Q2 2025 PROS Holdings Inc Earnings Call
Greetings, and welcome to the PROS Holdings second quarter 2025 earnings conference call.
At this time, all participants are in a listen-only mode. Any question-and-answer session will follow the formal presentation.
If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded.
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 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 Jeff cotton president and chief executive officer and Stefan Schultz Chief Financial Officer
Please note that some of the commentary today will include forward-looking statements including without limitation those about our strategy. Future business prospects and Market opportunities and our financial projections and guidance.
Actual results could differ materially from such statements in our forecast.
For more information, please refer to the risk factors described in our SEC filings.
Pros assumes no obligation to update, any forward-looking statements to reflect future events or circumstances.
As a reminder, during the call, we will discuss non-GAAP metrics reconciliations between each non-GAAP measure. The most directly comparable GAAP measure, to the extent available without unreasonable effort, is included in our earnings press release. With that, I'll hand the call over to Jeff.
Thank you, Belinda and good afternoon, everyone. Thank you for joining us today. I'd like to start by expressing my gratitude to Andres and the entire Pros team for enabling a smooth leadership. Transition as I came on board as CEO,
After digging into our business over the past couple of months, my excitement has only increased about the future of PROS.
Having spent over 2 decades in Enterprise IT services and software. I've seen firsthand, how AI is transforming the future of work. And I believe that prose is at the Forefront of this Evolution with AI powered solutions that enable businesses to outperform through intelligent Commerce.
There is momentum in our business and palpable opportunity to build on it.
We delivered a strong second quarter, exceeding the high end of our guidance ranges across all metrics and putting us in a position to raise our full-year outlook for both subscription revenue and subscription.
In Q2, we grew subscription, Revenue by 12%.
Total revenue increased by 8% and adjusted EBITDA improved by 42% year-over-year.
In a dynamic and complex macro environment where businesses are selective and strategic with every dollar spent, we are proud of our results in the quarter and our ability to help our customers navigate these uncertain times.
Our impact continues to be recognized by the market and Q2, we were named a leader by isg in the 2025 cpq buyers guide, our fourth consecutive leadership, designation from an industry analyst in just 3 quarters.
This recognition from isg along with previous acknowledgements, from Gartner Forrester, and IDC demonstrates. Our continued leadership in the cpq space.
Our strong value proposition is translating into continued momentum across B2B industries, where businesses are turning to PROS to help them win.
Winning in today's market, means offering the right products and solutions together with the right pricing and incentives at the right time.
The pros platform gives businesses what they need to optimize their winning formula.
In Q2 new, customers such as Linux, Louis difus, and rhi, magnacca among others selected smart cpq to bring winning offers to Market.
Additionally, new customers, including a global life sciences leader and a top U.S. auto parts distributor, plus expanded partnerships with Wholesome and Unidos, demonstrate how Smart Palm is empowering enterprises to take control of their commercial strategies and deliver superior buying experiences to their customers.
In the airline industry, we're helping carriers, build stronger customer, loyalty and drive sustainable growth through intelligent offer optimization in marketing.
Momentum in our Airline business, continued in Q2 with new customer wins, such as air, Greenland and Value Jet.
And expanding Partnerships with carriers across the globe and domestically including American Airlines.
By adopting our digital offer Marketing Solutions these carriers are empowered to transform inspiration into action, converting more business through compelling offers.
To support their growth strategy.
This investment highlights their trust in PROS, industry-leading forecasting and optimization capabilities to unlock new revenue opportunities and deliver winning offers across their network.
Now, I want to talk a bit about our priorities as an organization and where we are focused.
We're continuing to lead with innovation, building the most complete and intelligent commercial platform to help businesses win.
with the introduction of Pros, AI agents unveiled at our recent outperformed conference where uniquely combining language models with our proprietary numerical models that we've perfected over decades bringing specialized intelligence to agentic AI
Our agents are designed to drive goal oriented execution across a wide range of use cases using deep domain, expertise from sales to pricing to rebates and revenue management.
Said in a simpler way, our agents are not just conversational or built to enhance user experience. They are designed to act as the most experienced members of your team, equipped with decades of knowledge on how to define commercial strategies.
Right now, our efforts with our new agents are in pilot phases and will be launching for customers to test them in Q3.
They are a key to our long-term growth strategy by bringing the value of PROS to life even faster.
Pros Rich, history and continued innovation in AI. Create a sustainable and expanding competitive Advantage for us.
Looking ahead, we will expand our platform to power end-to-end Commercial Excellence, further strengthening our capabilities in areas such as rebates and incentives.
We'll also enhance platform extensibility to further enable partner Innovation as well as go deeper and wider on AI agents.
Over the past several quarters, the team has done great work strengthening our go-to-market function, which is evident in our improving sales cycle times, competitive win rates, and bookings linearity.
With this solid foundation, we're now focused on amplifying these efforts in three key areas.
First, we need to apply the same level of rigor, that we've successfully used in late stage pipeline management. And now apply that rigor to the top of the funnel.
Through more effective. Early stage, nurturing, we can further improve lead, quality, and conversion rates.
Second, we're expanding our Market reach through targeted campaigns focused on customer expansion and new logo acquisition in key verticals and product specific opportunities like rebate management building on early success from our analysts recognition campaigns.
These Focus areas are why organizationally we've elevated our leadership team to drive tighter alignment between marketing and sales.
Finally, we must double down on true. Strategic platform Partnerships specifically where these Partners can broaden the distribution of Pros.
This is an area where I see a huge opportunity and where I've had a lot of experience in the past.
In fact, we're already making progress in this area, as mentioned earlier. Today, we announced a new partnership with Commerce, formerly known as BigCommerce, to combine our enterprise-grade pricing and CPQ capabilities with their portfolio of e-commerce solutions.
Together, we will equip B2B, Merchants with real-time Dynamic pricing and streamline product and service configuration, so they can win more business with offers that build buyer confidence.
Commerce and prose create the perfect complements to solve the evolving needs of enterprise sellers looking to drive superior buying experiences.
We're at a generational inflection point as AI transforms the future of work.
For companies like ours, this creates a rare and compelling opportunity with a strong Foundation, clear, Focus areas and a differentiated platform Pros is well positioned to capture long-term value and lead in this next era of Enterprise transformation.
Before I close, I'd like to thank our Global team for everything. They do to deliver amazing value to our customers and make Pros a truly unique company.
I'd also like to think our customers partners and shareholders for their ongoing support of Pros.
Now, I’ll hand the call over to Stefan to cover our financial performance and outlook.
Thank you, Jeff and good afternoon, everyone.
As Jeff just shared, we have a great opportunity to continue expanding our growth and profitability.
And I'm very excited to support Jeff on the strategy that he just outlined.
Profitability, our results, reflect our continued commitment to driving profitable growth, and position as well for the second half of the year.
And as Jeff mentioned, the momentum we're seeing in our business supports, increasing our subscription ARR and subscription Revenue annual guidance ranges.
Now I'll dive into our Q2 results in more detail.
We grew subscription revenue 12% year-over-year to $73.3 million and total revenue 8% year-over-year to $88.7 million, both exceeding the guidance ranges.
Our second quarter recurring Revenue was 86% of total revenue and increase from 84% reported in Q2 of last year.
Our training 12-month gross revenue, retention continued to be better than 93%.
We grew recurring calculated Billings in the second quarter by 5% year-over-year and 13% for the trailing 12 months. Exceeding, our expectations
Our non-GAAP subscription growth margin was 80% in the second quarter, an improvement of over 50 basis points year-over-year.
We also delivered 11% non-GAAP service, with gross margins in the second quarter increasing from 10% reported last year.
With these improvements. Our overall non-cap gross margin was 69% in the second quarter, increasing from 67% last year.
We delivered adjusted ebaa of 7.4 million in the second quarter, exceeding guidance, and a 42% improvement over last year.
Our free cash flow was $3.2 million in the second quarter, bringing us to $4.3 million in free cash flow generated in the first half of 2025.
compared to the first half of last year, we delivered an improvement of over 3 million,
And I'm pleased to see us start the year with two positive cash generation quarters. Despite the first half of the year being our seasonally high period for cash.
From a balance sheet perspective, we exited the second quarter with $199 million in cash and investments.
Additionally, in the second quarter, we announced an exchange of 186.9 million of our 2027 notes for 185 million of new notes. Due in 2030, taking advantage of our favorable, bond prices to reduce our debt by approximately $2 million.
As a result, the outstanding amount due in September 2027 has been reduced to $79.9 million.
Also, once the 2027 notes are fully retired, our total debt will be 12%, lower than it was prior to the exchange.
While we were satisfied with our capital structure before the exchange transaction, we now have a greater degree of financial flexibility.
Our second quarter non-GAAP earnings per share was $0.13 per share, also exceeding our guidance.
Now, turning to our forward-looking guidance,
For the third quarter, we expect subscription Revenue to be in the range of 74.8 to 75.3 million representing 12%. Growth year-over-year at the midpoint
We expect to total revenue to be in the range of 90.5 to 91.5 million representing 10% year-over-year. Growth at the midpoint
We expect adjusted EBITDA to be between $11 million and $12 million, representing 24% growth year-over-year at the midpoint.
and using our non-gaap estimated tax rate of 22%. We anticipate non-gaap earnings per share to be in the range of 15 to 17 cents per share based on an estimated 48.3 million diluted weighted. Average shares, outstanding
For the full year, we are raising our subscription ARR to a range of $310 million to $313 million.
Representing 11% growth year-over-year at the midpoint.
we are raising our subscription Revenue to a range of 295.5 million to 297.5 million representing, 11% growth year-over-year at the midpoint
We expect total revenue to be in the range of $360 million to $362 million, representing 9% growth year-over-year at the midpoint.
and we expect adjusted, EBA to be in the range of 42 to 44 million representing an improvement of 43%, year-over-year at the midpoint and free cash flow in the range of 40 to 44 million, a 61% Improvement, year-over-year at the midpoint
in closing, we delivered strong results with continued progress to our key financial and strategic priorities.
And discipline execution across all as all aspects of the customer journey. And we're continuing to expand our competitive mode through innovation.
We are well, positioned to drive long-term value for our shareholders.
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. And 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 and Confirmation tone will indicate that you are in the question queue. You may press star 2 to remove yourself from the queue.
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1 moment while we pull for questions.
And our first question comes from the line of Parker Lane with stifel, please receive with your question.
Hey, good afternoon, everyone, and thanks for taking the question here. Uh, Jeff, you emphasized one of the key priorities is building top of funnel, and I think you mentioned driving tighter alignment between marketing and sales was one of the ways you're going to do that. Um, could you go a little bit deeper on exactly what initiatives you have in place to build that tighter alignment and what sort of timeline should we expect?
Effect to see some of those uh changes in the structure here and approach uh really benefiting that subscription Revenue line.
Yeah Parker. Thank you for the question. Uh a couple things first and foremost look our marketing organizations already got a lot of activity going right now on campaigns that were really dialing in to very specific ideal customer profiles. I'll give you an example. Manufacturing is 1 that, as I've gotten out to our customer base, there's just so much, uh, messaging that we can really tailor to that specific industry that we're going to continue to dial in and then even get into sub segments within manufacturing. And so, then as you get those campaigns defined and launched in Market, uh, you've got to line your sales activity to that, to make sure that then we have sales people that have targets aligned against, uh, those specific uh, sub-segments of of Industry groups. And so that's the type of alignment here, uh, that we're talking about is we continue to evolve our campaigns, you know, look timelines. You know, you're going to be looking at a, a few quarters out before you start to really see bookings. Momentum there, right? We've got to get these campaigns out. We've got to then, get top of funnel.
Activity going. But that's the type of alignment that we're starting to Define here for our 2026 planning efforts.
Got it. It's good feedback. And then maybe on the other side of the house and travel and Airlines a nice mix of some net new Airlines there, as well, as some expansion activity, you know, stepping into this role, when you look at the Tam, you have their, how would you address that opportunity? How do you see it? Um, what are the the things that excite you most about um the the opportunity in front of you and the travel segment?
Yeah I'm really glad you asked that 1. Look, I'll tell you this is probably been 1 of my bigger pleasant surprises in stepping into the role. I've actually spent a lot of time with a lot of our Airline customers, actually, since before I joined and now that I've had a chance to get in and and and meet with many of them and I will tell you the airline industry as you, well know, I'm sure you cover a lot of their respective businesses is going through more complex, change than probably any industry, right? They've got massive shifts and they're buying patterns, and terms of Premium products being more in demand, uh, than lower fare class products, they're shoving. A lot more complexity into the ancillary products, Etc, and all of that creates demand for us. Um, our towering strengths are in offer management specifically. And the conversations that we're having now is they're looking at redefining, their Tech stack as they shift more into an offer and Order management type of a, a tech stack and offer is where they're putting a premium, that's what's going to help them. Solve a lot of the complexity that they're
Now facing as they look at, you know, trying to seek new Revenue sources as they try to shift into this more holistic, travel experience. And so I have to tell you, I've been really surprised pleasantly at the demand that we're starting to see in the conversations. We're now engaging. Now obviously, these are long sales Cycles, right? You're at the very beginning of helping them Define in many cases, how these new buying patterns are going to operate. Uh, and then standing up the platforms, uh, uh, that we offer today for them and getting those vetted in and implemented. But I'll tell you, there is a lot of demand that we're hearing directly for our offer, uh capabilities.
Got it. Thanks again. And uh congrats on the quarter. Jeff.
Yeah, thank you.
Comes from the line of Nahal Chokshi with Northland Capital Markets. Please receive with your question.
Thank you and uh congrats on a good quarter including Billings above expectations. It sounds like that's what's uh driving the forward subscription rays which is great. Um
what needs to happen?
For remainder of the year, in order for subscription growth to further, accelerate going into counter 26.
Yeah, and they all. Thanks for the question. This is Stefan. I'll, I'll take that. So, you know, first of all, I mean, we're, we're very happy with where we sit at the mid-year Point, obviously, through that, we were able to raise our, not only our Revenue, but also our ARR, you know, our our, uh, our teams continue to do well, in the marketplace, our products continue to be in demand. Um, but at this point, you know, we we put together a a guidance range that we feel represents. Um, you know what we feel like is is is achievable, you know, our our methodology from a guidance perspective is still the same. Uh, we want to provide something we have a high degree of of confidence, we can achieve and we feel like we've done that. Um, you know, certainly there's there's opportunity to to, uh, to leverage other products. Other things that are happening are, are agent technology? That that Jeff highlighted on his prepared remarks. But right now, we're comfortable with where we are. We do see momentum in our business and, um,
yeah, there is a possibility that that there could be more, but at this point in time, given all the things that are in play, we feel comfortable with where we sit, um, you know, at the, at the 3:10 to 3:13 on the subscription are our side
Okay. Um, any thoughts to share on? Um, whether or not, uh, gross can accelerate encounter 26, what needs to happen in order for that to for growth accelerating 226 subscription growth
Yeah, I think, you know, the question that was just asked of Jeff just a few minutes ago, things that we can do around, um, becoming more, uh, optimized in in the top end of our funnel in progressing opportunities, farther along in a quicker and faster fashion. Certainly something that we can do, uh, you know, we made an announcement also today with our partnership with Commerce and and what that means, I think, you know, Jeff has been very clear in terms of of what he wants to prioritize both at outperform and and I think even today that we want to leverage more Partners as well. Have more people, uh, more feed on the street, not just direct sales reps but also, uh, folks, that that are advocating on our behalf. So those are several initiatives that are underway. Now that we uh we feel like will help accelerate the growth rate, you know, not to mention things that we already had in play uh around being more efficient in the selling process. Um, you know, having faster. Time to Value making sure our products can be deployed faster all those initiatives.
That were in play before uh continue to be in play and we feel like the combination of the things that were already in Flight. Plus the things that Jeff is bringing in to focus on, give us an opportunity to do that. Um, I'll be prepared to talk more about that in the coming quarters. As we, you know, get through our planning process as you can imagine, we're going through a little bit of a different planning process now. And uh, but once we have some, some better ideas around that we'll certainly share those with you.
That's great. Thank you.
Thank you.
And our next question comes from the line of Jeff vanrai with Craig hullum Capital group. Please receive with your question.
Hey, this is Daniel henchman on for Jeff banri. Thanks for taking my questions, Jeff and Stefan, Jeff just as you're coming on board here, you know, maybe you could share with us, you know, as you're taking a very significant role in sales. Some more about your background in, go to market, your philosophy, to go to market, and just generally how you're wanting to posture Pros to strategically from, from a go to market perspective.
Yeah, great question. You know, first of all I would tell you, I spent probably at least the last. Let's call it. You know, 20 years of my career uh focusing pretty heavily in specifically go to market. And what I would tell you I spent a lot of time on is not necessarily running the day-to-day sales. Obviously we have a great sales team and A great sales leader, who's doing that.
Ization that seems to work really well. Well, we'll start to really pull apart the top of the funnel and you'll look at, you know, what do we expect from uh, Partners uh, over the coming months and quarters and then you build a detailed plan that says, okay, how many leads do I need to be getting access to Via those Partners? How many opiates do we want to be creating, what are the conversion rates? And then measuring those, we do the same thing with marketing and looking at very specific campaigns and being able to flow a campaign from the leads and and the the contacts literally that were out marketing to all the way down to bookings. And then you do the same thing on the direct sales side, right? We've got lots of opportunity in both our travel and our B2B business to market products that uh, customers don't have. Great example on the Travel. Space is for our Revenue management, customers going and offering uh, our digital marketing offer capabilities. We've just launched a new agent there. Uh, that is really exciting and so we've got to have very specific campaigns to go do that. So once again, you'll Define the amount of customers we have, in our
Base, that do not have digital offer marketing and, you know, the campaigns you'll activate against those targets and then flow it down to bookings. And so, that's the type of rigor here, that I've done at other organizations that were bringing here. And the Stefan said, we're in the very middle of building that plan, uh from, you know, literally top very top of the contacts. They were marketing to or uh, targeting in our existing customer base all the way down to bookings.
Thanks, Jeff, and and then just on travel versus B2B performance, you know, incrementally over the past 90 days, didn't hear Too Much commentary about that on the prepared remarks, maybe. Just, you know, for either of you a from either of you just a little bit more commentary on how travel and how B2B did you know incrementally over the past 90 days? Thanks,
So we're we're pleased with both actually. Um you know we continue to see B2B performing well and you know, our Airline business, you know, really just continues to get stronger and you know, especially, you know, you think a year ago, uh, where we were from from an airline perspective, we were talking about some of the challenges and then the 4 quarter cents. You know, we've been able to see strong and steady progress in that Airline business and that continues through uh, this past quarter as well.
Okay, that's it for me. Thanks Jeff. Thanks toon.
Thank you. And our next question comes from the line of Zane mihan with Key Bank Capital markets. Please proceed with your question.
Great. Thank you guys for taking my question. I'm on for Jason seleno today. Um Jeff start with you um the the Commerce.
Uh, partnership announcement is super exciting, just hoping you could give a bit more detail on, you know, how that partnership works both from a go to market and monetization standpoint. Um, you know, is there a co-sell or
Rev share agreement in place, and then, you know, is this something we should?
You know, expect going forward, more more announcements like this.
Yeah, great question. So, um, so the the way that the partnership works first of all, you know, what would your should expect to see going forward, is that when we announced these types of relationships, first of all, they're going to be ones that start at the top of the partner organization. I believe very much. You've got to align strategically on the customer profile. You're going after the use cases and we, we've got to have real strategic alignment, how the product is going to come together to solve that ideal customer profile, uh, and use case. And then after that alignment, uh, and how we commercially want the relationship to work, then we start to do the goto Market structures and activate those campaigns. So, all of that work has now been done, uh, with what is now known as Commerce Travis. And I have spent a lot of time together outlining what we want this uh future relationship to look like. And so it's starting as a referral uh relationship where they're activating their customer base. In fact, we already have our first handful of customers where we're actively having uh, conversations currently. And so we will join
I think it's important. What I love about this story already is that we're actively working a customer that Pros had a look at a couple of years ago and the customer decided to make no decision. And this has already given us the right to get back into that customer conversation that I'm not sure we would have without this relationship. So it's it's very much a tangible example of things to come.
Great. Yeah. Very, very good color. Appreciate it. And then, Stefan relatedly to that. Um, you know, as, as Pros leans in, on the, the partnership angle,
Should should we expect services to, you know, to start to moderate a little bit as you lean in or um you know that stay insulated from that from that objective. Thanks.
Uh, that's that's a great, great follow-on question. So yeah, I I think so, I mean, you're already seeing some, uh, evidence of that. You know, if you look at the year-to-year growth on on Services, it's already, you know, relatively flat and maybe even slightly down, uh, through the first half of this year. And, you know, I think if you look at at the guidance that would imply roughly a, you know, 6 to 8% growth rate for the year and services which is below what we're doing from a subscription standpoint. So yeah, I think you'll continue to see that um, you know, I think some of the the the partner models and some of the channels that that we're looking at would imply, um, you know, Services being performed by uh other partners.
And we're perfectly good with that again, just getting as many, uh, folks out there that are, you know, experts in the Pro solution, we feel like is to our advantage. And so, while it may take away some of the services Revenue, our bet is that it's going to yield more subscription revenue and we feel like that's a, that's a pretty good trade. And I want to add on to this as well, because I also want you thinking about Services, Revenue a little differently and and not just from a partner perspective, look this value. The this company is obsessed and focused. Right now, on driving subscription, recurring revenue, and and as we think about Services, look, I want to make our products even easier to deploy as we look at Ai and agents. We're actively working today on how we simplify the deployment of our products number 1 for our customers benefit. Uh but that will also help start to shift the mix over time of services. And and right now the you know, services are in service of driving subscription Revenue
Very clear. Thank you both.
Thank you.
And our next question comes from the line of Victor Chang with the Bank of America. Please proceed with your question.
Hi, thanks for taking my questions. Um,
Maybe, first of all, on the, uh, just if you can provide us some more color on the macro environment. I think in the prepared remarks, you continue set the improving cell cycle just wanting to specifically for this quarter as well, whether that is still improving, um, and maybe by region as well. Do you see a bit more hesitation maybe in the US compared to other regions as well?
Yeah. So in terms of macro uh the first thing I'm going to tell you is look it absolutely remains to be a challenging sales environment. I think, you know, we've been talking about that for a number of quarters now and and that really hasn't changed, you know, it's certainly challenging. Uh, what I tell you is that, you know, look, we have a number of deals and that we work, uh, you know, day in day out, that really have no impact at all from any macroeconomic or tariff related things, right? They sell right through our, our sales process and then you'll have other deals, most notably in international. So to your point on, on Regional impact, you know, we we most notably see this with, uh, companies, uh, operating outside of the United States that have in some cases either delayed projects, or in some cases, just flat out, uh, put, uh, projects on pause. And so that certainly, uh, you know, has some level of impact from a, from a, from a, you know, individual customer perspective. But I would say that, that Trend really hasn't changed.
Dealing with tariffs and all of their raw material components and all the costs fluctuating the way they have without our products. So, you know, they're sort of a double-edged sword here for us. Certainly, you know, there are individual customers that you see day in and day out that may have some impact, most notably outside the U.S. But then we also have a demand driver here for our products for customers that are operating in these environments where they're seeing volatility.
Got it, very clear. And then the other, the second question, maybe Jeff. I think you mentioned that, you know, set down and spoke with a lot of the airline customers. What you're seeing in terms of obviously, as we know airlines are moving to, you know, from the current PSS, architecture to offer order.
um,
I think, you know, some in the show early adopters,
maintain their, you know, best of breed versus Best in Class uh,
Option and obviously with left-hander you you know they remained as a breed and and continue to pick pros and and to collaborate and to develop new Solutions, whereas some others continue to be investing class.
Um, I think, you know, at this stage, where do you see, or where do you expect airlines to be going forward? Will they kind of be aligning to what they used to be, or do you see this as an opportunity?
For you to gain more share in that space or you, you see actually more competition as well given given the shift.
yeah, so first of all,
Obviously in in uh the airline technology platform uh space. But what I would tell you is a couple of trends that we're seeing. First of all, as I mentioned uh a little bit ago are most Airlines right now that we're interacting with are very much in a planning and and a strategy mode of trying to figure out what does their NextGen platform. And, and when we're having conversations with them, look, they're actually really interested in co-investing with us. Uh, uh, and and, and a lot of these areas as they're looking across the platform and very specifically. Uh, as I mentioned as well, a few minutes ago offer management is where we're spending the majority of the time, that's obviously where our roots are and revenue management. Uh, and and the digital offering, uh, capabilities, uh, that we have. And so, what that tells you is, that they're all mostly considering a sort of best of breed approach. Uh, you know, I think, in the industry, there have been, you know, big, uh, uh, all-encompassing platforms,
Players and certainly you're going to have Airlines where that's going to be fine and they're and they're going to want to continue to go that route but what you see is as they're all trying to get to this sort of broad encompassing travel experience. Offer management is really where uh the the the Strategic differentiation is going to come in and really helping them identify, what part of the experience. Do I want to own? What do I actually? What can I offer within my company versus third-party services that we want to bring in and offer? And that's where our product is really going to shine. So I would tell you, we're having extensive conversations specifically on offer management and with those Airlines and I would tell you, it's a significant amount of them, they're very comfortable with the best best of breed approach.
Great. Thank you.
Thank you.
And our final question comes from the line of Patrick Schultz with beard. Please proceed with your question.
Hey ya, good afternoon, everyone. Thanks for taking my questions. Maybe starting off first, it seems like the pace of AI innovation keeps accelerating, with pricing models also evolving along the way when it comes to rolling out the PROS AI agent.
And other agentic features I guess. Can you talk about how we should be thinking about the balance between driving use and adoption relative to any monetization efforts and maybe broadly speaking. How is prose able to maintain its competitive Advantage around AI
Drive usage because I think that's going to be the name of the game, right? If you just think about yourself, everybody's playing with all these different models right now, and whoever gets the 1 that is going to become sort of the ubiquitous uh, uh uh, agent out there that's used in a various industry, is the 1 that's going to win. So to me it's it's really all about driving it option and we'll zero in on the right. Uh, monetization model. But ultimately, we expect that monetization model to be an outcome based 1, uh, where it's a, you know, based on the the usage of of the actual agent itself.
Okay, very helpful. I appreciate the call. Maybe just a quick follow-up for Stephan, just on profitability, adjusted. Even I was coming above guidance for both quarters so far this year. What tools? Are you back from raising the full-year guidance? Are there any incremental investments that are needing to be made in the second half of the year? Thanks, guys.
Yeah, yeah, Patrick good question. Um yeah, so your answer is is is spot on. I mean, you, you kind of answer the question for me. Um, we're very thrilled with, with how we've been able to, to drive more efficiency in our business, for the first half of the year and we do want to take some of that uh and some of that savings if you will and apply that to some of the things that we're wanting to execute on from a selling and marketing perspective, I think it's safe to say you'll you'll continue to see us drive greater and greater efficiencies on this on the R&D and GNA line items and put more not just what we save in the R&D and GNA but actually take some of the you know the the extras that that we generated in the first half of the year.
Here and put that more towards sales and marketing as well. So yeah, your your assumption is spot on
Thank you.
And with that, ladies and gentlemen, we have reached the end of our question and answer session.
I would like to turn the call back to Belinda over they put for closing remarks.
Thank you for listening to today's call. We look forward to speaking with you at conferences and events this quarter we will be attending the Key Bank technology leadership Forum conference on August 11th and Park City. The virtual Oppenheimer annual technology, internet and Communications conference on August 12th. And the stifel tech executive Summit on August 25th and 26th in Park City. If you have any questions following today's call, please contact us at IR atpro calm. Thank you and goodbye.
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