If everyone could take their seats, we'll get started. Hopefully, everybody got breakfast. Feel free to keep eating 'cause it looks delicious. Okay, so I'm Belinda Overdeput. I'm the head of investor relations for PROS. And sorry? Don't play with the clicker. I know, the clickers are sensitive. Okay. I'm really excited to be here. Thank you to everybody who came out to Outperform. It means a lot to have you here at our conference. We really appreciate your time. Before we get started, I'm gonna read the forward-looking statement disclaimer, and then we're gonna jump right into our customer panel. All right. Please note that some of the commentary today will include forward-looking statements, including, without limitation, those about our strategy, 2026 targets, future business prospects and market opportunities, and our financial projections, including these 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 our most recent earnings press release. Okay, it's always fun to do that one live. I'm gonna grab a seat, and I have the honor of having three of our customers here with us today. So before we get started, I'm gonna quickly have them introduce themselves and give a background of their company, and what they do at their company. So Julia, maybe we'll start with you. Sure. Good morning. I'm Julia Brasher with Highline Warren. We are a premier manufacturer for oil and chemicals, and distributor of those products, along with other consumables in the aftermarket auto industry. I'm Director of Pricing and Revenue Management there, and we have a small pricing team, but we have quite a few sales force, so... Great. Lucio? Okay, so Lucio Bustillo, senior director of RM science and practice at Air Canada. Been in the airline industry for 15 years, with 10 of those years consecrated to Air Canada. My team is essentially responsible for the calibration and development of all the forecasting and transactional systems that actually deliver or are responsible for the end price that we show to our customers. We also provide decision support to revenue management. So in terms of Air Canada, we're a Canadian airline. Hopefully, that's easy to guess. In 2023, we transported roughly 44.8 million passengers with an average of 1,025 flights a day, so it's a rather large company with a complex network. We have three hubs: Toronto, Montreal, and Vancouver, that we use to connect Asia and Europe to the rest of the Americas, so very happy to be here. Thank you. Christoph? Yeah. Finally, hello. Good morning. I'm Christoph Riemer. I'm head of corporate pricing at HAWE Hydraulics SE. We are a family-owned company based in Munich, Germany. We have roughly in revenue of EUR 500 million per year, and we are in the market since 75 years, and we are specialized in high-pressure hydraulic components, serving several industries like construction, medical, renewable applications. And, yeah, my team and myself, we are really responsible for everything in terms of pricing globally. So we are, yeah, we are selling globally, and we have production facilities in China, Europe, and here in the States. Yeah. Awesome. Thank you. I think to get started, it's always helpful for our investors, especially since we serve a broad range of industries, to understand some of the dynamics that each of you face in your industry that drive you to select a solution like the PROS platform. So Julia, maybe we'll start with you on that. If you could just give an overview of your industry and kind of what were the drivers of assessing the need for a solution like PROS? Sure. Well, the way our company came together is just a product of a lot of acquisitions, and so we're currently... 60% of our revenue goes through the manufacturing side, 40% goes through the redistribution of just resalable products. And so on the manufacturing side, we really wanted to find a solution that helped us move faster on raw material costs, and we were-- we've been able to do that with PROS. Our problem is that during the acquisitions, we're now using four older ERPs, and so we wanted just up-to-date technology that we could attach to those ERPs that would be sending those raw material costs faster, where we could maintain our margin with our sell prices. On the redistribution side, we wanted to provide our sellers a faster, more efficient, more effective sales price so that they could get through their orders faster. They're talking with multiple customers throughout the day. Sometimes customers have 100 lines on the orders, and the sellers are moving very quickly. They really face the burden of having to price those themselves or just always kind of thinking about the price, changing it, and we just wanted to deliver a real-time, accurate price. ... Thank you. So I'm gonna go for the airlines. So really the challenge for us is a little bit complex. So our challenge is really comes from what we sell, how we sell it, and how complex the calculations that you need to do to come up with a right price are. So first of all, airlines are really selling a perishable product, so the moment the plane takes off, you cannot resell that seat, right? It goes out empty. So there is a lot of forecasting science that we need to implement to be able to forecast how many passengers we're going to have on the flight and deliver to the market the prices that are going to equilibrate the demand and the offer. So not only we're selling a perishable, but we're also selling a product that can be reused as part of multiple products. So a single seat in an aircraft could be sold for passengers that are, for example, connecting from Europe, or connecting from Asia, or just going in the local, in the local origin destination. So imagine, New York to Toronto. It could be a New York to Toronto passenger, a Frankfurt to New York, or a, or a, let's say, a Haneda to New York passenger. So all of these passengers have different willingness to pay, have different demand patterns, so you need to be able to predict all of them, accurately evaluate them, to come up with the right pricing policy, to maximize the capacity that you have out there. So that's a little bit the challenge of the airline network. The second piece of it is the distribution side and the scale of our transactions. So airlines are mainly a B2C type of business, so the systems or the transactions that are needed to support that are enormous. So for every passenger that we carry, there's roughly between 240,000 pricing requests that come in into the airline. So you're talking trillions of transactions that coming in to validate for a price. So you need to have a robust and scalable system, not only to deliver those prices, but to deliver those prices in your direct channels and outside of your direct channels. So you are redistributing content for third party to assemble those into actual offers that go out to passengers. So the airline side has the two type of challenges: the analytical challenge, which is the one that is leveraging most of the AI and the high-accuracy forecasting models that PROS develops, and then you have the transactional one that is really managing the very high volume of transactions that you have. So we sort of live the two sides of that spectrum. Thank you, Lucio. That's a good overview. Christoph, we'll end with you on your industry. Yeah, I mean, as said, we are working in the hydraulics industry, which is, from my perspective, an old industry, I mean. And, as further, we are a family-owned company, which we have a lot of in Germany, which have EUR 500 million of revenue. And in parallel, the hydraulic market is a matured market. I mean, in order to grow organically is quite hard and challenging. So by that, on the other side, we have still a lot of customers. Even in Germany, we have close to 40,000 customers, in combination of nearly 400,000 products we have in our portfolio. Wow! If you just make simple math, you end up with more than, I think, 90 billion combinations. The answer of our sales for that was, "Okay, one fixed discount per customer. Go for it." They entered it in SAP, and it stays in SAP forever. I mean, growing with this path, you will not success, and of course, you can start to widen it, you can start making product-specific discount, but it will be getting a mess. Right. So, this is the challenge for us to say, "Okay, we have to do it differently. Yep. Yeah. And then, of course, you can't do it with a calculator. You need somehow a technical IT support, and this is, for our perspective, where PROS come in. Yep. And that's why we are using PROS, in order to support our customers with these combinations to get always the right price, in order to be successful in the market, in order to even grow organically with existing customers and or existing products with new customers. So it's very different industries and/or business themes, but I feel like the common theme here is needing to do things fast, needing to process a lot of volume, and needing to deliver effective, essentially, sales strategies, commercial strategies, pricing strategies across your businesses, and it's great that we have the pleasure to help you with all of that. I'm gonna jump into a couple questions, and I will open it up to the room first, but I wanna go through a few of these. So, Lucio, I'll start with you because I think if we look at the customers on this panel, HAWE and Highline Warren are relatively newer customers for PROS on the B2B side in their industries. But Air Canada is unique and... Maybe not unique, we have several examples of this, but they've been a customer for almost three decades or more than three decades. And so just given the tenure of the relationship with PROS, it'd be interesting to hear your perspective of what has kept Air Canada in business with PROS for so many years. So I'll just go with a brief history of, of that relationship. So Air Canada was PROS' second customer back in 1988. So I won't speak for the, for the period where I was in kindergarten, so no knowledge there. I really joined Air Canada in the 2010s, and over that period where I was in kindergarten, both companies went through significant transformations and improvements on the science and on the methods used to succeed at revenue management at Air Canada. So in the 2010s, Air Canada decided to modernize its commercial stack. So we used to have our availability calculation that was done by our in-house PSS. We decided to bring in the next generation first of the forecasting engine from PROS. So that's Revenue Management Advanced, and also the transactional piece of the system, which is RTDP, that computes in real time the availability that you're going to present to passengers, that ultimately determines the price. So that was in 2014. In 2017, to make sure that our system scaled properly, we migrated to PROS software as a service solution in the cloud, and we recently acquired or started the implementation of, first, the next generation of the forecasting engine, so the Willingness-to-Pay Forecaster. Second, the next generation of the availability calculator that allows you to do continuous pricing. And third, we started leveraging the synergies that PROS has with the B2B world by bringing in their Corporate Sales solution into our stack. So those are the, let's say, recent changes that we've had. And probably I would say over this very long relationship, I would say there's three things that have been, maybe the key that keep it alive. So the first one is really the innovation side and the accuracy of the systems that are delivered by PROS. So it's really top-of-the-shelf type of science and optimization, and, in the airline industry, we do a lot of data science. We've been at it since the eighties, so we're able to verify with our own research claims that vendors make, and I would say we've been happily satisfied to see that the claims turn out to be correct in terms of revenue uplift. And so that science is one component of it. The second of it is really the co-creation that PROS engages on. So there's a lot of collaboration with the industry, not only with specific customers, but the industry as a whole. So the whole ecosystem can benefit from the innovation that comes out of PROS. And lastly, and this is probably more for the IT-minded type of people, which includes me, their system scale properly. So when it comes to technology, they're able to adopt and renew the stack quite often. So that allows us to have an economic offering for handling this volume of transactions that is... that remains really, an attractive offer. Thank you, Lucio. It's so amazing to hear from you. I wanna also pivot to Julia. So as some background for our audience here, Julia and Highline Warren have actually recently implemented our Gen IV price optimization. Investors have heard us talk about this quite a bit. This is our price optimization based on neural network technology. And so, Julia, I wanna just ask you first, could you describe what incentivized you to to choose Gen IV price optimization for PROS? And then I have a follow-up question on explainability and adoption within that solution. Sure. Well, I can't explain the AI. Yeah. We have Dr.- It's okay, we have Dr. Wu for that. Yeah. Yep. But, no, we needed new technology, and we needed a pricing solution again, to stack onto these four ERPs, and that would also drive us into the future if we ever were to consolidate to a newer ERP. And as we were researching different software companies, you know, we researched a lot of smaller ones, all the big ones. You know, when Gen IV came out, it was just, you use the word innovation, you know, it was just innovation that we wanted to be a part of. And, our ownership really believes in technology. We see the future of AI coming. We really believe it's gonna be a part of the B2B process, so we just wanted to be in the front of it, and it was a great opportunity for us. And so it was really an easy decision to make for the company, and I really appreciate all the... Dr. Wu spoke to our owners and made everyone just feel like it was the best solution for us and really gonna drive us forward. And, you know, in saying that, you know, we went through our workshops, and we were all still a little hesitant of what was gonna happen when we flipped the switch, right? So, you know, the pricing team is hesitant. Leadership is wanting to know, okay, is the AI really gonna be accurate? And of course, our sellers, you know, they have years of experience. They never like my pricing. They're certainly not gonna like a robot pricing for their customer. And, you know, just... I'm constantly getting, you know, criticism, and no one is excited. They're very, very hesitant to what's gonna happen. But what we did is, just my team, we did a, we called it our proof of pricing project, and we would run the guidance. We would just check it against year-over-year average sale prices, what was going on with competitors' online pricing, what we saw in just market conditions even, and it was really accurate for the difficulty of taking... We have 19,000 active SKUs and thousands of customers, ranging from $1 million-dollar accounts to $5,000-dollar accounts. And, you know, just the math that it could do was better than any math any of us could do, and I report up to a statistician, and he was—He just couldn't believe it. We were all really excited. We presented this to leadership. We presented these findings at our national sales meeting. The sales force was still a little hesitant, and so we chose just six sellers to be the first ones to use the AI guidance, the Gen IV. We took the older, grumpy, unhappy seller who thinks he has all the years of experience, and I should, you know, always come to him before I price something. So we, we took him, we took some, a younger guy who was really successful and, and had a great reputation in the company, and we took a few managers, and we gave them all Gen IV. And they, they had great feedback and really were happy. You know, I got credit for finally doing something right. I looked good, and that was nice, finally. But it was great to see them embrace the technology, and then they became advocates that we worked alongside to put the remainder of the sellers in with Gen IV, so. That's amazing. Well, I'm happy we were able to help you there. That is great. Christoph, HAWE is using, just as background for the audience, essentially the end-to-end B2B platform, offering everything from price optimization. They're actually implementing Gen IV right now, but they are using our price optimization already, so that's an upgrade for them. And then they're also using our Configure Price Quote solution and our Sales Agreements offering. So Sales Agreements essentially allows you to set up corporate pricing agreements and then execute mass chain-price changes against those agreements. So think about the breadth of basically all of the solutions on the PROS platform. So my question to you, Christoph, is, for you, as a customer, what was the value that you saw in kind of adopting the solutions end to end? Yeah. Yeah, thanks for this question. I mean, as I said, I'm now for five years at HAWE, and when I started, it was clear that we first making a pricing project. We just picked some external consultancy to say, "Okay, how is pricing looking in the future for us? Mm-hmm. The reason why we're doing this is, in my... When you just go to a vendor like PROS and ask, "Hey, show me your solution- Mm-hmm ... you will get a mass mind-blowing presentation, but at the end, you don't know what to do- Yeah ... because you have so many options. That's why we say, "Okay, first, we would like to get a clear vision what we would like to do. Mm-hmm. Okay, and within this project, we came up with three different pricing logics. One is for the day-to-day quoting, okay, a customer is asking, getting a quote. The second one was for our project business, and it's like you have a big box of Lego bricks, and you just put them together, and at the end you have something new. So it is... And the third element is our, let's say, contract sales agreement pricing, long-term contract with customers. And, after we finished this, then, of course, it was clear that we somehow need support from an IT solution because Excel was not on the list, right? Mm-hmm. Not an option. Yeah. And then we run a beauty contest with several vendors. One, of course, was PROS, but we even choosing Salesforce, for example, as a CRM option. And at the end, the solution PROS was offering us was really even the best way for every of our three pricing logics. And even from the guidance point of view, what we came up with our logic was more or less same or matching the Gen III version. Mm-hmm. So, and then for us, it was clear, okay, and, to go with PROS, even of that you are the longest in the market, I mean, even this is for us was okay, it's nothing. Maybe it could be disappear next year because it's only five years, so this was even one major point as well on the final list. Yeah, and then we go and implementing it, and the, the overall target of the project was accelerate sales. It means giving the sales a unique starting point for their daily work, and this is our sales for our CRM environment, and within the CRM environment, we implemented PROS. So it means, from a user perspective, he has one touch point, and nevertheless, if doing A, B, or C, he has always one starting point, and PROS is seamless, integrated, and supporting him, nevertheless, what challenge he has, and this was one of, for us, the most benefits. Yeah, it's amazing. They're using our platform integrated into Salesforce, and so to Christoph's point, the seamless experience from the sales rep is, "I'm still in Salesforce, where I've always been. Mm-hmm. But in reality, they're opening up PROS. They're getting all of the insights, the pricing through that application, but they're, from a change management perspective, continue to stay within the applications they're used to, which I think is part of what drives the value as well. Okay, I do have a question for all of you, and I think this is very relevant for investors. So everybody is talking about AI. AI is the number one theme in all of the markets right now, and I spend a lot of time explaining to investors what PROS AI is, how it's different from maybe other types of AI in the market. And so I'm curious, from your perspective as customers, how do you view PROS as an AI innovator versus maybe the way that AI is being talked about in the broader markets? I guess, Julia, I'll—we'll just go right down. I'll start with you. Well, you know, when you hear all the news of what's going on with certain AI products, you know, I think when it comes to the pricing world, you know, AI has kind of always been there. AI just makes sense to help us do better math more efficiently, comparing behavior among customers that we don't always see in our spreadsheets, we don't always see in our BI analytics, and even considering new customers and how the AI can price for those, it's with all the algorithms we've had in the past, you know, we've built matrices, we've had customer segmentation, we've tried all these things, and it's been our own attempts at some sort of AI. And this Gen IV just, it just makes sense for the pricing world. I don't think it's as risky as some of the other AI products you see out there. Love that. Okay, so I'll have to make a disclaimer here that airlines have been at data science for a while. So since the 1980s, we've been using data science to make decisions about our network and our pricing policy. So let's say that we've... what today gets branded as AI used to be predictive analytics, used to be big data, used to be descriptive analytics even. So the part that sometimes is unclear in the market is what is being presented as AI, and even the term itself is somewhat loaded in the sense that you have this anthropomorphized idea of a creature that is intelligent. But in reality, it's just a system that is able to infer trends from data and make decisions in an automated fashion. It shouldn't be. It doesn't have all this heavy load when you, when you get down to practice. So, from our side, because we've had this experience of doing data research, and the airline industry itself is a very literature and academics-heavy type of industry, so we've had a lot of research simulation that goes on into, into testing these algorithms. You're very wary when you, when you have a vendor that is, let's say, leading the charge with the term AI and is claiming revenue uplifts that are in the double digit or triple digit even. So more realistically, revenue uplifts are going to be in the single digit if they, if they are there, but you're going to be applying them over a huge base. So for an airline, we do see a lot of potential in these new methods that computationally were not necessarily feasible in the past, but had existed in a while. And now that you have cloud technology, cloud infrastructure, you can actually compute these methods in an economical fashion and gain that additional revenue uplift. So from our side, when it comes to innovation, we're focused a little bit more in what we would call useful innovation, and this already Julia touched on it. For us, the effort of deploying a new system or algorithm tends to be roughly 60% change management, 15% is the model, and let's say 25% is really integration, just because airlines have a very complicated stack sometimes. So if you read the airline literature and have the data, you can come up with a scientifically sound solution. That's not necessarily the differentiating factor. Really, the key that for these models to be successful is that 60% of change management. So from that perspective, the innovation at PROS is, first of all, fit for purpose because they have a long story when it comes to the airline industry itself. Second of all, it's scalable and robust, so you need to have a very well-established infrastructure to address the edge cases. And when you're dealing with big numbers, the edge cases can become even PR nightmares sometimes, so you need to have systems that are very reliable. And the last point is, it needs to be innovation that is scalable, so it needs to be able to handle very large volumes of transactions. So I would say that to be able to be part of that stack, there's a certain series of criteria that have to be met, and let's say vendors that are a little bit of upstarts don't necessarily have that infrastructure all the time. So that's a little bit what we see as the differentiating factor. Thank you, Lucio. I mean, when we announced implementing PROS in our, in our company, a lot of, like Julia, called them grumpy, old sales rep. We are thinking, "Okay, we are going to implement Skynet, and Skynet is taking over sales. Yeah. Because for them, it was something like that, nè? And it takes us a lot of explaining to say: "Hey, the system is there to support you, first of all." So from my perspective, and we had a discussion with Michael Wu in Düsseldorf, it's... for me, it's, it's still the sales in combination with the AI. Mm-hmm. So there's still like a, they both have to work and act together. And, and the point is as well, when you previously, even before I start working with, when you're doing something, you're analyzing something, as soon as you have done the analysis and you have implemented, it's outdated. Mm-hmm. Nè? And this is the advantage of AI to say, "Okay, the system is always calibrating, is always rethinking, is always remodeling, and up to date in order to really be the latest state, the status." And this is the point, what, what the benefit is for us, nè, in order to give the sales in... And they are still confused that the recommendation is today this, and the next day is this, because there could be something changing in the data. Mm-hmm. So for them, it's still, "Okay, one price per year for a customer, don't touch it. Mm-hmm. This is even the point where we have to explain the benefits of the system in order to, "Hey, use it as an additional information source. Use and trust in it, and this is even getting better." And I'm really looking forward to Gen IV on that because I'm really convinced on that as well. Yeah, and this is still a long path in order to convince the people who are doing the same thing for 30, 40 years. And now we came in, and it's like a young guy like me. I'm still counting me young, yes. A young guy like me to say, "Hey, we can do it differently, and just think about that," and yeah. ... I love that. Christoph, I have a question for you, and I think all of you could probably comment on this. But often, when we look at the tech landscape of what our customers are integrating with, and typically on the B2B side, there's a CRM involved, there's an ERP system, and then PROS is coming in and kind of providing the pricing support- Mm-hmm. and the sales optimization. But I'm curious, and to explain to investors, why seek out a solution like PROS instead? You know, I think the question that I often get is: Can't they do pricing in the ERP system? Can't they do pricing in SAP, or can't they do quoting in CRM? Mm-hmm. It would be helpful to just explain from your perspective- Mm ... how PROS is solving challenges that these other systems do not solve for you. I mean, I mean, an ERP system has a completely different scope- Mm-hmm ... as an IT tool. I mean, for us, it's like of order management, invoicing, even production related. Mm-hmm. It has purely not really something to do with sales- Yep ... from the first place. The second challenge is, for us, for example, we have two different ERP systems, and in every subsidiary, we have our own instance. So we have, let's say, we have close to 30 subsidiaries. That means we have 30... I mean, they're all the same name of these ERP system- Mm-hmm ... but it's different instance. To implement something within each of them, it would be a mess. Yeah. So, and of course, the system is not made to do so. Yep. And I mean, even at the beauty contest, I mean, even SAP has founded its own pricing software with Vistex. Now, so even they going a different way. And for us, now we build a CRM, which is a roof of all the pillars. Mm-hmm. Within this roof, within CRM, we integrated PROS. So that means for us, we have one single point where we can optimize the system, and all of the users are benefiting. So it's not that we're implementing some advanced enhancement in A, and we have to do the same in B, C, and whatever. Mm-hmm. It's just at one place, one enhancement, and everybody is getting the benefit of this. For me, this is, I mean, we have a CRM, we have ERP, and we have PROS. Mm-hmm. So, and everyone has his dedicated meaning, has the value, the added value it brings into the company. Yep. I don't want to, let's say, enlarge ERP in order to get the same function because the system is not made for it. Mm-hmm. Yeah. Thank you. That's helpful. I don't know, Lucio or Julia, if you have anything to comment in that regard. I'll let you go first. Well, I would just... I mean, our ERPs, you know, do not price the way that PROS does. I think, you know, you said earlier, the price just sits there- Mm-hmm ... and grows stale. You lose visibility to it until it shows up on an invoice, and it was at a negative margin. And then where did that price come from, you know? And so what we're able to do with PROS is just constantly provide an accurate, up-to-date market price, maintain margins, and it's not getting stale sitting in that ERP. Mm-hmm. So it's just not even a question in our minds if the ERP prices. Yeah. So. Awesome. From the airline stock, I would say that the ERP is more of a system of record. Mm-hmm. It's not really meant to be an analytical system, and if what you're trying to do is to make a decision on your pricing, the information there, it's useful, but the analytics and the intelligence is not there. That's a completely different system, but that's only speaking for what the ERP does for airlines. I can't speak for B2B, but that's the whole point of having a decision system on the side that allows you to actually give you insights on what's happening there, but most importantly, being able to have all the right inputs and levers, so you can transform your business strategy into an actual pricing policy. And at least from our side, the ERP is not. That's not its purpose. I love the system of decision versus a system of record. Mm-hmm. Mm-hmm. We're gonna steal that from a marketing perspective, but okay, last question, and then I will open it up to the room for questions. And this is the money question. So I would like to ask each of you, what has the success been like working with PROS? What value have you seen, or what have you driven in your business? Julia, we can start with you. You know, I would just say that what we were presented in the initial presentation from the, from sales and the estimated basis points pickup, you know, is accurate. We're seeing that right now pretty quickly. So, you know, we see it as a successful project, and everyone is happy with the results. Thanks, Julia. So, Air Canada, being a publicly traded company, I can't discuss any specific figures. However, what I can say is that, the implementation of these models, would tend to match the revenue uplifts that you would see, in the industry literature. So actually materializing the benefits of the research and delivering actual revenue uplifts is probably the, the biggest one that, that we've seen, of course. And, the scalability portion is, is rather important for us because airlines tend to scale up and scale down based on the economic cycle. So it's important for us to have systems that are able to do so as well. When we're implementing the guidance, I mean, guidance is proposing an envelope from expert, target, and floor. And normally, the target price is the one you have to go for, but from a psychological standpoint, we've said that the expert price is a default value. So always when the user's adding a line, he gets the expert value. And just by doing this, we observed that it brings a 0.5% on EBITDA.... purely margin just by this tiny decision to go for the expert first, because the users always stays there, or he goes maybe a bit lower, but he's still over the target. And this is just an additional, EBIT or a revenue, or margin, sorry, margin, and not counting all the other benefits we do have from the system. Yeah. That's amazing. Wow! All right, I will open it up to the room and see if there are any questions. It looks like we have one from Zane. Hi, Zane Meehan, KeyBanc Capital Markets. Julia, one for you. You kinda touched on it just now on the benefit you're seeing from adopting PROS, but specifically, the adoption of Gen IV, is there any kind of quantification that you can share with us the benefit you're seeing from adopting Gen IV? I'll just quickly repeat the questions 'cause of the microphone. Zane's question was around the adoption of Gen IV, and for Julia, and any benefits that you're seeing as a result of the adoption of Gen IV. Yeah. So, I mean, what we did to measure the ROI on the project was we started to analyze, okay, if the seller brings the—if our seller, we can analyze, okay, if they brought up the envelope to see the expert target- Mm ... floor, we have a trigger to where we measure, okay, they are viewing the envelope. We allow them to change the price. So okay, they viewed this guidance, they entered a price, and we're comparing that price to the average sale price of the previous year from that same customer product combination. And we are seeing, we have a revenue target of... Well, I mean, we're trying to hit a $4 million EBITDA increase from the project, and we believe we're gonna hit that target. Just looking at how these ASPs are just inching up with the guidance. And the guide. Or what's the best part is our sellers have not, have just had minimal. They've had no change in order entry. They don't really know what they're doing, and we've just been able to turn this on, and they're happier getting these prices faster and more efficiently, and it's just, it's a huge benefit. I'd also talked to the-- Just mention, you know, there are so many benefits that we're unable to quantify. Mm-hmm. Just with how my team is able to operate more efficiently. We're able to bring in younger analysts who have immediate confidence that they can give a price to a seller who may call in with a big customer and needs an immediate price. They can just pull up the guidance, and it saves us so much time, and it gives confidence to these newer analysts or sellers. I love that. That goes back to the explainability. We talk about the glass box approach to PROS AI quite a bit. And so Julia was, when we were talking yesterday, referring to these newer analysts being able to just look at how the screen is telling them that price is calculated and being able to understand very quickly what is driving the value. And so, it's great to hear that that's had benefits from your team's perspective. Any other questions? Thank you, Sunil, for running mics. Thanks so much for giving your perspective. I'm wondering if you can talk a little bit, you're all very positive about PROS. I'm curious to hear from each of you one or two things that you think PROS could do better, areas that they could work on. It could be something at the platform level, something related to service. Just curious to know one or two things that you think PROS could do better. We are perfect. Just kidding. I mean, of course, there are, like in a marriage, you have good days, and you have bad days. It's always the case. I mean, I would lie if I say the world is red, whatever. Yeah. I mean, I don't know the English phrase correctly. Yeah. The point is, I mean, if there is something, of course you can trust that they will solve it. Mm-hmm. Of course, they will take care on, and they will take you seriously, and they will support you. Yeah. This is what I observe on that. And I know that, if you, let's say, like in a marriage, if you break up and you go with a new one, you have different issues. Mm-hmm. It's like even changing the company, the grass is always greener on the other side. No, it's not. Yeah. So, that's the point. I mean, this is what I said at the beginning. I mean, PROS is in the market since a lot, quite a long time. So they have a good record, and they know what they do. This was one point- Mm ... for us to say, "Okay, we go for them." And even by knowing it will be not everything good and so far and so on, but still, we know when we have an issue, they are there, and they're taking care, and they solve it. Yeah. Thank you. I don't know if anyone has anything else to add. Well, I guess I would echo the sentiment. I mean, a relationship with a vendor is a day-to-day thing, so there's always going to be issues that you have to solve and so on. But the ability to come to the table, listen to your needs, and craft a solution is probably what we value the most. And I would say from the airline side, we have a very complicated stack, so being able to integrate with other partners is really key to what we do, and that is something that PROS does very well. Let's say that if I had a wish list, it would be for those models to come faster. We really need the revenue. Okay, Sunil, no pressure. Our Chief Product Officer is in the room. We love pressure. Yeah. Well, and yesterday I was in a breakout session and wrote down a quote from one of the Ernst & Young consultants, and he said, "You know, we come into companies, and sometimes we have to remind them what they bought." And I've been talking to some of our PROS colleagues and friends and saying, "I'm gonna need a little help reminding me of some of the features that we bought that maybe we aren't using yet. Mm-hmm. And so where we got so much support at implementation, and, you know, I'm forgetting a few features that we could turn on- Mm-hmm and things like that. So, but that's, that's what's great about the partnership, is coming in and, and speaking to that. And already there's been some features where we think, "Well, shouldn't it be able to do this?" And as soon as we ask the question, they said, "Oh, that's in the next release. Mm-hmm. That's in the next quarterly release. You're not the only customer to have brought that up." Everything seems very responsive to our suggestions. Thank you. And maybe bouncing off of that, and this goes with any relationship, following your metaphor, it's like you also have to invest as a customer. Mm in the relationship. Oh, yeah. So you need to develop your support team, you need to develop your own analysis infrastructure. So if your reporting platform, if your support team for the organization is not there, it makes it very hard for you to translate those needs into actual improvements. So customers can sometimes be disappointed if they didn't really invest that time in developing their own internal processes. Because if you're dealing with a very complex system, you have to be able to articulate your needs, and that takes some time for customers to do, and it takes a dedicated team to do so. Helpful. Rob, you have a question? Great, yeah. Rob Morelli here with Needham & Company. Thanks for taking the time, and thanks for taking my question. I got two here. Question for Julia: as you implemented the Gen IV price optimization with 4 ERPs, can you just touch on how complex or difficult the implementation was versus your expectations? Well, my expectations were that it would not be able to be done. I mean, I really didn't know how they were gonna do it. The ERPs are very old, and but what they were, they were able to work with our team, and it really didn't seem to take an extreme amount of time to figure out. They really knew what to do, and they told me they'd be able to do it. But, they, you know, it's just API connections. And so where before the pricing team, we worked in four silos to do pricing for four ERPs, and now just all the ERPs come in to PROS. We still have different SKUs for the same material. So, for example, we may manufacture DEF, and that comes up in the one ERP as DEF, and it has a different SKU for the same product in the other ERP. But PROS aligns all of that. We can quickly see that, filter that. Again, it's easy to explain to the new analysts who come in, where, I mean, before you would need a decoder ring to figure it all out of where things were coming from. But no, they use the API calls to pull from the four ERPs. It goes into PROS. We apply a change on the thousands of SKUs at one time, and it goes back out to the four ERPs. We're able to do that twice a day. So we change prices in the middle of the day, and, I mean, I just didn't think it'd be able to be done, so I've been really impressed. Got it. That's helpful. And then, question for Lucio: How do you think about expanding your relationship with PROS? Are there any other features or capabilities that could be a good fit for your organization? And then, you know, what are your thoughts on increasing revenue through adjacencies? Thanks. So, unfortunately, I cannot speak about future plans so much, but we definitely keep a very keen eye on PROS offerings, especially now that airlines are going through the offer and order transformation. So that's a really massive transformation for the airline industry. So it's a full stack rebuild, so you have, essentially the servicing system, transactional systems, analytical systems, and even the system of records that need to be restacked to be able to deliver the kind of experience that the retail space has been able to deliver to customers for a very long time. So definitely, PROS is a very relevant player in the area of offer science, and that's probably the one that is, for the airlines, the most attractive of being able to construct a product that fits that fit with the need of our customers and is relevant to the context and is built dynamically. Because as airlines, we've been able to, let's say, over the years, develop a system that is very easy to get a price out of, but it's not very easy to get a customized product out of. So something that is built in, let's say, outside of the pre-built products that you have. So let's say that that is the space where PROS is probably one of the most interesting players for the airline space, and this is where the industry is going, so we're renewing our stack. Definitely, that's an area that we keenly look at for PROS. Some synergies, of course, with the B2B side when it comes to corporate systems and so on, which are much closer to the retailing experience that we want to deliver to the customers. Thank you, Lucio. And I do have to unfortunately end it there 'cause we have to get to the second half of this presentation. But first of all, I just want to say thank you all so much. I appreciate it. It's been amazing to hear from you. How about a round of applause for our customers? And at this point, we're gonna transition, so we'll have you guys on mic, and then I'm gonna bring up our management team for the second part of the presentation. Okay. Thank you again. Thank you. I have the pleasure now of having some of our executive team up here with me. We're gonna give a quick update. We'll start with a couple slides, and then we'll just go right into Q&A. There's not a lot of content. First, I'm gonna hand it to, of course, Andres, so we'll talk a little bit- Thank you, Belinda. ... about our strategy for this year. And thank you for being here. For us, it's an incredible pleasure to have you here with our customers. It goes without saying that, you know, we have the most amazing customers in the world, and for you to be able to talk to them directly is really great. I did want to give a brief update on the strategic pillars. Our land, realize, expand, you know, we had set a pretty bold goal of going from $400 average ACV, $400,000 average ACV to $200,000 and really accelerate our momentum. We wanted to make it easier to sell our solutions, faster to get to value, and real quantifiable, realizing value. I could tell you, we're now at $200,000 average ACV. We've increased dramatically our deal velocity. In Q4, we gave the example, we closed as many deals in Q4 than we did in all of 2021, in Q4 of last year, and that, that goes to the testament. While we're doing that, our subscription gross margin last quarter was 79%. So we're making improvement to our subscription gross margin while we're driving much higher volume at a lower average ACV. We've also improved the time to value 20% the last two years. We're making it easier, to get customers to adopt our technology. You could take, for example, our, our Gen IV guidance today and adopt it in less than 2 months be live. And we have examples of that. You know, that, that is really transformational for customers 'cause as you heard today in the panel, it is very complex. Pricing is not easy, but a lot of innovation on the product to make it easier, to get to value. The next pillar is establishing PROS as a core platform, power and profitable growth. We made the shift to become a cloud company, and now we're making the shift to be a platform. Our belief is that, having a microservice architecture and an expandable solution, composable architecture is part of the future. You know, as you heard today from our panel, you know, we're integrating our technology to every possible sales motion that could exist. Obviously, direct sales, e-commerce, marketplaces, any channel where a company wants to begin a sales transaction, we're embedding our technology. And I could tell you, the launch of our marketplace, if you haven't seen it, go to marketplace.pros.com. We have over 150 applications now in the marketplace. There's a big focus on every one of our innovations, our customers being able to activate faster, and allowing customers to expand our solutions. And, you know, our dynamic ancillary pricing is a perfect example. airBaltic talked about a 6% revenue uplift.... You can get that solution up, you know, in weeks and get to value, measurable value, for an airline. That is part of our platform strategy of making it easier. A lot of our new innovations, whether you look at Gen IV guidance or new capacity aware, if a B2B company wants to include real-time inventory and drive a level of optimization, those solutions we can activate faster than ever, and get to value. Or request specific pricing is another example, or willingness to pay forecasting and travel. So if you look at how we're driving innovations, we're driving fine-grain innovations to allow both B2B customers and airlines to drive new algorithms, get them to value very quickly. And, and you heard from Lucio, that that's what airlines want, and that's what they love about collaborating with PROS. They would want it even faster, which you know, we all want to innovate more, but that is part of our platform strategy, and making it composable and extensible is a key component. And the last one, infusing AI in everything that we do. I talked about that in my keynote. I would say this is the most strategic pillar in terms of getting us to the Rule of 40. You know, as you've seen the Rule of 40, as we accelerate sales, we want to drive leverage in the business. To me, infusing AI into everything we do, we've always been an AI company. I can tell you, we believe in AI deeply, and we believe every part of PROS can leverage AI to drive digitization, automation in AI. Now we're applying broadly into every organization, and we think this is important in twofold. One, you know, to prepare our employees for the future, they have to be very, very knowledgeable in AI. It's gonna transform their careers and their growth opportunities. Also from our business, we want to automate every aspect. So I'll share a couple of examples, like in our SDR team today, we can grab social signals through Demandbase, and grab company information through ZoomInfo and apply AI to that to get an SDR to be able to create an email that's contextual to what the customer is doing in a digital experience. That company's specific information could be the last earnings release, earnings reports, financial reports, as well as all the knowledge about PROS. And that's a process that before used to be manual. They had the tools. They would have to do the investigation. It could take them eight days to craft the right message to send out. Now they can do that, you know, in an hour, in minutes, be able to use it using AI. It's really transforming, you know, their performance. I give... I can tell you, year-over-year, their quotas are going up 50%, and that's all efficiency gain from them being able to be quicker in what they do, less manual, tedious work, and making them more successful. So think about, that's just one example on the SDR. We're applying it to every aspect of sales, or RFP is another area we've applied it. We had Damian Olthoff, our General Counsel, talk in my keynote, where we can now take an RFP, apply generative AI, and get a response automatically. So think about the investment in time when an RFP comes in for different parts of the organization to answer, from the security team to the product team, to the implementation team. Now, we don't have to do any of that. You get one more consistent response, a much faster response. What do customers want? Is speed. What does it help you to drive sales momentum? It's actually being quicker to respond and accelerate the sales cycle. So everything that we're doing across every aspect, you know, Lindsay Vallen, who leads our professional services, talked about a couple of areas that we're applying AI. One is, we're using now generative AI algorithms to do data ingestion. As you heard from our panel, you know, data ingestion into a platform when you bring in from multiple ERPs can be very complex. We have over time built a lot of connectors to facilitate that and make it easier. Now, we're applying generative AI to make it even easier to do and to automate. We're also looking at areas around quality assurance, so using generative AI to automatically create test cases, as you heard from our panel. Quality in our response is really critical. You know, we said our mission is to help people and companies outperform. We care deeply about the results we drive. You know, our solution cannot produce bad results 'cause we're responsible for driving revenue growth and margin to our customers. The accuracy of our results are important. Auto-generating test cases helps facilitate the validation, as well. These are just examples. It goes all the way to our security team, who's using generative AI to do automated pen testing, in addition to all the pen testing that we do using third parties and/or ethical hackers within our security organization. It's another level. But every part of PROS and every team, their goal is to look at how are they gonna drive efficiencies, and how are they gonna drive scale in how we leverage AI? And to me, this is critical so that as we accelerate our growth, the mindset from our team is not that if we grow 20%, we need to add 20% more staff to drive growth. It's how we're thinking of scaling by driving more automation, and this is helping our people grow. It's helping to drive a better customer experience. So I can tell you, very excited about that. That gives you a brief overview of what we're doing, and look forward to the Q&A. Thank you, Andres. So, Stefan, I think everybody wants to hear from you. I'll have you give a quick update as well- All right. And I'll give you power of the clicker. Careful, 'cause the back comes off easily, so it may drop. All right. Just hold on for your life. Clicker. Yeah. The dreaded clicker. Yeah. Yeah. So, thank you. Thank you, Andres and Belinda. So what I wanted to do today is kinda go back a bit and go back to last year when we had the opportunity to set forth our goal, our long-term financial goal, for our business over the next three years. And if you look at the left part of that slide, we talked about getting to a Rule of 40, and we set a range of 16%-21% of total revenue growth, and we set a range of 19%-24% in terms of our free cash flow margin. And so obviously, that's a range of roughly 35-45 in terms of that Rule of 40. You know, at the time, it was a very bold goal for us to set because up until that point, we had largely been a negative free cash flow business, and when you put together the growth rate we had and the negative free cash flow, we were a Rule of 3 business. So you think about we were going from a Rule of 3 to we're talking about being a Rule of 40 in a little over three years. Pretty bold goal. And what I'm here to say is, we're not changing that goal. That goal is still our goal for now. It's to be at that level in the year 2026. So what I thought I would do is, since that was a year ago, just give you a little bit of an update, and if you look to the right-hand side of that chart, you can see the progress we made in 2023, and you can see the progress we continue to make as we look at guiding to the full year of 2024. But more specifically, we laid out some, some things that we felt like were gonna happen. So we didn't just say: Hey, here's the goal. We said: Here's how we're gonna get there. And so you can see, we talked about our services gross margin, our subscription gross margin, and our overall gross margin. And as you can see, there was, you know, we had a little bit of work to do on our services side. We had made a lot of progress on our subscription, but as I like to point out, you know, going from 77% to somewhere between 80%-82% is a significant move because you have to think in terms of the reverse. So don't think of it in terms of an improvement on 77%. Actually, think about it an improvement on a 23% cost. So when you think of it that way, you know, we need to expand our cost 4% on 23% cost. So that's a significant move that we would need to make in order to be successful there. And then lastly, on our overall gross margins, it's a similar story. We need both of those two—the services and subscription—to work together. The good news is, we've made a lot of progress since then. So if you look at what we've done with our services gross margins, we've actually improved those all the way to 9%. We're almost at our goal in just one year. Similarly, we have made a percentage point improvement, or we've made that one percentage point on the cost base of 23 on our path to getting to the 4. So we're well on our way, and if you look at our most recent quarter, as Andres just pointed out, we actually achieved 79. So the direction is in the right, going in the right direction, and, and if you look at, you know, our, our trend there, I feel like that's a very achievable goal. And then lastly, the combination of all that, you can see we've made two percentage point improvements on our overall gross margin in just a year. So tremendous progress on our gross margin side, and as I said, and as the title talks about, our success really depends on the success there. As long as we're continuing to make improvements there, we have a much better chance of making our goal from a profitability perspective. The second thing I talked about was our subscription growth and our operating expense profile. And obviously, we had, you know, a profile in 2022 at the time we presented this. We had goals that we wanted to achieve by 2026, and here's where we are on a trailing 12-month basis. Now, at the time, we were a - 7% free cash flow margin, and one of the things that we talked about was our biggest challenge was gonna go from that negative 7% to our range of 19%-24%. We knew that was an area we had to get started on very quickly, and we have. So if you look at our research and development costs, we're at 26% of revenue, where we were at 29, so we've made a significant improvement there. Sales and marketing, we're already at the range there of 24% versus the 28% we were sitting at, and we've made the little move in G&A that we were expecting to make, so we're really on track from that standpoint as well. So all along the way, when you look at the steps that we needed to take as a business, we've made those steps happen. But I wanna be clear, we're not finished. We still have work to do. There's still things that we need to accomplish in order to get to our goals, and as I said earlier, I'm not here to change that. Our goal is still to be there in the year 2026. Now, let me say this: It's a goal. It's a bold goal, and, you know, there are some things that we may decide over the next 2 and a half years we need to tweak. We may decide, no, we need to spend a little bit more on R&D than we were thinking because of some opportunities and some innovation that we wanna have, based on what our customers are saying. We may make that decision. We may decide that we need to take G&A down a little more. We may decide we need to invest a little bit more in sales and marketing. There's things that may need to happen. As I know a lot of us do, myself included, I have my own model. I have the things that I think need to happen in order for us to be there, but I will say that there are gonna be some things likely that'll tweak over time. I'll also say this... It's possible that we get there a quarter early. It's possible we get there a quarter or two late. That's possible. But one thing I will tell you is we're gonna be at a Rule of 40, one way or another, in that timeline, in that rough timeline. We're committed to delivering to that. We're committed on, on, achieving this objective. It's something that we did when we became a cloud-first company. We set a bold goal for ourselves of what we wanted to achieve, and we did achieve it. And so we look at this the very same way. And so I come back to this overall target. This is what we're focused on as a business. And, you know, I'll turn it over to questions at this point. Yeah. Belinda, I'll let you have the clicker back here. Yeah. Thank you. Before we open it up to the room, I do quickly have questions for our two other panelists here. So we do have, Sunil John, our Chief Product Officer, and then Dr. Michael Wu, our Chief AI Strategist, who is probably arguably the hottest ticket at Outperform right now. Yeah. So I've secured him- By far. Yeah, I've secured him here. No offense to our other panelists. You are also very desired. But I do wanna make sure that we give some time as well. So, Sunil, it is Outperform. There's a lot of unveiling that we've done around our product features and things that we're bringing to market, and so I would love if you could share with investors some of the things we've talked about over the last few days that you're excited about and our customers are excited about. Yeah. Thank you, Belinda, and, and thank you all for, for being here. It's been an amazing conference, starting with Monday, when we had our customer advisory boards for all of our B2B industries, as well as our, our travel customers. The richness of the conversation and when we share with them some of the innovations that they've helped inspire over time have been amazing. Starting with our Gen IV price optimization and all the explainability and the quick time to value, that's resulted in, in tremendous value for their business. If you think about what Lucio said earlier, the model was about 15%, the change management was about 60%, and then the integration. So we focused a lot on these quick time to value. We focused a lot on the explainability of the algorithms, and that's led to a high degree of trust in our AI solution that they don't experience with, other AI, exploratory kind of things that are happening right now in the market. Our capacity-aware optimization. So when you think about a business and some of the constraints on that business for them to grow, sometimes it's not manufacturing capacity, it's not demand, it could be the fleet of delivery vehicles that you have to get your product to market. And so now, we've unveiled a solution that helps these customers price appropriately based on the opportunity cost. As an example, we've got a cement manufacturer that's really interested in finding ways to shift demand from the morning periods when cement... Everybody wants cement delivered in the mornings, and how they can shift that into other time periods. Or, similarly, if you have window repairs, and window repairs usually need to take place in the beginning or end of the day. Well, now you've got a way to shift that demand. And so these algorithms are really driving tremendous value. The other thing I would say is on the, for our airline customers, this offer and order management journey that they're going on, the offer is composed of the seat and the ancillaries. What we've unveiled right now is a real-time, continuous pricing approach to get unshackled from the fare classes that these legacy systems have forced a lot of airlines to operate in, and we can have a continuous pricing approach. We've also got a way now to explore the pricing boundaries of every ancillary. So if you saw the demo yesterday that we unveiled, or if you go to our innovation center, you'll hear our teams talk about dynamic ancillary pricing. Think of the seat, the seat selection, and how you can dynamically adjust the price of that based upon the attributes of the customer. And one final thing I'll share with you is a technology we've unveiled, and we had a customer speak about it yesterday at a session around collaborative quoting. This collaboration capability lets our customers, the sellers, collaborate with their customers, the buyers. And there was actually a video testimonial of one of our customers interviewing their customers and talking about how this has enabled a high degree of collaboration on putting a complex door together. When you're in an architectural scenario and you have so many customizations that you can make on a door, the way that our technology has facilitated a tighter relationship has been incredible. Thank you, Sunil. Very exciting. And then, Michael, a question for you. I think with AI obviously being such a huge focus of the market right now, we are very happy to have you at PROS. You've been at PROS for quite some time, but I'd love to have you share your perspective about what is unique about PROS and what we're doing in the space of AI that keeps you excited and energized, about the things that you're working on. Okay. Let me try to answer this in a way that's a little easier to understand. So by asking you guys all a question: Do you think that airlines can actually operate their business profitably without a revenue management system? Why do you think every single airline have a RM? 'Cause their margin is so thin, right? They actually have to price pretty much at the optimal, right? You can't price off the optimal, otherwise they go into red line, they go into negative margin. Okay, so that's... So we have a lot of airlines, you know, that's using our RM to keep their business profitable. ... on the other end, right, we also have these B2B, you know, customers, and, you know, and there's, there's a huge TAM there. I don't know how big of a TAM it is, you know, it's just like, it's- It's most of the 30 billion TAM that we've sized. Yeah. So it's like... So a lot of them are not using, you know, PROS or not using, you know, revenue management or pricing. And the interesting thing is that, like, you know, there is, I would say, a kind of a, this socioeconomic trend, you know, that that's driving the margin to be compressed over time, you know. And that to see this margin compression trend, I mean, the way I like to look at it is that this is actually something that I recognized when I was doing a little bit of research, you know, when I was joining PROS. And it's something that I find, you know, when I was, like... 'Cause I actually have zero background in revenue management or airline and zero background in pricing. Absolutely zero. I know nothing about them. I was doing this research, and so I was kind of a little bit of a strange, you know, like, you know, why did I choose PROS? And 'cause when, when I know nothing about it, and, and but when I was doing this research, I, what I find is that, like, you know, as with any technology, they eventually get more and more commoditized, right? Any technology, you know, will eventually become more and more commoditized, and what that means is that more and more business will actually get access to those technology, right? When every single business have access to the same technology, then it evens the playing field, and what that means is that, you know, they become more competitive in the market. Okay, so how does that actually reflect on the business, you know, versus their competitor? Is that your competitor will start taking your customers, right? That's what competition means, right? So, business typically have two ways to deal with competition. One way to deal with the competition is you lower your price. How do you keep your customer from your competitor taking it away, right? One is that you lower your price, right? So that will compress your margin, right? The other way, and then probably a better way, you know, probably more innovative company will address this issue is like, I'll provide, you know, I'll offer more, right? I'll keep the price the same, but I offer free shipping, you know, I even give you a better product, you know, or I keep research to give you a newer version of the product. But all of those increases your cost, and that compresses your margin too, right? So over time, the margin will constantly get compressed and compressed and thinner and thinner. Eventually, they will have no choice but to use a solution like PROS. I mean, they would basically, you know, at those, I mean, how often do you get, you know, you know, a company where the future demand for your technology is pretty much guaranteed? I mean, competition's aside, right? I mean, there will be more and more need for this technology as time goes on, because margin will get, you know, competition will increase because technology become more accessible, and margin will continuously being compressed over time. That's why I feel like this is a very special company and very unique in that way, you know, 'cause we drive profitability and keep those margins, you know, in the positive range. Thank you. I love that, that thought, and very scientific approach to understanding kind of the future values. I think, to your point, there's a lot of benefit from PROS solutions. We heard in Andres's keynote, from Graybar, their VP of Pricing and Profitability, talking about exactly that, being able to drive margin expansion when you have all these competitive dynamics, and so I think it reinforces the value prop. Okay, at this point, I will open it up to the room and to the online audience for any questions. And if we could just run some mics around, to make sure that we're getting everyone. Looks like we have one in the front from Zane. Hi. Hello. Is it on? How about now? Yes. Okay. There you go. Hi, Zane Meehan, KeyBanc Capital Markets. Andres, we're seeing airlines start talking about travel demand, coming back, specifically corporate travel. Just wondering if you could speak to the demand trends that you're seeing, broadly across your travel portfolio and, anything you can share with us there. Yeah, so airlines, I would say from a demand perspective, airlines are doing very well, and the demand continues to grow. I think some of their challenges is more not being able to add more capacity. You've probably heard about that. But overall, I feel the demand environment is very, very good. I think a lot of airlines are thinking about the future of digital retail, and you're seeing them more not just think about the seat, but how are they driving a great customer experience. You know, thinking about everything pre-flight experience, in-flight experience, and post-flight experience. They see a huge opportunity in driving revenue growth in the future of digital retail. I think these areas of offer optimization in the future of order management are areas that there's a lot of interest. The areas of dynamic ancillary pricing is an area that most airlines, they have fixed prices for ancillaries. They're not changing them. With our latest generation AI solution, the value is pretty significant, as we've shown. So I would say airlines are looking to continue to invest across different aspects of their business. ... and we've always been very forward leaning on the future. If you think about it, the airline experience is a pretty sophisticated experience as an end customer, but it's very digitized. They're thinking of the next level of digitization, where you can select your meal pre-flight, you can select any ancillary pre-flight, post-flight experiences, and they become more of a marketplace to drive travel experiences, and those are areas we're innovating with them. Okay, thanks. And then, a follow-up for Stefan. On the Rule of 40 framework. Yeah. It looked like the, the R&D expense line is where, you know, the most improvement will be coming from. Maybe you could share where, you know, where you would be making changes, and maybe if it's AI, that's, you know, helping to reduce that, that cost line. Yeah. So, I think the point on the R&D is it's a journey, right? And so to your point, AI is gonna have a big, big part in that, as we bring in the tools to help us be more efficient in our coding. And, the other thing that we're doing too, is, we have made some heavy investments in some technologies that have been rolled out, especially as we were rearchitecting our platform. As those have started to wind down, and we're really now focusing on current innovation and going forward innovation, that's gonna be helping as well. So that's gonna be an area that we don't, those are gonna be areas that we don't have to invest as much, and so that's where that's gonna come down. And then, to be honest with you, there's an element of scale, right? So, as we get better in our land and expand and expand upon what Andres was talking about, there'll be some scale that comes through, as well, and that's true on all line items, by the way. It's true on the R&D line item, selling and marketing, a little less on the selling and marketing, but also on the G&A side. Yeah. Yeah, we're, we're definitely deploying, you know, code generation technology for product development. It's an area and also, quality assurance internally. We're also-- we're a very global, you know, customer base. If you look at our customers, we have 60 countries represented here. We're deploying also more R&D, in other locations, like our Sofia, Bulgaria, location, which for us is a lower cost R&D center. But we're deploying also a lot of our R&D as we're adding, we're adding in, in, in lower-cost regions, to also have full stack capabilities in every region, so that we have... Think of from first-level support through third-level support, through core R&D, through QA. So we're also using that as a strategy over time to, to, to lower average cost. Yeah. The only thing I would say is to echo one point that Stefan was making. You've seen the expansion in subscription margins. It's because our platform is coming together. As opposed to thinking of our products as discrete, disparate products, you start getting scale by having a lot of shared services that go to all of our end markets, across travel and B2B. Mm-hmm. That's true. Question. Okay, so we have questions from online as well. Jody? Yeah, so we've got one from Scott Berg through the chat. Okay. This is for Andres. First, it's a two-parter regarding sales. So how is the sales team reacting to the year-over-year increase in quota? And then, how are you thinking about sales capacity relative to what we have today- Yeah ... and our abilities to meet the 2026 targets? Yeah, so, so a clarification. The quota increase was for our SDR demand gen team. Mm-hmm. Sales rep teams obviously don't have a 50% quota increase. Overall, look, sales likes it when it's easier to sell the solution and drive time to value. So a lot of our initiatives that we put in place around making it easier to sell our solution, get time to value, that's what sales wanted. So I think sales has been all along in this alignment because they wanna see the velocity increase. The reps wanna see their customers getting to value and expanding faster. So sales has been very aligned and played a very strategic role in this transformation. As you would imagine, you know, getting a rep to wanna sell at 200,000 versus a 400,000, it, it's not necessarily a trivial shift, right? 'Cause if the, the... With our platform, they could go sell at global, and it could be a multimillion-dollar deal. But getting them to believe that if they start, we make it very easy for a customer to get to value and start in an investment that, that's not as significant, we can get to value and drive expansions faster. They're actually gonna be more productive, and that's why we drove a 20% productivity improvement last year. And I think they're seeing the effect of that. So there's very close alignment from a go-to-market, and you'll see, Todd McNabb, our new CRO, talk about, you know, how do we continue to make it easier for reps to sell, easier for customers to get to value? And measuring and quantifying that value are key focus areas that we're doing. So overall, it's been really well-received. Thanks. Anything else on the online chat or Jack? Well, okay. Hey, guys. You talked about broad strength across all industries- Mm-hmm ... in one quarter, the first quarter. Going a layer deeper, what are the top three verticals that you see as opportunities through the 2026 framework? ... Yeah, no, I would tell you, look, B2B industries continue to be the top industries that we see trends. All of the commodity-driven industries, to me are highly critical, whether it be food, energy, those are, you know, the need for precision and speed, and the volatility is critical. Distribution has been broad, a very strong industry. Lot of complexity in the number of SKUs, the number of customers, the pressures in negotiating very low margin business. Distribution, you know, would be one that you could compare the closest to, to airlines in being very low margin. You know, every, you know, 100 basis point is a big, big difference to, to their margins. So I would tell you that those industries, we see a lot of change happening and a lot of adoption. I would tell you, we're seeing more broadly in B2B, not just thinking about direct channel, but thinking about self-serve. You know, you heard HP in my keynote yesterday talk about moving to 75% self-serve, and that's a pretty bold goal that they achieved. You're seeing more B2B companies, especially distributors and manufacturers, thinking about self-serve and how they're supporting a self-serve channel 'cause they know that will accelerate sales. If you have precision AI, you no longer need to have an intermediary review the deals and lag how long it takes you to put a quote out, and you know your win rate's gonna be improved 'cause you're first to quote. With a market-oriented that you have high probability to win, so we're seeing that play out well. Got it. And the second one for me, you guys have talked a lot about the convergence of B2B and travel, and Dr. Wu, I know you talked about this a little bit in your keynote yesterday. What does this look like in practice? Is this mostly on a product perspective, or is it something else? Thanks. Maybe- Yeah. Michael, do you wanna- Do you wanna- Just start a little on from an innovation perspective, and then we can talk about go-to-market, too? Sure. I think, from an innovation perspective, as I said, you know, first of all, you know, apologize for my clicker issue yesterday. It was not my best delivery. But anyway, it kills my flow, and then I just kind of didn't get the energy and momentum back. But- We're having clicker challenges, but everything else is going great. Anyway, I do think that, you know, this synergy between the two sides, right? I mean, it really enables us to bring our research, you know, to both the B2B industry and the airline, the travel industry, much faster. Because as I said, you know, like there's lots of innovation that is easily applicable to both. I mean, for example, our explainable AI, right? I mean, right now, it's actually built into our, you know, the Gen IV price optimization product, right? But that could easily be used for airline, too, because, you know, it's possible that they would they could use this to explain some of their black box algorithm, you know. And so why does it have to be only used for our Gen IV? You know, like it's... So there's many of these, I would say, like, you know, algorithms that our science, you know, AI research team, you know, develop. You know, if you use this kind of platform, then basically, they become available, right, to all the... It actually doesn't matter what industry you're in anymore, you know. So that's enable us to kind of innovate faster, much, much faster, you know? The essential about Lucio one, right? We could bring this, maybe some of the innovation with the research is done from the B2B side, right? But for, to solve a B2B problem, but when the algorithm is developed, maybe the airline could use them, right? So... You know, I think the way that I look at this is that, you know, all of our customers across all our industries, fundamentally, they're trying to put an offer out to their customers that is gonna be acceptable. So that's gonna be value for them and profitable for the seller. And so if you deconstruct the offer, you have the product or service that you're putting in place, you've got the price that you wrap around it, you've got the incentives that you put in place, whether that's a discount or a rebate or other type of incentive, and then you wrap that around an experience. And that's gonna be true for all of our end markets and verticals, and all of our technologies are really focused on driving the levers for every single one of those commercial decision points. This is whether it's a salesperson, this is whether it's a self-serve. How do we reveal those nudges, if you will, to get the offer completed and drive a, a higher and higher engagement with the customer over the lifetime of that, of that relationship? Yeah. The only thing I would add to that, if you think about travel, they're now, for the first time, thinking of a catalog. If you think about our main component, CPQ is a catalog. Because in the past, it was a seat. Now, they're thinking of a collection of products, and now, it, it, it is actually a configurable product, right? Because you can connect different use cases. Think about if you get to not just the bags or the seat and the all the in-flight, but think about post-flight. Think about if you want to attach tours to that. It's becoming more complex, and our innovations around the catalog are gonna apply, and more of the solutions you're gonna see cross between B2B and travel as a more common platform. On the B2B side, you know, most B2B companies don't have a really accurate forecast. They can barely predict demand maybe a week out, but no long-term forecast. I mean, airlines could not, you know, be successful if they didn't have a forecast a year out into the future, right? So we see our, our demand forecasting technology also as something that as B2B companies mature, those type of technologies will be transformative for them, allowing them to know what types of products they need to build to end up driving the right revenue and margin growth expectations that they have. So, there's over time, I would say B2B is probably a decade behind travel in levels of sophistication. You can see us blending more sophistication to the B2B side of algorithms we already have, and taking those to market for B2B companies that wanna be more advanced and build more capability, which will bring a lot of co-innovations from the single platform. The time does go quick, so we are actually at time for this session. Thank you to our panel. I appreciate all of you being here. Thank you so much again to everyone who came out for the conference, and thank you to the online attendees. I'm always available if there are any questions. You can find me at ir@pros.com. That's my email address, and I'm happy to chat after the session as well. But thank you very much. Thank you. Thank you. Thank you.