PROS Holdings, Inc.

PROS reported second-quarter subscription revenue of $73.3 million, up 12% year over year, and total revenue of $88.7 million, up 8% year over year. Non-GAAP subscription gross margin was 80% versus 79% last year, service gross margin was 11% versus 10%, and overall non-GAAP gross margin was 69% versus 67%. Adjusted EBITDA reached $7.4 million, up 42% year over year, free cash flow was $3.2 million, and non-GAAP EPS was $0.13. For Q3, the company guided to subscription revenue of $74.8 million-$75.3 million, total revenue of $90.5 million-$91.5 million, adjusted EBITDA of $11 million-$12 million, and non-GAAP EPS of $0.15-$0.17. For the full year, management raised subscription ARR to $310 million-$313 million, subscription revenue to $295.5 million-$297.5 million, total revenue to $360 million-$362 million, adjusted EBITDA to $42 million-$44 million, and free cash flow to $40 million-$44 million.

Jeff Cotten said he was increasingly excited about PROS after reviewing the business and framed the company as being at the forefront of AI-powered intelligent commerce. His strategic focus was on improving the top of the funnel, tightening alignment between marketing and sales, expanding distribution through strategic partnerships, and extending the platform with AI agents and broader commercial capabilities. His tone was optimistic but grounded, repeatedly noting that gains will take a few quarters to flow through bookings and revenue.

Stefan Schulz emphasized that the quarter showed acceleration in subscription revenue, total revenue, and profitability while remaining disciplined on guidance. He cited 86% recurring revenue mix, gross revenue retention above 93%, recurring calculated billings growth of 5% year over year in Q2, and $4.3 million in free cash flow generated in the first half of 2025. He also highlighted the balance sheet with $189 million of cash and investments and the debt exchange that reduced the amount due in September 2027 to $79.9 million, improving financial flexibility.

Analysts pressed on how PROS plans to build top-of-funnel demand, and Cotten said the company is tightening campaigns around specific ideal customer profiles, aligning sales coverage to those subsegments, and expects bookings benefits only after a few quarters, with 2026 planning already underway. Questions on the Commerce partnership were answered with details that it starts as a referral and co-sell relationship, with a future path to reseller model, and management said more similar platform partnerships are being pursued. On AI monetization, Cotten said the near-term priority is usage and adoption, with customers helping shape the pricing model, likely outcome-based over time; Schulz added that some second-half investment will be redirected toward sales and marketing, which is why EBITDA guidance was not raised despite first-half outperformance.