Greetings. Welcome to the PROS Holdings Q3 2023 earnings conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference call over to Belinda Overdeput, Director of Investor Relations. Thank you, operator. Good afternoon, everyone, and thank you for joining us. Our earnings press release, SEC filings, and a replay of today's call can be found on the Investor Relations section of our website at pros.com. Our prepared remarks will be available on our website immediately following the call and will be replaced by the official transcript, which includes participant questions, once available. With me on today's call is Andres Reiner, President and Chief Executive Officer, and Stéfan Schulz, Chief Financial Officer. Please note that some of the commentary today will include forward-looking statements, including, without limitation, those about our strategy, future business prospects and market opportunities, and our financial projections and guidance. Actual results could differ materially from such statements and our forecast. For more information, please refer to the risk factors described in our SEC filings. PROS assumes no obligation to update any forward-looking statements to reflect future events or circumstances. As a reminder, during the call, we will discuss non-GAAP metrics. Reconciliations between each non-GAAP measure and the most directly comparable GAAP measure, to the extent to which available without unreasonable effort, are available in our earnings press release. With that, I'll turn the call over to you, Andres. Thank you, Belinda. Good afternoon, everyone, and thank you for joining us on today's call. I'm proud to share we delivered a strong Q3, exceeding our guidance ranges across all metrics. We grew subscription revenue by 16% year over year, total revenue by 10% year over year, and delivered $5.6 million in positive adjusted EBITDA, an improvement of $7.8 million year over year. Our results are a testament to our team's relentless focus on driving profitable growth to achieve our goal of being a Rule of 40 company by 2026. As the market increasingly embraces AI, PROS' long-term trajectory continues to strengthen. C-suite leaders across industries are encouraging their teams to infuse AI into their operations, and PROS is a clear choice, given our enterprise AI is proven to fuel profitable revenue growth. When it comes to enterprise AI, accuracy, trust, and speed are critical, and this is what sets PROS apart. We ensure accuracy and trust by using an ensemble approach to combine multiple AI algorithms together. For example, we ensemble our price prediction algorithms with outlier detection and explainable AI algorithms to deliver the most optimal and transparent results possible. Our models are adaptive. They self-learn and recalibrate based on user interaction and real-time data signals to provide the most up-to-date predictions. We offer unparalleled solution performance, with response times that are guaranteed within milliseconds for real-time solutions. Through greater accuracy, trust, and speed, PROS delivers the promise of AI today. Our mission is to help people and companies outperform. Our enterprise AI generates significant revenue, margin, and efficiency improvement for our customers, as shown in our published ROI study. Recently, we ran an analysis to see how these business outcomes translating to shareholder returns for our customers. We found that PROS' publicly traded customers outperformed the Dow and S&P 500 by more than 15 percentage points between the beginning of 2022 and the end of Q3 2023. I'm proud that we're helping such amazing customers drive these incredible returns. I encourage you to check out this chart in our Q3 investor presentation. Our land and expand strategy is working, demonstrated by our accelerating subscription revenue growth, significant improvements to profitability, and the pace at which we're continuing to land new customers and expand their use of our platform. In Q3, we continued to welcome new logos across our target industries, and now I'll share a few examples. Genesis Energy, a New Zealand-based electricity and gas supplier, selected the PROS platform to provide a seamless customer experience with a harmonized omnichannel strategy. Trivium Packaging, a leading global manufacturer of metal packaging, selected the PROS platform in Q3 to fuel profitable growth. Trivium will improve their responsiveness to shifting raw material costs with dynamic pricing and drive accelerated time to quote with CPQ. JetSMART and GOL Airlines selected the PROS platform to use our Digital Offer Marketing solutions to increase online traffic and drive higher conversion of sales through digital channels. SKS Airways, a new Malaysian carrier planning to launch at the beginning of 2024, selected PROS as a strategic partner in driving their growth strategy. SKS Airways will use PROS revenue management platform to help them predict demand, scale their operations, and maximize revenue. Now, I'm excited to share a few of the incredible expansions we saw with our customers in Q3. Ingredion, a leading global ingredient solution provider, began their journey with PROS to drive a digitally connected sales motion and optimize pricing. Since implementing our platform, Ingredion is driving more accurate pricing by leveraging real-time cost changes, resulting in faster time to quote and an improved customer experience. Ingredion has expanded margins using PROS AI-powered pricing to optimize product and customer mix, and even highlighted this on their recent earnings call. Ingredion CEO, James Zallie, said on the call, "Our results demonstrate our ability to be responsive to shifting market dynamics and deliver continued profit growth." We're proud of Ingredion's success and pleased to share they expanded their use of the PROS platform to a new region each of the last two quarters. Air New Zealand expanded their use of the PROS platform with the adoption of Dynamic Offers solution. With PROS Dynamic Offers, Air New Zealand will modernize their retailing strategy with our leading capabilities in airfare shopping and pricing, enabling them to design, distribute, and manage price fares across direct, indirect, and digital sales channels. Turkish Airlines expanded their use of our platform with their adoption of our Digital Offer Marketing solution in their recent go-live of our latest generation of solutions for revenue management, real-time dynamic pricing, and group sales. Turkish Airlines has been a PROS customer since 2009, and it's been amazing to be part of their stunning breakthrough during this time. Turkish Airlines has more than doubled the number of destinations it flies to since the beginning of our partnership, and today flies to more countries than any other airline in the world. Our platform innovations enabled the next generation of modern retailing for Turkish Airlines on a massive global scale. Real-time dynamic pricing is the key to fueling revenue growth, managing availability, and intelligently controlling each offer. With the PROS platform, Turkish Airlines can increase online traffic and drive higher conversion rates of optimized offers across their global passengers and group business, driving their growth strategy. In closing, I would like to thank our global team for making PROS an incredible company and delivering on our mission of helping people and companies outperform. Also, I would like to thank our customers, partners, and shareholders for their ongoing support of PROS. With that, I would like to turn the call over to Stéfan to cover our financial performance and outlook. Thank you, Andres, and good afternoon, everyone. We delivered another strong quarter, which puts us in a position to raise our outlook once again for the year. Year to date, we have grown our subscription revenue by 15% and total revenue by 10%, while delivering over $20 million in improvements to both adjusted EBITDA and free cash flow. We have now generated positive adjusted EBITDA on a year-to-date basis and expect positive free cash flow for the full year after an expected seasonally strong Q4. These profitability improvements have been made while also executing to our revenue growth plan. We are off to a good start towards reaching our goal of achieving Rule of 40 by 2026, and I am pleased with our progress towards these objectives. Now for our Q3 results. Subscription revenue in the Q3 was $60 million, up 16% year over year, and total revenue was $77.3 million, up 10% year over year, both exceeding the high end of our guidance ranges. Our Q3 recurring revenue was 84% of total revenue. As expected, our Q3 calculated billings were relatively flat year over year and increased 5% for the trailing 12 months. As a reminder, the size and timing of our billings have an impact on our quarterly growth rate. Our trailing twelve-month gross revenue retention rate in the Q3 remained above 93%. Non-GAAP subscription gross margin was 78% for the quarter, improving from 77% a year ago. Our non-GAAP services margin was 9% in the Q3, improving from 4% a year ago. Our overall profitability improvements start with gross margins, and year to date, we have delivered over 145 basis points of improvement to subscription gross margins and over 800 basis points of improvement to services gross margins compared to last year. Driving greater efficiencies in how we deliver our solutions has been an area of focus for our professional services and product teams, and I wanna congratulate them for their achievements in this area. Adjusted EBITDA was $5.6 million in the Q3, exceeding guidance. We also generated $8.5 million of free cash flow in the Q3, a $17.6 million improvement compared to last year. From a balance sheet perspective, we exited the Q3 with $169.1 million of cash and cash equivalents, and have access to our $50 million revolving line of credit. Additionally, we exchanged approximately $122 million of our convertible notes due in May 2024, for approximately $117 million of additional notes under our 2027 indenture. The new notes under the 2027 indenture are recorded on our balance sheet at fair value because our 2027 notes were trading at a premium to par. So even though the exchange resulted in a lower level of debt at par value, our balance sheet will reflect a higher amount of debt. This non-cash premium will be amortized down to the debt's par value over the next four years. As a result of this exchange, we have reduced our debt due in May of 2024 to approximately $22 million. Our non-GAAP earnings per share was $0.09 per share. Now turning to guidance. For the full year, we are raising our subscription and total revenue guidance. We expect subscription revenue to be in the range of $233.3 to 233.8 million, and total revenue to be in the range of $302.2 to 303.2 million. We are also raising the midpoint of our EBITDA and free cash flow guidance. We expect Adjusted EBITDA profit for the full year of between $6.5 million and $7.5 million, and free cash flow of between $3.5 million and $6.5 million. We're maintaining our guidance for subscription ARR at $251 to 254 million. And for the Q4, we expect subscription revenue to be in the range of $60 to 60.5 million, and total revenue to be in the range of $76 to 77 million. We are anticipating a sequential decline in services revenue due to the holidays. We expect Q4 adjusted EBITDA profit of between $3 to 4 million, and using an estimated non-GAAP tax rate of 22%, we anticipate Q4 non-GAAP earnings per share of between $0.03 and $0.05 per share, based on an estimated 47.5 million diluted weighted average shares outstanding. In closing, I would like to thank our employees and customers for their continued passion and support. We also thank our shareholders for their continued support of PROS, and we look forward to speaking with you at our upcoming events. I will now turn the call back over to the operator for questions. Operator? Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please, while we poll for questions. Our first question comes from the line of Chad Bennett with Craig-Hallum Capital Group. Please proceed with your question. Great, thanks. Nice job again on great execution in the quarter. It's great seeing the re-acceleration in subscription revenue growth to 16%, pretty material year to date. And then also that flowing down to a very nice EBITDA and earnings beat. I guess, question I have is, you know, I kinda marked down, Andres, all the logos you talk about in expansions every quarter, and I could be wrong, but I think there are a fair amount of travel-related transactions this quarter. Can you give us a sense of where we are in that recovery and maybe into the Q4 here, and how we should think about the travel business and bookings there? Yeah, Chad, great question. Yes, I would say, travel had a, a good quarter, a very strong quarter, and we're very pleased both on the lands, with GOL Airlines, JetSMART, and SKS Airways, as examples. And also on the expansion side as well, you know, Air New Zealand expanding to Dynamic Offers, a huge win for us and, and continuing to broaden, our reach within Air New Zealand, and also Turkish Airlines continuing to expand now with our Digital Offer Marketing. What I would tell you is that where we innovated during the pandemic is areas that airlines, we knew when they started investing, they would wanna adopt these solutions, and, and definitely they're resonating, and, and the market is, is improving as we expected, into Q3 and, and Q4. Okay. W e are seeing demand recovery into the second half here? Yes. Yes, I would tell you it's pretty consistent with what we expected in a good way. We said we expected in the back half of the year for demand to pick up, and we're seeing it. ... Okay, and then maybe just yeah, on the other side of the B2B side of the business, just in terms of, you know, how to characterize, I think you talked about last quarter, a pretty significant reduction in sales cycles i think you said 30% and a improvement in new logo activity that you saw last quarter. Is that business, I assume it's driving the re-acceleration or a decent amount of it, but is there any characterization of how much that business has accelerated year to date and how to think about that going forward? Thanks. Yeah, Chad, great question. We're seeing the same improvement in the B2B new logo velocity that we talked about last quarter. We're seeing about a 30% improvement in those sales cycle times, and we're continuing to drive deal growth there. We're always proud to talk about the wins like Genesis Energy and Trivium Packaging. As well as I would tell you, the land-and-expand strategy that we started at the beginning of the year, we're seeing it working. Ingredion is a perfect example. You know, they're seeing significant value in each of the last two quarters, Q2 and Q3 t hey expanded into new regions, and I believe that motion, while we're not fully to our potential, we're executing very well. Got it. Thanks for the color. Nice job. Thank you. Our next question comes from the line of Rob Oliver with Baird. Please proceed with your question. Great. Hi, guys. Thank you very much for taking my question. Good afternoon. I had two—my first, Andres, was just around, and I recognize that it's still early, but a question around the Microsoft partnership o bviously, you know, some excitement around Azure with the recent report and, seeing, you know, some interest in AI solutions. And I know it's early for you guys, but would be curious to hear how you characterize the sort of progress and what constitutes early success for the Microsoft partnership a nd then I had a quick follow-up as well. Yeah, I would tell you, look, the Microsoft partnership continues to strengthen in all areas. I think from an innovation, we're continuing to drive innovation on the front of OpenAI and some generative AI capabilities around their next generation Viva Sales platform and PROS. But on a go-to-market, I would tell you there's very strong collaboration across all of our geographies between Microsoft and PROS. We can now resell our solutions in their marketplace, and we're working very well s till early phases, but I would tell you the partnership is as strong as it's ever been. Great. Okay, excellent to hear. And then just, looks like a real strong quarter for you guys in Europe, and I just wanted to parse out that a little bit and understand, was it more on the B2B side, more on the air travel side? And then, be curious for any color around those deals, partner-led, or, you know, sort of the new, more modular sales model, what's driving that strength? Thank you. Yeah, no, great question. I would tell you, look, in general, we're seeing. We're focused on this land-and-expand strategy s o I would say in general, we're trying to land these smaller deals and drive acceleration. As we know, it is a complex market, and we knew coming into this year that it was more important than ever that we land in a fast time to value, be able to measure uplift and drive quick expansion, 'cause companies are very focused on where they invest, and I think we've executed on that strategy well, both in travel and B2B w ith respect to EMEA. We saw good demand on the travel front with expansions, and we talked about some of those, also on the B2B front, so across both sides i would say both teams are very, very focused on how we land an account, and what is the best next offer that we can offer for existing customers to drive those rapid expansions. Thank you so much. Thank you. Our next question comes from the line of Jason Celino with KeyBanc Capital Markets, Inc. Please proceed with your question. Great, thanks for taking my question. You know, one on sales capacity. You know, next year is just around the corner at this point w anted to get an update how you're thinking about, you know, sales capacity heading into next year. Do you feel comfortable with your coverage? Any thoughts there? Yeah, great question, Jason. I would tell you, we're in a good place from a sales capacity w e've continued to add the reps that we need to onboard and get them productive for next year s o I feel like we're in a good place. We'll continue to execute through this quarter. We'll continue to our reps in preparation, but I feel we're in a really good place. With the team, we're also continuing to focus on driving higher rep productivity t his is an area that we started, and I would tell you, you know, we've made improvement to our CAC ratios, and we feel we can get to best in class, and we're going to continue also to focus on driving higher rep productivity as we look into next year. But we feel from a capacity, we're in a good place. Perfect. And then just a quick one for Stéfan. You know, on the EBITDA beat, you know, nice leverage there. Looks like you're raising the full year by only a little bit. You know, any expenses or investments that we should be aware of for Q4? ... No, Jason. We did in our forecast, assuming we, you know, deliver, you know, based on anticipation and how we're seeing the plan come in, there'll be some variable compensation components that come into play in the Q4. That's the only reason you see that number sequentially come down slightly from Q3 to Q4, is that, you know, potential variable co-incentive component. That's it. Great. Excellent. Good stuff. Thank you. Thank you. Thank you. Our next question comes from the line of Scott Berg with Needham. Please proceed with your question. Hi, Andres and Stéfan. Congrats on the good quarter, and thanks for taking my questions. I guess a couple things. Surprised this one lasted to me. There's a rumor at the end of the quarter that you've hired another investment bank to potentially, I guess, evaluate maybe some sort of incoming inquiries into the company. Not that I expect you to comment on any, you know, acquisition activity on the company here publicly, but I guess any thoughts on what the criteria or scenario would be to, you know, maybe potentially actually go through with the sale of the company? 'Cause I think you guys are at a fantastic point right now with AI, you know, with the rebound in travel. I would think the future looks really strong, and you probably have some interest in maintaining this as a public entity for a while. Thank you. Yeah, Scott, great question. And obviously, look, we don't comment on rumors or market speculation, but what we can tell you is that we are laser focused on executing our goal of being a Rule of 40 company by 2026. We believe we're in a very strong market position, a leader in our space, $38 billion TAM, and we've proven that we're executing really well on our land, realize, and expand strategy. So we feel we have a great opportunity to drive pretty significant shareholder returns. W e feel we're in a great place, and we're just focused on executing. Great. Thank you. And then from a follow-up perspective, Stéfan, you beat a pro-- you know, all profitability metrics pretty handily in the quarter. Looks like your sales marketing expense was down quarter over quarter, more than kind of the historical seasonal nature. I guess anything driving that in particular? And my guess is we should probably be thinking of sales and marketing being at a higher rate here, starting in Q4 going forward. Yes, Scott, I think your assumption about it going up again is a good one. The reason for the sequential decline from Q2 to Q3 had really to do with our Outperform event. A lot of resources go towards that event. Not only just the, you know, the third-party fees and the direct fees associated with it, but there's a lot of, you know, indirect fees that go to support that event. Y ou saw that, plus a couple of other events that occurred in the Q2, and we didn't have as much in the Q3. So that's the real big reason behind us seeing that type of a movement. A gain, to your point, I think going forward, you'll see that number start to rebound a bit. Great. That's all I have. Thanks for taking my questions. Thank you. Our next question comes from the line of Parker Lane with Stifel. Please proceed with your question. Yeah, hi, guys. Appreciate taking the questions here. First one's for you, Andres. You know, you're exposed to a lot of different industries out there i 'd be really curious to hear, you know, with the prioritization of AI and, you know, being that the subject that everyone's really concerned about, are there any particular verticals where you're seeing the greatest prioritization of AI or the budgets actually being a little bit more substantial than average? Yeah, Parker, great question. What, what I would tell you is, while we're seeing industries that are being impacted, that, that maybe their performance not well, we're not seeing the deprioritization of our initiatives. B roadly, we're seeing very strong industry interests across, and I think the importance of AI and digitization of sales in driving the right price guidance in this high volatility environment is continuing to resonate. I think, you know, I've said it all along at the beginning, I think it was very important for us to be able to land small, be able to measure the uplift in ROI, get to value quickly, and us executing to that has clearly demonstrated. I think the visibility of AI and the importance of AI has only increased, and I would say we're seeing that more and more interest of adopting, you know, or Gen 4 dynamic pricing algorithms or next generation of dynamic pricing for a revenue management and travel solutions, the digitization of the customer experience in travel in those areas. O verall, I would tell you, we feel pretty good about the market environment right now. Understood. Yeah, I appreciate that. And then, Stéfan, for you, I know you've oriented investors and, and us on the sell side here around ARR as the core metric, but wanted you to touch on RPO, if you could, a little bit, and, and when should we expect sort of a normalization in that metric? I saw it's declined here a couple of quarters. Yeah, Parker, you know, that's... That is a function of the things that we've been talking about. You know, to Andres's point about the land realize and expand strategy, you know, we're, our typical contracts are gonna be quite a bit smaller than they have been historically a nd so as that unwinds throughout the RPO disclosure, you're seeing an inconsistent way in which we used to run the business versus how we're running the business today, and it's showing itself in RPO. T o your point, I think, you know, as we get towards the middle part of next year, I think we should have that anniversaried out, and so we should be starting to see the real impact of the momentum in our business start to be reflective in more of those RPO metrics. Having said that, there's still anomalies that go into that metric, just like there are with Calculated Billings from a timing of renewal and, you know, when that occurs to regenerate that contractual obligation. But I think generally speaking, we should see a more an outcome that's more representative of the momentum in the business starting in the middle part of next year. Got it. Okay, that's all from me. Thank you. Thank you. Our next question comes from the line of Camden Levy with Oppenheimer. Please proceed with your question. Hi, this is Camden Levy sitting in for Brian Schwartz. Thanks for taking my question. Just one here. Given your guys' exposure to the travel industry and just thinking about, you know, Q3 moving into Q4, specifically just this first month of October, have you guys seen any, like, sequential softening in consumer demand from the ongoing conflict in the Middle East as it relates to EMEA and just some of the strength that you saw in that market this quarter? Thanks. Yeah, Camden, great, great question. I would tell you we're watching that very carefully s o far, we haven't seen any impact to demand or big impact to our customers. You know, b ut we are actively monitoring the situation, but so far we have not seen an impact, and we're not seeing our customers be impacted by that currently. Okay. And then maybe just, like, following up on it, any, like, of the customer conversations or just ongoing pipeline that you had with travel partners or suppliers in, I guess like EMEA and, like, Middle East, have any of those conversations maybe perhaps stalled or elongated as a result of October per se? Yeah, great question. I would tell you, no, no stalls. It's continuing, and I would say we are actively engaging in both of those regions, EMEA and Middle East, and we're continuing to see the focus on their strategy a nd I think they’ve seen the importance of innovating and the value that it can drive. So far, we haven't seen any instances of them slowing down. Okay. That's it for me. Thank you so much. Thank you. Our next question comes from the line of Victor Cheng with Bank of America. Please proceed with your question. Hi, Andres, and hi, Stéfan. Congrats on the solid quarter again. Just two from my side. Obviously, you mentioned you continue to see a faster sales cycle, but can you give us some more color, maybe on the pipeline, what you're seeing at the top of the funnel, whether you know there's more happening at the top? And maybe if you could split it by you know by geography as well, maybe a bit more color on the U.S. as well i t appears to be a bit softer in Q2 in Q3. Yeah, Victor, great, great question. W e didn't see any softness in the U.S., in Q3, and overall, top of the funnel continues to grow well. It puts us in a good position to continue to drive growth. O verall, I would tell you, whether we look at industries or geographies, we're seeing good demand across. There's not an area that we're seeing, you know, a decline, whether it be at the top end of the funnel or within, say, Q3. W e saw pretty, pretty good demand across the U.S., Europe, in other regions, as well as across industries. But one other thing I will note is the mix continues to be between new and existing in that 50/50 mix as well. Got it. And then the other one is maybe on travel. Obviously, you mentioned that demand is coming back, but just one check, is kind of the airline IT spend still below that pre-pandemic level? And as we think about 2024, with a lot of the volumes broadly normalized, and when I think about airline industry in general, they're going through a once in a generation change, both on distribution, on, you know, on software side, with offer orders management, to expect, you know, a much bigger appetite in 2024, 2025. When should we see that coming in? Yeah, great question, Victor. I would tell you that Q3 was a big progress quarter for us to see travel trend more towards the 2019 volumes a nd I think we, you know, we feel very good about Q4 and as we look into next year of that continuing. I think it's a little premature to call 2024, but I feel all the ingredients are there. You know, airlines are starting to invest, and they're investing in the areas that we innovated as we talked about. I think our market position is continuing to strengthen, and I think all the areas where we expanded our portfolio are resonating really, really well. I mean, just recently there was an article about Lufthansa and our continuous pricing as an example that they've had very significant success this year, and they attribute to the investments they did, you know, with Pros during the pandemic and now reaping those benefits. Those are great proof points that the innovations that we did are paying off, and I, and I believe that customers will continue to follow to adopt those latest generations of revenue management and our full solution from the digital fare marketing all the way into revenue management to drive better returns for their business. O verall, I feel very good about travel as we look into 2024, but it's a little premature to call next year. Very clear. Thank you. Thank you. Thank you. At this time, ladies and gentlemen, we have reached the end of the question and answer session. I would like to turn the call back to Belinda Overdeput for closing remarks. Thank you for listening to today's call. We look forward to speaking with you at conferences and events this quarter. We will be attending the Stifel Midwest One-on-One Growth Conference in Chicago on November 9th, the Craig-Hallum Alpha Select Conference in New York City on November 16th, the Needham Virtual SaaS 101 Conference, also on November 16th, and the UBS Global Tech Conference in Scottsdale on November 29th and 30th. If you have any questions following today's call, please contact us at ir@pros.com. Thank you and goodbye. This concludes today's conference. You may disconnect your line at this time. Thank you for your participation.