501		9,872
Total revenue	Total revenue	68,362		62,401		134,854		123,779		Total revenue		73,182		66,492
Cost of revenue:	Cost of revenue:									Cost of revenue:
Subscription	Subscription	13,746		13,589		27,525		27,390		Subscription		14,093		13,779
Maintenance and support	Maintenance and support	1,988		2,157		4,155		4,415		Maintenance and support		2,282		2,167
Total cost of subscription, maintenance and support	Total cost of subscription, maintenance and support	15,734		15,746		31,680		31,805		Total cost of subscription, maintenance and support		16,375		15,946

Services	Services	11,907		10,658		23,322		21,091		Services		13,167		11,415
Total cost of revenue	Total cost of revenue	27,641		26,404		55,002		52,896		Total cost of revenue		29,542		27,361
Gross profit	Gross profit	40,721		35,997		79,852		70,883		Gross profit		43,640		39,131
Operating expenses:	Operating expenses:									Operating expenses:
Selling and marketing	Selling and marketing	24,020		21,190		49,307		42,754		Selling and marketing		26,010		25,287
Research and development	Research and development	23,401		20,454		47,868		41,379		Research and development		22,291		24,467
General and administrative	General and administrative	13,837		10,659		28,166		23,646		General and administrative		14,135		14,329

Impairment of fixed assets	Impairment of fixed assets	—		—		1,551		—		Impairment of fixed assets		—		1,551
Loss from operations	Loss from operations	(20,537)		(16,306)		(47,040)		(36,896)		Loss from operations		(18,796)		(26,503)
Convertible debt interest and amortization	Convertible debt interest and amortization	(1,576)		(1,576)		(3,152)		(3,152)		Convertible debt interest and amortization		(1,576)		(1,576)
Other (expense) income, net		(2)		4		(420)		290
Other income (expense), net										Other income (expense), net		1,451		(418)
Loss before income tax provision	Loss before income tax provision	(22,115)		(17,878)		(50,612)		(39,758)		Loss before income tax provision		(18,921)		(28,497)
Income tax provision	Income tax provision	291		168		434		317		Income tax provision		81		143
Net loss	Net loss	$	(22,406)	$	(18,046)	$	(51,046)	$	(40,075)	Net loss		$	(19,002)	$	(28,640)

Net loss per share:	Net loss per share:									Net loss per share:
Basic and diluted	Basic and diluted	$	(0.50)	$	(0.41)	$	(1.13)	$	(0.90)	Basic and diluted		$	(0.41)	$	(0.64)

Weighted average number of shares:	Weighted average number of shares:									Weighted average number of shares:

Basic and diluted	Basic and diluted	45,222		44,321		45,154		44,283		Basic and diluted		45,926		45,085
Other comprehensive loss, net of tax:	Other comprehensive loss, net of tax:									Other comprehensive loss, net of tax:
Foreign currency translation adjustment	Foreign currency translation adjustment	$	(628)	$	157	$	(850)	$	(451)	Foreign currency translation adjustment		$	176	$	(222)

Other comprehensive (loss) income, net of tax		(628)		157		(850)		(451)
Other comprehensive income (loss), net of tax										Other comprehensive income (loss), net of tax		176		(222)
Comprehensive loss	Comprehensive loss	$	(23,034)	$	(17,889)	$	(51,896)	$	(40,526)	Comprehensive loss		$	(18,826)	$	(28,862)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

PROS Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


		Six Months Ended June 30,					Three Months Ended March 31,
		2022		2021			2023		2022
Operating activities:	Operating activities:					Operating activities:
Net loss	Net loss	$	(51,046)	$	(40,075)	Net loss	$	(19,002)	$	(28,640)
Adjustments to reconcile net loss to net cash used in operating activities:	Adjustments to reconcile net loss to net cash used in operating activities:					Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	Depreciation and amortization	8,448		6,092		Depreciation and amortization	3,001		4,647
Amortization of debt issuance costs	Amortization of debt issuance costs	746		746		Amortization of debt issuance costs	373		373
Share-based compensation	Share-based compensation	21,991		16,776		Share-based compensation	9,904		11,225

Provision for doubtful accounts		(300)		(1,690)
Provision for credit losses						Provision for credit losses	108		(91)
Loss on disposal of assets						Loss on disposal of assets	35		—
Impairment of fixed assets						Impairment of fixed assets	—		1,551

Impairment of fixed assets		1,551		—

Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts and unbilled receivables	Accounts and unbilled receivables	6,441		9,919		Accounts and unbilled receivables	2,239		(12,130)
Deferred costs	Deferred costs	132		1,409		Deferred costs	425		(48)
Prepaid expenses and other assets	Prepaid expenses and other assets	(1,395)		1,095		Prepaid expenses and other assets	(2,505)		(262)
Operating lease right-of-use assets and liabilities	Operating lease right-of-use assets and liabilities	(1,117)		26		Operating lease right-of-use assets and liabilities	(591)		(739)
Accounts payable and other liabilities	Accounts payable and other liabilities	1,629		899		Accounts payable and other liabilities	(3,793)		3,903
Accrued liabilities	Accrued liabilities	(68)		(201)		Accrued liabilities	504		(109)
Accrued payroll and other employee benefits	Accrued payroll and other employee benefits	(9,144)		(2,975)		Accrued payroll and other employee benefits	(8,174)		(13,246)
Deferred revenue	Deferred revenue	9,187		(1,435)		Deferred revenue	11,333		22,552
Net cash used in operating activities	Net cash used in operating activities	(12,945)		(9,414)		Net cash used in operating activities	(6,143)		(11,014)
Investing activities:	Investing activities:					Investing activities:
Purchases of property and equipment	Purchases of property and equipment	(769)		(2,085)		Purchases of property and equipment	(1,546)		(461)

Investment in equity securities		(169)		(501)

Net cash used in investing activities	Net cash used in investing activities	(938)		(2,586)		Net cash used in investing activities	(1,546)		(461)
Financing activities:	Financing activities:					Financing activities:

Proceeds from employee stock plans	Proceeds from employee stock plans	1,443		1,596		Proceeds from employee stock plans	1,137		1,443
Tax withholding related to net share settlement of stock awards	Tax withholding related to net share settlement of stock awards	(212)		(352)		Tax withholding related to net share settlement of stock awards	(4,710)		(212)

Net cash provided by financing activities		1,231		1,244
Net cash (used in) provided by financing activities						Net cash (used in) provided by financing activities	(3,573)		1,231
Effect of foreign currency rates on cash	Effect of foreign currency rates on cash	277		(52)		Effect of foreign currency rates on cash	11		84
Net change in cash and cash equivalents	Net change in cash and cash equivalents	(12,375)		(10,808)		Net change in cash and cash equivalents	(11,251)		(10,160)
Cash and cash equivalents:	Cash and cash equivalents:					Cash and cash equivalents:
Beginning of period	Beginning of period	227,553		329,134		Beginning of period	203,627		227,553
End of period	End of period	$	215,178	$	318,326	End of period	$	192,376	$	217,393

Supplemental disclosure of cash flow information:	Supplemental disclosure of cash flow information:					Supplemental disclosure of cash flow information:
Noncash investing activities:	Noncash investing activities:					Noncash investing activities:
Purchase of property and equipment accrued but not paid	Purchase of property and equipment accrued but not paid	$	140	$	335	Purchase of property and equipment accrued but not paid	$	136	$	45

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

PROS Holdings, Inc.

Condensed Consolidated Statements of Stockholders’ (Deficit) Equity

(In thousands, except share data)

(Unaudited)


		Three Months Ended June 30, 2022																								Three Months Ended March 31, 2023

		Common Stock			Additional Paid-In Capital				Treasury Stock						Accumulated Deficit			Accumulated other comprehensive loss				Total Stockholders’ (Deficit) Equity				Common Stock					Additional Paid-In Capital				Treasury Stock					Accumulated Deficit			Accumulated other comprehensive loss			Total Stockholders’ (Deficit) Equity
		Shares	Amount				Shares			Amount							Shares								Amount					Shares				Amount
Balance at March 31, 2022		45,179,184	$	50			$	559,148		4,680,723			$	(29,847)						$	(537,292)			$	(4,881)		$	(12,822)
Balance at December 31, 2022																									Balance at December 31, 2022	45,638,003			$	50		$	590,475			4,680,723		$	(29,847)		$	(590,898)		$	(5,253)		$	(35,473)

Stock awards net settlement	Stock awards net settlement	68,095	—		—				—		—				—			—				—			Stock awards net settlement	338,089			1		(4,711)				—		—			—			—			(4,710)
Proceeds from employee stock plans	Proceeds from employee stock plans	—	—		—				—		—				—			—				—			Proceeds from employee stock plans	55,149			—		1,137				—		—			—			—			1,137

Noncash share-based compensation	Noncash share-based compensation	—	—		10,766				—		—				—			—				10,766			Noncash share-based compensation	—			—		9,904				—		—			—			—			9,904

Other comprehensive loss	Other comprehensive loss	—	—		—				—		—				—			(628)				(628)			Other comprehensive loss	—			—		—				—		—			—			176			176
Net loss	Net loss	—	—		—				—		—				(22,406)			—				(22,406)			Net loss	—			—		—				—		—			(19,002)			—			(19,002)
Balance at June 30, 2022		45,247,279	$	50	$	569,914			4,680,723		$	(29,847)			$	(559,698)		$	(5,509)			$	(25,090)
Balance at March 31, 2023																									Balance at March 31, 2023	46,031,241			$	51	$	596,805			4,680,723		$	(29,847)		$	(609,900)		$	(5,077)		$	(47,968)

Three Months Ended June 30, 2021
Common Stock Additional Paid-In Capital Treasury Stock Accumulated
Deficit Accumulated other comprehensive loss Total Stockholders’
(Deficit) Equity
Shares Amount Shares Amount
Balance at March 31, 2021 44,252,765 $ 49 $ 518,338 4,680,723 $ (29,847) $ (449,472) $ (4,039) $ 35,029
Stock awards net settlement 86,917 — — — — — — —
Noncash share-based compensation — — 8,588 — — — — 8,588
Other comprehensive loss — — — — — — 157 157
Net loss — — — — — (18,046) — (18,046)
Balance at June 30, 2021 44,339,682 $ 49 $ 526,926 4,680,723 $ (29,847) $ (467,518) $ (3,882) $ 25,728

~~The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.~~

~~Table of Contents~~

~~PROS Holdings, Inc.~~

~~Condensed Consolidated Statements of Stockholders’ (Deficit) Equity (Continued)~~

~~(In thousands, except share data)~~

~~(Unaudited)~~

Six Months Ended June 30, 2022
Common Stock Additional Paid-In Capital Treasury Stock Accumulated
Deficit Accumulated other comprehensive loss Total Stockholders’
(Deficit) Equity
Shares Amount Shares Amount
Balance at December 31, 2021 44,520,542 $ 49 $ 546,693 4,680,723 $ (29,847) $ (508,652) $ (4,659) $ 3,584
Stock awards net settlement 677,492 1 (213) — — — — (212)
Proceeds from employee stock plans 49,245 — 1,443 — — — — 1,443
Noncash share-based compensation — — 21,991 — — — — 21,991
Other comprehensive loss — — — — — — (850) (850)
Net loss — — — — — (51,046) — (51,046)
Balance at June 30, 2022 45,247,279 $ 50 $ 569,914 4,680,723 $ (29,847) $ (559,698) $ (5,509) $ (25,090)


		Six Months Ended June 30, 2021																								Three Months Ended March 31, 2022
		Common Stock			Additional Paid-In Capital				Treasury Stock						Accumulated Deficit					Accumulated other comprehensive loss			Total Stockholders’ (Deficit) Equity			Common Stock					Additional Paid-In Capital			Treasury Stock					Accumulated Deficit			Accumulated other comprehensive loss			Total Stockholders’ (Deficit) Equity
		Shares	Amount				Shares			Amount									Shares								Amount			Shares				Amount
Balance at December 31, 2020		43,461,544	$	48			$	589,040		4,680,723			$	(29,847)			$	(438,773)				$	(3,431)			$	117,037
Balance at December 31, 2021																									Balance at December 31, 2021	44,520,542		$	49			$	546,693		4,680,723		$	(29,847)		$	(508,652)		$	(4,659)		$	3,584
Stock awards net settlement	Stock awards net settlement	836,168	1		(353)				—		—				—					—			(352)		Stock awards net settlement	609,397		1			(213)			—		—			—			—			(212)
Proceeds from employee stock plans	Proceeds from employee stock plans	41,970	—		1,596				—		—				—					—			1,596		Proceeds from employee stock plans	49,245		—			1,443			—		—			—			—			1,443

Cumulative effect of adoption of ASU 2020-06		—	—		(80,098)				—		—				11,330					—			(68,768)

Noncash share-based compensation	Noncash share-based compensation	—	—		16,741				—		—				—					—			16,741		Noncash share-based compensation	—		—			11,225			—		—			—			—			11,225
Other comprehensive loss	Other comprehensive loss	—	—		—				—		—				—					(451)			(451)		Other comprehensive loss	—		—			—			—		—			—			(222)			(222)
Net loss	Net loss	—	—		—				—		—				(40,075)					—			(40,075)		Net loss	—		—			—			—		—			(28,640)			—			(28,640)
Balance at June 30, 2021		44,339,682	$	49	$	526,926			4,680,723		$	(29,847)			$	(467,518)				$	(3,882)		$	25,728
Balance at March 31, 2022																									Balance at March 31, 2022	45,179,184		$	50		$	559,148		4,680,723		$	(29,847)		$	(537,292)		$	(4,881)		$	(12,822)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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PROS Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Organization and Nature of Operations

PROS Holdings, Inc., a Delaware corporation, through its operating subsidiaries (collectively, the "Company"), provides solutions that optimize shopping and selling experiences. PROS solutions leverage artificial intelligence ("AI"), self-learning and automation to ensure that every transactional experience is fast, frictionless and personalized for every shopper, supporting both business-to-business ("B2B") and business-to-consumer ("B2C") companies across industry verticals. Companies can use these selling, pricing, revenue optimization, distribution and retail, and digital offer marketing solutions to assess their market environments in real time to deliver customized prices and offers. The Company's solutions enable their customers to provide the buyers of their products the ability to move fluidly ~~across its customers’~~from one sales channel to another, whether direct, ~~sales,~~ partner, online, mobile ~~and~~or other emerging channels, each with a personalized ~~experiences~~experience regardless of which channel ~~buyers choose.~~is used. The Company's decades of data science and AI expertise are infused into its solutions and are designed to reduce time and complexity through actionable intelligence.

2. Summary of Significant Accounting Policies

Basis of presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States ("GAAP") for interim financial reporting and applicable quarterly reporting regulations of the Securities and Exchange Commission ("SEC"). In management's opinion, the accompanying interim unaudited condensed consolidated financial statements include all adjustments necessary for a fair statement of the financial position of the Company as of ~~June 30, 2022,~~March 31, 2023, the results of operations for the three ~~and six~~ months ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021,~~ cash flows for the ~~six~~three months ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021,~~ and stockholders' (deficit) equity for the three ~~and six~~ months ended ~~June 30, 2022~~March 31, 2023 and ~~2021.~~

Certain prior year amounts have been reclassified for consistency with the current year presentation. Such reclassifications impacted the classification of general and administrative expenses and research and development expenses. These insignificant reclassifications had no effect on the reported results of operations, cash flows, or financial position.2022.

Certain information and disclosures normally included in the notes to the annual financial statements prepared in accordance with GAAP have been omitted from these interim unaudited condensed consolidated financial statements pursuant to the rules and regulations of the SEC. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021~~2022 ("Annual Report") filed with the SEC. The unaudited condensed consolidated balance sheet as of December 31, ~~2021~~2022 was derived from the Company's audited consolidated financial statements but does not include all disclosures required under GAAP.

~~Risks and uncertainties~~

~~Since its initial onset in early 2020, the coronavirus ("COVID-19") pandemic has created significant global uncertainty,~~ ~~and c~~ompliance with the various containment measures implemented by governmental authorities has impacted the Company's business, as well as the businesses of its customers, suppliers and other counterparties, and the scope and duration of the outbreak and timeframe for economic recovery is uncertain. As there are no comparable recent events that provide guidance as to the long-term effect of the COVID-19 pandemic, the Company is unable to predict the full impact that COVID-19 will have on its results from operations, financial condition, liquidity and cash flows due to numerous uncertainties, including the duration and severity of the pandemic and containment measures.

Changes in accounting policies

There have been no material changes in the Company’s significant accounting policies and their application as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021,~~ 2022~~except for the Company's adoption of certain accounting standards described in more detail under "Recently adopted accounting pronouncements" in this Note 2below.~~.

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Fair value measurement

The Company's financial assets that are included in cash and cash equivalents and that are measured at fair value on a recurring basis consisted of $~~179.0~~176.5 million and ~~$203.3~~$168.1 million at ~~June 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively, and were invested in treasury money market funds. The fair value of the treasury money market funds is determined based on quoted market prices, which represents level 1 in the fair value hierarchy as defined by ASC 820.

Trade and other receivables

Trade and other receivables are primarily comprised of trade receivables, net of allowance for ~~doubtful accounts,~~credit losses, contract assets and unbilled receivables. The Company records trade accounts receivable for its unconditional rights to consideration arising from the Company's performance under contracts with customers. The Company's standard billing terms are that payment is due upon receipt of invoice, payable generally within thirty to sixty days. The carrying value of such receivables, net of the allowance for ~~doubtful accounts,~~credit losses, represents their estimated net realizable value. When developing its estimate of expected credit losses on trade and other receivables, the Company considers the available information relevant to assessing the

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collectability of cash flows, which includes a combination of both internal and external information relating to past events, current conditions, and future forecasts as well as relevant qualitative and quantitative factors that relate to the environment in which the Company operates.

Contract assets represent conditional rights to consideration that have been recognized as revenue in advance of billing the customer. Unbilled receivables represent unconditional rights to consideration arising from ~~contingent~~ revenue that have been recognized ~~as revenue~~ in advance of billing the customer.

Deferred costs

Sales commissions earned by the Company's sales representatives are considered incremental and recoverable costs of obtaining a customer contract. Sales commissions are deferred and amortized on a straight-line basis over the period of benefit, which the Company has determined to be five to eight years. The Company determined the period of benefit by taking into consideration its customer contracts, expected renewals of those customer contracts (as the Company currently does not pay an incremental sales commission for renewals), the Company's technology and other factors. The Company also defers amounts earned by employees other than sales representatives who earn incentive payments under compensation plans also tied to the value of customer contracts acquired. Deferred costs were $~~15.2~~14.4 million and $~~15.3~~14.8 million as of ~~June 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively. Amortization expense for the deferred costs was $~~1.4~~1.5 millionand ~~$1.5~~$1.4 million for the three months ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021, respectively, and~~ ~~$2.9 million~~ ~~and $3.1 million for the six months ended June 30, 2022 and 2021,~~ respectively. Amortization of deferred costs is included in selling and marketing expense in the accompanying unaudited condensed consolidated statements of comprehensive loss.

Deferred implementation costs

The Company capitalizes certain contract fulfillment costs, including personnel and other costs (such as hosting, employee salaries, benefits and payroll taxes), that are associated with arrangements where professional services are not distinct from other undelivered performance obligations in its customer contracts. The Company analyzes implementation costs and capitalizes those costs that are directly related to customer contracts expected to be recoverable to satisfy the undelivered performance obligations in those contracts. Deferred implementation costs are amortized ratably over the remaining contract term once the revenue recognition criteria for the respective performance obligation has been met and revenue recognition commences. Deferred implementation costs were ~~$2.0~~$1.5 million and ~~$2.4~~$1.6 million as of ~~June 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively. Amortization expense for the deferred implementation costs was $~~0.3~~0.2 million and $0.3 million for ~~both~~ the three months ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021, and~~ ~~$0.6 million~~ ~~for both the six months ended June 30, 2022 and 2021.~~respectively. Deferred implementation costs are included in prepaid and other current assets and other assets, noncurrent in the unaudited condensed consolidated balance sheets. Amortization of deferred implementation costs is included in cost of subscription and cost of services revenues in the accompanying unaudited condensed consolidated statements of comprehensive loss.

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Impairment of Long-Lived Assets

Long-lived assets are reviewed for impairment whenever an event or change in circumstances indicates that the carrying amount of an asset or group of assets may not be recoverable. The impairment review includes comparison of future cash flows expected to be generated by the asset or group of assets with the associated assets’ carrying value. If the carrying value of the asset or group of assets exceeds its expected future cash flows (undiscounted and without interest charges), an impairment loss is recognized to the extent that the carrying amount of the asset exceeds its fair value. During the three ~~and six~~ months ended ~~June 30,~~March 31, 2023 and 2022, the Company recorded zero and $1.6 million, respectively, of impairment charge related to fixed assets. The 2022 impairment resulted from the Company's changed intentions for these assets in connection with a new agreement with a software vendor. ~~The Company did not record any impairment charges during the three and six months ended June 30, 2021.~~

~~Recently adopted accounting pronouncements~~

~~In August 2020, the FASB issued ASU 2020-06,~~ ~~Debt - Debt with Conversion and Other Options ("Subtopic 470-20") and Derivatives and Hedging - Contracts in an Entity's Own Equity ("Subtopic 815-40")~~, which simplifies the accounting for certain convertible instruments, amends the guidance on derivative scope exceptions for contracts in an entity's own equity, and modifies the guidance on diluted earnings per share calculations as a result of these changes. This new standard is effective for the Company's interim and annual periods beginning January 1, 2022, and earlier adoption is permitted on January 1, 2021. The Company may elect to apply the amendments on a retrospective or modified retrospective basis. ~~The Company early adopted the new standard effective January 1, 2021 on the modified retrospective basis. The adoption decreased additional paid-in capital by~~ ~~$80.1 million~~ related to the equity conversion component of the outstanding convertible notes which was previously separated and recorded in equity, and increased convertible debt, net by $68.8 million related to the removal of the debt discounts and adjustment of debt issuance cost recorded under the previous standard. The net cumulative effect of the adjustments of ~~$11.3 million was recorded as a decrease to the opening balance of the accumulated deficit as of January 1, 2021. The adoption had no impact on the condensed consolidated statements of cash flows.~~

Recently issued accounting pronouncements not yet adopted

~~With the exception of the new standard discussed above, there~~There have been no ~~other~~ recent accounting pronouncements or changes in accounting pronouncements during the ~~six~~three months ended ~~June 30, 2022,~~March 31, 2023, as compared to the recent accounting pronouncements described in the Company's Annual Report, that are of significance or potential significance to the Company.

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3. Deferred Revenue and Performance Obligations

Deferred Revenue

For the three months ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021,~~ the Company recognized approximately ~~$48.6~~$49.4 million and ~~$45.3 million, respectively, and for the six months ended June 30, 2022 and 2021, the Company recognized~~ ~~approximately $71.2 million and $70.3~~$44.3 million, respectively, of revenue that was included in the deferred revenue balances at the beginning of the respective periods and primarily related to subscription, maintenance and support, and services.

Performance Obligations

As of ~~June 30, 2022,~~March 31, 2023, the Company expects to recognize approximately $~~434.9~~430.6 million of revenue from remaining performance obligations. The Company expects, based on the terms of the related, underlying contractual arrangements, to recognize revenue on approximately ~~$197.4~~$210.0 million of these performance obligations over the next 12 months, with the balance recognized thereafter. Remaining performance obligations represent contractually committed revenue that has not yet been recognized, which includes deferred revenue and unbilled amounts that will be recognized as revenue in future periods.

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4. Disaggregation of Revenue

Revenue by Geography

The geographic information in the table below is presented for the three ~~and six~~ months ended ~~June 30, 2022~~March 31, 2023 and ~~2021.~~2022. The Company categorizes geographic revenues based on the location of the customer's headquarters. Because the Company's contracts are predominately denominated in U.S. dollars, it has limited exposure to foreign currency exchange risk as discussed under "Foreign Currency Exchange Risk" of Part I, Item 3 below.


		Three Months Ended June 30,								Six Months Ended June 30,									Three Months Ended March 31,
		2022				2021				2022				2021						2023	2022
(in thousands)	(in thousands)	Revenue		Percent		Revenue		Percent		Revenue		Percent		Revenue		Percent		(in thousands)			Revenue		Percent		Revenue		Percent
United States of America	United States of America	$	23,908	35	%	$	21,875	35	%	$	47,102	35	%	$	42,751	35	%	United States of America			$	26,232	36	%	$	23,194	35	%
Europe	Europe	20,865		30	%	18,562		30	%	41,688		31	%	37,254		30	%	Europe			22,949		31	%	20,823		31	%
The rest of the world	The rest of the world	23,589		35	%	21,964		35	%	46,064		34	%	43,774		35	%	The rest of the world			24,001		33	%	22,475		34	%
Total revenue	Total revenue	$	68,362	100	%	$	62,401	100	%	$	134,854	100	%	$	123,779	100	%	Total revenue			$	73,182	100	%	$	66,492	100	%

5. ~~Business Combination~~

~~EveryMundo~~

On November 30, 2021, the Company acquired EveryMundo LLC ("EveryMundo"), a privately held company based in Miami, Florida, for cash consideration, net of cash acquired, of approximately $79.5 million and an equity consideration of approximately $10.0 million. Since the equity consideration is contingent on certain employee' continued employment with the Company for a two-year period, it was determined, based on accounting guidance, the related amounts should be treated as post-combination compensation and accordingly are not included as part of the purchase price allocation. EveryMundo is a digital offer marketing pioneer that enables brands to broaden their digital reach and deepen customer engagement, providing greater control over direct and indirect channels they participate in to help create superior brand experiences and foster brand loyalty over time.

~~The preliminary allocation of the purchase price for EveryMundo is as follows (in thousands):~~


~~Current assets~~	$	~~2,193~~
~~Noncurrent assets~~	~~736~~
~~Intangibles~~	~~23,300~~
~~Goodwill~~	~~58,915~~

~~Current liabilities~~	~~(4,972)~~


~~Noncurrent liabilities~~	~~(542)~~
~~Purchase consideration~~	$	~~79,630~~

~~The following are the identifiable intangible assets acquired (in thousands) with respect to the EveryMundo acquisition, and their respective useful lives:~~

Weighted Average Useful Life
Amount (years)
Developed technology $ 15,700 5
Customer relationships 5,500 4
Trade name 2,100 8
Total $ 23,300

The goodwill recognized was primarily attributable to the assembled workforce and expanded market opportunities from integrating EveryMundo's technology into the Company's product portfolio. The goodwill is deductible for U.S. federal income tax purposes.

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The Company made a preliminary determination that $2.8 million of deferred tax asset was assumed on the acquisition date. The deferred tax asset is comprised of excess tax basis in goodwill. A full valuation allowance of $2.8 million was recorded offsetting the deferred tax asset as of the acquisition date.

6. Leases

The Company has operating leases for data centers, computer infrastructure, corporate offices and certain equipment. These leases have remaining lease terms ranging from 1 year to ~~11 years.~~10 years. Some of these leases include options to extend for up to 15 years, and some include options to terminate within 1 year.

As of ~~June 30, 2022,~~March 31, 2023, the Company did not have any finance leases.

Supplemental cash flow information related to leases was as follows (in thousands):


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2022		2021		2022		2021				2023		2022
Cash paid for operating lease liabilities	Cash paid for operating lease liabilities	$	2,353	$	1,917	$	4,195	$	4,378	Cash paid for operating lease liabilities		$	2,251	$	1,842
Right-of-use asset obtained in exchange for operating lease liability	Right-of-use asset obtained in exchange for operating lease liability	$	243	$	194	$	243	$	291	Right-of-use asset obtained in exchange for operating lease liability		$	—	$	—

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In January 2023 and 2022, an existing operating lease was modified due to a change in future payments. The result of the 2023 modification was a decrease in the related right-of-use asset and corresponding lease liability of $1 million and the result of the 2022 modification was a decrease in the related right-of-use asset and corresponding lease liability of $2.7 million.

As of ~~June 30, 2022,~~March 31, 2023, maturities of lease liabilities were as follows (in thousands):


Year Ending December 31,	Year Ending December 31,	Amount		Year Ending December 31,	Amount
Remaining 2022		$	5,168
2023		9,618
Remaining 2023				Remaining 2023	$	6,649
2024	2024	5,260		2024	4,869
2025	2025	4,211		2025	4,057
2026	2026	4,109		2026	4,039
2027	2027	4,043		2027	3,965
2028				2028	4,029
Thereafter	Thereafter	23,685		Thereafter	19,223
Total operating lease payments	Total operating lease payments	56,094		Total operating lease payments	46,831
Less: Imputed interest	Less: Imputed interest	(16,374)		Less: Imputed interest	(14,235)

Total operating lease liabilities	Total operating lease liabilities	$	39,720	Total operating lease liabilities	$	32,596

7.6. Earnings per Share

The following table sets forth the computation of basic and diluted earnings per share for the three ~~and six~~ months ended ~~June 30, 2022~~March 31, 2023 and ~~2021:~~2022:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
(in thousands, except per share data)	(in thousands, except per share data)	2022		2021		2022		2021		(in thousands, except per share data)		2023		2022
Numerator:	Numerator:									Numerator:
Net loss	Net loss	$	(22,406)	$	(18,046)	$	(51,046)	$	(40,075)	Net loss		$	(19,002)	$	(28,640)
Denominator:	Denominator:									Denominator:
Weighted average shares (basic)	Weighted average shares (basic)	45,222		44,321		45,154		44,283		Weighted average shares (basic)		45,926		45,085
Dilutive effect of potential common shares	Dilutive effect of potential common shares	—		—		—		—		Dilutive effect of potential common shares		—		—
Weighted average shares (diluted)	Weighted average shares (diluted)	45,222		44,321		45,154		44,283		Weighted average shares (diluted)		45,926		45,085
Basic loss per share	Basic loss per share	$	(0.50)	$	(0.41)	$	(1.13)	$	(0.90)	Basic loss per share		$	(0.41)	$	(0.64)
Diluted loss per share	Diluted loss per share	$	(0.50)	$	(0.41)	$	(1.13)	$	(0.90)	Diluted loss per share		$	(0.41)	$	(0.64)

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Dilutive potential common shares consist of shares issuable upon ~~the settlement of stock appreciation rights ("SARs"), and~~ the vesting of restricted stock units ("RSUs"), market stock units ("MSUs") and equity consideration related to the EveryMundo LLC acquisition. Potential common shares determined to be antidilutive and excluded from diluted weighted average shares outstanding were approximately2.4 million and 2.2 million ~~and~~ ~~1.2 million~~, for the three months ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021, respectively, and~~ ~~2.6 million and 1.3 million~~ ~~for the six months ended June 30, 2022 and 2021,~~ respectively. In addition, potential common shares related to the convertible notes determined to be antidilutive and excluded from diluted weighted average shares outstanding were 5.8 million for both the three ~~and six~~ months ended ~~June 30, 2022~~March 31, 2023 and ~~2021.~~2022.

8.7. Noncash Share-based Compensation

The Company's 2017 Equity Incentive Plan (as amended and restated, the "2017 Stock Plan") has an aggregate authorized limit of 7,650,000 shares for issuance. As of ~~June 30, 2022, 2,829,815~~March 31, 2023, 1,344,949 shares remain available for issuance under the 2017 Stock Plan.

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The following table presents the number of shares or units outstanding for each award type as of ~~June 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively, (in thousands):


Award type	Award type	June 30, 2022	December 31, 2021	Award type	March 31, 2023	December 31, 2022

Restricted stock units (time-based)	Restricted stock units (time-based)	2,624	2,145	Restricted stock units (time-based)	3,209	2,235
Restricted stock units (performance-based)		—	140

Market stock units	Market stock units	216	126	Market stock units	358	216
EveryMundo Equity consideration		273	273
EveryMundo equity consideration				EveryMundo equity consideration	137	137

During the three months ended ~~June 30, 2022,~~March 31, 2023, the Company granted ~~205,642~~1,547,607 RSUs (time-based) with a weighted average grant-date fair value of ~~$24.05 per share.~~

~~During the six months ended June 30, 2022, the Company granted 1,353,221 RSUs (time-based) with a weighted average grant-date fair value of $30.23~~$25.59 per share. The Company also granted ~~116,640~~142,386 MSUs with a weighted average grant-date fair value of ~~$37.65~~$30.42 to certain executive employees during the ~~six~~three months ended ~~June 30, 2022.~~March 31, 2023. These MSUs vest on January 31, ~~2025~~2026 and the actual number of MSUs that will be eligible to vest is based on the total stockholder return of the Company relative to the total stockholder return of the Index over the performance period, as defined by each award's plan documents or individual award agreements. The maximum number of shares issuable upon vesting is 200% of the MSUs initially granted.

The ~~Company did not grant any stock options, SARs or performance-based RSUs during the~~ ~~three and six~~ ~~months ended June 30, 2022.~~

~~The~~ assumptions ~~used~~used to value the MSUs granted during the ~~six~~three months ended ~~June 30, 2022~~March 31, 2023 were as follows:


	~~June 30, 2022~~Three Months Ended March 31, 2023
Volatility	~~54.50~~63.26	%
Risk-free interest rate	~~1.20~~3.76	%
Expected award life in years	2.97
Dividend yield	—	%

Share-based compensation expense is allocated to expense categories on the unaudited condensed consolidated statements of comprehensive loss. The following table summarizes share-based compensation expense included in the Company's unaudited condensed consolidated statements of comprehensive loss for the three ~~and six~~ months ended ~~June 30, 2022~~March 31, 2023 and ~~2021:~~2022:

~~Table of Contents~~


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2022		2021		2022		2021				2023		2022
Share-based compensation:	Share-based compensation:									Share-based compensation:
Cost of revenue	Cost of revenue	$	1,006	$	976	$	1,831	$	1,802	Cost of revenue		$	832	$	825
Operating expenses:	Operating expenses:									Operating expenses:
Selling and marketing	Selling and marketing	3,276		2,510		6,516		4,734		Selling and marketing		2,928		3,240
Research and development	Research and development	2,899		2,117		6,612		3,943		Research and development		2,350		3,713
General and administrative	General and administrative	3,585		3,003		7,032		6,297		General and administrative		3,794		3,447
Total included in operating expenses	Total included in operating expenses	9,760		7,630		20,160		14,974		Total included in operating expenses		9,072		10,400
Total share-based compensation expense	Total share-based compensation expense	$	10,766	$	8,606	$	21,991	$	16,776	Total share-based compensation expense		$	9,904	$	11,225

At ~~June 30, 2022,~~March 31, 2023, the Company had an estimated ~~$94.7~~$100.7 million of total unrecognized compensation costs related to share-based compensation arrangements. These costs will be recognized over a weighted average period of ~~2.8~~3.0 years.

The Company's Employee Stock Purchase Plan (as amended, the "ESPP") ~~provides for~~permits eligible employees to purchase Company shares on an after-tax basis in an amount between 1% and 10% of their annual pay: (i) on June 30 of each year at a 15% discount of the fair market value of the Company's common stock on January 1 or June 30, whichever is lower, and (ii) on December 31 of each year at a 15% discount of the fair market value of the Company's common stock on July 1 or December 31, whichever is lower. An employee may not purchase more than $5,000 in either of the six-month measurement periods described above or more than $10,000 annually. In May 2021, the Company's stockholders approved an amendment to the ESPP Plan increasing the aggregate amount of shares available for issuance under the ESPP to 1,000,000. During the three ~~and six~~ months ended ~~June 30, 2022,~~March 31, 2023, the Company issued ~~zero and~~ ~~49,245~~55,149 shares under the ~~ESPP, respectively.~~ESPP. As of ~~June 30, 2022,~~March 31, 2023, ~~444,466~~331,976 shares remain authorized and available for issuance under the ESPP. As of ~~June 30, 2022,~~March 31, 2023, the Company held approximately $~~1.3~~0.7 million on behalf of employees for future purchases under the ESPP, and this amount was recorded in accrued payroll and other employee benefits in the Company's unaudited condensed consolidated balance sheet.

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8. Convertible Senior Notes

The following is a summary of the Company's convertible senior notes as of ~~June 30, 2022~~March 31, 2023 (in thousands):


		Date of Issuance		Unpaid Principal Balance				Net Carrying Amount								Contractual Interest Rates		Date of Issuance				Unpaid Principal Balance		Net Carrying Amount				Contractual Interest Rates
						Current				Noncurrent										Current				Noncurrent

1% Convertible Notes due in 2024 ("2024 Notes")	1% Convertible Notes due in 2024 ("2024 Notes")		May 2019			$	143,750			$	—			$	142,106				1%		1% Convertible Notes due in 2024 ("2024 Notes")	May 2019		$	143,750	$	—	$	142,779	1%
2.25% Convertible Notes due in 2027 ("2027 Notes")	2.25% Convertible Notes due in 2027 ("2027 Notes")	September 2020		$	150,000			$	—			$	146,927			2.25%	2.25% Convertible Notes due in 2027 ("2027 Notes")	September 2020				$	150,000	$	—	$	147,373	2.25%

The 2027 and 2024 Notes (collectively, the "Notes") are general unsecured obligations and rank senior in right of payment to all of the Company's indebtedness that is expressly subordinated in right of payment to the Notes, rank equally in right of payment with all of the Company's existing and future liabilities that are not so subordinated, are effectively junior to any of the Company's secured indebtedness to the extent of the value of the assets securing such indebtedness and are structurally subordinated to all indebtedness and other liabilities of the Company's subsidiaries (including trade payables but excluding intercompany obligations owed to the Company or its subsidiaries).

Interest related to the 2027 Notes is payable semiannually in arrears in cash on March 15 and September 15 of each year, beginning on March 15, 2021. Interest related to the 2024 Notes is payable semi-annually in arrears on May 15 and November 15 of each year, beginning on November 15, 2019.

The 2027 Notes mature on September 15, 2027 and the 2024 Notes mature on May 15, 2024, unless redeemed or converted in accordance with their terms prior to such date.At March 31, 2023, the Company had $192.4 million of cash and cash equivalents. The Company believes its existing cash and cash equivalents will provide adequate liquidity and capital resources to meet its operational requirements, anticipated capital expenditures and coupon interest payments for the Notes for the next twelve months. Capital markets have tightened recently in response to the macroeconomic environment making new financing more difficult and/or expensive and the Company may not be able to obtain such financing on terms acceptable to it or at all.

Each $1,000 of principal of the 2027 Notes will initially be convertible into 23.9137 shares of the Company’s common stock, which is equivalent to an initial conversion price of approximately $41.82 per share. Each $1,000 of principal of the 2024 Notes will initially be convertible into 15.1394 shares of the Company’s common stock, which is equivalent to an initial conversion price of approximately $66.05 per share. The initial conversion price for the 2027 and the 2024 Notes is subject to adjustment upon the occurrence of certain specified events.

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As of ~~June 30, 2022,~~March 31, 2023, the 2027 and 2024 Notes are not yet convertible and their remaining term is approximately 6253 months and 2213 months, respectively.

As of ~~June 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, the fair value of the principal amount of the Notes in the aggregate was $~~266.7~~277.3 million and ~~$299.4~~$263.7 million, respectively. The estimated fair value was determined based on inputs that are observable in the market or that could be derived from, or corroborated with, observable market data, including the Company's stock price and interest rates, which represents level 2 in the fair value hierarchy.

~~Effective January 1, 2021, the Company early adopted ASU 2020-06,~~ ~~Debt - Debt with Conversion and Other Options and Derivatives and Hedging - Contracts in an Entity's Own Equity.~~ Upon adoption of the new standard, the Company removed the debt discount and adjusted the debt issuance cost which was previously allocated between the liability and the equity component, resulting in an increase of $68.8 million to convertible debt, net. In addition, the Company recorded a reduction to additional paid-in capital of $80.1 million related to the equity conversion component of the outstanding convertible notes which was previously separated and recorded in equity. The net cumulative impact of the adoption of the standard was recorded as a decrease to accumulated deficit.

The Notes consist of the following (in thousands):


		June 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022

Principal	Principal	$	293,750	$	293,750	Principal	$	293,750	$	293,750
Less: debt issuance cost, net of amortization	Less: debt issuance cost, net of amortization	(4,717)		(5,463)		Less: debt issuance cost, net of amortization	(3,598)		(3,971)
Net carrying amount	Net carrying amount	$	289,033	$	288,287	Net carrying amount	$	290,152	$	289,779

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The following table sets forth total interest expense recognized related to the Notes (in thousands):


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2022		2021		2022		2021				2023		2022
Coupon interest	Coupon interest	$	1,203	$	1,203	$	2,406	$	2,406	Coupon interest		$	1,203	$	1,203
Amortization of debt issuance costs	Amortization of debt issuance costs	373		373		746		746		Amortization of debt issuance costs		373		373

Total	Total	$	1,576	$	1,576	$	3,152	$	3,152	Total		$	1,576	$	1,576

Capped Call Transactions

In September 2020 and in May 2019, in connection with the offering of the 2027 and 2024 Notes, respectively, the Company entered into privately negotiated capped call transactions (collectively, the "Capped Call") with certain option counterparties. The Capped Call transactions cover, subject to customary anti-dilution adjustments, the number of shares of the Company’s common stock initially underlying the Notes, at a strike price that corresponds to the initial conversion price of the Notes, also subject to adjustment, and are exercisable upon conversion of the Notes. The Capped Call transactions are intended to reduce potential dilution to the Company’s common stock and/or offset any cash payments the Company will be required to make in excess of the principal amounts upon any conversion of Notes, and to effectively increase the overall conversion price of the 2027 Notes from $41.82 to $78.90 per share, and for the 2024 Notes from $66.05 to $101.62 per share. As the Capped Call transactions meet certain accounting criteria, they are recorded in stockholders’ equity and are not accounted for as derivatives. The cost of the Capped Call was $25.3 million and $16.4 million for the 2027 and 2024 Notes, respectively, and was recorded as part of additional paid-in capital.

~~10.~~9. Commitments and Contingencies

Litigation

In the ordinary course of business, the Company regularly becomes involved in contract and other negotiations and, in more limited circumstances, becomes involved in legal proceedings, claims and litigation. The outcomes of these matters are inherently unpredictable. The Company is not currently involved in any outstanding litigation that it believes, individually or in the aggregate, will have a material adverse effect on its business, financial condition, results of operations or cash flows.

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Purchase commitments

In the ordinary course of business, the Company enters into various purchase commitments for goods and services, mainly related to infrastructure platforms, business technology software and support, and other services.

In ~~July 2021,~~January 2023, the Company entered into a noncancelable agreement for ~~data subscription~~software support services with a ~~five-year~~four-year term. The remaining purchase commitment as of ~~June 30, 2022~~March 31, 2023 was ~~$4.3~~$3.5 million and the agreement expires in ~~June 2026.~~March 2027. There were no other material changes outside the ordinary course of business to the noncancellable purchase commitments disclosed in the Annual Report.

10. Severance and Other Related Costs

In ~~November 2021,~~the quarter ended March 31, 2023, the Company ~~entered into a noncancelable agreement with a computing infrastructure vendor that amended~~made additional organizational changes and incurred approximately $3.6 million of severance, employee benefits, outplacement and related costs during the ~~existing agreement dated~~ period. These costs were recorded primarily as operating expenses in the unaudited condensed consolidated statements of comprehensive loss, mainly research and development, and sales and marketing. During the quarter ended March ~~2019. The amended agreement had purchase commitments~~31, 2023, cash payments of$3.2 million ~~$166.1~~were recorded for the incurred costs. The Company expects to settle the remaining accrued expense of approximately $1.3 million ~~remaining as of June 30, 2022, and expires in November 2026.~~during 2023.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The terms “we,” “us,” “PROS” and “our” refer to PROS Holdings, Inc. and all of its subsidiaries that are consolidated in conformity with generally accepted accounting principles in the United States.

This management's discussion and analysis of financial condition and results of operations should be read along with the unaudited condensed consolidated financial statements and unaudited notes to unaudited condensed consolidated financial statements included in Part I, Item 1 ("Interim Condensed Consolidated Financial Statements (Unaudited)"), as well as the audited consolidated financial statements and notes to consolidated financial statements and management's discussion and analysis of financial condition and results of operations set forth in our Annual Report.

~~Q2 2022~~Q1 2023 Financial Overview

In the ~~second~~first quarter of ~~2022~~2023, we continued to grow our subscription revenue. For the three ~~and six~~ months ended ~~June 30, 2022,~~March 31, 2023, our subscription revenue increased ~~14%~~15% and total revenue increased 10% for the three months ended March 31, 2023, each as compared to the same ~~periods~~period in ~~2021. Total revenue increased 10% and 9% for the three and six months ended June 30, 2022, respectively, as compared to the same periods in 2021.~~2022. Recurring revenue (which consists of subscription revenue and maintenance and support revenue) as a percentage of total revenue accounted for 84% and 85% of total revenue for the three ~~and six~~ months ended ~~June 30,~~March 31, 2023 and 2022, ~~respectively, and 85% of total revenue for the three and six months ended June 30, 2021.~~

respectively. Our gross revenue retention rates remained ~~consistent~~ above 93% during the trailing twelve months ended ~~June 30, 2022~~March 31, 2023.

Cash used in operating activities was ~~$12.9~~$6.1 million for the ~~six~~three months ended ~~June 30, 2022,~~March 31, 2023, as compared to ~~$9.4~~$11.0 million for the ~~six~~three months ended ~~June 30, 2021.~~March 31, 2022. The ~~increase~~improvement was primarily attributable to increased cash collections during the period and a ~~higher~~lower annual incentive payment in ~~2022~~2023 as compared to prior ~~year,~~ ~~partially offset by strong collections during the period.~~year.

Free cash flow is a key metric to assess the strength of our business. We define free cash flow, a non-GAAP financial measure, as net cash provided by (used in) operating activities, ~~minus~~excluding severance payments, less capital expenditures, ~~(excluding expenditures for our new headquarters),~~ purchases of other (non-acquisition-related) intangible assets and capitalized internal-use software development costs. We believe free cash flow may be useful to investors and other users of our financial information in evaluating the amount of cash generated by our business operations. Free cash flow used during the three months ended ~~June 30, 2022~~March 31, 2023 was ~~$2.2~~$4.5 million, compared to ~~$5.7~~$11.5 million for the three months ended ~~June 30, 2021.~~ March 31, 2022~~This decrease~~. The improvement was primarily ~~due~~attributable to ~~strong~~increased cash collections during the ~~period.~~ ~~Free cash flow used during the sixmonths ended June 30, 2022 was $13.7 million, compared to $10.4 million for the six months ended June 30, 2021.~~ ~~This increase was primarily due to~~period and a ~~higher~~lower annual incentive payment in ~~2022~~2023 as compared to prior ~~year,~~ ~~partially offset by strong collections during the period~~.year. The following is a reconciliation of free cash flow to the most comparable GAAP measure, net cash used in operating activities (in thousands):


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2022		2021		2022		2021				2023		2022
Net cash used in operating activities	Net cash used in operating activities	$	(1,931)	$	(4,985)	$	(12,945)	$	(9,414)	Net cash used in operating activities		$	(6,143)	$	(11,014)
Purchase of property and equipment (excluding new headquarters)		(308)		(741)		(769)		(944)
Severance										Severance		3,170		—
Purchase of property and equipment										Purchase of property and equipment		(1,546)		(461)

Free Cash Flow	Free Cash Flow	$	(2,239)	$	(5,726)	$	(13,714)	$	(10,358)	Free Cash Flow		$	(4,519)	$	(11,475)

Factors Affecting Our Performance

Key factors and trends that have affected, and we believe will continue to affect, our operating results include:

•Macroeconomic Environment. We believe ~~that~~ the combination of increased inflation, rising interest rates, volatile capital and financial markets, supply chain disruptions, ~~from the pandemic,~~ tight labor markets, pricing volatility, ~~inflation,~~ the Russia-Ukraine conflict, ~~rising interest rates,~~ and other macroeconomic conditions ~~will put pressure on~~increases corporate ~~growth initiatives and increase near term~~ focus on ~~profitability. Despite~~profitable growth. Despite this challenging ~~macro~~ environment, we remain confident in our ability ~~to continue~~ to help optimize shopping and selling experiences for our ~~customers across a wide variety of industries.~~customers. For example, pricing volatility and inflation are catalysts for demand for our price management and optimization ~~solutions, while concurrently uncertain~~solutions. Uncertain macroeconomic and industry conditions in countries and regions in which we operate create a challenging selling environment for large enterprise technology ~~deployment. COVID-19 impacted~~deployment and ~~is anticipated~~we believe in the near term will lead new customers to ~~continue impacting~~increasingly emphasize smaller scope initial purchases with faster implementations. While our ~~subscription revenue growth rates adversely due to lower subscription bookings during the pandemic and the lag~~

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between subscription bookings and the revenue recognized on those subscription bookings. Although the pandemic reduced our revenue growth rates compared to pre-pandemic growth rates and is affecting our 2022 revenue, we continue to grow our subscription revenue and expect total revenue growth in 2022. However, the continuing impact of COVID-19 and rate of economic recovery remains uncertain and varies across industries and geographies. While ourrecurring revenue and earnings are relatively predictable as a result of our subscription-based business model, the broader implications of these macroeconomic events on our business, results of operations, cash flows and overall financial position, particularly in the long term, remain uncertain. Under this model, our lower subscription bookings during the pandemic has adversely impacted our subscription revenue growth rates due to the timing lag between subscription

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bookings and the revenue recognized on those bookings. However, despite the impact of the pandemic on our prior revenue growth rates, we had double digit growth for both subscription revenue and total revenue in the first quarter of 2023. For a full discussion on the risks and uncertainties to our business, please see the "Risk Factors" section in our Annual ~~Report~~Report.

•Profitable Growth as a Priority. We believe our market opportunity is large and underpenetrated and intend to continue investing in our business to create awareness for our solutions, acquire new customers, and expand within our existing customer base globally, while focusing on ~~Form 10-K.~~cash flow and profitability. We intend to continue investing for growth and also seek opportunities to mitigate the growth in our costs and reduce our existing cost structure. We also plan to continue investing in product development to enhance our existing technologies, including initiatives to accelerate customer time-to-value, improve efficiency, provide out-of-the-box integration with third-party commerce solutions and develop new applications and technologies.

•Travel Industry ~~Recovery~~Recovering. ~~Early~~Despite operational headwinds and regional variances in the ~~pandemic,~~timing of travel restrictions being lifted, the travel industry, ~~was materially adversely impacted~~particularly the airline industry, continues to recover from the unprecedented disruption caused by ~~unprecedented declines in~~the pandemic. While global capacity has not fully returned to pre-pandemic levels, demand for air travel ~~demand, forcing airlines~~continues to focus on their core operations, significantly reduce costs, de-prioritize new technology investments, and in certain cases, file for bankruptcy protection. Certain airlines responded by increasing their air cargo operationsincrease as a result of increased global e-commerce during the pandemic which helped offset losses from traveler demand. In turn, we have seen an increase in airline interest in our price optimization and CPQ solutions. As travel restrictions have ~~lifted, airlines have experienced strong pent-up demand from leisure travelers, which~~been lifted. Travel in ~~turn~~North America has led this recovery with Asia Pacific lagging, particularly as China has only recently lifted international travel restrictions. The International Air Transport Association is forecasting airline industry profitability in 2023 with certain U.S.-based airlines ~~to begin to reprioritize technology investments as their businesses recover, while still addressing ongoing operational challenges, such as staffing shortages. This pent-up demand may decline~~already publicly reporting profitable quarters. Still, the rate of airline industry recovery could be impacted negatively if inflation impacts consumer disposable ~~income. While there remains significant~~income or limits business travel. Despite geographic variation, ~~based on ongoing travel restrictions in certain regions,~~ we expect airlines to increasingly prioritize technology investments as travel returns to pre-COVID levels. ~~The~~

•Digital Purchasing Driving Technology Adoption. We believe the long-term trends toward digital purchasing by both consumers and corporate buyers will increasingly drive demand for technology that provides fast, frictionless and personalized buying experiences across direct sales, partner, online, mobile and emerging channels. Buyers often prefer not to interact with sales representatives as their primary source of research, and increasingly prefer to buy online when they have already decided what to buy. For example, in the airline industry, the pandemic ~~also~~ accelerated a long-term trend towards direct booking channels, ~~in part due to a significant reduction in business travel,~~ and we anticipate airlines continuing to invest in technology, including mobile device-enabled solutions, to enhance their ability to capture a greater percentage of bookings through their own channels such as their websites.

•~~Digital Purchasing Driving Technology Adoption. The pandemic accelerated long-term trends toward digital purchasing by both consumers and corporate buyers. Buyers often prefer not to interact with~~ We believe companies must adopt technologies which power these types of experiences across sales ~~representatives~~channels as ~~their primary source of research, and increasingly prefer to buy online when~~ they ~~have already decided what to buy. Across industries and geographies, companies are increasingly modernizing~~modernize their sales process to compete in digital ~~commerce by adopting technologies which provide fast, frictionless~~commerce. Increasingly, companies are looking to AI to deliver actionable insights from their data, improve and ~~personalized buying experiences across sales channels.~~customize their offerings and drive process efficiencies. Our AI-powered solutions enable buyers to move fluidly and with personalized experiences across our customers’ ~~direct~~ sales ~~partner, online, mobile and emerging~~ channels, and our digital offer marketing solutions to help our customers drive their ~~customers~~buyers directly into their direct selling channels.

•~~Investing in Growth and Scaling our Business~~. We believe that our market opportunity is large and underpenetrated, and intend to continue investing in our business while focusing on cash flow and profitability, to create awareness for our solutions, acquire new customers, and expand within our existing customer base globally. We plan to continue investing in product development to enhance our existing technologies, including initiatives to accelerate customer time-to-value, improve efficiency, and provide out-of-the-box integration with third-party commerce solutions, and develop new applications and technologies. We have also increased our investments in our people to continue to attract, develop, retain and reward our employees in light of highly competitive labor markets.

•Cloud Migrations. As we continue to migrate ~~more and more of~~ our ~~historical on premises~~on-premises customers from our legacy licensed solutions to our current cloud solutions, we expect our future maintenance and support revenue to continue to decline and subscription revenue to ~~correspondingly~~ increase. We ~~are encouraging these migrations and~~continue to encourage our customers to migrate to our cloud solutions as we have announced ~~to our customers~~ end of support dates for certain of our ~~on premises~~on-premises solutions.

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Results of Operations

The following table sets forth certain items in our unaudited condensed consolidated statements of comprehensive loss as a percentage of total revenues for the three ~~and six~~ months ended ~~June 30, 2022~~March 31, 2023 and ~~2021:~~2022:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2022		2021		2022		2021				2023		2022
Revenue:	Revenue:									Revenue:
Subscription	Subscription	74	%	71	%	74	%	70	%	Subscription		76	%	73	%
Maintenance and support	Maintenance and support	11		14		11		15		Maintenance and support		8		12
Total subscription, maintenance and support	Total subscription, maintenance and support	84		85		85		85		Total subscription, maintenance and support		84		85

Services	Services	16		15		15		15		Services		16		15
Total revenue	Total revenue	100		100		100		100		Total revenue		100		100
Cost of revenue:	Cost of revenue:									Cost of revenue:
Subscription	Subscription	20		22		20		22		Subscription		19		21
Maintenance and support	Maintenance and support	3		3		3		4		Maintenance and support		3		3
Total cost of subscription, maintenance and support	Total cost of subscription, maintenance and support	23		25		23		26		Total cost of subscription, maintenance and support		22		24

Services	Services	17		17		17		17		Services		18		17
Total cost of revenue	Total cost of revenue	40		42		41		43		Total cost of revenue		40		41
Gross profit	Gross profit	60		58		59		57		Gross profit		60		59
Operating Expenses:	Operating Expenses:									Operating Expenses:
Selling and marketing	Selling and marketing	35		34		37		35		Selling and marketing		36		38
Research and development	Research and development	34		33		35		33		Research and development		30		37
General and administrative	General and administrative	20		17		21		19		General and administrative		19		22

Impairment of fixed assets	Impairment of fixed assets	—		—		1		—		Impairment of fixed assets		—		2
Total operating expenses	Total operating expenses	90		84		94		87		Total operating expenses		85		99
Convertible debt interest and amortization	Convertible debt interest and amortization	(2)		(3)		(2)		(3)		Convertible debt interest and amortization		(2)		(2)
Other (expense) income net		—		—		—		—
Other income (expense), net										Other income (expense), net		2		(1)
Loss before income tax provision	Loss before income tax provision	(32)		(29)		(38)		(32)		Loss before income tax provision		(26)		(43)
Income tax provision	Income tax provision	—		—		—		—		Income tax provision		—		—
Net loss	Net loss	(33)	%	(29)	%	(38)	%	(32)	%	Net loss		(26)	%	(43)	%

Revenue:


		Three Months Ended June 30,				Variance				Six Months Ended June 30,				Variance					Three Months Ended March 31,	Variance
(Dollars in thousands)	(Dollars in thousands)	2022		2021		$		%		2022		2021		$		%		(Dollars in thousands)		2023		2022		$		%
Subscription	Subscription	$	50,386	$	44,224	$	6,162	14	%	$	99,151	$	86,872	$	12,279	14	%	Subscription		$	55,969	$	48,765	$	7,204	15	%
Maintenance and support	Maintenance and support	7,249		8,570		(1,321)		(15)	%	15,104		18,244		(3,140)		(17)	%	Maintenance and support		5,712		7,855		(2,143)		(27)	%
Total subscription, maintenance and support	Total subscription, maintenance and support	57,635		52,794		4,841		9	%	114,255		105,116		9,139		9	%	Total subscription, maintenance and support		61,681		56,620		5,061		9	%

Services	Services	10,727		9,607		1,120		12	%	20,599		18,663		1,936		10	%	Services		11,501		9,872		1,629		17	%
Total revenue	Total revenue	$	68,362	$	62,401	$	5,961	10	%	$	134,854	$	123,779	$	11,075	9	%	Total revenue		$	73,182	$	66,492	$	6,690	10	%

Subscription revenue. Subscription revenue increased primarily due to ~~revenue from our acquisition of EveryMundo and~~ an increase in new and existing customer subscription ~~contracts.~~contracts and a recovery of approximately $1 million from a customer that previously declared bankruptcy.

Maintenance and support revenue. Maintenance and support revenue decreased primarily as a result of existing maintenance customers migrating to our cloud solutions and, to a lesser extent, customer maintenance churn. We expect maintenance revenue to continue to decline as we continue to migrate maintenance customers to our cloud solutions.

Services revenue. Services revenue increased primarily as a result of higher sales of professional services related to our subscription contracts and follow-on professional services to existing customers. Services revenue varies from period to period

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services revenue recognition on certain subscription contracts and efficiencies in our solutions implementations requiring less professional services during a particular period.

Cost of revenue and gross profit:


		Three Months Ended June 30,				Variance				Six Months Ended June 30,				Variance					Three Months Ended March 31,	Variance
(Dollars in thousands)	(Dollars in thousands)	2022		2021		$		%		2022		2021		$		%		(Dollars in thousands)		2023		2022		$		%
Cost of subscription	Cost of subscription	$	13,746	$	13,589	$	157	1	%	$	27,525	$	27,390	$	135	—	%	Cost of subscription		$	14,093	$	13,779	$	314	2	%
Cost of maintenance and support	Cost of maintenance and support	1,988		2,157		(169)		(8)	%	4,155		4,415		(260)		(6)	%	Cost of maintenance and support		2,282		2,167		115		5	%
Total cost of subscription, maintenance and support	Total cost of subscription, maintenance and support	15,734		15,746		(12)		—	%	31,680		31,805		(125)		—	%	Total cost of subscription, maintenance and support		16,375		15,946		429		3	%

Cost of services	Cost of services	11,907		10,658		1,249		12	%	23,322		21,091		2,231		11	%	Cost of services		13,167		11,415		1,752		15	%
Total cost of revenue	Total cost of revenue	27,641		26,404		1,237		5	%	55,002		52,896		2,106		4	%	Total cost of revenue		29,542		27,361		2,181		8	%
Gross profit	Gross profit	$	40,721	$	35,997	$	4,724	13	%	$	79,852	$	70,883	$	8,969	13	%	Gross profit		$	43,640	$	39,131	$	4,509	12	%

Cost of subscription. Cost of subscription ~~overall remained relatively unchanged year over year. Cost of subscription~~ increased slightly primarily due to anincreased infrastructure cost to support our current subscription customer base and higher employee-related costs mainly due to increase in ~~intangibles amortization and personnel costs associated with the acquisition of EveryMundo.~~headcount. The increase was partially offset by ~~lower costs driven by infrastructure cost efficiencies and lower~~a decrease in amortization expense for ~~capitalized~~intangible assets and internal-use software. Our subscription gross profit percentages were ~~73%~~75% and ~~69%~~72% for the three months ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021, respectively, and 72% and 68% for the six months ended June 30, 2022 and 2021,~~ respectively.

Cost of maintenance and support. Cost of maintenance and support ~~decreased primarily due to a decrease in personnel costs as a result of the need to support a declining maintenance customer base as we migrate customers to our subscription solutions.~~remained relatively unchanged. Maintenance and support gross profit percentages were ~~73%~~60% and ~~75%~~72% for the three months ended ~~June 30,~~March 31, 2023 and 2022, respectively. The decrease in gross profit percentages was primarily due to lower maintenance and ~~2021, respectively,~~support revenue as we continue to migrate customers to our subscription solutions and the cost of maintenance and ~~72% and 76% for the six months ended June 30, 2022 and 2021, respectively.~~support being relatively fixed.

Cost of services. Cost of services increased primarily due to higher personnel costs to support the increase in our services revenue during the ~~periods.~~period. Services gross profit percentages were ~~(11)~~(14)% and (16)% for the three months ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021, and (13)% for the six months ended June 30, 2022 and 2021.~~respectively. Services gross profit percentages vary period to period depending on different factors, including the level of professional services required to implement our solutions, the utilization of our employees and our effective man-day rates.

Operating expenses:


		Three Months Ended June 30,				Variance				Six Months Ended June 30,				Variance					Three Months Ended March 31,	Variance
(Dollars in thousands)	(Dollars in thousands)	2022		2021		$		%		2022		2021		$		%		(Dollars in thousands)		2023		2022		$		%
Selling and marketing	Selling and marketing	$	24,020	$	21,190	$	2,830	13	%	$	49,307	$	42,754	$	6,553	15	%	Selling and marketing		$	26,010	$	25,287	$	723	3	%
Research and development	Research and development	23,401		20,454		2,947		14	%	47,868		41,379		6,489		16	%	Research and development		22,291		24,467		(2,176)		(9)	%
General and administrative	General and administrative	13,837		10,659		3,178		30	%	28,166		23,646		4,520		19	%	General and administrative		14,135		14,329		(194)		(1)	%

Impairment of fixed assets	Impairment of fixed assets	—		—		—		—	%	1,551		—		1,551		—	%	Impairment of fixed assets		—		1,551		(1,551)		(100)	%
Total operating expenses	Total operating expenses	$	61,258	$	52,303	$	8,955	17	%	$	126,892	$	107,779	$	19,113	18	%	Total operating expenses		$	62,436	$	65,634	$	(3,198)	(5)	%

Selling and marketing expenses. During the three months ended ~~June 30, 2022,~~March 31, 2023, selling and marketing expenses increased primarily due to ~~higher employee-related costs and intangibles amortization related to the EveryMundo acquisition as well as~~ an increase in sales and marketing initiatives and travel expenses. ~~During the six months ended~~ ~~June 30, 2022, selling and marketing expenses increased primarily as~~The increase was partially offset by a ~~result of an increase~~decrease in employee-related costs ~~primarily~~mainly due to higher headcount related to our EveryMundo acquisition and higher severance cost primarily related to the separation of our Chief Operations Officer in the first quarter of 2022. In addition, there was an increase in intangibles amortization related to the EveryMundo acquisition and higher travel related expenses.organizational changes.

Research and development expenses. Research and development expenses ~~increased~~decreased primarily due to ~~an increase in employee-related costs due to higher headcount associated with the EveryMundo acquisition as well as an increase~~a decrease in noncash share-based compensation.n and contractors expense. The noncash share-based compensation was higher in prior year mainly due to the acceleration of equity awards related to the retirement of a senior officer in the first quarter of 2022.

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General and administrative expenses. General and administrative expenses ~~increased primarily due to an increase in employee-related costs and a change in bad debt expense as we had a expense recovery during 2021 as a result of improved credit conditions~~remained relatively consistent with certain customers. The bad debt expense recovery was $1.1 million and $1.7 million for the three and six months ended June 30, 2021, respectively. In addition, our acquisition of EveryMundo also contributed to overall higher general and administrative expenses as compared to the prior year.

Impairment of fixed assets. During the ~~six~~three months ended ~~June 30,~~March 31, 2023 and 2022, we recorded azero and $1.6 million impairment charge related to fixed ~~assets.~~assets, respectively. The 2022 impairment resulted from changes to our intentions for these assets in connection with a new agreement with a software vendor.

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Non-operating expenses:


		Three Months Ended June 30,				Variance				Six Months Ended June 30,				Variance					Three Months Ended March 31,	Variance
(Dollars in thousands)	(Dollars in thousands)	2022		2021		$		%		2022		2021		$		%		(Dollars in thousands)		2023		2022		$		%
Convertible debt interest and amortization	Convertible debt interest and amortization	$	(1,576)	$	(1,576)	$	—	—	%	$	(3,152)	$	(3,152)	$	—	—	%	Convertible debt interest and amortization		$	(1,576)	$	(1,576)	$	—	—	%
Other (expense) income, net		$	(2)	$	4	$	(6)	(150)	%	$	(420)	$	290	$	(710)	(245)	%
Other income (expense), net																		Other income (expense), net		$	1,451	$	(418)	$	1,869	(447)	%

Convertible debt interest and amortization. Convertible debt expense for the three ~~and six~~ months ended ~~June 30,~~March 31, 2023 and 2022 ~~and 2021~~ related to coupon interest and amortization of debt issuance costs attributable to our Notes.

Other income (expense) ~~income,~~, net. The change in other income (expense) ~~income,~~, net for the three ~~and six~~ months ended ~~June 30, 2022,~~March 31, 2023, primarily related to higher interest income and to a smaller extent due to the impact of foreign currency ~~impact during the periods.~~fluctuations.

Income tax provision:


		Three Months Ended June 30,						Variance				Six Months Ended June 30,						Variance					Three Months Ended March 31,	Variance
(Dollars in thousands)	(Dollars in thousands)	2022			2021			$		%		2022			2021			$		%		(Dollars in thousands)		2023			2022			$		%
Effective tax rate	Effective tax rate	(1.3)		%	(0.9)		%	n/a		n/a		(0.9)		%	(0.8)		%	n/a		n/a		Effective tax rate		(0.4)		%	(0.5)		%	n/a		n/a
Income tax provision	Income tax provision	$	291		$	168		$	123	73	%	$	434		$	317		$	117	37	%	Income tax provision		$	81		$	143		$	(62)	(43)	%

Income tax provision. The tax provision for the three ~~and six~~ months ended ~~June 30, 2022~~March 31, 2023 included both foreign income and withholding taxes. No tax benefit was recognized on jurisdictions with a projected loss for the year due to the valuation allowances on our deferred tax assets.

Our effective tax rate was ~~(1.3)~~(0.4)% and ~~(0.9)~~(0.5)% for the three ~~and six~~ months ended ~~June 30,~~March 31, 2023 and 2022, ~~respectively, and (0.9)% and (0.8)% for the three and six months ended June 30, 2021,~~ respectively. The income tax rate varies from the 21% federal statutory rate primarily due to the valuation allowances on our deferred tax assets. While our expected tax rate would be 0% due to the full valuation allowance on our deferred tax assets, the income tax provision and related effective tax rates is due to foreign income and withholding taxes.

Jurisdictions with a projected loss for the year where no tax benefit can be recognized due to the valuation allowances on our deferred tax assets are excluded from the estimated annual federal effective tax rate. The impact of such an exclusion could result in a higher or lower effective tax rate during a particular quarter depending on the mix and timing of actual earnings versus annual projections.

Liquidity and Capital Resources

At ~~June 30, 2022,~~March 31, 2023, we had ~~$215.2~~$192.4 million of cash and cash equivalents and ~~$110.4~~$95.9 million of working capital as compared to ~~$227.6~~$203.6 million of cash and cash equivalents and ~~$128.7~~$106.3 million of working capital at December 31, ~~2021.~~2022.

Our principal sources of liquidity are our cash and cash equivalents. In addition, we could ~~have~~ access to capital markets to supplement our liquidity position. Our material drivers or variants of operating cash flow are net income (loss), noncash expenses (principally share-based compensation, intangible amortization and amortization of debt issuance costs) and the timing of invoicing and cash collections from our customers. Our operating cash flows are also impacted by the timing of payments to our vendors and the payments of other liabilities.

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We believe our existing cash and cash equivalents will provide adequate liquidity and capital resources to meet our operational requirements, anticipated capital expenditures and coupon interest payments for our Notes for the next twelve months. Our future working capital requirements depend on many factors, including the operations of our existing business, growth of our customer subscription services, future acquisitions we might undertake, expansion into complementary businesses, timing of adoption and implementation of our solutions and customer churn. Capital markets have tightened recently in response to the macroeconomic environment making new financing more difficult and/or expensive and we may not be able to obtain such financing on terms acceptable to us or at all. During the first quarter of 2023, the financial markets experienced disruption due to certain bank failures. We have not experienced any material impact from the disruption but will continue to monitor the situation and take action accordingly.

Our 2024 Notes, with a principal amount of $143.8 million, mature on May 15, 2024, unless redeemed or converted in accordance with their terms prior to such date.

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The following table presents key components of our unaudited condensed consolidated statements of cash flows for the ~~six~~three months ended ~~June 30, 2022~~March 31, 2023 and ~~2021:~~2022:


		Six Months Ended June 30,					Three Months Ended March 31,
(Dollars in thousands)	(Dollars in thousands)	2022		2021		(Dollars in thousands)	2023		2022
Net cash used in operating activities	Net cash used in operating activities	$	(12,945)	$	(9,414)	Net cash used in operating activities	$	(6,143)	$	(11,014)
Net cash used in investing activities	Net cash used in investing activities	(938)		(2,586)		Net cash used in investing activities	(1,546)		(461)
Net cash provided by financing activities		1,231		1,244
Net cash (used in) provided by financing activities						Net cash (used in) provided by financing activities	(3,573)		1,231
Cash and cash equivalents (beginning of period)	Cash and cash equivalents (beginning of period)	227,553		329,134		Cash and cash equivalents (beginning of period)	203,627		227,553
Cash and cash equivalents (end of period) ~~(1)~~	Cash and cash equivalents (end of period) ~~(1)~~	$	215,178	$	318,326	Cash and cash equivalents (end of period) ~~(1)~~	$	192,376	$	217,393

~~(1) The decrease in cash and cash equivalents year over year was primarily due to the acquisition of EveryMundo in November 2021. Refer to note 5 for further detail.~~

Operating Activities

Net cash used in operating activities for the ~~six~~three months ended ~~June 30, 2022~~March 31, 2023 was ~~$12.9~~$6.1 million. The ~~$3.5~~$4.9 million ~~increase~~improvement over last year was primarily attributable to increased cash collections during the period and a ~~higher~~lower annual incentive payment in ~~2022~~2023 as compared to prior ~~year, partially offset by strong collections during the period.~~year.

Investing Activities

Net cash used in investing activities for the ~~six~~three months ended ~~June 30, 2022~~March 31, 2023 was ~~$0.9~~$1.5 million. The ~~decrease from prior year~~increase was ~~primarily related~~due to higher capital expenditures, primarily related to third-party software license renewal, in ~~2021 mainly attributable~~2023 as compared to the ~~build out of our new headquarters which was committed~~same period in prior ~~to the pandemic.~~year.

Financing Activities

Net cash ~~provided by~~used in financing activities for the ~~six~~three months ended ~~June 30, 2022~~March 31, 2023 was ~~$1.2 million and remained consistent with prior year. It~~$3.6 million. The increase was primarily attributable to ~~proceeds from employee stock plans, partially offset by payment of~~higher tax ~~withholdings~~withholding payments on the vesting of employee share-based awards.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material. We do not have any relationships with unconsolidated entities or financial partnerships, such as variable interest entities, that would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Contractual Obligations and Commitments

Other than changes described in Note 109 above, there have been no material changes to our contractual obligations and commitments disclosed in our Annual Report.

~~Credit facility~~

~~Our $50 million secured Credit Agreement ("Revolver") with the lenders party thereto and Wells Fargo Bank, National Association as agent for the lenders party thereto~~ ~~expired in March 2022.~~ ~~There were no outstanding borrowings under the Revolver prior to its expiration.~~

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Recent Accounting Pronouncements

See "Recently ~~adopted~~issued accounting pronouncements not yet adopted" in Note 2 above for discussion of recent accounting pronouncements including the respective expected dates of ~~adoption.~~adoption, if any.

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Critical accounting policies and estimates

Our consolidated financial statements are prepared in accordance with GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses, and related disclosures. Actual results could differ from those estimates. The complexity and judgment required in our estimation process, as well as issues related to the assumptions, risks and uncertainties inherent in determining the nature and timing of satisfaction of performance obligations and determining the standalone selling price of performance obligations, affect the amounts of revenue, expenses, unbilled receivables and deferred revenue. Estimates are also used for, but not limited to, receivables, allowance for ~~doubtful accounts,~~credit losses, operating lease right-of-use assets and operating lease liabilities, useful lives of assets, depreciation, income taxes and deferred tax asset valuation, valuation of stock awards, other current liabilities and accrued liabilities. Numerous internal and external factors can affect estimates. Our critical accounting policies related to the estimates and judgments are discussed in our Annual Report under management's discussion and analysis of financial condition and results of operations.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign Currency Exchange Risk

Although our contracts are predominately denominated in U.S. dollars, we are exposed to foreign currency exchange risk because we also have some contracts denominated in foreign currencies. The effect of a hypothetical 10% adverse change in exchange rates on our foreign denominated receivables as of ~~June 30, 2022~~March 31, 2023 would result in a loss of approximately ~~$0.6~~$0.9 million. We are also exposed to foreign currency risk due to our operating subsidiaries in France, United Kingdom, Canada, Germany, Ireland, Australia, Bulgaria, Ecuador and United Arab Emirates. A hypothetical 10% adverse change in the value of the U.S. dollar in relation to the euro, which is our single most significant foreign currency exposure, would have decreased revenue for the three ~~and six~~ months ended ~~June 30, 2022~~March 31, 2023 by approximately ~~$0.9 million and $1.9 million, respectively.~~$1.1 million. However, due to the relatively low volume of payments made and received through our foreign subsidiaries, we do not believe that we have significant exposure to foreign currency exchange risks. Fluctuations in foreign currency exchange rates could harm our financial results in the future.

We currently do not use derivative financial instruments to mitigate foreign currency exchange risks. We continue to review this matter and may consider hedging certain foreign exchange risks through the use of currency derivatives in future years.

Interest Rate Risk

As of ~~June 30, 2022,~~March 31, 2023, we had outstanding principal amounts of $150.0 million and $143.8 million of the 2027 and the 2024 Notes, respectively, which are fixed rate instruments. Therefore, our results of operations are not subject to fluctuations in interest rates. The fair value of the Notes may change when the market price of our stock fluctuates.

We believe that we do not have any material exposure to changes in the fair value as a result of changes in interest rates due to the short-term nature of our cash equivalents.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act) as of ~~June 30, 2022.~~March 31, 2023. Based on our evaluation of our disclosure controls and procedures as of ~~June 30, 2022,~~March 31, 2023, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during the three months ended ~~June 30, 2022~~March 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we are a party to legal proceedings and claims arising in the ordinary course of business. We are not currently aware of any such proceedings or claims that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition, results of operations or cash flows.

ITEM 1A. RISK FACTORS

~~Except as set forth below, there~~There have been no material changes in the Company's risk factors from those disclosed in Part I, Item 1A, of our Annual Report.

~~We are a multinational corporation exposed to risks inherent in international operations.~~

~~The majority of our revenues is derived from our customers outside the U.S.~~ To date, the majority of our sales has been denominated in U.S. dollars, although the majority of our expenses that we incur in our international operations is denominated in local currencies. To date, we have not used risk management techniques or "hedged" the risks associated with fluctuations in foreign currency exchange rates. Consequently, our results of operations, cash flows, and financial condition, including our revenue and operating margins, can be subject to losses from fluctuations in foreign currency exchange rates, as well as regulatory, political, social and economic developments or instability in the foreign jurisdictions in which we operate.~~For additional financial information about geographic areas, see Note 19 of the Notes to the Consolidated Financial Statements in our Annual Report on Form 10-K.~~

Our operations outside the U.S. are subject to risks inherent in doing business internationally, requiring resources and management attention, and may subject us to new or larger levels of regulatory, economic, foreign currency exchange, tax and political risks. We have customers in over 60 countries internationally, which we service through our operations in the U.S., Australia, Bulgaria, Canada, France, Germany, Ireland, United Arab Emirates, United Kingdom and Singapore. We expect our international operations to continue to grow. In addition to navigating the challenges related to the ongoing COVID-19 pandemic in foreign jurisdictions, we face other risks with respect to our international operations, including:

•~~economic conditions in various parts of the world, particularly impacts from the COVID-19 pandemic,~~ ~~disruptions in supply chains, turmoil in labor markets and inflation;~~

•~~sustained disruption to international travel from the COVID-19 pandemic and variations or mutations thereof as well as any other outbreaks of contagious diseases;~~

•~~differing labor and employment regulations, especially where labor laws are generally more advantageous to employees as compared to the U.S.;~~

•~~the difficulty of managing and staffing our international operations and the increased travel, infrastructure and legal costs associated with multiple international locations;~~

•~~new and different sources of competition;~~

•compliance with multiple, conflicting, ambiguous or rapidly evolving governmental laws and regulations, including tax, privacy, data protection and sovereignty, cybersecurity, anti-corruption, import/export, antitrust and industry-specific laws and regulations and our ability to identify and respond timely to compliance issues when they occur;

•vetting and monitoring our third-party business partners in new and evolving markets to confirm they maintain standards consistent with our brand and reputation and comply with our Supplier Code of Conduct as applicable;

•~~less favorable intellectual property laws;~~

•~~tariffs and trade barriers and other regulatory or contractual limitations on our ability to sell or develop our solutions in certain foreign markets;~~

•~~availability of sufficient network connectivity required for certain of our products; and~~

•~~difficulties in enforcing contracts and collecting accounts receivable, especially in developing countries.~~

~~Table of Contents~~

In addition, while there has been no material impact on our business to date, we are subject to risks from the direct and indirect impacts from the Russian invasion of Ukraine and the ensuing sanctions. These risks include general geopolitical unrest, turmoil in certain financial markets, instability in the financial system, disruption to domestic and international travel, displacement of persons, disruption of supply chains and routes, including energy supplies, commodity and other price inflation, increased cybersecurity threats and attacks, the possibility of military activity or risk of wider war in countries near or adjacent to Ukraine. For example, in Sofia, Bulgaria, we have ~~marketing, research and development, professional~~ ~~services, customer success, maintenance and support and general and administrative staff, representing approximately 14% of our personnel.~~

If we continue to expand our business globally, our success will depend, in large part, on our ability to anticipate and effectively manage these and other risks associated with our international operations. Our failure to manage any of these risks successfully could harm our international operations and reduce our international sales, adversely affecting our business, operating results and financial condition.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

We have an ongoing authorization from our board of directors to repurchase up to $15.0 million in shares of our common stock in the open market or through privately negotiated transactions. As of ~~June 30, 2022,~~March 31, 2023, $10.0 million remained available for repurchase under the existing repurchase authorization. We did not make any purchases of our common stock under this program for the three months ended ~~June 30, 2022.~~March 31, 2023.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURE

None.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS

Index to Exhibits

Provided

Incorporated by Reference

Exhibit No.

Description

Herewith

Form

Filing Date

31.1

Certification of Chief Executive Officer Pursuant to Exchange Act Rule 13a-14(a)/15d-14(a).

31.2

Certification of Chief Financial Officer Pursuant to Exchange Act Rule 13a-14(a)/ 15d-14(a).

32.1*

Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350.

Exhibit No.

Description

101.INS

XBRL Instance Document.

101.SCH

XBRL Taxonomy Extension Schema Document.

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB

XBRL Taxonomy Extension Label Linkbase Document.

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document.

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*			This certification shall not be deemed “filed” for purposes of Section 18 of the Securities Act of 1934, or otherwise subject to the liability of that Section, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


		PROS HOLDINGS, INC.

~~July 28, 2022~~May 2, 2023	By:	/s/ Andres Reiner
		Andres Reiner
		President and Chief Executive Officer (Principal Executive Officer)

~~July 28, 2022~~May 2, 2023	By:	/s/ Stefan Schulz
		Stefan Schulz
		Executive Vice President and Chief Financial Officer (Principal Financial Officer)

2925


	Three Months Ended June 30, 2021
	Common Stock			Additional Paid-In Capital		Treasury Stock			Accumulated Deficit		Accumulated other comprehensive loss		Total Stockholders’ (Deficit) Equity
	Shares	Amount				Shares	Amount
Balance at March 31, 2021	44,252,765	$	49	$	518,338	4,680,723	$	(29,847)	$	(449,472)	$	(4,039)	$	35,029
Stock awards net settlement	86,917	—		—		—	—		—		—		—









Noncash share-based compensation	—	—		8,588		—	—		—		—		8,588
Other comprehensive loss	—	—		—		—	—		—		157		157
Net loss	—	—		—		—	—		(18,046)		—		(18,046)
Balance at June 30, 2021	44,339,682	$	49	$	526,926	4,680,723	$	(29,847)	$	(467,518)	$	(3,882)	$	25,728


	Six Months Ended June 30, 2022
















	Common Stock			Additional Paid-In Capital		Treasury Stock			Accumulated Deficit		Accumulated other comprehensive loss		Total Stockholders’ (Deficit) Equity
	Shares	Amount				Shares	Amount
Balance at December 31, 2021	44,520,542	$	49	$	546,693	4,680,723	$	(29,847)	$	(508,652)	$	(4,659)	$	3,584

Stock awards net settlement	677,492	1		(213)		—	—		—		—		(212)
Proceeds from employee stock plans	49,245	—		1,443		—	—		—		—		1,443







Noncash share-based compensation	—	—		21,991		—	—		—		—		21,991

Other comprehensive loss	—	—		—		—	—		—		(850)		(850)
Net loss	—	—		—		—	—		(51,046)		—		(51,046)
Balance at June 30, 2022	45,247,279	$	50	$	569,914	4,680,723	$	(29,847)	$	(559,698)	$	(5,509)	$	(25,090)


			Weighted Average Useful Life
	Amount		(years)
Developed technology	$	15,700	5
Customer relationships	5,500		4
Trade name	2,100		8
Total	$	23,300