Q1 2024 PROS Holdings Inc Earnings Call

unknown: BF-WATCH TV 2021

Greetings and welcome to the Pros Holdings first quarter 'twenty 'twenty four earnings conference call.

Operator: Welcome to the PROS Holdings first quarter 2024 earnings conference call. At this time, all participants will be in listen-only mode. The question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to Belinda Overdeput, Head of Investor Relations. Please do so.

Operator: At this time, all participants will be in listen only mode.

Belinda Overdeput: A question and answer session will follow the formal presentation.

Belinda Overdeput: If anyone should require operator assistance. Please press star zero on your telephone keypad.

Belinda Overdeput: As a reminder, this conference is being recorded I would now like to turn the conference over to Belinda overdue to it head of Investor Relations. Please go ahead.

Belinda Overdeput: Thank you, Operator. Good afternoon, everyone, and thank you for joining us.

Belinda Overdeput: Thank you operator, good afternoon, everyone and thank you for joining US our earnings press release, SEC filings and a replay of today's call can be found on the Investor Relations section of our website at pros Dot com.

Belinda Overdeput: Our earnings press release, SEC filings, and a replay of today's call can be found in the Investor Relations section of our website at PROS.com. Our prepared remarks are also available on our website and will be replaced by the official transcript, which includes participant questions, once available. With me on today's call is Andres Reiner, President and Chief Executive Officer, and Stefan Schulz, Chief Financial Officer. Please note that some of the commentary today will include forward-looking statements, including, without limitation, those about our strategy, future business prospects, and market opportunities, and our financial projections and guidance.

Belinda Overdeput: Our prepared remarks are also available on our website and will be replaced by the official transcript, which includes participant questions once available.

Belinda Overdeput: With me on today's call is Andras, Reiner, President and Chief Executive Officer, and Stefan Schulz Chief Financial Officer.

Belinda Overdeput: Final results could differ materially from those in our forecast. For more information, please refer to the risk factors described in our SEC filings. PROS assumes no obligation to update any forward-looking statements to reflect future events or circumstances. As a reminder, during the call, we will discuss non-GAAP metrics. Reconciliations between each non-GAAP measure and the most directly comparable GAAP measure, to the extent to which they are available without unreasonable effort, are available in our earnings press release. With that, I'll turn the call over to you, Andres.

Belinda Overdeput: Note that some of the commentary today will include forward looking statements, including without limitation, those about our strategy future business prospects and market opportunities and our financial projections and guidance actual results could differ materially from such statements and our forecast for more information. Please refer to the risk factors described in our SEC filings.

Andres: Pros assumes no obligation to update any forward looking statements to reflect future events or circumstances. As a reminder, during the call. We will discuss non-GAAP metrics reconciliations between each non-GAAP measure and the most directly comparable GAAP measure to the extent to which available without unreasonable effort are available in our earnings press release with that I'll.

Belinda Overdeput: Turn the call over to you Andres.

Andres D. Reiner: Thank you, Belinda. Good afternoon, everyone.

Andres: Thank you Bill and good afternoon, everyone and thank you for joining us on today's call. We delivered a strong start to 2024 exceeding the high end of our guidance ranges across all metrics. We grew subscription revenue by 15% in total revenue by 10%, while delivering an nir.

Andres D. Reiner: And thank you for joining us on today's call. We delivered a strong start to 2024, exceeding the high end of our guidance ranges across all metrics. We grew subscription revenue by 15% and total revenue by 10%, while delivering a near 300% improvement in adjusted EBITDA year over year. Reflecting our continued focus on our 2026 goal of being a rule of 40 company, core to our strategy to fuel our growth is to continue to bring groundbreaking AI innovations to market and drive market adoption of the PROS platform with our land, realize, and expand strategy.

Andres D. Reiner: Our 300% improvement in adjusted EBITDA and year over year, reflecting our continued focus on our 'twenty 'twenty six goal of being a rule of 40 company.

Andres D. Reiner: Core to our strategy to fuel our growth is to continue to bring groundbreaking AI innovations to market and drive market adoption of the pros platform with our land realized and expand strategy.

Andres D. Reiner: In Q1, we officially launched the PROS CO-PILOT for Sales plugin in partnership with Microsoft. In today's environment, customers place a premium on speed and efficiency, and research shows that 35 to 50% of sales go to the vendor that responds first.

Andres D. Reiner: In Q1, we officially launched the pros co pilot for sales plug in in partnership with Microsoft.

Andres D. Reiner: In today's environment customers place a premium on speed and efficiency in research shows that 35% to 50% of C. L scope to the vendor the response first.

Andres D. Reiner: The PROS Copilot for Sales plugin seamlessly integrates PROS AI Power Quo insights into Microsoft Copilot for Sales, empowering sellers to deliver fast, personalized offers to customers directly from email threads. PROS is the first vendor to integrate Quoting Sites into Microsoft Copilot for Sales, uniquely harnessing the power of data from across ProSmart CPQ, Microsoft 365 apps, and CRM platforms to drive AI-powered offers that win. Our platform innovations are responding, evidenced by our wins across the industry.

Andres D. Reiner: The pro scope all it foresee us plugging seamlessly integrates proceeds <unk> powerful insights into Microsoft co pilot for sales.

Andres D. Reiner: In Paris sellers did deliver fast personalized offers to customers directly from email threats.

Andres D. Reiner: This is the first vendor to any great quote insights into Microsoft co pilot for sales uniquely harnessing the power of data from my Cross Pros Smart C. P Q.

Andres D. Reiner: Microsoft 365 apps in CRM platforms to drive AI powered offers that win.

Andres D. Reiner: Or platform innovations are resonating evidenced by our wins across industries I will share a few of our exciting wins, starting with new customers.

Andres D. Reiner: I will share a few of our exciting wins, starting with new customers. In Q1, ECE Group and Les Schwab made the strategic decision to adopt the PROS platform. ECE Group, a global leader in real estate management, chose to activate smart CPQ to power offers for retail rental spaces to accelerate time to quote and drive a better customer experience. Les Schwab, a leading automotive tire and parts distributor, chose to activate smart price optimization and management to power real-time dynamic pricing across its more than 500 retail stores.

Andres D. Reiner: In Q1 E C group unless schwab made the strategic decision to adopt the Prost block four.

Andres D. Reiner: E C group, a global leader in real estate management chose to activate Smart C. P. Q2 power offers for their retail rental spaces to accelerate time to quote and drive a better customer experience.

Andres D. Reiner: Schwab, a leading automotive power and parts distributor chose to activate smart price optimization and management to power real time dynamic pricing across they are more than 500 retail stores fueling their profitable growth strategy.

Andres D. Reiner: Fueling Their Profitable Growth Strategy, We also welcome Air India as a new PROS customer in Q1. Air India selected the PROS platform to activate or offer a marketing solution to seamlessly market personalized offers to passengers online, bringing them into their direct booking channel to drive higher conversion of online sales and fuel profitable growth. Now on to some of our incredible expansions in Q1.

Andres D. Reiner: We also welcome era, India as a new pros customer in Q1 Air India selected the <unk> platform to activate or offer marketing solution to seamlessly market personalize offers to passengers online bring.

Andres D. Reiner: In them into their direct booking channel to drive higher conversion of online C. L same fuel profitable growth.

Andres D. Reiner: Now on to some of our incredible expansions in Q1.

Andres D. Reiner: Hi has expanded its use of our firm marketing on the PROS platform to continue to drive exceptional experiences for their guests through optimized and personalized marketing campaigns. The new innovations enable Hyatt to enhance customer acquisition strategies by launching customizable pages at scale across all digital campaigns. AirBaltic, the flag carrier of Latvia, expanded their use of the PROS platform by activating dynamic ancillary pricing. Airlines around the world are increasingly focused on driving revenue growth through ancillary pricing.

Andres D. Reiner: Hi has expanded its use of our firm marketing on the <unk> platform to continue to drive exceptional experiences for their guests through optimizing personalized marketing campaigns.

Andres D. Reiner: New innovations enable hyatt to enhance customer acquisition strategies by launching customizable pages at scale across all digital campaigns.

Andres D. Reiner: Airball take the flag carrier of Latvia expanded theories suite approach platform by activating dynamic ancillary pricing.

Andres D. Reiner: Airlines around the world are increasingly focused on driving revenue growth through ancillary fees in process. The only AI power solution in the market for ancillary pricing.

Andres D. Reiner: In process, the only AI-powered solution in the market, France Larry Price. PROSDAP uses reinforcement learning techniques to present tailored ancillary service prices to passers-by, aiming to drive more overall ancillary sales at a more optimal price. Based on PROS' initial estimates, DAPP is expected to drive a 2-6% revenue uplift through AI-powered dynamic pricing. With that, Air Baltic has already seen revenue uplift on assigned seating, which is one of their largest ancillary revenue contributors.

Andres D. Reiner: DAP uses reinforcement learning techniques to present tailored ancillary service prices to passengers aiming to drive more overall ancillary sales at more optimal prices.

Andres D. Reiner: Based on proceeds initial estimate snap is expected to drive 2% to 6% revenue uplift through AI powered dynamic pricing with.

Andres D. Reiner: With that they're Baltic has already seen revenue uplift on assigned seating, which is one of their largest ancillary revenue contributors.

Andres D. Reiner: Cargolux expanded their use of the PROS platform by activating our Gen4 AI price optimization, including our capacity-aware optimization. With this expansion, Cargolux would take advantage of our latest AI innovations to drive even more value as they continue to use the PROS platform to power their omni-channel sales movement. We're so proud to see how the PROS platform is helping businesses across industries and around the globe drive men's value. You will hear more from our customers directly and learn more about the new AI innovations we're bringing to market at our upcoming Outperform with Pros conference.

Andres D. Reiner: Cargo Lux expanded their use of the pros platform by activating or Gen. Four AI price optimization, including our capacity aware optimization with this expansion target latch would take advantage of our latest innovations to drive even more value as they continue to use it.

Andres D. Reiner: <unk> platform to power their omnichannel sales motion.

Andres D. Reiner: We're so proud to see how the pros platform is helping businesses across industries and around the globe driving men's value you will hear more from our customers directly and there are more about the new AI innovations, we're bringing to market at our upcoming outperform with pros conference.

Andres D. Reiner: Now onto a recent organizational update. We welcome Todd McNabb as Chief Revenue Officer. Todd will lead our global go-to-market team, bringing to PROS over 25 years of experience driving sales and scaling organizations. His leadership will amplify our growth momentum, building upon our land, realize, and expand strategy. I'm excited to welcome Todd to the team, and I'm enjoying working closely with him on our growth objective. Lastly, our core values of ownership, innovation, and care show up in everything we do, including our efforts to build a more sustainable future.

Andres D. Reiner: Now onto our recent organizational update we welcome Todd make Nab as Chief revenue Officer Todd.

Andres D. Reiner: Todd will lead our global go to market team, bringing to pros over 25 years of experience in driving C. L. Since scaling organizations.

Andres D. Reiner: <unk> leadership will amplifier growth momentum building upon our Lan realizing expand strategy I'm excited to welcome Todd to the team and I'm enjoying working closely with them on our growth objectives.

Andres D. Reiner: Lastly, or core values of ownership innovation in care show up in everything we do including our efforts to build a more sustainable future.

Andres D. Reiner: This is reflected in our recently published 2023 Sustainability Report, which highlights our progress across environmental, social, and governance-related topics and embodies our company's culture in action. You will find our new report in the Investor Relations section of our website. Before I close, I would like to thank our incredible global team for their passion and dedication to PROS, our customers, and our community. I would also like to thank our customers, partners, and shareholders for their ongoing support of PROS. With that, I'll turn the call over to Stefan to discuss our financial performance analysis.

Andres D. Reiner: This is reflected in our recently published 20 twenty-three sustainability report, which highlights our progress across environmental social and governance related topics and embodies our company's culture inaction, you will find our new report in the Investor Relations section of our website.

Andres D. Reiner: Before I close I would like to thank our incredible global team for their passion and dedication to pros or customers in our communities I would also like to thank our customers partners and shareholders for their ongoing support of pros with that I'll turn the call over to Stefan to cover.

Stefan: Financial performance and outlook.

Stefan B. Schulz: Thank you, Andres, and good afternoon, everyone. It has been almost one year since we outlined our 2026 financial objectives, and I'm pleased with the progress we have made during that time, including in the first quarter of this year. In the first quarter, we set new highs for non-GAAP subscription and overall gross margins, as well as our second-best adjusted EBITDA result. I mention this because we typically see our best adjusted EBITDA and free cash flow results during the second half of each year. And with that, I will dive into our results for the first quarter.

Stefan: Thank you Andre and good afternoon, everyone.

Stefan B. Schulz: It has been almost one year since we outlined our 2026 financial objectives and I'm pleased with the progress we have made during that time, including first quarter of this year.

Stefan B. Schulz: In the first quarter, we set new highs for non-GAAP subscription and overall gross margins as well as our second best adjusted EBITDA result.

Stefan B. Schulz: I mentioned this because we typically see our best adjusted EBITDA and free cash flow results during the second half of each year.

Stefan B. Schulz: Now with that I will dive into our results for the first quarter.

Stefan B. Schulz: Subscription revenue was $64.3 million, up 15% year over year, and total revenue was $80.7 million, up 10% year over year, both exceeding the guidance range. For the first quarter, recurring revenue was consistent at 84% of total revenue, and our trailing 12-month gross revenue retention continued to be better than 93%. Calculated billings in the first quarter increased 3% year over year and 11% for the trailing 12 months, in line with our expectations and the seasonality of our business. We expect the trend of calculated billings this year to continue to be consistent with what we saw last year.

Stefan B. Schulz: Subscription revenue was $64.3 million up 15% year over year, and total revenue was $80.7 million up 10% year over year, both exceeding the guidance ranges.

Stefan B. Schulz: Our first quarter recurring revenue was consistent at 84% of total revenue and our trailing 12 month gross revenue retention continued to be better than 93%.

Stefan B. Schulz: Calculated billings in the first quarter increased 3% year over year and 11% for the trailing 12 months in line with our expectations and the seasonality of our business.

Stefan B. Schulz: We expect the trend of calculated billings this year to continue to be consistent with what we saw last year.

Stefan B. Schulz: Our non-GAAP subscription gross margin was 79% in the first quarter, an improvement of over 140 basis points year-over-year. We also delivered a 9% non-GAAP services gross margin in the first quarter, an improvement of over 1,500 basis points year-over-year. With these improvements, our overall non-GAAP gross margin increased to 67% in the first quarter, an improvement of 315 basis points in non-GAAP gross margin year-over-year. I'm very pleased with the progress we are making on our key gross margin metrics.

Stefan B. Schulz: Our non-GAAP subscription gross margin was 79% in the first quarter, an improvement of over 140 basis points year over year.

Stefan B. Schulz: We also delivered a 9% non-GAAP services gross margin in the first quarter, an improvement of over 1500 basis points year over year.

Stefan B. Schulz: With these improvements our overall non-GAAP gross margin increased to 67% in the first quarter, an improvement of 315 basis points and non-GAAP gross margin year over year.

Stefan B. Schulz: I'm very pleased with the progress we are making on our key gross margin metrics.

Stefan B. Schulz: We generated adjusted EBITDA of $4.6 million in the first quarter, significantly exceeding guidance and achieving a near 300% improvement year-over-year. Our continued focus on operational efficiency through the initiatives we have in place, such as infusing AI into all aspects of our operations, are helping us continue to drive better profitability. Our free cash flow burn in the first quarter was $4.9 million, which is about in line with our burn in the first quarter of last year. I'm very pleased with this outcome given the increase in incentive payments made in the first quarter of this year compared to last year.

Stefan B. Schulz: We generated adjusted EBITDA of $4.6 million in the first quarter significantly exceeding guidance and achieving a near 300% improvement year over year.

Stefan B. Schulz: Our continued focus on operational efficiency through the initiatives, we have in place such as infusing AI in all aspects of our operations are helping us continue to drive better profitability.

Stefan B. Schulz: Our free cash flow burn in the first quarter was $4.9 million, which is about in line with our burn in the first quarter of last year.

Stefan B. Schulz: I'm very pleased with this outcome given the increase in incentive payments made in the first quarter of this year versus last year.

Stefan B. Schulz: As a reminder, it is typical for us to have higher expenses in the first half of the year because of payroll taxes, as well as marketing initiatives and events. From a balance sheet perspective, we exited the first quarter with $166.4 million of cash in investment. Later this month, we have $21.7 million of our convertible notes due, and we currently plan to pay this balance with our existing cash.

Stefan B. Schulz: As a reminder, it is typical for us to have higher expenses in the first half of the year because of payroll taxes, as well as marketing initiatives and events.

Stefan B. Schulz: From a balance sheet perspective, we exited the first quarter with $166.4 million of cash and investments.

Stefan B. Schulz: Later this month, we have $21.7 million of our convertible notes due and we currently plan to pay this balance with our existing cash and investments.

Stefan B. Schulz: Our first quarter non-GAAP earnings per share was $0.04 per share, also exceeding guidance. Now, let's turn to guidance for Q2. We expect second quarter subscription revenue to be in the range of $64 to $64.5 million, representing 12% growth at the midpoint. We expect second quarter total revenue to be in the range of $80.5 to $81.5 million, representing 7% growth at the midpoint. We are anticipating services revenue to be essentially flat due to the outsized 25% growth we saw in services revenue during the second quarter last year.

Stefan B. Schulz: Our first quarter non-GAAP earnings per share was four cents per share also exceeding guidance.

Stefan B. Schulz: Now turning to guidance for Q2.

Stefan B. Schulz: We expect second quarter subscription revenue to be in the range of $64 million to $64.5 million, representing 12% growth at the midpoint.

Stefan B. Schulz: We expect second quarter total revenue to be in the range of $80.5 million to $81.5 million, representing 7% growth at the midpoint.

Stefan B. Schulz: We are anticipating services to be essentially flat due to the outsized 25% growth we saw in services revenue during the second quarter last year.

Stefan B. Schulz: This is impacting our expected total revenue growth rate by as much as 2%. We expect second quarter adjusted EBITDA of between $1 and $2 million and an improvement of $1.4 million year over year. We are expecting an increase in selling and marketing expenses for Outperform, which will take place later this month. Using a non-GAAP estimated tax rate of 22%, we anticipate second quarter non-GAAP earnings per share at breakeven to two cents per share based on an estimated 48.2 million diluted weighted average shares outstanding.

Stefan B. Schulz: This is impacting our expected total revenue growth rate by as much as two percentage points.

Stefan B. Schulz: We expect second quarter, adjusted EBITDA of between one and $2 million, an improvement of $1.4 million year over year.

Stefan B. Schulz: We are expecting an increase in selling and marketing expenses for outperform which will take place later this month.

Stefan B. Schulz: Using a non-GAAP estimated tax rate of 22%, we anticipate second quarter non-GAAP earnings per share at breakeven to two cents per share based on an estimated $48 2 million diluted weighted average shares outstanding.

Stefan B. Schulz: For the full year, we are raising our guidance for subscription revenue, total revenue, and adjusted EBITDA. We now expect subscription revenue to be in the range of $263.5 to $265.5 million, representing 13% growth at the midpoint, and total revenue to be in the range of $332.5 to $334.5 million, representing 10% growth at the midpoint. Similar to what we saw in Q2 of last year, we have visibility to a higher level of services revenue in the second half of this year than our guidance would imply for the first half of 2024. Adjusted EBITDA is expected to be in the range of $17 to $20 million, representing an improvement of $12.5 million year-over-year.

Stefan B. Schulz: For the full year, we are raising our guidance for subscription revenue total revenue and adjusted EBITDA.

Stefan B. Schulz: We now expect subscription revenue to be in the range of 263.5 to $265 $5 million, representing 13% growth at the midpoint.

Stefan B. Schulz: And total revenue to be in the range of $332.5 million to $334.5 million, representing 10% growth at the midpoint.

Stefan B. Schulz: Similar to what we saw in Q2 of last year, we have visibility to a higher level of services revenue in the second half of this year from what our guidance would imply for the first half of 'twenty 'twenty four.

Stefan B. Schulz: Adjusted EBITDA is expected to be in the range of $17 million to $20 million, representing an improvement of $12 $5 million year over year.

Stefan B. Schulz: In closing, I would like to thank our global team and our customers for their continued support of PROS. We also thank you, our shareholders, for your support of PROS, and we look forward to speaking with you at our upcoming events. I will now turn the call back over to the operator for questions. Operator? Thank you.

Speaker Change: In closing I would like to thank our global team and our customers for their continued support of pros. We also thank you our shareholders for your support of pros and we look forward to speaking with you at our upcoming events I will now turn the call back over to the operator for questions operator.

Operator: Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment, please, as we pull for questions. The first question will come from Scott Berg with Needham. Please go ahead.

Speaker Change: Thank you at this time, we will be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.

Scott Randolph Berg: You May press Star two if you would like to remove your question from the queue for.

Scott Randolph Berg: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Operator: One moment, please as we poll for questions.

Operator: The first question will come from Scott Berg with Needham. Please go ahead.

Scott Randolph Berg: Hi everyone, congrats on the nice quarter and I like to see the profitability improvements. A nice steady year over year trend there.

Scott Randolph Berg: Hi, everyone. Congrats on a nice quarter and like to see the profitability improvements nice steady year over year trend there.

Andres D. Reiner: Andres, I wanted to ask a question that I actually feel kind of weird about asking is, it's about your new copilot functionality that you announced. It's only weird because I want to ask you how you monetize AI or how you plan to monetize new AI technologies, knowing that you've been monetizing AI for, obviously, a couple decades now, but how should we think about this, you know, innovation being infused into the platform? Is there an opportunity to step up, you know, ARPU, you know, for customers and costers? Or is it really more about embedding the functionality, you know, to create further differentiation?

Scott Randolph Berg: Andreas I wanted to ask a question that actually feel kind of weird about.

Andres D. Reiner: Asking is it's on your new copilot functionality that you are that you announced its only weird because I wanted to ask you how you monetize AI or how you plan to monetize.

Andres D. Reiner: <unk> technologies, knowing that you'd been monetizing the iceberg, obviously, a couple of decades now, but how should we think about that.

Andres D. Reiner: Innovation being infused into the platform is there an opportunity to step up our pool for customers in cluster or is it really more about embedding this functionality.

Andres D. Reiner: Create further differentiation of your pipeline.

Andres D. Reiner: Yeah, great question, Scott. Look, we're very excited about the sales go pilot innovation because I think Microsoft is changing the way that sales reps will work in the future, and bringing this type of technology really gives them the best AI possible to continuously respond to customers. So for us to be embedded into these workflows and then being able to help reps quickly respond to prospects with the right email response and the right quotes powered by PROS creates a significant differentiation in the market.

Andres: Yeah, Great question Scott.

Andres D. Reiner: We're very excited about the C L scope.

Andres D. Reiner: No you shouldn't cause I think Microsoft is changing the way that the L. Scraps will work in the future in bringing this type of technology really brain stem the best AI possible.

Andres D. Reiner: <unk> continuously respond to customers so for us to be embedded into these workflows and then being able to help perhaps quickly respond to prospects with the right email response with the right well, it's fire bag prowess creates a significant differentiation in the market.

Andres D. Reiner: So I think this, first and foremost, it adds a lot of differentiation to our platform and the ability to now extend email threads all the way through being able to dynamically create a quote powered by PROS will result in a lot more adoption of our solution in the market. So see, anybody that buys Sales Go pilot can now embed PROS CPQ and have AI-powered deals right there in their finger. So, we see this as a big opportunity to continue to innovate with Microsoft and something that helps us drive our strategy of landing more deals, realizing value, and driving more expansion.

Andres D. Reiner: <unk> is a one in four months say it adds a lot of differentiation through our platform and the ability now extend.

Andres D. Reiner: You know email threats, all the way through being able to dynamically create a quote powered by pros.

Andres D. Reiner: And a lot more adoption of our solution in the market. So see anybody that buys C. L. Scope pilot can now embed pro C. P Q and have AI powered deals right. There in their fingerprint. So so we see that says the big opportunity to continue to innovate with Microsoft.

Andres D. Reiner: And something that helps us.

Andres D. Reiner: Drive our strategy of landing more deals are realizing value and driving more expansions.

Andres D. Reiner: Okay.

Andres D. Reiner: Got it helpful. Thank you and then from a follow up perspective, you hired a new CMO Todd.

Scott Randolph Berg: I feel like you and I just had this conversation about two months ago about whether you're going to hire a new CRO or not, and the comment I made at that point in time was your best or at least most consistent sales execution in the last five or six years has seemingly been when A. Reiner has been running sales. What does Todd bring to the table that's different than maybe the prior couple people that have been in this role? And how does he feel about your growth strategies over the near term?

Andres D. Reiner: I feel like you and I just had this conversation about two months ago that youre going to hire a new CIO or not.

Scott Randolph Berg: Comment I made at that point in time was your best or at least most consistent sales execution last five or six years has seemingly been $1 <unk> dot Reiner has been running sales what does what does <unk> bring to the table that's different than maybe the prior couple of people that have been in this role and how does he cannot scale York.

Scott Randolph Berg: Growth strategies over the near term.

Andres D. Reiner: Great question, Scott. Look, I'm really excited to have Todd on the team. He brings a unique skill in sales to go to market. I think a lot of the work that we've done in building our land realization expand strategy and our platform has positioned us to really scale the business. If you think about deal velocity and deal consistency that we've driven, we've dramatically increased. What Todd brings is a very clear experience in significantly scaling sales organizations.

Speaker Change: Yes, Great question, Scott look I'm really excited that Todd and the team he brings a unique skill and sales go to market.

Andres D. Reiner: Thank a lot of the work that we've done in building our land realized expand strategy in our platform.

Andres D. Reiner: Decision us to really scale the business. If you think about deal velocity consistency that we've driven we've dramatically increase with pod brain says very clear experiencing significantly scaling sales organizations and we think tied to our goal of <unk>.

Andres D. Reiner: And we think, tied to our goal of getting to the rule of 40 by 2026, we think now is the time to invest in our go-to-market theme. This year was very important for us to make a big improvement in profitability and start to invest in our go-to-market strategy and scale it. The other aspect that I'm really excited about is that we're seeing B2B and B2C converge. You're seeing a lot of the wins that we're talking about.

Andres D. Reiner: Getting to rule of 40 by 2026, we think now is the time to invest in our go to market team. This year was very important for us.

Andres D. Reiner: A big improvement in profitability and start to invest in our go to market and scaling at the other aspect that I'm really excited about is we're seeing data being beta see converge youre seeing a lot of our wins that we're talking about they're not just traditional <unk> stories. They are beta b with B to C N <unk>.

Scott Randolph Berg: They're not just traditional B2B stories; they're B2B with B2C and direct to consumer strategies as well. So we're seeing more of a unified platform in our go-to-market strategy and abilities to really bring our sales go-to-market theme to drive more efficiency and scale as we move forward. So I'm really excited. Todd and I are going to be working closely together. We're aligned on this strategy. It's not about changing our strategies; it's about really amplifying that strategy and really setting us up for 25 and 26. I could tell you I'm really excited. And what he brings is very strong sales back to the market.

Scott Randolph Berg: To consumer strategies as well so we're seeing more of a unified platform and our go to market in a daily piece to really bring our sales go to market team.

Scott Randolph Berg: To drive more efficiency and scale as we move for US I'm really excited part and I are going to be working closely together. We are aligned on the strategy is not about changing our strategy is about really amplifying that strategy and really setting us up for 25 and 26 I can tell you I'm really excited.

Scott Randolph Berg: And what he brings to their friend is very strong sales go to market background.

unknown: Understood. Congratulations on the next quarter again, and thanks for taking my question. Thank you.

Speaker Change: Understood Congrats on the nice quarter again, and thanks for taking my thank you.

Operator: The next question is from Parker Lane with Stiefel. Please go ahead.

unknown: The next question is from Parker Lane with Stifel. Please go ahead.

Matthew Kickert: Hi, everyone. This is Matthew Kickert for Parker.

Operator: Hi, everyone. This is Matthew kicker for Parker. Thank you for taking my questions first our last call. We mentioned the 28% reduction in new logo sales cycle times for beta B are you continuing to see improvements in that metric and what do you believe is driving the.

unknown: Thank you for taking my questions. First, last quarter, you mentioned a 28% reduction in new logo sales cycle times for B2B. Are you continuing to see improvements in that metric? And what do you believe is driving that?

Andres D. Reiner: Yeah, so I would say it's been consistent. So we're continuing to see, you know, the improvement remain the same. So no, no changes. You know, and so right now, no, no real changes from what we're seeing. We're seeing them continue to improve.

Speaker Change: Yeah. So I would say it's been consistent so we're continuing to see the improvement remain the same so no no changes.

Andres D. Reiner: You know and so right now no no real changes from what we've seen we're seeing them continue to maintain.

Andres D. Reiner: Okay.

unknown: Okay, sounds good. And then we turn to the marketplace, which continues to be a focus for you this year. What are attach rates looking like there? And how big a role can the marketplace play in your achievement of the Rule of 40 goals going forward? Yeah, great question. I will tell you right now.

Andres D. Reiner: Okay sounds good and then turn into the marketplace, which continues to be a focus for you this year.

unknown: Our attach rates looking like there and how big of a role can the marketplace play and you're achieving the rule of 40 goals going forward.

Andres D. Reiner: Yeah, great question. I will tell you, right now, the marketplace is still in its infancy, in its creation. But what I'm really excited about is the opportunity to have new solutions in the marketplace that can be activated with real small, little to no activation, which will allow customers to now be able to expand on some of our products in a very, very fast way. And I think that over time, the opportunity that we have with the marketplace is getting our customers to adopt a lot of these solutions for trial and adopt them in a much faster way.

unknown: Yeah, Great question, and I will tell you right now the marketplace stopes in the infancy and that creation.

Andres D. Reiner: But what I'm really excited is the opportunity to have a new solutions in the marketplace that can be activated with REIT real small little to no activation.

Andres D. Reiner: Which will allow customers to now be able to expand on some of our products.

Andres D. Reiner: In a very very fast way.

Andres D. Reiner: And I think that over time, the opportunity that we have where the marketplace is getting our customers to adopt these solutions to trial and adopt them in in a much faster way. So we're very very excited about the marketplace.

Andres D. Reiner: So we're very, very excited about the marketplace. This is the beginning of a product-led growth strategy. And I think a lot of work has gone into being really proud of the product team for bringing together the platform in the marketplace to allow us to bring these new solutions to market and allow our customers to activate them seamlessly as we move forward. So right now, the current attach rate is small. Over time, I see this increasing quite a bit as we get to our 2026 goal.

Andres D. Reiner: This is the beginning of a product led growth strategy and I think a lot of work has gone really proud of the product team for bringing together the platform in the marketplace to allow us to bring these new solutions to market and allowing our customers to activate them seamlessly as we move forward so right.

Andres D. Reiner: Now the current attach is small over time see this increasing quite a bit as we get towards 2026 goals.

Andres D. Reiner: Okay.

Speaker Change: Terrific. Thank you.

Speaker Change: Thank you.

Andres D. Reiner: Yeah.

Patrick Schultz: The next question is from Patrick Schultz with Baird. Please go ahead.

Andres D. Reiner: The next question is from Patrick Schultz with Baird. Please go ahead.

Andres D. Reiner: Hey guys, yeah, thanks for taking my question. I guess maybe starting off on travel. I think last quarter you called out that you started to see some nice momentum in that business, and it seems like it's continued this quarter. Could you maybe explain how the recovery path has trended relative to expectations? And then, when looking at the rest of the year, how are you thinking about the contribution from new logos versus existing customer expansion?

Patrick Schultz: Hey, guys. Yeah. Thanks for taking my question I guess, maybe starting off on travel I think last quarter, you called out you're starting to see some nice momentum in that business and it seems like that's continued this quarter could you maybe frame how the recovery path has trended relative to expectations and then when looking at the rest of the year. How are you thinking about the contribution from new logos versus existing customer expansion.

Andres D. Reiner: Yeah, great questions. So I would say look, travel continues to drive improvements. I would say, typically, in the year, early on, travel tends to be more back end loaded, not front end loaded, but we are seeing good wins, both in net new and existing expansions. But we're still seeing B2B drive growth. So make no mistake about it; B2B is continuing to drive growth. Travel is continuing to improve.

Speaker Change: Yeah, great questions. So I would say look travel continues to drive improvements I would say you know typically in the year you know early on.

Andres D. Reiner: Travel tends to be more backend loaded and our loaded in the year, but we are seeing good wins, both in net new and existing spat expansions, but we're still seeing beta be drive the growth.

Andres D. Reiner: But make no mistake about that <unk> continuing to drive the growth travel is is continuing to improve but we expect that similar to last year backend is stronger than the front end overall in terms of a sales cycle times in travel they're still not back.

Andres D. Reiner: But we expect that, similar to last year, the back end will be stronger than the front end. Overall, in terms of sale cycle time, in travel, they're still not back to the pre-COVID years, but from a deal growth perspective, we're seeing very good deal growth. In B2B, we're seeing better improvement on deal cycle times and continuing to see that as the main growth driver.

Andres D. Reiner: The pre COVID-19 years, but from a deal growth, we're seeing very good deal growth in <unk>, we're seeing better improvement on deal cycle times and continuing to see that as the main growth driver for the business.

Patrick Schultz: Okay, very helpful. That may be a quick follow-up for Stefan, too. One quick thing on the new versus existing. We expect that to be for the year that 50-50 split, and we're continuing to see strong new logo wins, as well as expansions. And think of that, obviously, B2B driving more new logo wins, and travel strong on the expansion. But I would say, look, we're very pleased with expansions in the quarter, both in B2B and travel.

Speaker Change: Okay very helpful. And then maybe a quick follow up first the font dangelo, one quick thing on the new versus existing we expect that to be for the year that 50 50 split we're continuing to see strong new logo wins as well as expansions and think of that obviously a beta be draw.

Patrick Schultz: Having more new new logo wins travel strong on on the expand but I would say look we are very pleased with that expansion in the quarter, both <unk> and travel.

Patrick Schultz: Great, appreciate the caller there. And Stefan, maybe just on subscription revenue for the year, you posted a strong start to the year, I think you beat Q1 guidance by about a million dollars, but full year guidance looks like that was raised by a little bit less than that. Can you just talk about that dynamic there? And why not pass through the full beat?

Speaker Change: Great appreciate the color there.

Speaker Change: Maybe just on subscription revenue for the year you posted a strong start to the year I think you'd be Q1 guidance by about $1 million, but full year guidance looked like that was raised by a little bit less than that can you just talk about that dynamic there and why not pass through the full beat has anything changed from a broader macro perspective since last quarter.

Stefan B. Schulz: Has anything changed from a broader macro perspective since last quarter?

Stefan: Yes, nothing's changed from a broader macro perspective as it relates to the.

Stefan B. Schulz: The beat in Q1, and how much of that was applied to the full year, we had a little bit of a benefit from a timing perspective in terms of how we initially modeled the year.

Stefan B. Schulz: Yeah, nothing's changed from a broader macro perspective. As it relates to, you know, the beat in Q1 and how much of that was applied to the full year, we had a little bit of a benefit from a timing perspective in terms of how we initially modeled the year of the subscription rollout in terms of revenue recognition. And we actually were able to pull some of that into Q1. And so that's why we had a bit of a beat in Q1 was really moving some revenue up, which we'll always take when we can. And so that's why there was half a million dollars of that full million dollars that was reflected in the beat.

Stefan B. Schulz: <unk> rollout in terms of revenue recognition and we actually were able to pull some of that into Q1 and so that's why we had a bit of a beat in Q1 was was really moving some some revenue up which will always take when we can.

Stefan B. Schulz: And so that's why there was a half a million dollars of that $4 million that was reflected in the b.

Patrick Schultz: You know, as it pertains to our views for the rest of the year, as I said earlier, we don't really see anything changing with the macro. We have increased our guidance a bit. But I would also tell you that, you know, our guidance philosophy is continuing to stay consistent. And that is, we provide guidance on numbers we have a high degree of confidence we can achieve. And so as we go throughout the year, you know, I expect we'll refine that more and more as our visibility improves. But, you know, nothing has really changed. We're very happy with where we sit as of today.

Stefan B. Schulz: As it pertains to our views for the rest of the year as I said earlier, we don't really see anything change with the macro.

Patrick Schultz: We have increased our guidance a bit but I would also tell you that.

Patrick Schultz: Our guidance philosophy is continuing to stay consistent and that is we provide guidance on numbers. We have a high degree of confidence we can achieve and so as we go throughout the year.

Patrick Schultz: We will refine that more and more as our visibility improves.

Patrick Schultz: Nothing has really changed we're very happy with where we sit as of today.

unknown: Perfect. I appreciate the call. Thanks for taking my questions.

Speaker Change: Perfect appreciate the color thanks for taking my questions.

Speaker Change: Thank you.

Operator: The next question is from Brian Schwartz with Oppenheimer. Please go ahead.

unknown: The next question is from Brian Schwartz with Oppenheimer. Please go ahead.

Brian Jeffrey Schwartz: Thanks for taking my questions today. Andres, can you talk a little bit more about the sales productivity and the bookings that you had in Q1? It does look like the year is a little bit more back-end loaded than it was when you gave guidance three months ago. Maybe if you could just provide a little insight into the productivity in Q1.

Brian Jeffrey Schwartz: Yeah, Hi, Thanks for taking my questions today.

Brian Jeffrey Schwartz: <unk> can you talk a little bit more just about the sales productivity and the bookings that you had in Q1 you know it does look like the year is a little bit more backend loaded.

Brian Jeffrey Schwartz: And then it was when you gave guidance three months ago and.

Brian Jeffrey Schwartz: Maybe if you can just provide a little insight into the productivity in Q1.

Andres D. Reiner: Yes, so overall, we're seeing pretty consistent sales cycle times. I did say we've seen some improvement from a B2B perspective, but overall, it's remained, you know, pretty similar in terms of how the year is turning out. It's turning out pretty much how we expected. So I wouldn't say we've always been back-end loaded. You know, the back half of the year is stronger than the front half of the year. The year is turning out exactly as we predicted, so no changes there. And overall, in terms of our efficiencies, you know, and our wind rates continue to improve.

Andres: Yes, so overall, we're seeing pretty consistent.

Andres D. Reiner: Sales cycle times I did say, we've seen some improvement from.

Andres D. Reiner: From a <unk> perspective, but overall it's remained.

Andres D. Reiner: You know pretty similar in terms of how the year's starting out is starting out pretty much how we expected. So I wouldn't say, we've always spend it back end loaded.

Andres D. Reiner: Now back half of the year is stronger than the front half of the year the year starting out exactly how we predicted so no changes there and overall in terms of our efficiencies.

Andres D. Reiner: You know in our win rates continue to improve.

Andres D. Reiner: And then the follow-up question I wanted to ask you about the Microsoft Copilot integration. Is that your expectation, I guess it's early now, but do you think that that will increase awareness for your AI driven dynamic pricing solution in the market?

Speaker Change: Thank you and then the follow up question I wanted to ask about also about the Microsoft co pilot integration.

Andres D. Reiner: Is it your expectation I guess, it's early now, but do you think that that will increase awareness.

Andres D. Reiner: For your AI, driven dynamic pricing solution in the market.

Andres D. Reiner: Yeah, absolutely. There's no doubt about that.

Speaker Change: Yeah, absolutely there is no doubt like Microsoft and US are planning to market. This as being the first partner did innovated on this.

Andres D. Reiner: It's really really important.

Andres D. Reiner: And you know there aren't many AI solutions that that produced this much revenue and margin uplift with quantifiable value that.

Andres D. Reiner: Look, Microsoft and us are planning to market this as being the first partner that innovated on this is really, really important. And, you know, there aren't many AI solutions that produce this much revenue and margin uplift with quantifiable value that help transform the sales process. So I think both Microsoft and PROS are very proud of this innovation. This is just the beginning, but it definitely will increase visibility within the Microsoft ecosystem.

Andres D. Reiner: That helped transform the sales process. So so I think.

Andres D. Reiner: Both Microsoft and pros are very proud of this innovation. This is just the beginning but it definitely will increase visibility within the Microsoft ecosystem and we're very focused from a go to market on how we're gonna amplified that visibility.

Andres D. Reiner: And we're very focused from a go-to-market perspective on how we're going to amplify that visibility. You know, one of the transformative areas of the sales co-pilot that's unique, and I think it's been very clever on the Microsoft side, is that this technology can integrate with any CRM. So not just the Microsoft ecosystem but also the Salesforce.com ecosystem, because you can plug in the sales co-pilot on top of both Salesforce and Microsoft. So I think it can really unify the way that sales reps sell. And that's to be right there to help the reps respond faster and drive higher win rates at better margins and revenue, a very high ROI.

Andres D. Reiner: You know one of the transformative area. So the sales scope pilot that's unique and I think it's been very clever on the Microsoft side is this technology can integrate with any CRM. So not just the Microsoft ecosystem, but also the salesforce dot com ecosystem, because you can plug in sales co pilot on top of those sales force.

Andres D. Reiner: Same Microsoft So I think it really and unify.

Andres D. Reiner: The way that sales rep sell.

Andres D. Reiner: And not to be right there to help the reps respond faster and drive higher win rates at better margin and revenue. It said very high ROI use case.

Stefan B. Schulz: And then one question for Stefan, I just want to ask you about the visibility for the second half now that you're one quarter into the year. I know last quarter you felt that, you know, the visibility wasn't as strong for the back half of the year. I'm just wondering how you're feeling today, if that has at all improved now that we're one quarter into the year. Thanks for taking the time to answer my question. Yeah, Brian, it has definitely improved.

Andres D. Reiner: And then one question for Stephane just wanted to ask you about how you're feeling about the visibility to the second half now that you're one quarter into the year I know <unk>.

Stefan: Last quarter, you felt that you know the visibility wasn't as strong for for the back half of the year I'm just wondering how you're feeling today if that it has at all improve now that we're one quarter into the year. Thanks for taking my questions.

Stefan B. Schulz: Yeah, Brian, it has improved a bit. You know, being 90 days further down the line, we have a better view in terms of things like the amount of services that we're going to have to book on bookings that occurred both last year and this year. And I highlighted that in my prepared remarks. Our visibility has improved to the degree that I can actually comment and say we expect to see a meaningful bump up in services revenue in the second half of the year.

Stefan: Yeah, Brian It has improved a bit.

Stefan B. Schulz: Being 90 days further down the line, we have a better view in terms of things like.

Stefan B. Schulz: The amount of services that we're gonna have to book on bookings that occurred both last year and this year and I highlighted that in my prepared remarks, our visibility has improved to the degree that I can actually comment and say, we expect to see a meaningful bump up in services revenue in the second half of the year.

Stefan B. Schulz: And I can also say that, you know, similarly on the on the subscription side, you know, we have a better idea of what Q3 is going to look like given, you know, the bookings that we've had in Q1. And so, you know, just as a point in color on that, you know, as we look at the full year. You look at the mix last year, first half, the second half, and how that unfolded, we're expecting subscription to be somewhat similar this year, so a similar ratio, if you will, first half, the second half, and services is what we're expecting to see, you know, a meaningful jump in the second half from what you saw in the first half of the year, so, you know, we're starting to get a better feel for how the year is going to, you know, shake out, and that's the color we can give at this point in time.

Stefan B. Schulz: And I can also say that similarly on the on the subscription side, we have a better idea of what Q3 is going to look like given.

Stefan B. Schulz: The bookings that we've had in Q1 so.

Stefan B. Schulz: Just as a point and color on that as we look at the full year.

Stefan B. Schulz: You look at the mix last year first half second half and how that unfolded, we're expecting subscription to be somewhat similar.

Stefan B. Schulz: This year. So a similar ratio if you will first half the second half and in services is what we're expecting to see.

Stefan B. Schulz: A meaningful jump.

Stefan B. Schulz: In the second half from what you saw in the first half of the year. So we're starting to get a better feel for how the year is going to shake out in and Thats. The color. We can give at this point in time.

Speaker Change: Thank you.

Stefan B. Schulz: Mhm.

Operator: The next question is from Jason Celino with KeyBank Capital Markets. Please go ahead.

Stefan B. Schulz: The next question is from Jason Selina with Keybanc capital markets. Please go ahead.

Jason Vincent Celino: Great, thanks for taking my question. You know, Andres, a bit of a philosophical philosophical question.

Jason Vincent Celino: Great. Thanks for taking my question Andreas.

Jason Vincent Celino: And a bit of a full archivolt philosophical question.

Andres D. Reiner: Actually, I think several months ago, there was a fast food chain that was looking at real-time pricing on menus. I don't think it ended up going through with that plan, but it kind of shows you, you know, how far we've come with the industry. As we think about pricing optimization today and reflect on the kind of technology and the adoption trends, you know, especially for the industries that you serve today, you know, what might be talking about maybe three to five years from now.

Jason Vincent Celino: So I think several months ago, and there was a fast food chain that was looking to add real time pricing that menu I don't think it.

Andres D. Reiner: It ended up going with through with that plan, but kind of shows yeah.

Andres D. Reiner: How far we've come with the industry.

Andres D. Reiner: As we think about pricing optimization today and reflect on kind of the technology and the adoption trends.

Andres D. Reiner: Actually for the industries that you serve today, what <unk> been talking about maybe three to five years out.

Andres D. Reiner: Yeah, I would say, look, the adoption of dynamic pricing algorithms, especially for B2B industries, which is over $30 billion of the TAM opportunity, is huge. But, I mean, the adoption is still low.

Speaker Change: Yeah, I would say look that the adoption of dynamic pricing algorithms, especially for the BTB industries, which is over $30 billion.

Andres D. Reiner: Of the Tam opportunity is huge I mean, the adoption is still low and it's great. Examples to have less Schwab. For example, this quarter. That's one of the very important criteria send them selecting pros is really to power their over 500 real.

Andres D. Reiner: Retail stores with real time pricing. So we see this use case applying very broadly in the <unk> <unk>.

Andres D. Reiner: Space and more important than ever to compete and win.

Andres D. Reiner: And it's a great example to have Les Schwab, for example, this quarter. I think a lot of the challenges that companies are having are, one, their products are changing pretty dramatically. So the configuration aspects of the products, the impersonalization criteria they have, so recommending the right offer, and second is the right price at which they can win. That is in real time; it is adapting to market changes. So I think we're still at the beginning of the journey. I would tell you that this applies to the majority of the opportunities that we're closing. This is very important.

Andres D. Reiner: Thank a lot of the challenges that companies are having its one their products are changing pretty dramatic so they configuration aspects of the products.

Andres D. Reiner: In personalization criteria. They have so recommending the right offer and second is the right price at which they can win that is a real time that is adapting to market changes. So I would tell you like a large percentage of the wins, we're having it's because of these real time capabilities in our.

Andres D. Reiner: <unk> of the growth opportunity and the excitement that we have is we feel we're significantly ahead years ahead of anybody in the market and producing real time AI algorithms that can scale in.

Andres D. Reiner: And can be pure machine run with very significant revenue and margin uplift. So I think we're still at the beginning of the journey I would tell you. It applies to the majority of the opportunities that we're closing this is a very important component.

Jason Vincent Celino: Yep, no, nice to hear on the lush log side, you know, that's the company in my neck of the woods, you know, so yeah, we're very excited. And then one quick one for Stefan, you know, business linearity, I guess, how did kind of sales, execution, you know, business pipeline, closed deals? How did that kind of fare throughout the quarter? Was it all fairly consistent?

Speaker Change: Yep no nice to hear on the <unk> side, you know that the.

Jason Vincent Celino: The company in my neck of the Woods you know so yeah, we're very excited about.

Jason Vincent Celino: And then one quick one for Steffan business linearity, I guess, how did kind of.

Jason Vincent Celino: Sales.

Jason Vincent Celino: Execution business pipeline and close deals.

Jason Vincent Celino: Does that kind of fair throughout the quarter or was it fairly consistent.

Stefan B. Schulz: Yeah, I'd say fairly consistent, you know, it always, you know, leans heavily towards the third month. And that's, that's pretty typical. Even when we talk about linearity, linearity is assuming a certain percentage in month one, month two, and a bigger percentage in month three. That's, that's just the nature of the business, but nothing unusual in the first quarter at all. Okay.

Stefan: Yeah, I'd say, it's fairly consistent.

Jason Vincent Celino: It always leans heavily towards the third month.

Stefan B. Schulz: And that's pretty typical.

Stefan B. Schulz: Even when we talk about linearity linear linearity is assuming a certain percentage in month, one month, two and a bigger percentage of month three.

Stefan B. Schulz: That's just the nature of the business, but nothing unusual in the first quarter at all.

Jason Vincent Celino: Okay, perfect. Thank you both.

Speaker Change: Okay perfect. Thank you both.

Speaker Change: Thank you.

Operator: The next question is from Nehal Chokshi from Northland Capital Markets. Please go ahead.

Neyhart Chalk: The next question is from Neyhart chalk she from Northland Capital markets. Please go ahead.

Nehal Sushil Chokshi: Oh yeah, thank you and congrats on a strong quarter here. However, on Bill and Stefan, you mentioned that that was in line with expectations; it was up 3% year-over-year. And then you also said that you expect Billingsworth to be consistent with the trend of last year, but I'm not too sure what you mean by a trend of last year because that trend from last year was volatile on a year-to-year basis. You know, give a little bit more color on what you need there.

Nehal Sushil Chokshi: Oh, yeah, Thank you and congrats on a strong quarter here.

Nehal Sushil Chokshi: However on billings Rose Stephane, you mentioned that that was in line with expectations was up 3% year over year.

Nehal Sushil Chokshi:

Nehal Sushil Chokshi: And then you also said that you expect billings growth to be consistent with the trend of last year, but I'm not too sure. What you mean by the Chinese lessor because.

Nehal Sushil Chokshi: That trend from lessor was volatile.

Nehal Sushil Chokshi: For your basis, so could you just give.

Nehal Sushil Chokshi: Give a little bit more color on what you mean there.

Stefan B. Schulz: Yeah. Yeah, Nehal, that's a good observation. So our calculated billings on a quarter-to-quarter basis are volatile, and we saw that last year. And the point I was trying to make is we're expecting to see that volatility again this year, although I will say it might be muted a bit. In other words, the volatility would be a little less than what we saw last year, which is – I think it's welcome to all of us in that regard. But think in terms of a consistent pattern where the strengths of last year will match the strengths of this year.

Nehal Sushil Chokshi: Yeah, Yeah that's.

Stefan B. Schulz: It's a good observation so our calculated billings on a quarter to quarter basis are volatile and we saw that last year and the point I was trying to make is we're expecting to see that volatility again. This year, although I will say it might be muted a bit in other words, the volatility would be a little less than what we saw last year, which is.

Stefan B. Schulz: Welcome to all of us in that regard but.

Stefan B. Schulz: I think in terms of of a consistent pattern, where the strengths of last year will match the strength this year.

Nehal Sushil Chokshi: Okay, so despite basically a year ago being a tough comparison, you'd still expect that to be strength on a year of your basis?

Stefan B. Schulz: Okay. So despite basically a year ago, a tough compare you would still expect that to be strength on a year over year basis.

Stefan B. Schulz: Yeah, so think in terms of, you know, our total revenue, you know, plan, and calculated billings being in that same zip code just like it was last year.

Speaker Change: Yeah, So think in terms of our total revenue.

Stefan B. Schulz: Plans and in calculated billings being in that same ZIP code just like it was last year.

Speaker Change: Got it okay.

Nehal Sushil Chokshi: Why are you expecting a deceleration in subscription revenue for Q2?

Stefan B. Schulz: And then why are you expecting a deceleration of subscription revenue for Q2.

Stefan B. Schulz: It's really related to timing of recognition. So we were able to pull a little bit of revenue forward. You know, the criteria actually required it.

Nehal Sushil Chokshi: It's really related to timing of recognition. So we were able to pull a little bit of revenue forward criteria were actually required it and so it was a little faster than what we had originally modeled and so we we had a little bit of a beat in Q1 as it relates to that and so that had had.

Stefan B. Schulz: And so it was a little faster than what we had originally modeled. And so we, you know, we had a little bit of a beat in Q1, as it relates to that. And so that had an impact on the second quarter number. And, you know, we see that, you know, throughout our history, there are times when we'll see a, you know, a concentrated amount of recognition occur in one quarter versus another.

Stefan B. Schulz: Impact on the second quarter number.

Stefan B. Schulz: And we see that throughout our history. There are times, when we will see a concentrated amount of recognition occur in one quarter versus another.

Stefan B. Schulz: But as I was talking earlier, you know our visibility allows us to see how this year is going to unfold and we are expecting to see that number increase again in the second half of the year.

Stefan B. Schulz: But as I was talking earlier, you know, our visibility allows us to see how this year is going to unfold. And we're expecting to see that number increase again in the second half of the year.

Nehal Sushil Chokshi: And that sooner than expected recognition of some incremental substitution revenue within a quarter, does that have to do with the strong billings that you saw in Q4, I mean, strong bookings rather, because of that strong ARR that you put up there?

Stefan B. Schulz: And that's sooner than expected recognition of some incremental subscription revenue within a quarter does that have to do with the strong billings that you saw in Q4, we had strong bookings rather because of a strong IRR that you put up there.

Stefan B. Schulz: Well, yes, but I wouldn't say it's a direct correlation. It just happened to be a transaction that was recorded in the fourth quarter that we were able to accelerate the recognition on. Basically, the delivery happened a little faster than we had assumed. Great.

Nehal Sushil Chokshi: Well, yes, but I wouldn't I wouldn't say, it's a direct correlation that just happened to be the.

Stefan B. Schulz: The transaction that was recorded in the fourth quarter that we were able to accelerate their recognition on basically the delivery happened a little faster than what we had what we had assumed.

Nehal Sushil Chokshi: Great. Thank you very much. Congratulations. Thank you.

Speaker Change: Great. Thank you very much congrats.

Speaker Change: Thank you.

Operator: The next question is from Victor Cheng with Bank of America. Please go ahead.

Nehal Sushil Chokshi: The next question is from Viktor Chang with Bank of America. Please go ahead.

Victor Cheng: Hi Andres and Stefan, thanks for taking my questions. Congratulations on a solid quarter again.

Victor Cheng: Hi, Anderson Stefan Thanks for taking my questions.

Victor Cheng: Congrats on the solid quarter again.

Andres D. Reiner: Maybe first on AI, can you give us some color on how your Gen 4 AI has been responding with customers and what's the adoption rate right now? And then more broadly, how should we think about whether generative AI will change the playing field? Obviously, you have now integrated with Copilot, and you've talked a lot about, you know, the opportunities with Microsoft Copilot for sales. How should I think about maybe future plans on leveraging generative AI capabilities into your portfolio?

Victor Cheng: Maybe first on AI can you give us some color on how your Gen. Four AI has been resonating with customers and couple of C adoption rate right now and then more broadly how should we think about where.

Andres D. Reiner: Whether cannot if AI would change the playing field. Obviously, we have now integrated with co pilot and you've talked a lot about the opportunities with Microsoft Copilot herself.

Andres D. Reiner: How should I think about maybe future plans on leveraging <unk> AI capabilities in into your portfolio.

Andres D. Reiner: Yeah, great questions. So in terms of Gen 4 AI, I think it's been transformative for the market. I would tell you that all the deals we're winning, whether it's Les Schwab, or we're seeing an expansion at Cargolux, or any of the deals I talked about, you know, the Gen 4 technology is a very big leap compared to our Gen 3 technology. And it's responding really well, especially in these types of markets where you have high volatility. You can't go with the typical segmentation based on pure historical data, as many companies do in the marketplace. So that continues to play a big role.

Speaker Change: Yeah, great questions. So in terms of Gen. Four AI I think it's been transformative for the market I would tell you that all of the D elsewhere, winning whether it's less schwab or we're seeing an expansion at cargo locks or any of the deal side talked about you know the Gen. Four technology say if Barry.

Andres D. Reiner: Big leap compared to our Gen three technology, and it's resonating really well, especially in these type of markets, where you have high volatility you cant go with the typical segmentation based on peer historical data.

Andres D. Reiner: Many companies have in the marketplace. So that continues to play a big role generative AI one of the really transformative parts of our AI platform is our ability to ensample multiple algorithms and nail Atlanta seen including you know the open AI technology that.

Andres D. Reiner: Generative AI, one of the really transformative parts of our AI platform is our ability to combine multiple algorithms. And LLMs, including, you know, the open AI technology that we're using with Microsoft, allow us to leverage those for the right use cases. So think of a sales assistant type of technology, and a pricing assistant type of technology. Those are where we're leveraging LLMs technology and will continue to do so as well as in many aspects of our business.

Andres D. Reiner: Same with Microsoft allows us to leverage those for the right use cases, so think of a sales assistant type of technology pricing assistant type of technology. Those are where we're leveraging llm's technology and we'll continue to do so as well as many aspects of our business, but it's there.

Andres D. Reiner: But it's a combination of many types of algorithms that we're bringing to bring a higher level of intelligence to our solution and continue to transform the AI space. So I think we're very excited about being able to leverage all of these different types of AI algorithms for the right problem areas and will continue to innovate very closely with Microsoft, especially on the generative AI front.

Andres D. Reiner: A combination of many types of algorithms that we're bringing to bring a higher level of intelligence.

Andres D. Reiner: To our solution and continue to transform.

Andres D. Reiner: D I space. So I think we're very excited about being able to leverage all of these different types of AI algorithms for the right problem areas and will continue to innovate very closely with Microsoft, especially on degenerative AI front.

Stefan B. Schulz: Got it. Thank you. And maybe one follow-up on Sharebase Comp, I noticed it's edged a bit higher for Q1 and Pocoyo as well. Can you give us some color on that? Is there any kind of wage inflation that we should be factoring in a bit more?

Speaker Change: Got it thank you and maybe one follow up on.

Stefan B. Schulz: So the base call notice, it's edged up higher for Q1 and for full year as well.

Stefan B. Schulz: Can you give us some color on that is there any kind of wage inflation that where we should be factoring in a bit more.

Victor Cheng: No, that's the timing of some accelerated expenses that we took in the first quarter. It's basically going to take expenses away from the rest of the year. So, what you should see is as the year unfolds, our percentage of stock-based compensation expense should actually decline year over year from about 14% a year ago to about 13% this year. It's really more about the acceleration of some of that that occurred in the first quarter, and you'll see the benefit throughout the rest of the year.

Stefan B. Schulz: No.

Stefan B. Schulz: That's timing of some.

Victor Cheng: Some accelerated expense that we took in the first quarter.

Stefan B. Schulz: Very clear. Thank you.

Victor Cheng: It's basically gonna take expense away from the rest of the year. So what you should see us as the year unfolds, our percentage of stock based compensation expense should actually decline year over year from about 14% a year ago to about 13% this year.

Stefan B. Schulz: It's really more about the acceleration of some of that that occurred in the first quarter and you'll see the benefit throughout the rest of the year.

Speaker Change: Alright, thank you.

Speaker Change: Thank you.

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

Stefan B. Schulz: Ladies and gentlemen, we have reached the end of the question and answer session I would like to turn the call back to Belinda overdue put for closing remarks.

Belinda Overdeput: Thank you for listening to today's call. We look forward to speaking with you at conferences and events this quarter. As a reminder, we will be hosting our 2024 Outperform with PROS Conference on May 20th to 22nd in Orlando, Florida. We will host a session for investors and analysts at the conference at 8 a.m. Eastern Time on the 22nd, which will include a customer panel and executive management panel. Registration is open on our website for the conference.

Belinda Overdeput: Thank you for listening to today's call. We look forward to speaking with you at conferences and events. This quarter as a reminder, we'll be hosting our 2020 for outperformance <unk> conference on May 20th 22nd in Orlando, Florida, We will host a session for investors and analysts at the conference at eight a M. Eastern time on the 22nd which will include a cusp.

Belinda Overdeput: <unk> panel and executive management paddle registration is open on our website or the conference Investor and analyst session will be streamed live virtually from the Investor Relations section of our website and available thereafter for those who cannot attend the conference in person.

Belinda Overdeput: The investor and analyst session will be streamed live virtually from the investor relations section of our website and available thereafter for those who cannot attend the conference in person. We will also be attending the Needham Technology, Media, and Consumer Conference on May 15th in New York City, the Craig Hallam Institutional Investor Conference on May 29th in Minneapolis, the Stiefel Cross-Sector Insight Conference on June 4th in Boston, the Baird Consumer Technology and Services Conference on June 5th in New York City, and the Bank of America Technology, Media, and Telecommunications Conference on June 12th in London. If you have any questions following today's call, please contact us at iratpros.com. Thank you, and goodbye.

Belinda Overdeput: We will also be attending the Needham technology and media and consumer conference on May 15th in New York City, The Craig Hallum Institutional Investor Conference on May 29 in Minneapolis, The Stifel Cross sector Insight conference on June 4th in Boston, The Baird Consumer Technology and services conference on June 5th.

Belinda Overdeput: In New York City, and the Bank of America Technology Media and Telecommunications Conference on June 12 in London. If you have any questions. Following today's call. Please contact us at IR at <unk> Dot com, Thank you and goodbye.