Okay, good afternoon, everybody. Thanks for joining us for day two of Baird's Global Consumer Technology and Services Conference. I'm Rob Oliver, one of the software analysts here at Baird, and I follow PROS Holdings. It's a pleasure to have Stefan Schulz, who's the CFO, longtime CFO of PROS Holdings here, as well as Belinda Overdeput, who does investor relations. Thank you. It's nice to see you both. Nice to see you too. Amtraking down from Boston, old style. Yeah. Thanks for having us. Yeah, great to have you here. So PROS is a company we picked up, I do not know, maybe six, seven, six years ago. It has been a while. We tracked it as a, prior to covering it, tracked it as a public company. And And really got excited when we went to a couple of the user conferences around what PROS is doing in pricing and price optimization. It feels like we are entering an interesting period for that. Maybe we will start, Belinda, just for the purposes of level setting the room, maybe just give a brief intro of PROS, and then we can jump in. We can also make it interactive, so do not hesitate. You can put your hand up, or you can email session5@rwbair.com. Awesome. Yeah, thank you. I'll start. Yeah, we're PROS. Our vision is to optimize every shopping and selling experience. What that means is we focus on AI-powered solutions on a platform that span everything from revenue management to price optimization and management to CPQ, or Configure, Price, Quote. We're a leader in CPQ across Gartner, Forrester, and IDC. We're the only ISV that's a leader across all three of those major industry analyst evaluations. We've done a lot around AI, so I always like to tell people we've been doing AI since before it was cool. Our solution is built on predictive and prescriptive AI. We're now most recently layering agentic AI, which I'm sure we'll talk about, to drive value for customers. Our solutions generate significant ROI for our customers, 8% revenue uplift on average, with a payback period of nine months or less. Super powerful solutions. We're targeting this year to be about $361 million in revenue based on the midpoint of our guide for total revenue, and about 85% of our revenue is recurring, strong, healthy SaaS business, completed a SaaS migration a while ago. Excited to tell you more about PROS and the massive market opportunity in front of us. Yeah, exciting. That's great. Let's start with the big news, which is you guys have a new CEO, which Andres has been at the company as long as I've been around PROS. That in and of itself is an important moment. Maybe talk a little bit about Jeff's arrival. Yeah. Yeah, so you're right. Andres has been with the company for 26 years, been the CEO for a little over 15, and announced about six months ago his plans to retire. The board immediately started a search to find his replacement with some key criteria in mind. One, they were looking for someone who had CEO experience. Second, they were looking for someone who could understand the technology, understand the go-to-market, because as Belinda indicated, what we sell and the value proposition we have is quite complicated and involved, but tremendously valuable. The last thing is PROS has a very strong sense of culture in terms of helping our customers outperform. That's our mission. That's something that all employees really rally around and adopt. The board was really looking for someone who could further that culture. We found Jeff Cotten, who we feel is a perfect fit given all those criteria. He was the CEO of a company called Alvaria, and he's currently the chairman of the board of that company now as well. He comes to us with a technology background. That's where he studied and got his degree in college. He spent most of his time as a professional in the go-to-market field. He really hit on all the things that we were looking for. Today is day three for Jeff. He'll be out talking with a lot of you next quarter after he's had a chance to just get acclimated to the business. It's probably a little early to ask what his priorities are. On the other hand, you guys did have him on the call for us, so it's probably fair game. Is there any initial priorities of Jeff's? I mean, he's got the experience on the go-to-market side. He sounded really enthused about the B2B side. Anything to call out there? Yeah, I'd say there's three things specifically. Number one, and number two are both continuations of things that we had already put in place. Number one, we had talked about our long-term plan and our long-term goal of being a rule of 40 company. We gave some specific ranges of where we wanted to be from a revenue growth perspective and from a Free Cash Flow margin perspective. Jeff has come out and confirmed we're going to continue to pursue those objectives. That's still going to be a part of our long-term objectives. The second thing that he's talked about is our involvement around AI. When Belinda was talking about the intro of the company and an overview, we are an AI company at heart. Our products incorporate AI in just about everything that we offer. We also enjoy implementing AI inside of our own business. One of our pillars of our overall strategy is to infuse AI in everything we do. That was a question as to whether Jeff was going to be as interested in infusing AI in everything we do as we have been before. He has come out and said, "Absolutely, I want to continue that." As we'll probably talk later, that's a big key to our overall objective of being a rule of 40 company, especially on the Free Cash Flow margin side. We see scalability in our business primarily through increasing our adoption and use of AI inside the company. The third point is probably the one where I think we'll see a little bit of a difference, and that is around how we use channels. To date, most of our go-to-market activities have been via a direct channel, and that direct channel has served us well. One of the things that we feel like we have, given the product strength that Belinda outlined and the relative interest in the type of solutions we provide in such a volatile market, we feel like having other entities and other more arms and legs out on the street promoting the product and selling the product is going to be to our advantage. That is something Jeff brings an expertise in, and that'll be something you can expect to see us lean into going forward. Got it. Great. Really helpful. I mean, historically, I think of you guys really serving kind of two markets, one more defined than the other, with one being travel, which there's a lot of different things that go into travel, and then kind of a broader market for B2B. Maybe talk about what you're seeing in those end markets now, and maybe for those that do not know the story well, maybe lay out how you guys think about those markets and how it sets you up for future growth. Why do not I start with trends and you hit the growth? On the B2B side, there is a couple of things. Actually, this hits on the travel side as well. If you think about, I think everyone in the room is probably familiar with volatility that is happening in the market today, whether it is by tariffs or no tariffs or tariffs again or currency fluctuations, supply chain challenges. B2B businesses have been dealing with this kind of ebb and flow of different challenges that eventually affect price and how they set price and how they manage their strategy. What we have seen over the last couple of years, actually, is an elevation of the strategic role of pricing for B2B businesses and B2B businesses really looking at ways to modernize how they approach price, how they set price, and a greater willingness to use AI to do that. That plays to our strengths. That's exactly what we do. That's what we've done for quite some time. I think we have a much more receptive audience at this point, and that's working in our favor. I'll also note from a B2B perspective, the leadership recognition that we have across our portfolio of solutions from all major industry analysts is definitely elevating the PROS brand, and that's driving inbound demand to PROS. We're seeing some nice trends in B2B as a result of those things. We're, of course, continuing to innovate in the platform to drive even more AI capabilities, a lot with agentic AI, making the solutions even easier to use through the use of agents and driving even more value for our customers. On the travel side, obviously, when we talk about travel, we're talking predominantly about passenger airlines. That industry has come from a very depressed state over the pandemic. I do not think anyone wants to relive that again. It took a while for that industry to recover. Even though we saw passenger volumes recover, we did not necessarily see the willingness to take on more strategic revenue projects until recently. The last three quarters, we have seen really strong improving trends in our travel business, which is key in all that stuff and share kind of the growth, how that drives the growth. Airlines are super focused on areas of offer optimization. How do you drive not only the seat, but the right bundle of ancillary products to every passenger that is relevant to them, that is meaningful to them, that drives the revenue opportunity and also a good passenger experience? A lot of our innovations are in that area, and there's a really healthy level of interest and activity around those solutions right now. Yeah, I think how that translates into growth, Belinda, to your point, a large number of B2B companies today do not have the ability to move pricing at the rate and pace that the market is changing. As a result, our solution has really helped a lot of companies react to changes in the market environment literally by the second. We have real-time pricing capabilities that can be delivered in as much as 400 milliseconds, so usually smaller time than that. We are talking about taking all the characteristics and all the variables at that moment in time and then providing that price point. That is a tremendous advantage in a market that is constantly changing. Historically, companies that had a lot of exposure to commodities were companies that were leaning into our solution. Now, given that that type of volatility exists for many other industries, we're seeing more demand, and our sales team is taking advantage of that. I will say this also about our sales team. Our sales team continues to increase its tenure. We're seeing sales reps that have been with us on average longer than we did, say, a year ago. That's tremendously helpful because being able to articulate the value proposition and provide the experiences that they've had goes a long way towards helping us be more effective in selling. We've seen an improvement in the sales cycle times. We've seen an improvement in the productivity of our reps over the course of the last year as a result of that. I think kind of transitioning to the travel side, as Belinda was talking about, what we're seeing on the travel side from a market position is a more willingness now and a more availability to provide resources to implement IT solutions. To her point, airlines were basically hanging on after the recovery in COVID, if you might recall. That shift back in demand went very, very fast. It happened before airlines could really get the equipment together, their employees together. They did not really have capacity to take on projects of the likes that we promote and sell. They've now started to have that capacity. If you think about it, there's literally a four- or five-year demand that has been accumulated for solutions that can help in the offer space, especially around offering ancillary benefits or promotions that would be more tailored to the way in which all of us travel. Airlines are looking to do that. We have solutions that provide that capability. We're excited about what that means, not only for the last several quarters, but what that means going forward. One last point I'll make is a lot of the booking momentum that Belinda just highlighted has been accumulating in our backlog. As we talk about an accelerating growth rate we're expecting in the second half of the year, that's largely coming from the bookings that we've seen and the momentum that we've seen that's lined up to be recognized in future quarters. There is good visibility to it, although I do not want to skip the point that we still need to execute on our booking side. We do, but we have a really good head start with what we have already seen so far in the travel space. Okay. Let's start with travel and then move to B2B. On the travel side, I mean, you guys have unbelievable customer references, businesses that have said, and we've heard them say, "Hey, we couldn't run our business without PROS." Now that we're back into, I guess, a more normalized spending environment where some of these projects are starting to take hold again, you guys are a global business. What's the sweet spot for PROS? I mean, obviously, many of the large mega carriers have very sophisticated internal IT departments, and perhaps maybe will do some of that themselves, but you also do win there occasionally. What's the right way for us to think about kind of the sweet spot for you guys? I think without question, our sweet spot is revenue management. As Belinda said, we defined that category almost 40 years ago now. That is, without question, the sweet spot. That is one way to enter into a customer's book of business. There are other ways that we have developed over the course of time that also provide value that, quite frankly, can provide a significant amount of return for them. One such product is a recent product that we came out with about a year ago called Dynamic Ancillary Pricing. Really what we are doing there is we are helping airlines optimize the ancillary components that they are selling. That has become a much bigger part of their overall revenue and profit profile. If you think historically, that has been largely a product that has been ignored or it has been actually bundled in with the seat. Now that that's been broken out, the question is, how do you optimize that in a way that drives more revenue and more business for the airline? We have developed a product that specifically does that and have highlighted some unique benefits that the airlines would not have otherwise known about. We have also done things around our Offer Marketing solution, which essentially enables bookings to occur in multiple different platforms. By promoting fares in a unique way, whether that's on a map or whether that's in kind of vacation-based travel or what have you, there are different ways in which things can be booked or venues such as this, for example. We have a lot of customers who were taking an event such as the one we're at here and incorporating travel as a part of the registration of the event. If you think about it, that makes it easier for the ultimate attendee to not only register, but get here. The airlines get the benefit of having that be front and center when the person's thinking about the trip. There are a bunch of different ways in which we can add value for our customers, not just in revenue management, although that is, to your point, that is the sweet spot of what we offer. Got it. I know Andres for a while was talking about almost like, I don't know if he used the word unbundling, but the way you guys used to go to market was like a much larger land, and that average contract value of that land came down for you guys. I think the goal you guys were seeking there was maybe to kind of gain entry and then expand. Talk about where we are with that. Yeah. Yeah, go ahead. I think we've done really well. I mean, we've been about stable with our ASPs for a couple of years now, so we're not seeing them continue to come down. Our land expand motion has been really successful. We've made the platform much more modular, much more composable so that customers can take smaller bites, really start with what's the most immediate pain point, solve that, get the payback in nine months or less, with the implementation taking around six months, and then really going from there to the next thing. There's a number of different ways our customers can choose to start with their adventure, get activated with just a price optimization solution, just a CPQ solution, start in a small business unit, roll out to more business units. What that has done, and part of what is in the growth algorithm as we get from here to the 2027 targets, is not only continuing to win new logos and penetrate the industries that we are in where we have a ton of market opportunity, but drive the expansion and the upsell. We have seen cases where those customers can grow six, seven, eight x that initial sale just from this expansion opportunity. Got it. Got it. Very helpful. On the B2B side, I guess similar question, you guys serve a bunch of different industries. Have there been particular industries where you've seen traction where you know you can replicate that? I can think of a few, and you guys have used some as examples, but just for the purposes of the audience, where do you guys find the most buy-in? Because it is clear that global companies are looking to go more to B2B, real-time, order management. There is a trend that really is a tailwind for you guys. What industries are first, and where do you expect to be able to show the most growth? I mean, definitely areas like industrial manufacturing and distribution. We see a lot there. Chemicals and energy is a pretty volatile industry where obviously supply chain and availability of materials can affect how they set price and their strategy. Food and consumables, we've had a number of wins in that space over the last year. I think we're honestly, we focus on about seven or so key verticals in B2B, and it's really hard to pick one that's doing significantly better than the other because we kind of have a consistent deal flow across the set. We've been successful at over 40 industries, so we focus on the seven because we have a huge opportunity just with that. We've got to focus our outbound somewhere. No, honestly, it's been a pretty healthy mix because I think to your point, every business is really experiencing this pain in one way or another and needs these types of solutions. Yeah. One thing to add to that, the product is highly configurable, meaning it can be configured to optimize price, which is what we see most of the time. It can also be configured to optimize around inventory. It can also be optimized around cost. There are a number of ways in which it can be put to use to drive value for the enterprise. As a result of that, we see customers leveraging it in multiple different ways. The beauty behind that is it's a configuration. It's not a customization. When you look at the type of people we have implementing the solution, it's a lot of people that are right out of college. They're not necessarily software engineers like a lot of our competitors have, which we feel like is a tremendous advantage for us and also speeds up the amount of time it takes to actually deliver the product. A couple of questions from the audience. I appreciate it. One, and this is the question I get often from investors, so I appreciate the opportunity to have you guys respond to it. That is that clearly you guys have had a lot of early attention focused on AI. You were one of the first companies I followed that even was talking about it and indeed brought one of your AI evangelists here to our conference, I do not know, probably six years ago. I guess the question is, how does that serve your competitive position today? In other words, from an investment perspective, the world of AI is moving so fast. In fact, we did our generative AI survey, and we started to send that out in February and agentic ramped dramatically while we were doing the survey, right? We were like, "Oh, do we need to change the survey?" The point is, how do you guys get comfortable that you've future-proofed your ability to adapt with the evolution that's very rapid of this technology? Yeah. That's a great question. To your point, we've been leveraging AI for a very long time. One of the things that's a hallmark to our culture and who we are is around innovation. One of the reasons why Andres initially put injecting AI in everything we do as a part of our cultural strategic pillar is so that we don't have that type of thing happen. One of the things that we've always talked about is the current existing competitors and kind of the old way that things have been attacked in terms of the industry and providing the solutions is something we're all very familiar with. It's easy to keep your eyes on. The things that we are really paying a lot of attention to are those newcomers that are coming in with an entirely different way of looking at the problem and solving it with new tools and new capabilities. Obviously, AI brings that sort of benefit to the table. By us leaning into AI and having all of our employees look at ways in which they can leverage AI to improve themselves and everyone having an agent or multiple agents that they manage to help them do their job is how we're keeping up with what's happening. I'm happy to say the group inside of our organization that's leaning into this the most is our R&D organization. It is why we were able to have our Outperform conference about three weeks ago, and we highlighted 15 agents that are going to be working as a part of our solution to further expand the capability of what we provide and make it even more valuable to the organization because the agents are going to be finding soft spots or opportunities that the human eye would not have been able to see in a reasonable period of time. These agents are going to be identifying opportunities around spoilage that the human might not have witnessed or opportunity around a rebate that can fuel more sales than they otherwise would have seen. We are leaning into this, looking for ways in which we can further our capability and provide even more value. It is a great question, and it is one that we are keenly aware of. I feel like with the approach we take, we're never satisfied, and we realize that tomorrow, to your point, Rob, it's going to be a different world than one we're sitting in today. We need to lean in now. Yeah. I'll also add to the way that we think about AI is operationalizing it where the work is happening. It is one thing to create a great algorithm that does a great thing. It is an entirely different problem to put that into a system that can operationalize it and deliver it at enterprise-grade speed, scale, performance, which is what we are doing for huge businesses all around the world in milliseconds. I think not only are we continuously kind of competing with ourselves in terms of the new solutions we bring to market, but doing so in a way while driving expanding subscription gross margin and making sure we are running as efficiently as possible and giving our customers the speed and the scale that they need. That's a great point. Yep. Got it. Really helpful. Time flies. I have a few questions I want to get in here. One was on just the implied second half ramp in your guide, which is just investors are freaking out about any company right now that has any kind of implied second half ramp in their guide, and you guys have one. Stefan, I'd love to hear you discuss kind of your comfort level in that guide and what are sort of the assumptions that were kind of framed as part of it. Yeah. Anytime we're looking at the future, whether we're talking about billings or we're talking about subscription revenue, one of the benefits of a recurring business model is you do have some visibility based on what your backlog looks like. As we looked at this year, we even knew this last quarter and this quarter, the successes that we saw from bookings in the latter part of 2024 and also in the first part of 2025, we knew that is queuing up recognition to occur throughout the year. As all of you know about a subscription business, as those bookings start to layer in, the revenue then starts to feel the impact of it. We started to see that when we compared a year ago to where we are this year now, and we look at the backlog that's queued up to be recognized, we see an accelerating rate of growth. That's what's giving us the baseline and the comfort of talking about it. As I said earlier, we still have to do our job. We still have to book new business because in order to get to the final outcome that you're going to see, we not only need to have a good backlog, but we need to continue to book new business. Based on the things that we've talked about, we feel like we're in a good position to continue our bookings momentum in the second half of 2025, just like we talked about in the first half of 2025 and the last part of 2024. As long as we continue to execute the way we've been executing, we feel very good about an accelerating rate of growth. Like I said, it really starts with the visibility we have on the backlog going into the period. Got it. Super helpful. I also wanted to ask on the margin front where you guys have been, one of the knocks historically was, "Oh, these guys, they didn't make money. They don't have operating margin profits." You guys have showed tremendous stewardship of the margins over the last couple of years. Still a long way to go to your Free Cash Flow margin target in 2027. I guess how much of that is still stuff that you can control internally? How much of that is revenue dependent? Maybe help us understand that. Yeah. I'll start by saying it's not dependent upon revenue accelerating, although that would help. We'll get to the ranges even if the revenue growth rate stays about the same. The good news about the margin expansion over time gets to the opportunity that exists with infusing AI in everything we do. As much as we've been doing over the last year or two, there's even more to come. I mean, we're literally just scratching the surface of what that could look like as people get more familiar with the tools, just get more familiar with the concepts. Ideas pop out almost every day of things that we could be establishing that's going to add efficiency and capability to our organization. As we look out and we project the type of costs that we need to incur, we see a tremendous opportunity to leverage agents as opposed to resources like human resources to fulfill the needs for supporting the growth. That is why we've got a lot of confidence. Like I said, we're just now scratching the surface. More to come on that. Got it. In the time we have remaining, I wanted to ask about the Outperform user conference, which I like to go to. Unfortunately, I could not make it. Patrick went this year and certainly came away with some positive takes, but would love to hear from you guys a few highlights to leave the audience with on some of your kind of key takes from that. Yeah. I mean, I think the biggest thing was agentic AI. We talked a lot about it. We have a goal to get to 50 agents on the platform this year. We unveiled probably, I think, about 15 or so on the platform. A lot of customer excitement around this. We also had a record number of customer speakers at our conference. I think one thing that's really exciting and unique about PROS in our Outperform conference is we let them do the talking. They tell our story way better than we do. Some of the value and the ways that they're talking about the differentiation they've seen with our product. We had customers who had replaced competitive solutions with PROS talking about how much better that experience has been, how accurate the results are, how adaptive the algorithms are. Those testimonials, I feel like really resonated with other customers in the audience and also was exciting to hear as employees of the company. I think from an agentic perspective, we're super excited about the opportunity. I think it helps our customers get more value from the platform. We're doing kind of a pilot program where customers can opt in, trial them out. We can get a feel for what that usage looks like. There was a ton of volunteers to get into that. That was also really exciting to see. Tons of good stuff coming out of Outperform. Those sessions and some of the major keynotes will be on the PROS website in the coming months. If you missed the conference, keep an eye out for that content as it rolls out. Got it. Any other questions from the audience? Great. Stefan, Belinda, thank you guys very much for joining us. We appreciate it. Thank you again for having us. Yeah.