We good? Okay. Everybody, we've got a minute. I'm just making sure everyone's gonna be able to hear me, so you can grab your seats. Wow, it got quiet real quickly. Attentive audience. I like it. We followed directions. I can see that. That's great. Okay, just quickly for people in the room, we will have couple different options or times where you can ask questions. I just ask that if you wanna ask a question, please grab the mic off the stand and bring it close to you so that the participants on the webcast can hear the questions that you're asking. All right, it's 1:30, I'm gonna get started 'cause we've got a lot to cover. First and foremost, welcome to our 2023 Analyst Day at Outperform. I'm so excited that we're here. I'm so excited that we get to do this. Thank you. I know for our investors and our analysts, this is a time commitment. You're making the trip out here to learn about us, and we appreciate it. Whoo, all right. First, I'm gonna read the forward-looking statement and get that out of the way. Gotta do it, and I don't have it memorized. I did try, but it's a little hard. Okay. 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. In particular, today we will cover long-term financial targets. Actual results could differ materially from our statements and 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 presentation, 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 the appendix of this presentation and our most recent earnings press release. All right. I also probably should say I'm Belinda Overeynder. I'm the head of investor relations for PROS. Today, I'm really excited that we're gonna start actually with one of my favorite things to do, which is. They told me how to turn this on 10 x. Here we go. Okay. Which is a customer panel. I'm gonna welcome our customers up here in just a moment. We're gonna move to an executive management presentation. You'll hear from Andres, our Chief Executive Officer. You're gonna hear from Michael Wu, Dr. Michael Wu, our Chief AI Strategist, we'll also hear from Martin and Surain, who are our leaders of our Go-to-Market teams for B2B and travel. Last but not least, we'll wrap up with Stefan Schulz, our Chief Financial Officer, with some updates on our long-term financial model. We'll move to Q&A. All right, without further ado, I would like to invite, and I'm really honored to host, four of our customers today. Customers, if you could please come on stage. I'm gonna have you introduce yourselves when you get up here. And if you wouldn't mind, Amit, Art, Jen, and Jason, if we could sit in order. Amit, I'll have you kind of up here first, and then Art, Jen, and Jason. Thank you. again because I got confused. Yeah. Last name first. What, what order? You're gonna sit here, second chair. Yep, then Jen, then Jason. All right. I also wanna remind those that are actually dialed in virtually on the webcast that we do have Q&A functionality enabled, and if you wish to ask a question, you can type it in. We'll do our best to get to everything with in-room participants and the virtual participants. We're gonna do a Q&A panel with these lovely customers. Before I get started with some questions, and again, I'll open it up to the audience as well, I wanna start by having each of them introduce themselves. Amit, I'd like you to go first, if you wouldn't mind. Can you describe just a little background on yourself and your company? Sure. Hello. Yeah. My name's Amit Khandelwal. I work for Emirates Airlines as Divisional Vice President of Revenue Optimization and Distribution, which involves the core inventory management or revenue management function, the revenue forecasting, revenue planning for the company. It involves the distribution function, selling through the GDS and direct channels, and a number of other forecasting, PSS, PROS systems, et cetera. I've been in the industry for just over 30 years. I have a master's in operations research from Texas Austin and an engineering undergraduate. Most of those 30 years have been airline or airline-related technology. Thank you. Thanks, Amit. Next, we'll go to Art. Art joins us from Deluxe. Hi, my name is... Am I on? Am I on? Am I on? I think you're on. Yep. Okay. Hi, my name is Art Klebanov. There you go. I am the Vice President of Pricing for Deluxe Corporation. For those of you who may not have heard of Deluxe, we're a legacy check company that's been undergoing a major transformation to become a leading digital payments and data company. I'm responsible for driving profitable growth in the promotional solutions business, which is a multi-channel, multi-segment, go-to-market strategy, and we're using PROS to help us get there. Awesome. Thanks, Art. Jen? Good afternoon, everyone. Jen Kohlmeyer. I'm the Director of Pricing and Profitability with Crescent Electric Supply. I've been in the electrical distribution industry for going on 12 years. Myself and my team are responsible for driving profitability and pricing strategy along with management of into stock cost SPAs, which are special pricing agreements, along with all of our product data. Crescent Electric has been in business for over 100 years now, national electrical distributor. Hey, good afternoon. I'm Jason Sprunk with Rockwell Automation. Rockwell Automation is the world's largest and oldest pure-play industrial automation company in the world. Been around for over 100 years. I lead our revenue management organization for systems, data, operations, and our list price processes. Been at Rockwell for just about 16 years. Spent my entire career doing enterprise transformation, usually at the intersection of people, process, and technology, large-scale implementations. Came into the pricing organization in late 2014, was asked to kind of do what I do in terms of enterprise transformation. Who knew, pricing is an interesting space to be in, so I haven't left the organization in terms of the pricing function. Really pleased to be here today and talk about how we're partnering with PROS to do what we do. Awesome. Well, thank you. I'm honored to have all of these guests here. I think that if you can just see the distribution of industries that we have representation of just with these four customers, I think speaks to the breadth of what PROS can do. I'm excited for you to hear about their unique perspectives on the solution and the relationship with PROS. I'm gonna start, and I'll kick us off with some questions. I'm gonna start with you, Amit. Obviously, I think anyone who's attended the sessions today, has probably picked up on some major themes that we're talking about from a travel perspective. The airline industry is going through an evolution. A lot of sessions at Outperform have been talking about this shift to offer and order management and airlines kind of evolving as modern retailers. Our investors will also hear a little bit more about this from Serene in his section. I wanted to get Amit's perspective, and this is a two-part question. First, what is your perspective on this shift and the potential that moving to offer optimization can have on an airline business? Second, how do you see PROS as a partner on this journey to full offer optimization? Okay. For the first question, I think airlines were the pioneers of global distribution and E-commerce and big data, long before those terms were invented in actual technology industry. In 1996, when I worked for United, we used the IBM Deep Blue computer to solve the forecasting of O&Ds at United. Subsequently, when I worked with PROS and we ran the same forecasting problem, we ran on one of those HP high-end servers to solve the problem. This is all still in the nineties. We were already selling seats across the globe using a mainframe and dumb terminals. I don't know, 50,000-100,000 agencies amongst the large carriers. E-commerce and distribution came to us naturally and before everyone else. I think where we lost steam was because that infrastructure worked so well and served us so well. When, you know, the whole dot-com boom came and websites and Internet and E-commerce and mobile apps, we were the laggards. The last 15 years, we've sort of been the laggards. It's always interesting to go to a retailing conference and being told we should sell our product like Amazon sells its wares. I have to remind them, you know, the difference between the two is we have to put human bodies in a compressed situation 35,000 feet and fly across 10 or 12 national borders, not deliver soap to your house. Thank you very much. Having said that, I would say, given that we had the foundations of global pricing, big data forecasting, it thrives on mobile commerce. I think on an average in industries, 70% of the transactions are done on mobile commerce. In the airline industry, only 35% are. The reason for that is our product is complex. It's a big-ticket item usually. We need to sort of make it easy, frictionless, transparent for the consumer. Today, for example, we show 11 or 12 air brands across the four cabins that Emirates aircraft have. We wanna get to the point where knowing the customer, knowing who he is, what he's been shopping for, what the context of his travel is. Is it a family trip or isn't it? We need to be able to narrow it down to two or three choices, making it a frictionless, you know, a good experience for the customer. That's gonna drive our top line. Our estimates on this are about, I think, 4% - 5%. There's a joint study between McKinsey and IATA. You can look at that. On being able to do modern retailing, there's right at 4% - 5% uplift on the airline's revenues. To put it in another context, when we build the whole big OND and RTDP application at PROS, and we sold it to the airline industry, the gain there was gonna be 1.5% - 2%. The cake this time is 2x - 2.5 x bigger than when we went out to the world selling OND and RTDP. I think that's a realization that's very slowly sinking in. The challenge, of course, is it goes beyond just revenue management. It's revenue management, E-commerce, distribution, and digital marketing all combined into one. You have to solve that problem holistically, which requires a lot of investment, and it requires a lot of change management. That's where we need to go. Sorry, a very long answer to that question. No, no, that was helpful. I think it's great for them to hear how impactful this shift is for an airline business. Yeah. The second part of my question was, how do you see PROS as a partner on this journey? Right. I mean, as we see the journey from where we sit, revenue management is gonna be at the foundation of this thing. The pricing, forecasting, and optimization platform of PROS is still very much as relevant going forward into modern retailing as it is prior to that. On top of that, you need to build personalization and bundling algorithms, which, again, the technology there is far easier. What you have to deal with is the interoperability and the fact that it's a function that may actually be splintered across five different divisions within an airline. There's more challenge in the change management and interoperability than in the technology to extent to do these things. Right. Thank you. All right, next I'm gonna go to Jen from Crescent Electric. I think our, each of our B2B customers are gonna have kind of a different perspective on this. I do wanna hear from each of you. First, Jen, can you talk about what dynamics you were facing in your industry, as you were assessing the need for a solution like PROS? What actually drove you to think about getting a solution like PROS? Our industry has been heavily involved with Microsoft Excel, homegrown use of Excel spreadsheets. In order to really manage the large amount of data and analyze and put forth strategic efforts, we needed a solution like PROS to help us in doing that. It helped us manage people, resources, we're able to streamline our processes and ensure that what we were putting forth made sense in the marketplace. We actually came from another pricing platform prior to PROS, but really saw the benefits with PROS since moving over. The return on investment has been great for us. Thank you. I wanna get more into that return on investment here in a little bit, but let's go to Art next. Art, kind of similar question. I know you talked a little bit about the go-to-market for Deluxe, and I thought maybe it'd be interesting for you to expand a little bit more on the go-to-market strategy and also what dynamics you're facing, and that kind of necessitated the need for a solution like PROS. Great. At Deluxe, we've been, my biggest challenge at, was when I joined three years ago, and it still is, it's how do we keep up with changes in the macro environment, the competitive pressure and the downward pressure on pricing from our customers while at the same time, the cost of everything from eggs to, you know, fuel to diesel fuel, driving up the cost and just trying to stay on top of inflation and competition, while at the same time providing superior service for our customers and delivering that value. That's what we've been driving towards and, does that answer you? Yeah. Yeah. Thank you. Lastly, Jason, kind of similar question from your end. For Rockwell, I know, you know, the assessment process and looking at vendors. I wanna understand just kind of what were the dynamics again in your industry that drove you to look at a solution like PROS, and kind of what were the criteria that you were looking for to make your selection ultimately on a vendor? Sure thing. If I think back in time, we've been a customer, I think, since 2018. It seems like so long ago, really. I think back to that time, we were really beginning to see, I think many of the things we've talked about already. There's the Amazonification, right? The changing expectations of the folks that are interacting, even if it's on the industrial side, that, you know, infiltrates or permeates into the buying process, and the expectations change, and those expectations translate to the need for speed as well. We were seeing pressures on just this, you know, need for improved experience, this need for improved speed of decision-making. You know, days or hours to minutes, right, is the expectation, now we're seconds, really. The other thing that I think, again, thinking back in time to some of the decision-making criteria, the factors that sort of, the vector factors that pushed us into this and the need to do this was globalization and consolidation. What I mean by that is as the price of computing and data comes down, we saw more and more where, you know, a pricing data point over on, let's just say, the other side of the world, wherever he may be, became increasingly transparent. As the transparency increases, like, huh, the world that we once lived in, where a deal over there was the deal over there versus the deal over there, that really, I think, began to come into focus as well. The consolidation as well. As consolidation occurs, the defensibility of the pricing decisions became, you know, something more in focus as well. I think those factors were kind of at the core of the strategic needs to transform. Organizationally, we'd just come off of an enterprise transformation as well, and that meant, you know, some core systems and such. Kind of the time was right to build upon that and take it to the pricing arena, hence how I came to be involved in the, in the pricing conversations. Excellent. I think the part 2 was that was, sort of the selection criteria of the process. Yeah. Again, thinking back in time, I would say your typical selection criteria pieces, you know, your bake-off stuff. I think as I think back in time, there were a couple of things that stood out as key factors. One, I would just say is longevity in the space. Certainly, as you looked at that time across the industry, thinking about who's been at this the longest became an important factor. One of the key differentiators was, frankly, the benchmarking conversations, as I recall them, that we were connected with folks that had been at this with PROS for a bit of time. Those conversations were really vital for helping us know that we were moving down the right path with the selection. Excellent. Love to hear that. Your conversation about tenure and kind of leadership in the industry sparked a question that I'd like to ask Amit, because I think specifically our history in airlines, I think everybody knows this goes back pretty far. I went through our history, and Emirates and PROS have actually been in business together for nearly 30 years, if my calculations are correct. We're extremely proud of this long-standing partnership. I know everybody at PROS is proud of all the relationships we build with our customers, and even just the continued innovation that we do together with Emirates. For example, one of our most recent engagements was partnering with Emirates on the launch of their amazing premium economy offering. Amit, I'm wondering from your perspective, like what are the attributes of the partnership with PROS that have contributed to the tenure? Sure. Happy to answer that. It's an unconfirmed fact, but after Boeing, PROS is our second longest partner, so we're in the airline business, so you do need the planes... Point of complaints. After Boeing, PROS, we were on the fourth generation of the core forecasting and optimization platform of PROS, which is RMA and RTDP. We have recently implemented the FareQuote engine, which you referred to as was the basis for launching our premium economy product because our legacy engine provided by another supplier in the industry was not gonna be responsive. The engine that PROS provided also leads us down the path of modern retailing very well. That worked very well. I think if I use two terms to describe the partnership, why the partnership with PROS works very well, one is they are responsive. And responsive, so going back to the premium economy example, I don't know, we are not a publicly traded company. We're not based in this part of the world, but our president is known to be a visionary in the industry. Everything from showers on board the A380s to lounge bars in the back of the plane to, you know, chauffeur drive service across the globe and our own two-level lounges at Dubai Airport, so you can board at the top level on the A380 on the double-decker. All of those innovations are driven top-down, largely by our leader and it's very agile decision-making. I think in November, he told us that by May we'll have our first set of premium economy aircraft ready to be in service, and you need to start selling it by May. We already had the ongoing project on FQE, but our timelines were, you know, sort of, I think 12 - 15 months, Ren, yeah. When we got that mandate from the president, right, and you don't say no to this president or you find another job, I had to pick up the phone, I had to call Seren. I said, "This is a mandate. It's for both the teams. We'll have to stick it out and deliver it. If you cannot deliver it, tell me in November. Let's not try to get to April and then say we need 3 more months." They committed, we committed, we worked jointly. We delivered on time. It works like a charm. I think end of this month, so I guess a week from now, we're gonna retire our 20-year-old legacy pricing engine we've been using on the mainframe. We are already 100% on the PROS engine. That's the responsive part. The innovative part is in 2 terms, and I think it's innovative and pivotal because when they saw a need in the marketplace for a pricing engine, they went and acquired Vayant, which worked very well for us, for other customers, for their product portfolio. You have a company which has. I don't know the counts now, but they used to be 50%-60% who were PhDs and masters back then in operations research, which are no different than what you call data scientists today. To have a research team with that much focus on data science and optimization easily makes their product world-class, science-wise. Again, pivotal, and now they see the modern retailing opportunity, and they're going full guns with that investment and working with the industry to deliver to that. That's why it works for us. Amazing. Thank you. Jen, I wanted to go back to you. You did mention some of the ROI that you've seen from the PROS solution. Wanted to get a little bit more detail, and then I will let the audience ask questions. By the way, I don't wanna hog them, but I am excited. Do wanna ask you, can you talk about the benefits that you've realized from the PROS solution? Also, do you see any opportunity to drive continued innovation with PROS at Crescent Electric? Absolutely. We've actually seen a return on investment, even during an inflationary time period, moving from our prior price optimization to the PROS system. One of the things that I'm really looking forward to is with PROS, they're always innovating, they're coming up with new solutions, and I can see just day-to-day, I'm like, "Oh, that's a great opportunity for us. Future state, let's look at that as the next step." It's a continued growth path for us to become more and more strategic. It also brings down the need for so much manual work. We're really looking forward to further automation, through any of our processes, and PROS is gonna help us get there. Amazing. I will also see if there's anybody in the audience that has questions or anybody on the webcast, feel free to ask. Wow. Scott, I saw your hand first. Why don't you jump up, please talk into the mic, and then Brian, we can go to you next. Just grab the entire thing. That'll work. There you go. Hopefully that's on. That's on. Great. Thanks. Scott Berg with Needham & Company. Thanks everyone for joining us today and spending some time with us. I wanted to touch on Jen, your history and journey into PROS. You came from a competitive solution. I guess, what in the PROS solution was kind of the, I don't know, one or two key items that drove that change in your environment? I guess probably a global question for both Art and Jason as well is, when you think about your pricing kind of journey, do you look at price optimization? Do you look at CPQ, combining all those, tying all that together? Every business is a little bit different, just help us understand kind of what type of products you're working with. Thank you. From my perspective, I guess. Is this thing still on? Yeah, I think so. Just didn't sound like it. Oh, there you go. From our perspective, we actually found that PROS was able to handle the data in an accurate manner. We're working with extremely large subsets of data, and it's not always extremely accurate. Our prior solution just wasn't able to handle the data as PROS could. We found that PROS is actually able to provide us much more granular detail and strategy with where we should be from a market perspective. Thanks, Art, maybe you and then Jason could comment on the second part of the question, which is just how do you see or I guess, which solutions are you using, and do you see an I think you, Scott, just to rephrase, do you see an opportunity to use pricing and CPQ, or, how do you think about those products together? We sell physical product as well as services, and there's an opportunity. We're leveraging PROS in the implementation of multiple pricing models based on how the customer wants to shop. If they're coming through an e-com, we're leveraging PROS to actually look at competition, margin, and Willingness-to-Pay and look at it in aggregate holistically, as opposed to what I find is, you know, you have Excel, you've got, you know, people are trying to exchange information. It's error prone, right? Mm-hmm. I call it sort of reading the news versus making the news, and we spend so much time data wrangling that, you know. I think that's what PROS is helping us drive, is flipping that equation so that we're spending more time on insights and letting PROS really take us to that next step on the integration side. We've made great strides, and we'll continue to do so. Awesome. Thank you. Jason? When I think about the challenges of the complexity of the globe, I mean, the last two years has been an adventurous timeframe for those of us in pricing with macroeconomic conditions as they are, and the need to do, you know, rapid, frequent price actions. At any one of those events, we've got millions of records across, you know, I think we've got 44 legal entities across the globe, and we do business in over 100 countries. The ability to go fast is really important. From a PROS specific perspective, as a control and guidance customer, I've got to show up where the enterprise tech stack lives today. What that means is that we're not at a place across the enterprise where everything is as modernized as you'd like, and every shop is in that place, right? It's never as good as you want it to be. You've got goals for tomorrow. What PROS is able to do for us in that case is using the APIs, show up at the point of need, kind of in a composable way, in some ways, irregardless of the technology within the enterprise architecture, and allow that speed, allow that guidance capability to be, again, present at the point of need across some of the complexity that exists in a big shop like ours. Thank you. Brian, you're up next, then we have some others. Hi. Thank you very much for doing this. Brian Schwartz with Oppenheimer. I had two questions. One, Jen, I wanted to follow up on the ROI that you achieved with the PROS system. I think you did talk about that you're clearly lowering the total cost of ownership. You probably shut down Microsoft. You know, you're getting benefits through automation, manual work. Is revenue uplift part of that ROI? Are you measuring how much PROS is giving you in an uplift compared to the old system? We are actually. We do measure that on a monthly basis and look to determine what that ROI is, from a revenue and profit margin standpoint. Okay. The question I had for the group was just trying to understand a little bit more of the analytics use case, which would help drive the personalization. Are any of your companies today using the PROS system to better understand the customer behavior beyond the purchasing? Thanks. Yeah. I'll share a story from the analytics piece. There we go. I think I mentioned the benchmarking that we had done at the evaluation stage of the partnership. One of the benchmarking outcomes was, I'd say, a reframing to put analytics first. That analytics first journey allowed us to kind of create credibility, and trust in the organization, helped us understand where data opportunities existed to continue to improve our data. It helped us set us on a course to, I'll say it sounds Nirvana-ish, but to end the data debates. In our world, when folks show up with your, you know, Power BI this or your Tableau that or what... It... Those are great visualization tools, but by having, in our world, a single source of the truth from a PROS analytics standpoint, it's allowed us to kind of move past those data debates and into the analytics part of the conversation, the business conversation. That learning from several years ago was that the analytics piece is actually a key enabler. Then to make the analytics work, obviously the data janitorial work that has to go on becomes part of that journey as well. Thank you, Dr. Wu. I think that also helped us recognize through the analytics view that we had some work to do on the data, the outcomes just, again, propelled us to where we're at today and forward. Thank you. I'd just like to add. One of the ways we've leveraged PROS is to actually set the standard for how a data specification should be laid out. We're actually using it to drive not only requirements for pricing, but it's also, you know, driving towards a more consistent process, right? When I query the data twice, I should get the exact Mm-hmm. You know, I should get similar, you know, the same result. We're finding opportunity everywhere. When we talk about ROI, yes, there's a financial aspect, but there are also the non-tangibles, the time savings. The people are able to go out and do more value add work. Awesome. I'll do Chad and then Jason. Yeah, let's go. Thank you. Chad Bennett from Craig-Hallum. Just, can you talk about the data, you know, pre-PROS versus post-PROS in terms of the data that you're pulling in, the variables you're pulling in and inputs into figuring out the correct price or how you're thinking about it? You know, you talk to a lot of B2B customers and, like, you know, there's a certain amount of data or variables, right? And you implement PROS and maybe you get a couple more, but it's. You know, you're not getting a vast amount more data, but maybe you're getting more accurate pricing at the or more comfort with the pricing at the end. Are you pulling in more data and variables post-PROS, and are those variables important to pricing? Second question would be, has pricing velocity changed at all? I mean, you look over the last year or two, it's probably changed a lot, right? you know, you talk to B2B customers, "Oh, we have contract pricing. We change prices once a year, six months." maybe you have more comfort in those changes, but has the velocity of pricing changed at all with PROS now being live? Thanks. Yes. Yes, yes. Yeah. You know, you almost... If you don't have... You know, I see PROS as a real source of competitive advantage. If you cannot react to the market, you know, with vendor consolidation, you know, you're losing buyer power. Really when we look at pricing, we also have to look at the other side of the coin, because we're looking at EBITDA growth. Right. We're working on, you know. What PROS also allows you to do is give you visibility into the margin leakage through the. It's given us visibility into our own data by standardizing it and working closely with us to look for the next step. I guess I would just add that especially during the inflationary time period that we've seen over the last 2 years, we needed something that could move quickly with us to implement those cost changes that were happening monthly, every other month. We were used to 6 months, 12 months, it was coming in fast and furious, and without having PROS in place, we would have had to add additional resources to even manage that amount of data. It's also allowed us to be much more strategic when we're looking at the data. We can look at much larger subsets of data without having to wait for Excel to spin and spin and spin and maybe get out what you're looking for. We can utilize PROS to actually see a much larger subset of our data. I'll just add that, the guidance engine has allowed for us to create high speed. You know, think about the traffic analogy. We've got now high-speed traffic lanes that wouldn't have been theoretically possible before that algorithm in place, and that allows for the other lanes of traffic to have more human time as needed. I think for me, the answer is an unequivocal yes in terms of speed being a truly immeasurable outcome on the other side of this. Got it. Thank you. All right, Jason. Great. Thanks. Jason Celino from KeyBanc Capital Markets. you know, ideally, pricing optimization should be even more important during tougher economic periods. In practice, I'm curious on how your organizations think about new pricing projects and initiatives and, you know, sensitivity to your business cycle. I would classify. If the question's around pricing projects and where they stand in terms of prioritization, I would say the last three years have been pricing cannot be more. You know, there's one of the things that keeps our Chief Executive Officer up at night is pricing, right? How do we keep up with inflation? How do we keep up with global supply chain constraints and yada, yada? You know, we have consumers are switching channels, they're going more digital. There's a lot of turmoil, a lot of turbulence, you know, to borrow a term. You know, we're managing through it. It's really how do you manage prices, and then you have to, at the same time, start the strategic planning process and involve the sales organization and your product folks to take them along. Yeah, It's fun to listen to investor calls. It really, I find it entertaining. It is. It really is. If you were to word map price cost over the last 24 months of quarterly public earnings calls, I'm certain, I'd bet money you'd see a 3-fold, 5-fold spike. I can't imagine how a publicly traded company could navigate the last two years of macroeconomic volatility without a price optimization capability. I don't know how you could do that. Yeah. All right. We do need to... Scott. I'll take one more question, and then we do need to wrap. I could do this all day, but we do have other content. Scott, why don't we take one more from you? We didn't have a pricing specific or an airline specific question, so I had to get one for Amit here, so. Yeah, let's get Amit back in the mix. Yeah. I think kind of a big change that's been looming in the airline industry is moving from a fare class-based system to something that's more real-time and dynamic, correct? I guess two questions there. Where is Emirates in that process? Don't know if you're leading that or still something to come. As you think about all the different applications that are involved with your pricing environment today, whether it's the front end, you know, merchandising that you're working with and all the, you know, technologies that have been talked today is, does that change to something more real-time, maybe change how you think about all the other downstream applications within this kind of pricing and packaging environment? Okay. Long question. Let me start. We've always been dynamic pricing, right? It's a combination of price and availability in the case of the airline business, right? If I go into the pandemic times, when we relaunched the network after the lockdown, we made a conscious choice of only sort of selling our products, which are flex and flex plus. The first thing we did was we said we're gonna refund the entire money that customers are holding tickets on us. I think in the first 3 months after we restarted operations, we probably doled out $3 billion and the inbound cash flow was, I mean, only like $500 million, so. What we did was we told customers, "You fly with us, these are the products available. You get a 100% refund." We packaged insurance as part of the product. We were selling higher price points, but we gave them with the reassurance of travel insurance and a full refundability, changeability up to a couple of years, et cetera. I think without having the platform of PROS RTDP, we couldn't have done that literally overnight. When markets reopened, we had to pick and choose where to reopen. The new engine we've implemented actually takes us away from... We have an arcane process with a company in Washington, D.C. called Airline Tariff Publishing Company. All the airlines file their fares into Airline Tariff Publishing Company, which disseminates it into these global distribution system, which the travel agencies around the globe sell tickets on. The new engine allows us to just real-time update fares without having to file it in ATPCO and making them dynamically available on our own website. We're still doing dynamic pricing, but we're far more in control of the content now than the old method where we had to keep filing it through ATPCO. I think you had another question there. In terms of you know, we have, for several years now, used our TDP product to do preferential availability and reward availability of our loyalty members or Skywards program, which is our loyalty program. The top three tiers, even if there's not a single seat available for sale, we'll sell them a price, and we use the PROS RTDP technology to do that. Similarly, if they want a reward seat in business or first, depending on how much the flights are booked, the reward seats is usually a pain point for a loyal customer. If they're a valuable customer for us, we are able to just override the availability real time and give it to them based on their tier and their loyalty with us. Going forward, I think the whole offer optimization and use of fare brands, use of dynamic personalized offers is gonna be even more driven by these models and front-end technologies. Awesome. Thank you, Amit. Okay. On that note, we're going to wrap the customer panel. I wanna thank each of you for your time today. I know I stole you away from a lot of amazing content, so I will let you go back to the conference and enjoy. Thank you so much. We're so proud of our partnerships with each of you and really, really appreciate your time. Thank you. Round of applause. Thank you. All right. The man that needs no introduction, but I will introduce him anyway. I'd like to invite our Chief Executive Officer and President, Andres Reiner. Thank you, Belinda. Do you really wanna give me your mic? I do. Gosh, Belinda. Well, good afternoon. First of all, I wanted to thank you all for being here again. It means a lot to us that you make time to come to our event. I always say that I'm most proud of our people and our customers, and this is the perfect event for you to get exposure to both. I wanted to start a little bit with our vision. From the very beginning, our vision was to optimize every shopping and selling experience. I wanted to click a little bit on that. We saw a world that sales would move to digital. From the very beginning, we were first to create a real-time AI platform that would allow any company, B2B or B2C, to optimize every shopping and selling experience. That guides us with our continued vision. I wanna talk a little bit about the business challenges we face today. You heard some of our customers, some of you that attended my keynote heard some of these areas. The first one, business uncertainty. We talk about it being here to stay. The volatility wasn't just COVID-oriented. We're seeing the market move much faster. We're seeing volatility, whether it be currency, whether it be cost, whether it be supply chain disruption. What you're also seeing is there's new competitive threats that a lot of our customers have. That means they're having to reprice, create new types of packages, new type of pricing. In this market, you have to move at the speed of business and more in real time. The other area that we're seeing is the customer experience angle. I talked about in my keynote as well, but we're seeing that customers, whether you're B2C or B2B, with the end-to-end experience is really important. Getting to consumer-like buying experience is what every buyer wants. This notion that you have a long, protracted sales process and it takes you 2 weeks to respond to a quote, and you have a paper quote and a deal desk approval, you can't win business in this type of environment. You have to strive to expand what your end-to-end is and make it real-time and more self-serve, personalized. The other business challenge that everyone faces, the way we work. The way we work for us is not about being in the office or hybrid, it's about the tools needed for the employees to be successful. Much like we say for the end customer, buying experience has to be digital. For the employee, the employee experience has to be digital. We talk about the concept of digitization, automation, and AI being key. You have to remove manual process. You need offline tools, one-off applications, to be successful. As you look at our solution, we have the only end-to-end platform that really connects all of your selling channels with your back office systems. What's really unique about PROS, you know, we have a CPQ solution. People talk about CPQ. Our CPQ is very different than most CPQ. Our CPQ wasn't designed to be an extension of CRM for direct sales quoting. Our CPQ was designed to power every digital channel, so direct sales, E-commerce, marketplaces. From the very beginning, it was architected as a real-time technology to power any sales channel, whether it be B2B or B2B2C, as we have some B2B customers moving direct to consumer. Likewise, at core foundation is our AI in real-time capabilities. You hear today a lot of companies talking about AI. We've been in the AI business from the very beginning. What differentiates us is we're creating predictive algorithms that actually tell our customers what demand's gonna be like and what's the right price to win the market. We're gonna have Dr. Michael Wu come up and give a little bit of explanation on our AI algorithm so you understand a little bit about the depth. The key with us is foundational to have the AI algorithms to be able to process in real time. Okay. Why don't Michael Wu come up. Thank you, Michael. Thank you. Thank you, Andres. I see quite a few familiar faces from my workshop yesterday. This will be some material that you might have seen yesterday. You know how we define AI. It's basically a machine mimicries of a human behavior with 2 important characteristic, and they only have to be able to automate human decisions and actions, and also learn. Okay? That's our definition, and lots and lots of solutions underneath are doing this right now. We talk about there's 4 major categories of AI applications out there today. That's actually gonna be very important probably in the next half decade or so. These are perceptual AI, also known as cognitive AI. They're trying to mimic the higher cognitive perceptual function of a human being. Internet AI, also known as personalization AI, because their main kind of use cases are in personalization and recommender systems. Autonomous AI, which is also obviously the biggest use case now is the self-driving car and in business AI, okay? We are using these AI to solve real-world practical business problem. Okay. What kind of problem are we using this AI to solve? We are using that to solve a profit optimization problem, right? Because we are a profit optimization company, right? Obviously, that require us to not only to have the profits, I would say the revenue side of the story, right? They have CDs algorithm that optimize revenue, but you also need a cost side of the story as well. You have to be able to manage costs. A lot of our algorithms are very good at actually estimating the opportunity cost, which is actually a very good indicator of the true cost. That's the market cost. Not necessarily the material that goes into making a seed or whatever, it's actually what the market is willing to pay for. Okay? That's the revenue side and the cost side. We also have lots of, I would say, algorithm that focuses on what we call sales and production guidance, right? For example, what to produce, what to sell, in order to optimize your revenue even further. Okay? If you look at these four classes of AI, PROS is actually heavily represented in the Business AI category. Okay? We have things such as the predictive algorithm that Andres talk about, right? That uses the cutting-edge neural network, NeuMF, neural network matrix factorization. I would say these online learning. These are kind of the more traditional Bayesian learning and real-time online updating mechanism, as well as decision trees-based algorithm. That's, for example, random forests and GBM, gradient boosting machines. Many, many, I would say, semiparametric and parametric estimation algorithm. Beyond the predictive aspects of it, there's also, I would say, the prescriptive aspect of it, that prescribe actions and to take, right? We have that actually that category actually includes the more traditional operations research approach, right? These are different kinds of linear programming, nonlinear programming, integer programming, all that stuff, right. But you also include the really the cutting edge, you know, innovation in reinforcement learning. Okay. Finally, you know, we also include a lot of these algorithm that extend the capability of our AI. For example, make our AI more extensible, makes our AI explainable, right. Interpretable, right. So all these are Our capabilities. So we are, as you've seen in this morning, we are actually expanding that into the perceptual and cognitive side as well, right, with ChatGPT being incorporated into our stack. Also we do some Internet AI, which is personalization through collaborative filtering, right. Sometime, you know, very often some people would ask like, you know, "So what algorithm do PROS product use?" I mean, that's a, I would say, difficult question to answer because we use a lot of different algorithm just in one product, right? Let me just give you an example. If you just take a look at this negotiated pricing problem, okay? We basically built We have four generations of our, of this product, of this, we call it It used to be called Guidance product. Right now it's called the Gen IV Price Optimization. If we We build that product to address this problem. This one product already have many, many different these algorithm in there, right? For example, we It has two stage. The first stage is a neural network that predicts people's Willingness-to-Pay, okay? It has neural network, feed-forward neural network, Neural Network Matrix Factorization. The second stage is a win rate modeling that using the Logistic Model. Since we use a Logistic Model, is a you know the parametric form of that model, right? It is a parametric estimation. After you do that modeling, you actually have to optimize the revenue from that. That's a Nonlinear Programming, right? Because we use a neural network that's a black box, you know, people cannot really interpret it, right? We also need to have these advanced kind of analytics capability to explain what's going on. These are Shapley value or these are ability to give our... Essentially explain the contribution of each one variable to the final pricing, so you can understand what this black box is actually doing, right? You can actually create comparable transactions through the k-nearest neighbor algorithm. As you can see, just one simple pro-product, right? I mean, well not simple product. I would say one product, right, already has so many different algorithms going to it, right? That's actually the, I would say, the norm, you know, for all of our pro-product portfolio. Hopefully this gives you a little idea into the depth of our AI capabilities. Thank you. Thank you, Michael. This gives you an idea of the level of sophistication. For us, our predictive AI has to produce accurate values. I mean, we cannot hallucinate. You can imagine Chief Financial Officer implementing and pricing real-time commerce solution, and you have a bad result. One of the things that our AI has been trained for is massive amounts of data and making sure that it can make very accurate predictions even when data is imperfect. You heard some of our customers talk about that. I think that's what has allowed us the success in the leadership position that we've had. Wanna talk briefly about our TAM. We've always had a very large TAM. It's now $38 billion. If you see our TAM expansion, you'll see a couple of areas where our TAM has expanded. We've moved now into the digital marketing area with our digital fare marketing and Digital Offer Marketing solutions on the travel space. We're also moving into the offer optimization space in the digital experience space. We see travel has a great opportunity to drive transformation in the travel retail space. The other area within travel is that with our solutions, as we launch our new generation packages, we can go to any airline of any size. We have very easy ways to start, whether it be a very small low-cost carrier to the largest multinational airline, and different sets of capability to allow them to move in levels of sophistication across our suite. On the B2B suite now, we can go to $100 million in revenue and up. You know, we have some of the largest companies in the world. We're also now with our new packages, we can get in at any size company or subset of a division in making it very easy to activate, get to value, and drive expansions. I'll go a little bit into our strategic focus areas. We talked about the first pillar on the Land, Realize, and Expand. For us, we've been very focused on how we make it easy to activate a capability within our suite. Realize value, which is something we're being very intentional on, is making sure every customer is measuring value. You heard some of our customers in the panel on a monthly basis. We're giving them the tools built into the product to capture the revenue and margin uplift. Because if we wanna live to our commitment and our mission of helping people and companies outperform, we have to measure that. That leads to making it easy to expand within an account in many expansion paths across each of our product suites in depth of capability. If you've seen with our new packaging now, we've made it a lot easier to start consuming and then many paths for expansions. Martin will cover some of that in strain as well. We're also leveraging our partnerships, both from a technology perspective, partners like Microsoft, as well as from the global SIs like EY, in helping us not just from a scaling globally, but in a co-selling motion. Finally, we've always said we made incredible improvements on time to value. You'll see when we launch Gen 4 now, we can get time to value in less than two weeks. This has been something we've been very focused intentionally, is how do we make it easier and easier to adopt our technology? We know we have incredible retention rates. We know our customers drive immense value. If we can make it easier and easier to activate, that helps us scale even better. We're gonna continue to focus. As much as we've gotten, we still see room for improvement and we're gonna continue to focus on getting customers to value as fast as possible in as minimal configuration. Okay? With that, I wanted to hand it over to Martin Simoncic, who leads our B2B, President of B2B Go-to-Market. Thank you, Martin. Thank you, Andres. I appreciate the opportunity to talk to you guys today, and I'll be happy to take your questions here in a little bit. Before we get there, I wanted to just talk about our business, the market opportunity we have, and how we are going after it. First one is Andres mentioned an update on our TAM, and it's huge. When you think about the opportunity for B2B, just when you look at our target industries and target geographies that we are going after, automotive and industrial chemicals, energy, food, healthcare, it's $11 billion plus. It's an immense opportunity for us that's remains largely unpenetrated at this point. The good news is, when we think about a market opportunity, we're not talking about going after new industries, new things. We have significant experience in each of these verticals, and we are very happy and lucky to have some of the best logos in each of these. When you think about companies like CITGO, ExxonMobil, you know, Nestlé, HP, real leaders in their industry. One of the new things that we've added, Andres referenced here a second ago, is when we launched our platform in 2021, we made our solution and our platform more accessible to companies in the $150 million-$500 million range. We've expanded our TAM a little bit and also make it more accessible to small business units or divisions of companies, where we're now able to apply all the lessons learned and all the experiences that we've learned in these industries over a period of time. It's been really helpful, and we've been able to land a lot of these smaller companies. You will see them on the slide there, Nature's Touch, Vector Security. These are smaller companies that were more difficult for us to land just due to the way we were going to market. A lot of great progress and the opportunity remains really large. The reason we are about to actually scale across the companies from $100 million - $100 billion company and across multiple different industries is the strength of our platform. Andres highlighted a few of the differentiators and key points of the platform. I'll just highlight three that are really key for us and for our growth. One is modular and composable. What that means is that our platform, you're able to consume it in different pieces and stitch different kinds of journeys for our customers on how they can generate the value, and allows us to solve the different challenges that customers may run into or try to solve in their particular industries. For example, when you think about AI, Michael did a great job talking through the models, and there's a plethora of solutions and algorithms that we have trained over the years to solve different problems. We have a whole library of these models. When you think about a customer that's a dairy manufacturer, all they have is milk. They gotta decide what are you gonna do with it? Are you gonna create powder milk or 2% or, you know, make some more brie cheese to maximize profitability? We have an AI model to help them make those decisions to maximize profitability. When you're oil and gas, you're a fuels marketer, you're trying to figure out how to optimize your price the next day. You need to know what the competitors are gonna price at tomorrow. We help them forecast where the competition is going to be, so they can set their price in an optimal way to achieve their objective, whether it's to drive volume, maximize margin, maximize revenue. You know, I talked about distributors. They are trying to maximize profitability, you heard Jen talking about it, the both sides of the equation, right? I wanna make sure I have the right price that optimizes my revenue, I also need to optimize the cost at the same time, in real time, as you are making a quote. A lot of companies do that with both price optimization and cost optimization. That's the power of the platform because we've built all these models. We have them now. Now it's just a matter of applying them. The second key point of the platform is real-time, and I think this one gets underappreciated sometimes because it's some people think of it as performance or, you know, system performs better. The real key to real-time is that it enables self-service digital experiences. When you think about E-commerce, when you think about your partner and reseller, as they all want quotes, they all want pricing in real time. Even your own employees, your own sales teams, they don't want to go through approvals and spreadsheets and a lot of manual process. In real time in E-commerce, it's impossible. We are the only vendor that can provide real-time responses. Every company has an SLA on uptime. Of course, we have that. We also offer our customers SLA on the response time, which is under 700 milliseconds, which is crucial. The last piece of this is delivering the omnichannel experience in any digital ecosystem. When you think about our platform, the way we are architected is we can apply anywhere. When you think about Regardless of the ERP solution that our customer, whether they have SAP or Oracle or something homegrown, regardless of the CRM, Salesforce, Microsoft, of course, we have pre-built integrations with many of these partners. We can operate even in absence of a CRM solution. We just launched a new innovation in Q1 where we can operate our CPQ on top of Power Apps, for example. There's many different ways for us to establish the platform in the market, which is really important. We are the leading platform, and it's not just because I said, of course I'm gonna say that, and I truly believe that. If you look at the other industry analysts in the space, you think about Gartner, IDC, The Shortlist, we are recognized as the leader in Smart CPQ market, in the smart price management optimization market. In fact, we are the only company that's recognized as a leader in both. That's becoming really important as those markets are converging, pricing and CPQ, to be able to address both. As a result, we drive incredible value for our customers. I think you heard from some of the customers here, you will be able to hear from them in the conference. That's a bit of a unique thing in this space. When you think about software and software providers, there are a lot of soft benefits, you know, we talk about efficiency, implementing processes, et cetera. We are actually able to quantify the value in real dollars, which really matters, to the Chief Financial Officer's. You know, based on a question earlier, where do these types of projects sit in priority given the macro environment? They sit at very top because they drive... They're the Advil, they're the pain pill for the problem that the companies have in order to drive more profitability and profitable growth. Couple examples on the studies that we've seen is, one, we released a study last year where we took a sample of 131 customers and showed 8% revenue improvement, 200 basis margin point improvement across the board. This is not some, you know, PROS analyst, you know, running spreadsheets in the background. This is a collection of customer self-reported results, which is quite incredible. We also have another data point. Forrester just released their Total Economic Impact study that they did based on talking with PROS customers. Amongst other benefits that were not quantifiable or not quantified either, they shared that our customers can expect 100% ROI over 3 years and payback in 9 months, which is just incredible results and we are very proud of. You might think of, okay, so we have the huge market. We have the best-in-class platform and the solution for it with proven value case. The last piece that we need to talk about is how do we actually attack this market and accelerate the growth. That's our Land, Realize, and Expand strategy that Andres really touched upon. This really started with our platform launch in 2021 in a different way because it allowed us to take advantage of our modular and composable platform and attack the market in a different way than we have done in the past, making it easier for smaller companies or smaller divisions or business units of our companies to get into the platform. The idea is very simple. We find now the most compelling use case that a company is looking to get value from that we can deliver very quickly in a 3-6 months period, and they can realize value in the time frame. They can expand quicker. We made a lot of investments on our pre-sale side. You know, when you think about enablement, training, compensation models to make that all work. On the Realize side, from the time to value perspective, it's all about implementing and getting to value quickly. We've invested significantly into reusable assets, package offerings, that we can get to our customers to get us started really quickly. We also have this great side benefit that also help us become a little bit more scalable. As you've seen our gross margins on the service side improve, that's the reason we expect that trend to continue. Finally, we get to Expand. When you think about Expand, we are no newbies to this. We've talked about Land and Expand for a long time, even prior to the platform launch, right? We have a history of expanding our customers very successfully. When you think about the four examples I came up here, you know, we have demonstrated we can land a customer and expand 6, 7x of the value where we landed at over a period of time. What's different, what we are doing right now? What's different is the velocity. When you think about it in the past, land expand was a more serial motion. We land a platform historically, you know, 3-4 year contract. It takes you a bit of time to get to value then through the realize step, and you get to the expansion. What's different now is the velocity of it. What that means is that when as soon as we land at a customer, we start to realize and expand motions right away. Because we are landing smaller, delivering value quicker, we don't have to wait to get to expansions. That builds this flywheel that just accelerates as you go. We saw that effect working really well last year. We talked about doubling our deals in last year every quarter as a result of the platform and change to the go-to-market approach. The beautiful part of that that our sales team really loves is that, you know, when you don't sell the whole enchilada to begin with, you are not taking stuff away from your pipeline when you close the land deal. You are actually expanding your pipeline. They are more in control of their destiny. They're able to generate the momentum as we go. Our goal now is to generate expands within 1 or 2 quarters of the actual land versus in the past, that used to take us longer. We have great examples we can comment on even in the earnings call. Vector Security is a company that we landed in Q4 last year to help their sales teams optimize their quoting processes with our CPQ. Already in Q1, they expanded to allow their partner and reseller channel to give them access. You know, we have an industrial distributor that we landed with price management for them in Q1. Already in Q2, they have expanded to price optimization. That's the velocity that we are trying to drive, and that's how we're gonna continue to drive the growth and drive more predictable and faster growth as we go. I'll close it with that. We'll have time for plenty of questions at the end of this. Now I'd like to welcome Serene, who's the President of our travel Go-to-Market team. I'll take the B2B for now. He will share his strategy for Go-to-Market. Thank you, Martin. It's a pleasure to talk to all of you today. Amit touched upon this earlier, but the airline industry truly is going through a transformative moment. It's evolving from selling seats to selling offers. This is a massive implication to the entire technology stack that drives airlines around the world. What used to be finding the right price for the right seat at the right time is now creating the right offer at the right time to the right individual, and that offer consists of far more than just the seat. It's the seat, plus flight-related ancillaries, plus third-party ancillaries, plus a lot more that the airline can bundle together. The airlines are first to revenue. In any travel situation, the first thing a traveler does is they organize their air travel. The airlines have that first crack at the revenue of the traveler, and this is expanding their opportunity to drive revenue as a company. We saw the beginning of this pre-COVID, with NDC, new distribution capabilities, direct sales, et cetera. COVID truly accelerated this entire process. During COVID, airlines realized they need to have transparency for the traveler to, as markets opened and closed, to know where they could travel and where they couldn't. They needed automated changeability, refundability, all these customer experience capabilities that were always on the to-do list, but not a priority for airlines. This transitioned the entire mentality of the airline industry to think about Offer Management and Order Management, which really plays to many of the strengths of PROS, where we've really played for many years. What is Offer Management? Offer management is bringing together the customer DNA, which is the information that the airline has about the traveler, the product DNA, which are the unique features of the products that the airline has to sell, and the context of the selling experience in real time. When we say real time in the airline industry, it's within usually 50 milliseconds or less. We're taking customer data, we're taking product data, context data, and creating one unified data platform and running real-time AI algorithms to create request-specific offers. This is truly transformative. Amit alluded to some of that. If you were able to sit in on the keynote of the travel segment, you heard the Lufthansa Group talk about it as well as a key part of their strategy and how they've already seen revenue from it. Once an offer is made, the customer has purchased the offer, you have to fulfill it. That's where Order Management comes to play. Order Management is actually taking that offer and being able to fulfill it in a very consistent and reliable way, and not only fulfilling the various segments of a creative offer, but capturing the customer data along the way. Many times, mistakenly, we think the traveler journey is one point of exploration of travel options and purchase. It's actually a lot more than that. The journey goes from pre-boarding, on flight, post-departure. There are many opportunities an airline has to engage with its customer to create increased customer satisfaction and engagement and also drive revenue. We've built a platform for offer and order that allows airlines to really meet all of these needs for the entire traveler journey, and we're very excited to what these capabilities mean to the airline industry. Many of us think that an airline is an airline is an airline. It takes us from point A to point B. There's a seat on a plane, and they all operate the same. Actually, airlines can be very unique. Every airline has a unique network topology and a unique business model and go-to-market strategy. They have different points in this offer order capability maturity journey that they are in today. What we have done is built a unified platform for offer and order that suits the need of every airline that we have encountered around the world, be it a small, mid-size, or large carrier. This involves all of these vertical elements that you see in the platform. We have various capabilities for revenue management, offer optimization, and parts of the order, such as distribution and the digital experience. We can fit our platform to every airline that wants to embark on this journey for offer and order, which we believe will be every airline in the world. It's a matter of time. Now, on the far left, you see other areas where we play as well, digital offer marketing, and this came to play with our acquisition of EveryMundo, a leader in digital offer marketing. It's a perfect fit to what we do at PROS because we are the experts of creating this special offer in real time that maximizes customer satisfaction, drives revenue, and they're on the front end of presenting the offer to the airline world. We have a virtuous loop where we can create an offer, and we have feedback of what people purchase and what they do not purchase. That makes all of our AI algorithms smarter and learning algorithms, as Michael pointed out. In the lower left-hand side, you'll see some other areas where we play. The group travel business, incredibly important for the airline space. Some airlines, 10% plus of their revenue are driven by groups. The corporate travel business, which is also very important, and in the past lived in a silo detached from true revenue management of passengers. We have a solution that makes it harmonized with the entire revenue management strategy. Finally, we have cargo, with cargo pricing and sales. What we have is a connection between cargo and the passenger side of the business, because now the airline has levers to decide how to balance their revenue opportunities between what's in the belly and who's flying on top. This became very important during COVID, where cargo was the lifeblood that sustained airlines. They've now redoubled their investment in cargo as they saw the importance of that business for each and individual airline. Moving on, Andres mentioned our TAM, which is now $3.3 billion. We wanted to share with you several of the drivers for this TAM. Basically, Land, Realize, and Expand, which Martin and Andres spoke about, applies very much to the airline space. There are three drivers we've listed. One is our expanded portfolio. We now bring to bear Digital Offer Marketing as well as offer optimization, digital experience, and the corporate travel solutions, all products that apply to every airline in the world. We've created new packages, which we call the essentials packages, that allow us to enter a market in which we did not play before, which is the lower midsize and smaller airline world. Historically, PROS did not play in that area because our products were beyond the price point that they could afford. Now we can land light and service the needs of these airlines as well. Finally, you'll see that this Land, Realize, Expand strategy is already driving new market penetration, which we did not achieve before. We're very excited about this. Similar to Martin's slide, you'll see some of the results of our Land, Realize, Expand. Couple of things I'd like to point out. Number one, many of these land and expand happened during COVID. We had a number of airline customers actually double down on their investment with us and expand their offer and order portfolios. If you attended the keynote, Benedikt Zimmermann of Lufthansa Group spoke to this. He spoke to how Lufthansa doubled down during COVID on continuous pricing with PROS and how now that's substantially paying off as demand has returned. As you know, 87% of global airline demand is back. There's still more room to run, but we see this as a key driver of revenue for many airlines going forward. I'd also like to point out on the upper left, one of the realizations from our land light with the essentials products, an airline that landed very light with $38K and then rapidly moved forward to a $282K commitment to PROS. Finally, I just wanted to do some PROS travel by the numbers for you. We have customers on six continents, very global business. 55 of the world's top 100 airlines use some PROS product, and 93 of the top 200 airlines use PROS products. This really gives us a seat at the table as a strategic partner with many of the great leading airlines of the world. Why is this important? Number one, we have our finger on the pulse of where the airline industry is and where it's going. Number 2, at PROS, we rarely innovate in a silo. We work very closely with our partners, with our new innovations to solve important use cases with them. As you can see, we have many new airlines who can utilize and benefit from our technology. But you also see that we have an opportunity to expand our footprint at each of these airlines as we solve bigger problems for them, especially as they move to Offer Management and Order Management. I think the most exciting number for us, over 50% of the world's air travelers were processed through some part of the PROS platform. Staggering number. You'll see in the bottom left, these were 2022 T2RL passenger data. One of our biggest areas, our footprints, is in China, and Chinese demand is just returning. We believe, and we fully believe and know that this number will be far higher than 50% by the end of the year. We're very excited about these opportunities. We feel like offer and order is a new horizon that opens up many potential possibilities for the airline world and for PROS to help solve some big problems. Thank you. With that, I'll hand it off to Stefan. Thank you, Surain. I love the stat that we have airline customers on six continents. You know, I think as soon as Antarctica comes up with an airline, maybe we'll call it Shackleton Airlines maybe, right? You know, we'll have them all seven continents. Sorry for those of you online, that's a reference to a keynote this morning. I really have just really one topic I wanna cover with you today, and that's really our long-term model. I could have actually distilled this into one slide, but in keeping with the spirit of explainability, just like we wanna have explainability on our AI, I wanna tell you a little bit about what makes us how we feel about our business and how we feel about our business today and extrapolating that for the next, call it, three years. First thing is that, you know, we have a track record, and I'm gonna get into this in a minute, of growing this business north of 20%. I'm gonna talk to you a little bit about that and how we've learned that lesson and what we know about our business that gives us confidence that we can return to that level of growth. Second, as you've heard Andres and Martin and Serene talk about, we have a platform that really provides us with access, you know, greater access to industry best solutions. If I had to pick one thing that I feel like it gives me the greatest amount of optimism going forward in our business, it's really this one. While on my third point, I talk about us having, you know, really the best products, which we do. We've always really had the best products. That's not anything really new. What's different is the accessibility of those products to more companies and also expanding the attractiveness to companies that may have been interested and been in our target profile, but not had the approvals, not had the budget, what have you, not able to execute to it. This really has changed everything. I'm sure a lot of you didn't realize this when we announced it back in July of 2021, when we said we're putting out our new platform strategy, and we've got some product bundles that go with that, you probably didn't think we were gonna be hammering on it so much as we are today. It is such a central part of our business and what we're gonna be doing over the course of the next several years to expand our reach as a company. I've already commented a little bit about the most complete and comprehensive AI. I would not do it anywhere justice to what Dr. Wu can do or even Andres or Martin or Serene, so I'm just gonna say we have the most complete AI, and I think that that stands on its own. Then as Serene just talked about, you know, the industry is starting to recover. Everything that you've seen from us over the last three years has really been kind of with one arm tied behind our back, if you think about it. Because while, yes, we've had some good successes, that industry has not really been firing on all cylinders like it was pre-pandemic, and like we know it will be over the course of the next several years. That's kind of the backdrop and, you know, how we're thinking about the business, because anytime you do a long-term model, it's largely a spreadsheet exercise. Let's be real. It's a largely a spreadsheet exercise. What really matters is what goes into the assumptions. What do you know about your business and what can you have confidence that you wanna predict and put into those cells to drive an outcome? As I was saying, we have a track record for, you know, generating 20% growth. Before we made the decision to go cloud first and become a SaaS company, we were growing at 27% CAGR. We were already doing that. We decided to reset things for ourselves because at that point in time, we wanted to make our product more accessible. We knew that the only way we were gonna be able to accomplish that was becoming a SaaS company. We could not stay on-prem and make our product more accessible, in terms of the market. In 2015, we decided to go cloud, and you could see what we were able to do then. Obviously, as just as we were getting through the tail end of that transformation, COVID hit, and that obviously had an impact on our business. What I wanna tell you is you look at this orange section, and you think about this go-to-market transformation that I've been talking about, what I will tell you is a lot of the same signs that we saw in 2015 and 2016 about our business we're seeing today. We're at the very front end of what we see as a nice upward trajectory in our business, and it's largely because of the things that we've done to set ourselves up by further expanding our capabilities with our product, but also making it easier to access. Buried within that slide, you probably saw we kinda highlighted what our subscription growth was doing. There are 2 things I wanna share with you on this slide. Number one, our subscription business has constantly grown, even during those tough times during COVID. Our growth driver of our business was continuing to grow. The second is I wanna point you to the pie charts that are at the very beginning and the very end of this, of this timeline. If you look at the makeup of our business back in 2015, you'll see just how little of subscription we had, but you also notice how much services we had. Services was a much bigger part of our business, and subscription was a much smaller part of our business. Translate that all the way to today, or I should say in this case, 2022, and you'll note that our subscription business represents almost 3/4 of our total business and services down to 16% of our total business. All the things that we're talking about have already started manifesting themselves in the product, and we expect to see that continue as we go forward over the course of the next 3 years. I can't go too long without talking about our gross retention rates. I emphasize gross retention rates. As all of you know, we measure ourselves on true retention. We don't cloud it with new business bookings that go into existing accounts. We really talk about what we had at the beginning of the year and what we have at the end of the year in terms of business from our customers. Our retention rates have been consistently at the 93+% level. We feel like that's a metric that actually can get a little better because when we dig into it and look at our subscription retention rates, they're actually a little better than that. As subscription becomes the more dominant part of our business, as maintenance starts to roll off, we'll start to see more of that stronger retention rate actually apply and manifest itself in this number. You know, as we think about the booking side of our business and how that manifests itself in revenue, we actually feel very good about how we're positioned and how we're gonna be able to hang on to those customers going forward. It's a good building block. It's good foundation upon which to build our model. We also focus on profitability. As I've said this many, many times, our profitability story starts with our gross margins, and more specifically, it starts with our subscription gross margins. I have to be honest, when I sat in front of a lot of you back in 2015 and 2016 when we had these investor days, we were targeting a 75% margin on our subscription business. I have to be honest, you know, we were looking at, you know, 50, upper 50s, as you can see on this chart. There was, you know, a lot of work that we needed to do. I knew it was achievable, but I also knew there was a lot of things that were outside of our control that were going to drive that, and we needed to execute as a business, both as an engineering team, and we also needed to execute as a sales team and take advantage of our infrastructure. Not only did we do that and deliver that, we've actually exceeded it, and as you're going to see here in a few minutes, we're actually going to set a new target that goes beyond even where we are today. There's the explainability. There's a lot that went into us building our model. Now, without further ado, I'll talk about where we see ourselves in the next three years. First thing is we buy into the Rule of 40. We get it. We understand why that's a metric, why that's something that people talk about. We understand that maximizing growth at the same time delivering a good, reasonable return to shareholders is an important combination and something that we strive and feel like we can achieve over the course of the next three years. The revenue growth, that's something that we've actually spent time with Martin and Surain and their teams talking about what that's gonna look like, what that's gonna take to generate that kind of revenue number. That was basically in the basis of a lot of the things they were talking about in terms of the Land, Realize, and Expand strategy. That's what's built into this 16%-21% growth rate. On the margin side and on the free cash flow margin side, getting to 19%-24%, that's a little bit farther of a climb to make, obviously. Because, you know, as you look at today, we're looking at this year turning into profitability. You know, being in the single-digit margin range and moving all the way up to the 19%-24%, that's a bigger jump. We're already making a lot of those changes that need to happen. What I would tell you on this next chart, I'm gonna tell you a little bit about how we're going to achieve it from an OpEx perspective. First, I think hit the margins first, actually. Starting on the left-hand side, you'll note that we have about a break-even services business, and it shows at -1%. Darn it, we were very close to making that break even, about $200,000 off from making that a break-even number. We're right at break even on professional services. As Martin was talking about, a lot of the changes, a lot of the things we're doing, we feel like are gonna get us to that 10%-12% range on professional services. As I mentioned, on the subscription gross margin side, we feel like an 80%-82% gross margin on subscription is an achievable number. Again, not gonna be easy. There's a lot of work that needs to happen. There's a lot of efficiencies that we need to build in because we provide a lot of capability, as Michael was talking about earlier. There's algorithms inside of algorithms inside of algorithms that go into our science, and that doesn't come cheaply because it takes compute to drive those types of answers. As a result, there's always a cost component that we have to work with, but our engineers have done an amazing job of doing that as efficiently as possible. They have some more tricks up their sleeves, at least that's what they've told me, that's gonna get us to a margin number that gets us over 80%. That's what we're thinking about for the next 3 years. All of that results in a gross margin that gets us to between 69% and 71%. Let's just call it 70%. At 70%, we feel very confident we can get to those overall free cash flow margins of 19%-21%. Underlying all of that is a subscription growth rate that's gonna drive the total growth rate. It's gonna be the primary reason why we get to where we wanna go. It's also gonna come with a little bit of services, obviously. Not as much, but to some degree, services is gonna grow a little bit with that. Here's the thing I really wanted to focus on, and that is our expense to revenue ratios. If you look at this chart from where we are today, the biggest gap appears to be R&D. You might think, gosh, that's what does that mean to your innovation? What does that mean to your overall business? The answer is, well, we've already made a lot of these moves. If you look at our R&D spend as a percentage of revenue in Q4 of last year and Q1 of this year, it's 25 and 26%. We've already moved the needle quite a bit on that. The reason that we've been able to move the needle is because we've actually finished a lot of the work that we were doing as a part of our SaaS transition. I wanna remind you, when we set up in front of you back in 2015 and said, "We're gonna become a SaaS company," we were emphatic in saying it was not a model shift. It was a fundamental shift in how we were gonna go to market and run our business. That's true, including architecting and re-architecting and rebuilding our products. We've largely completed that work, we do not need that additional cost that we had inclusive in our R&D spend over these last several years. That's not something we need to carry going forward. Really, when you look at that change of going from, you know, the, the 29% towards the 19%-21%, we've already made a significant move in that direction in the last 2 quarters. It's not as big of a lift. It's still a big lift. It's still gonna be an area that we need to continue to drive, you know, efficiencies and scalability, but that's true in our selling and marketing, and it's true in our G&A. I think that's something we can achieve because we've built infrastructure around the world. You know, as I joked at the beginning, we've got customers on 6 continents around the world, which means we have infrastructure in many places that our competitors do not. We can leverage that infrastructure as we grow our business and not have to make investments in our overall costs. That's what I had for you. Just to wrap up, we know what it takes to grow at this level. We've done it before. We know what it takes. I'll tell you this, I think our situation and our position is much better than it was if you go back and looked at 2014 or went back and looked at 2019. We sit today, we're in a much better shape because of what we've done with our platform. We've also made significant strides towards our profitability. We're on that track. We need to continue with that trajectory, and there is buy-in amongst our management team to continue to drive more efficiency. I mean, I'll say it, but, you know, I think you've been able to see it with our customers and with what Martin was talking about from an industry perspective, the gap between our competitors' technology and our technology has only widened. We have a further lead today. Our Gen 4 guidance is something the market's never seen. Our Willingness-to-Pay capabilities that we've done with RM, market's never seen. Our gap has only widened, so our competitive moat, if you will, has only gotten bigger. The fact that we can now do it in a much more consumer-friendly or customer-friendly way, I think, just really enhances our ability going forward. Finally, you know, adoption of AI is literally increasing by the day. It's easier for us to sell our solutions and what we do than it was before, primarily because people are used to having AI. That's what I had for you. I really wanted to talk primarily about the long-term model. That's really the new news that we had for you today. With that, I'd like to invite our team together and Belinda, and we'll take some questions from you. Already have one from Chad. That was quick. I figured all the hands would go up right away. I did prep questions, which is cute, 'cause just in case nobody wanted to ask any. All right. All right. Chad was rapid fire with the hand. We're good. Let me get settled. With all due respect to everybody out, that was, you know, the kinda clean up hitting part of the presentation. Thank you. With all due respect to everybody else, just in terms of that long-term target on total revenue and subscription revenue growth, how should we think about the two businesses, travel and B2B, you know, within that framework of the growth guidance? Yes. There we go. Yeah, the travel business we feel like has a tremendous opportunity to grow. I think if you were to ask Serene directly, he'll give you a better number than I will. 'Cause, you know, I obviously did the Chief Financial Officer thing, and I put a few, you know, put a few things on top of the numbers to see something that we felt like we could commit to and put out there. We feel like our travel business is going to be in those numbers, say, call it in the, you know, middle teens growth range. Think about the B2B business being on the, you know, the 20s, low 20s. if you think about the extreme of what I shared, the 16%-21%, think of travel being on that, you know, the lower end of that and B2B being on the higher end of that. Right. Then maybe one quick follow-up. You know, it's a 2026 target, but it seems like the level of confidence in the leading indicators on both sides of your business are just accelerating in general. Is that fair to say we kinda see incremental revenue acceleration and maybe more incremental margin acceleration just kinda annually from here to then? Is that a fair characterization? Yeah. Yeah. The good news is you're not gonna have to wait till 2026 to just see it happen. Yes. Yeah. Yeah. The good news is we've modeled this out. You know, we feel like there's gonna be a pretty even feel to that as we go. You know, as we execute in 2023 and we get into 2024 and 2025, you'll see, you know, not a complete, you know, even stream of pro-production there, but pretty close. You'll definitely see we're on the right track and it's getting to achieving, you know, those numbers that we put out there for 2026. Got it. Thank you. Mm-hmm. Jason. I'll use the microphone too. Yes, please use the microphone. You know, the margin guidance, you know, pretty impressive. You're right, it's a gap, and it looks like a lot of that's gonna be kinda made up from on the services side. Can you talk about, you know, some of the levers there to get that margin higher and then also maybe on the subscription side? Yeah. I'll start with subscription. Like I said, we've rearchitected the product to a large degree, and one of the things that we've seen going forward is there's still a few products that we have where we have good, strong SLAs in place. We've put redundancies in place. We've actually put, you know, additional compute in place to ensure that we deliver to those SLAs. Our engineering team has identified ways in which we can eliminate putting those types of redundancies in place, and still generate those SLAs and do it at a lower cost. As I think about the subscription side of the house, that's primarily where it's gonna come from, is delivering high availability and real-time answers in a more efficient way. I just kinda gave you an example of how we intend to do that. On the professional services side. You know, I can let Martin or Surain talk as well, but on the professional services side, there's so much work that's going into the product itself and the prepackaged solutions that we're putting together with our platform strategy. You know, one of the things that oftentimes gets overlooked is when we announced our platform strategy, we also put together services packages that went with it. We continuously work to improve those packages so we can deliver them with, you know, more consistency. We can deliver them with, you know, newer resources, not necessarily, you know, experienced resources that cost more money and that kind of thing. There's been a number of things that happened as a result of that platform strategy. I don't know, Martin or Serene, if there's anything y'all wanted to add to that. I can just expand on the part you were talking about, the standardization and the packages. We've taken the best and brightest that we had in our organization, set them aside and said, "We're gonna use them to invest in standardization packages, reusable assets," which we are now applying and creating new packages almost every month as we go. We launched our rapid package, for example, that allows customers to get to value in 30 days recently, and we already have customers that have used it, and they are actually getting live, getting value and expanding, which was the whole point of this. That's helping us improve the profitability. The other part is that as we look forward and as we standardize the sort of the technical part of the implementation, we are also going to focus on more high-value services that we already are providing to our customers, in forms of more advanced guidance, leadership on modeling, on the science, on optimization, on change management and other pieces. We'll see more of those services come into our portfolio over time, and they are higher margin services than the technical side. I did see Parker's hand shoot up, and then I'll try to get around to everybody. All right. Can you hear me? Yes. Is it working? This is probably for Dr. Wu actually. We've heard a lot about AI today and PROS capabilities there, but I'm curious if you could talk a little bit more about what you're seeing on your customers' side. How much of a priority is the development of their own algorithms? What are you guys doing to make it easier to implement those, and what are the implications for customer success? Hello? Yeah. I think the... Okay, there's a few question there, right? It's like... First of all, I think that we are definitely seeing that the adoption of AI is increasing by the day, as Stefan have said it. You know, customers are also investing in building their, I would say, data science capabilities and algorithm and they have, I would say, collect their proprietary data. One of the thing that we invest a lot, you know, one, in one of those categories that we say that other advanced algorithms is extensibility of our AI, right? Our AI is, you know, it's called, we call it Extensible AI. Extensible AI, I would say, is a little bit of a misnomer because it's not AI per se, but it's a set of tool that makes your AI more extensible, right? It's like explainable AI. It's a bunch of tool that makes your AI more explainable, same thing as Extensible AI. We have this tool that enables our AI to easily, you know, ingest proprietary customer data, you know, if they have it. You know, I don't know where they get them. They could get them from buying them, scrape them, whatever, right? I mean, they, if they have those data, we could ingest them. Since neural network, you know, for example, the Gen 4, using the neural network approach, we could easily ingest additional covariates and predictors. Moreover, we could also combine it with our solution, augment our solution with their algorithm as well. If they have not just data, but they have de-developed their algorithm, we can actually, using this type of learning algorithm called ensemble learning, we can actually combine them together so that, you know, it functions even more optimally. Martin and Surain, do you wanna comment, sorry, on, just on the customer success impacts and maybe what you're seeing in real-world examples as well? Yeah, for sure. I just wanted to say, every customer executive meeting we've had in the last six months has involved what are we doing in AI and the customer telling us what they are doing in AI to see how the two fit together. It is universal. Our customers definitely see this in the airline industry, as a huge driver of future profitability and customer retention and connection. They realize that the airline world is behind compared to retailers such as Amazon or, like, Netflix, et cetera. They see what value AI is driving in all these other industries. It's a very easy connection to make that airlines have all this data and should be driving similar value for airlines. We see it across the board. Yeah. I think it's similar on B2B. It's a question of the maturity of the customer. When you think about extensible AI, it's not something that we land with. It's something that we expand our customers into as they mature on their road to pricing excellence. When you think about In addition to just the extensible models, the really capability that I think is really driving this is our ability that we released last year to run multiple models at the same time. When you think about a customer, I actually mentioned them earlier, one of the leading PC manufacturers in the world, they use the PROS AI models to optimize majority of their business, but they found, like, you know what? For one segment of the business, call it large contracts to a specific target market, with some unique characteristics, we want to run a Monte Carlo simulation that's set up a little bit in its slightly different ways. We, of course, they can run that model on top of the PROS platform. We host it, we run it, we deliver in real time to their quoting solutions. Not only that, we now also route the request based on what the requirement is, whether it's going to hit, you know, customer-specific model or the PROS model, and allow it to do some A/B testing, et cetera. It's really creating, even for our more advanced customers now, kind of the next step to get to in terms of maturity. Okay. let's go to Brian. We do have questions on the phone too, which we'll get to, and some of the other hands that went up. Thank you, Belinda. It's Brian Schwartz from Oppenheimer. Wanted to continue the discussion on AI. You kinda touched upon the use cases. I wanna touch upon how to think about the evolution of the pricing model and the monetization with it. I don't know if it's a question for Andres or for Martin or Serene. You know, Serene, you're talking about how your airline customers are seeing AI as a way of increasing profitability. Well, there's certainly a belief here that AI is gonna, you know, replace workers and replace the number of users that probably are gonna need to be in an organization to run the PROS system. How do you overcome, combat with your pricing model and your monetization? Do you come out with more pricing tiers? Do you raise prices? Is there a potential success-based pricing model to capture the value that you'll deliver, but maybe with less workers needed? I can take it first, just for the first example. When you think about how we go to market and how we price our AI when we go to market, it's not based on users, et cetera, it's based on the value that we provide. The metric that we use, most commonly is Revenue Under Management. We price, based on that. For some companies where revenue is a very volatile number that are tied to commodities, we may use volume. They're really tied to the value that we drive because that's directly tied to the measure of output, that we are optimizing. We're certainly talking and thinking about how we best monetize the AI, and there will be things that we'll release to the market over time. We don't have an immediate issue where we see a, actually we have to react really quickly to kind of get back to our revenue basis based on the model that we have. In addition to that, we also have a transaction or volume. The more volume you process, with revenue, you get X amount of volume on platform. If you exceed those volume metrics, think of that big consumption-oriented component, we have opportunities to uplift. That's very common in travel. The way that we did our volume is don't think each unit of transaction costs extra. It's blocks of units. Because we don't want to be that dynamic that every 1 transaction costs X amount. We find that's very difficult for customers. What they like is having, you know, say in travel and maybe we process 10 million transactions and they get, you know, if they want to go above 10 million, they buy another 1 million transactions. That level of bucketing so that we give them a way to grow and stay on average within that threshold. We also allow the transactional volume is not measured on unique peaks and valleys, but usually, let's say, a period of time moving average of what that volume is, 'cause you do see some spikes and volumes coming down. Again, we wanna create a model that we can benefit financially, but we also wanna create a model that's easy for our customers and friendly to consume. I think that's gonna be a really important area as our customers evolve and start leveraging more and more models on the platform. I would just add one more thing. In the, in the airline scenario, with the emergence of our AI-driven Offer Management, we're handling a much larger piece of the revenue pie for the airline. It's not just the seat, it's the ancillary, the bundle. We're bringing into play groups, corporate, cargo. It's the end-to-end revenue spectrum for an airline, which is gonna allow us to drive our subscription growth. Thank you. Yeah. I will add one more to the job displacement comment that you mentioned. because I do believe that, you know, in the long run, any technology will actually create more job in the long run. There may be some, I would say, short-term displacement, or I would say, shifting of people's job. I think people are using. You know, it's like, I make use of it may be a dumb example, but I mean, you know, before there were cars, you know, people have to get from A to B, they use horse trolleys, right? You know, once you have a car, it's a new technology. You still need to get people from A to B, but you're just using a different technology to get people from A to B, right? Before AI, people still need to do pricing. They're just using a different technology to do it, you know? I would say in the short term, there may be some job displacement, but I think largely, I think there will be just a shift of how people do their work. In the longer term, these technology typically create a lot more opportunity for jobs. Yeah. Okay, I'm gonna go to Jody 'cause I know we have some questions coming in on the webcast. I don't wanna forget our virtual attendees. Okay. Can you hear me? This is probably a question for Serene. How should we think about where PROS is going with offer and order management capabilities relative to the current generation of PSS providers? Do you see a path for PROS to ultimately displace those providers in the future? Offer and order is definitely a tremendous change in the technology stack of the airline world. The PSS providers have provided a very valuable service for many years now, for decades. They do not provide a platform for airlines to achieve their goals of offer and order, cause they're just not designed for creating special offers with the seat plus ancillaries, et cetera, and then to fulfill these offers. As we know, the PSSs are very infrastructural to airlines around the world. As orders emerge, airlines are aggressively looking at what's the transitional world, where they go from the PNR to the order-centric, order-first fulfillment system of the future. You know, it's gonna be a very interesting time. We believe strongly it's gonna be an open platform. There's not one solution that drives this future state. It'll be an open platform with APIs, with many companies contributing to it. We believe that our PROS AI capabilities are central to it. We can really drive this change. I think. Did you have a question at the front? Yes. Thank you. Jason Kotik with Rockefeller Asset Management. I'm assuming, Stefan, you used your own tools to do that. You didn't use Excel for those long-term models. Not a question, but I'm just gonna assume that. I heard a lot from some customers that are relatively new. They seem to be B2B, old line industrial companies. It seems like they complain a lot about change management and how do we get our employees to embrace this. Question 1 is really about how do you guys help with that? 2 is, you talk about this long-term plan, but maybe talk about what you need infrastructure-wise to get you to these levels. Do you need more customer success people? Do you need more sales? Do you have to invest in people relative to your growth? I think that's most of my questions. Yeah, I can take that one on, change management. It's a, it's a great point and, when you think about it, you're taking in many of these cases, there's a lot of tenured companies. You have reps that have been there for 20 years, you know. They know, they know the customers, they know the business, and now they've got this AI recommendation in front of them on their screen. There is some change management that you have to do. Well, and we've done that very successfully. That's how we are able to drive the results that you see in terms of the returns. We've changed the approach on how we've actually gotten to it. When we first started, we hired a lot of really smart consultants, strategic consultants, high dollar services to go to these customers and work with them and do workshops and do, you know, do change management sessions and set up reporting and tracking to see how they were doing. That was really good and effective, but it's very expensive. Didn't help our services margins. The thing that we really switched to is we built these plays into the platform itself. We provide our customers every month with all of the change management information data that they need, and then we drive best practices to actually help them adapt. When you think about what it looks like right now is you have a company, we roll out AI, you're gonna have varied levels of adoption. You're gonna have the high adopters that get it right away. You got people in the middle, and you got people that just, "I don't need this to do my job." We very clearly in our data now highlight who those low adopters are, compare their performance in terms of revenue and margin growth compared to the high adopters. What you will find is the second you show the 20-year, 10-year salesperson, the guy that just started three months ago and doesn't know any better and pulls better performance, it changes the game really quick. It's not instant. You still have to track the metrics. You have to showcase. You have to do the monthly things, incentives, you know, some of the things that go around it, where we have captured in our best practices, and we're able to get through it and drive significant value for our customers that way. Then to answer your question on will we need to invest in people and resources, and the answer is yes. We do have that built into the plan. Although I will say, you know, how we invest will be a little differently going forward than how we've invested in the past. You know, it starts with the amount of investment we're gonna have in R&D is gonna be less. You probably also noticed that we didn't have as much efficiency on the selling and marketing line item because we are gonna need more frontline salespeople selling. We're gonna need more customer success people managing the enhanced number of customers that we have. Yeah, we are planning to make investments in those areas. To Martin's point, we also feel like there's efficiency gains to be had there as well. That is modeled in there as well, which is why that ratio comes down slightly. You didn't talk about Stock-Based Compensation. Obviously that doesn't go into the Rule of 40. How do you see that going forward? I think, there are some investors that care. Mm-hmm. That is becoming an increasingly, bigger and bigger topic, to your point. It's something that we look at as well. Our comp committee who, you know, governs how we, you know, issue stock is keen on that as well. You know, we've looked at it, more, you know, in a, to a greater degree this past year, and we're just below the median of, you know, our peer group. I think the median was, if I remember correctly, was around 16% of revenue was in Stock-Based Compensation. Ours is around 15%. As we look at this number going forward, we do see that percentage coming down. The reason we see that is there were a few unique grants that happened over the course of the last couple of years that, one, we see going away, and we also don't see repeating. One was as a result of the acquisition we did with EveryMundo. Also we did a grant to non-executives for employee retention purposes back in the great resignation era. That has had a little bit of an impact on our Stock-Based Compensation expense that will go away, and you'll see that number start coming down. Expect to see that number, you know, trending down over the course of the next 3 years as well. Scott Berg. Hi. Two go-to-market questions, probably for Martin and Seraine. First of all, on the travel side, if you look at your bookings historically, it's been heavy with your O&D products. All the talk of the conference here today and over the last year is around, obviously, the offer and management and some of the new technologies. I guess the question there is: what does that balance kinda look like going forward? Is it more kinda this historical core, you know, solution set of PROS, or is it a more balanced mix? The other question for Martin is, kind of embedded in your bookings, maybe assumptions the next couple years. The one thing that struck me at this conference that's been different than my, I don't know, 10 or 11 years that I've been coming here, is your SI partner involvement is not as, I don't know, out there, out as big as this one, as it has in the past. How do partners continue to influence your sales cycles, especially with the larger SI partners? 'Cause it almost seems like these smaller pricing and packagings actually don't play into a partner strategy as well, 'cause they like the big boom transformational projects. Thanks. I'll start with the airline part of your question. We still see a lot of room for our core revenue management, O&DRM, for example, products to grow within our decline base and across the airline world. As you've seen, we have a substantial footprint, but there are a number of other airlines that can truly benefit from our revenue management capabilities. Beyond that, we've dramatically upped the ante with our new technology. We've released Willingness-to-Pay, which is a new generation of AI demand driven forecasting, and we're now rolling it out in production across some of our core partners, and we believe that this will be transformational in the airline world. Then we're also working towards something called Request-Specific Pricing, where we're targeting through the core revenue management product, offers. There's more room to grow for sure in the core RM products. That being said, DPA, Dynamic Pricing and Ancillaries, the AI-driven bundling, all of these are new capabilities that we're just now bringing to market that we believe have widespread utility and will drive revenue across all the world's airlines, and will be a core part of their Offer Management transition as they transition their technology stack. We actually see growth across the board in both those areas. The only thing I would add on travel is we've already seen a lot more business across, even in the digital fare marketing side. I would say where before RM was the core selling module, now we're seeing a lot more from our groups, from corporate sales. Definitely we're seeing more solutions and a, and a better mix across the product suite. Yeah, I think it's a great question. I think the answer is nothing has changed in that direction. As you heard Andres mention, he talked about our three pillars, and they're core to our strategy. One of those is go to market with our partners. When we think about partners, we think about them as co- going to market together, right? We also think about them influencing deals. We also think about them helping us deliver the deals. You know, you mentioned the big bang projects that they maybe particularly like. We still have services opportunities. As Stefan mentioned, our long-term model, we still plan to have our services be 15%, 16% of our business. As you apply that to our growth rates, it's a pretty significant business. What we are changing is how we are going after it. Yes, we are not necessarily landing with a huge use case that will require, you know, large investment of time and resources and large partner involvement. We do have the expansions, and there is plenty of opportunity to expand. We are part of many digital transformations with our partners together. When we jointly go in, it's not just a PROS price optimization or CPQ, we are part of a larger transformation. There are a lot of opportunities there for partners, and I spoke with many of them here that are at Outperform, some with booth, some without booths, that are here work to work together with our prospects and customers and talk about our go-to-market partnerships. It continues to be an important part of our go-to-market. The only other thing I would add, though, is what you will see is different is in addition to kind of the big global GSIs, we are also partnering with smaller, more boutique partners that are focused either very strong in a certain industry or they are very strong in a certain geography. And we are establishing those partnerships as well, and that's helping us attack that market, that $100 million - $500 million - $750 million market. They're really effective in that space with us as well. One other thing. You know, we spent a lot of time talking about how our platform strategies allowed us to go and do the Land, Realize, and Expand strategy. Just to make the obvious known, we still like big deals. You know, that's. We still see those as a part of our future. Because there are customers who are 100% bought in, ready to make the deployment across the board, and we still expect to see those. However, we're not gonna be as dependent upon those as we would've been, say, you know, five, six years ago, because we'll have a much stronger base of, you know, smaller transactions. I think we're right at time, unfortunately, and I do wanna keep to time, 'cause two hours is long. Hey, I wanna thank all of you for, again, for joining in person, making the investment in the trip to come out. It means a lot to us. I'm always here to answer questions. You know where to find me, all of you. Please reach out if there's anything else that you want clarified. Thank you very much to everyone who attended virtually. We appreciate it. Thank you. Thank you. Thank you.