10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

___________________________________________________________________________ 

FORM 10-Q

_________________________________________________________________________ 

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

                    For the transition period from      to .

Commission File Number: 001-33554

___________________________________________________________________________ 

PROS HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

__________________________________________________________________________ 

Delaware	76-0168604
(State of Incorporation)	(I.R.S. Employer Identification No.)

3200 Kirby Drive, Suite 600				77098
Houston	TX
(Address of Principal Executive Offices)				(Zip Code)
		(713)	335-5151
(Registrant's telephone number, including area code)
(Former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common stock $0.001 par value per share	PRO	New York Stock Exchange

    Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

    Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ☒   No  ☐

    Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer", "smaller reporting company", and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated Filer	☐
Non-Accelerated Filer	☐	Smaller Reporting Company	☐
Emerging Growth Company	☐

    If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

    Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ☐  No  ☒

    The number of shares outstanding of the registrant's Common Stock, $0.001 par value, was 46,044,260 as of April 25, 2023.

PROS Holdings, Inc.

Form 10-Q

For the Quarterly Period Ended March 31, 2023

Table of Contents

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Interim Condensed Consolidated Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Comprehensive Loss	5
	Condensed Consolidated Statements of Cash Flows	6
	Condensed Consolidated Statements of Stockholders' (Deficit) Equity	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	22
Item 4.	Controls and Procedures	22
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	23
Item 1A.	Risk Factors	23
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	23
Item 3.	Defaults Upon Senior Securities	23
Item 4.	Mine Safety Disclosure	23
Item 5.	Other Information	23
Item 6.	Exhibits	23
Signatures		25

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended ("Exchange Act"). All statements in this report other than historical facts are forward-looking and are based on current estimates, assumptions, trends, and projections. Statements which include the words "believes," "seeks," "expects," "may," "should," "intends," "likely," "targets," "plans," "anticipates," "estimates," or the negative version of those words and similar expressions are intended to identify forward-looking statements. Numerous important factors, risks and uncertainties affect our operating results, including, without limitation, those described in our Annual Report on Form 10-K and in this Quarterly Report on Form 10-Q, and could cause our actual results to differ materially, from the results implied by these or any other forward-looking statements made by us or on our behalf. You should pay particular attention to the important risk factors and cautionary statements described in the section of our Annual Report on Form 10-K entitled "Risk Factors" and the section of this Quarterly Report on Form 10-Q entitled "Risk Factors." You should also carefully review the cautionary statements described in the other documents we file with the Securities and Exchange Commission, specifically the Annual Report on Form 10-K, all Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

You should not rely on forward-looking statements as predictions of future events, as we cannot guarantee that future results, levels of activity, performance or achievements will meet expectations. The forward-looking statements made herein are only made as of the date hereof, and we undertake no obligation to publicly update such forward-looking statements for any reason.

                        3

PART I.     FINANCIAL INFORMATION

ITEM 1. INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

PROS Holdings, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share and per share amounts)

(Unaudited) 

	March 31, 2023		December 31, 2022
Assets:
Current assets:
Cash and cash equivalents	$	192,376	$	203,627
Trade and other receivables, net of allowance of $722 and $609, respectively	45,787		48,178
Deferred costs, current	6,433		6,032
Prepaid and other current assets	12,149		9,441
Total current assets	256,745		267,278
Property and equipment, net	25,442		25,012
Operating lease right-of-use assets	14,797		17,474
Deferred costs, noncurrent	7,938		8,764
Intangibles, net	16,046		17,851
Goodwill	107,717		107,561
Other assets, noncurrent	8,872		9,012
Total assets	$	437,557	$	452,952
Liabilities and Stockholders' (Deficit) Equity:
Current liabilities:
Accounts payable and other liabilities	$	4,197	$	7,964
Accrued liabilities	13,356		12,854
Accrued payroll and other employee benefits	15,624		23,797
Operating lease liabilities, current	5,461		7,662
Deferred revenue, current	122,192		108,659
Total current liabilities	160,830		160,936
Deferred revenue, noncurrent	6,161		8,298
Convertible debt, net	290,152		289,779
Operating lease liabilities, noncurrent	27,135		28,184
Other liabilities, noncurrent	1,247		1,228
Total liabilities	485,525		488,425
Commitments and contingencies (see Note 9)
Stockholders' (deficit) equity:
Preferred stock, $0.001 par value, 5,000,000 shares authorized; none issued	—		—
Common stock, $0.001 par value, 75,000,000 shares authorized; 50,711,964 and 50,318,726 shares issued, respectively; 46,031,241 and 45,638,003 shares outstanding, respectively	51		50
Additional paid-in capital	596,805		590,475
Treasury stock, 4,680,723 common shares, at cost	(29,847)		(29,847)
Accumulated deficit	(609,900)		(590,898)
Accumulated other comprehensive loss	(5,077)		(5,253)
Total stockholders' (deficit) equity	(47,968)		(35,473)
Total liabilities and stockholders' (deficit) equity	$	437,557	$	452,952

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4

PROS Holdings, Inc.

Condensed Consolidated Statements of Comprehensive Loss

(In thousands, except per share data)

(Unaudited) 

	Three Months Ended March 31,
	2023		2022
Revenue:
Subscription	$	55,969	$	48,765
Maintenance and support	5,712		7,855
Total subscription, maintenance and support	61,681		56,620
Services	11,501		9,872
Total revenue	73,182		66,492
Cost of revenue:
Subscription	14,093		13,779
Maintenance and support	2,282		2,167
Total cost of subscription, maintenance and support	16,375		15,946
Services	13,167		11,415
Total cost of revenue	29,542		27,361
Gross profit	43,640		39,131
Operating expenses:
Selling and marketing	26,010		25,287
Research and development	22,291		24,467
General and administrative	14,135		14,329
Impairment of fixed assets	—		1,551
Loss from operations	(18,796)		(26,503)
Convertible debt interest and amortization	(1,576)		(1,576)
Other income (expense), net	1,451		(418)
Loss before income tax provision	(18,921)		(28,497)
Income tax provision	81		143
Net loss	$	(19,002)	$	(28,640)
Net loss per share:
Basic and diluted	$	(0.41)	$	(0.64)
Weighted average number of shares:
Basic and diluted	45,926		45,085
Other comprehensive loss, net of tax:
Foreign currency translation adjustment	$	176	$	(222)
Other comprehensive income (loss), net of tax	176		(222)
Comprehensive loss	$	(18,826)	$	(28,862)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5

PROS Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Three Months Ended March 31,
	2023		2022
Operating activities:
Net loss	$	(19,002)	$	(28,640)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	3,001		4,647
Amortization of debt issuance costs	373		373
Share-based compensation	9,904		11,225
Provision for credit losses	108		(91)
Loss on disposal of assets	35		—
Impairment of fixed assets	—		1,551
Changes in operating assets and liabilities:
Accounts and unbilled receivables	2,239		(12,130)
Deferred costs	425		(48)
Prepaid expenses and other assets	(2,505)		(262)
Operating lease right-of-use assets and liabilities	(591)		(739)
Accounts payable and other liabilities	(3,793)		3,903
Accrued liabilities	504		(109)
Accrued payroll and other employee benefits	(8,174)		(13,246)
Deferred revenue	11,333		22,552
Net cash used in operating activities	(6,143)		(11,014)
Investing activities:
Purchases of property and equipment	(1,546)		(461)
Net cash used in investing activities	(1,546)		(461)
Financing activities:
Proceeds from employee stock plans	1,137		1,443
Tax withholding related to net share settlement of stock awards	(4,710)		(212)
Net cash (used in) provided by financing activities	(3,573)		1,231
Effect of foreign currency rates on cash	11		84
Net change in cash and cash equivalents	(11,251)		(10,160)
Cash and cash equivalents:
Beginning of period	203,627		227,553
End of period	$	192,376	$	217,393
Supplemental disclosure of cash flow information:
Noncash investing activities:
Purchase of property and equipment accrued but not paid	$	136	$	45

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

6

PROS Holdings, Inc.

Condensed Consolidated Statements of Stockholders’ (Deficit) Equity

(In thousands, except share data)

(Unaudited) 

	Three Months Ended March 31, 2023
	Common Stock			Additional Paid-In Capital		Treasury Stock			Accumulated Deficit		Accumulated other comprehensive loss		Total Stockholders’ (Deficit) Equity
	Shares	Amount				Shares	Amount
Balance at December 31, 2022	45,638,003	$	50	$	590,475	4,680,723	$	(29,847)	$	(590,898)	$	(5,253)	$	(35,473)
Stock awards net settlement	338,089	1		(4,711)		—	—		—		—		(4,710)
Proceeds from employee stock plans	55,149	—		1,137		—	—		—		—		1,137
Noncash share-based compensation	—	—		9,904		—	—		—		—		9,904
Other comprehensive loss	—	—		—		—	—		—		176		176
Net loss	—	—		—		—	—		(19,002)		—		(19,002)
Balance at March 31, 2023	46,031,241	$	51	$	596,805	4,680,723	$	(29,847)	$	(609,900)	$	(5,077)	$	(47,968)

	Three Months Ended March 31, 2022
	Common Stock			Additional Paid-In Capital		Treasury Stock			Accumulated Deficit		Accumulated other comprehensive loss		Total Stockholders’ (Deficit) Equity
	Shares	Amount				Shares	Amount
Balance at December 31, 2021	44,520,542	$	49	$	546,693	4,680,723	$	(29,847)	$	(508,652)	$	(4,659)	$	3,584
Stock awards net settlement	609,397	1		(213)		—	—		—		—		(212)
Proceeds from employee stock plans	49,245	—		1,443		—	—		—		—		1,443
Noncash share-based compensation	—	—		11,225		—	—		—		—		11,225
Other comprehensive loss	—	—		—		—	—		—		(222)		(222)
Net loss	—	—		—		—	—		(28,640)		—		(28,640)
Balance at March 31, 2022	45,179,184	$	50	$	559,148	4,680,723	$	(29,847)	$	(537,292)	$	(4,881)	$	(12,822)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

7

PROS Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Organization and Nature of Operations

PROS Holdings, Inc., a Delaware corporation, through its operating subsidiaries (collectively, the "Company"), provides solutions that optimize shopping and selling experiences. PROS solutions leverage artificial intelligence ("AI"), self-learning and automation to ensure that every transactional experience is fast, frictionless and personalized for every shopper, supporting both business-to-business ("B2B") and business-to-consumer ("B2C") companies across industry verticals. Companies can use these selling, pricing, revenue optimization, distribution and retail, and digital offer marketing solutions to assess their market environments in real time to deliver customized prices and offers. The Company's solutions enable their customers to provide the buyers of their products the ability to move fluidly from one sales channel to another, whether direct, partner, online, mobile or other emerging channels, each with a personalized experience regardless of which channel is used. The Company's decades of data science and AI expertise are infused into its solutions and are designed to reduce time and complexity through actionable intelligence.

2. Summary of Significant Accounting Policies

Basis of presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States ("GAAP") for interim financial reporting and applicable quarterly reporting regulations of the Securities and Exchange Commission ("SEC"). In management's opinion, the accompanying interim unaudited condensed consolidated financial statements include all adjustments necessary for a fair statement of the financial position of the Company as of March 31, 2023, the results of operations for the three months ended March 31, 2023 and 2022, cash flows for the three months ended March 31, 2023 and 2022, and stockholders' (deficit) equity for the three months ended March 31, 2023 and 2022.

Certain information and disclosures normally included in the notes to the annual financial statements prepared in accordance with GAAP have been omitted from these interim unaudited condensed consolidated financial statements pursuant to the rules and regulations of the SEC. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022 ("Annual Report") filed with the SEC. The unaudited condensed consolidated balance sheet as of December 31, 2022 was derived from the Company's audited consolidated financial statements but does not include all disclosures required under GAAP.

Changes in accounting policies

There have been no material changes in the Company’s significant accounting policies and their application as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

Fair value measurement

The Company's financial assets that are included in cash and cash equivalents and that are measured at fair value on a recurring basis consisted of $176.5 million and $168.1 million at March 31, 2023 and December 31, 2022, respectively, and were invested in treasury money market funds. The fair value of the treasury money market funds is determined based on quoted market prices, which represents level 1 in the fair value hierarchy as defined by ASC 820.

Trade and other receivables

Trade and other receivables are primarily comprised of trade receivables, net of allowance for credit losses, contract assets and unbilled receivables. The Company records trade accounts receivable for its unconditional rights to consideration arising from the Company's performance under contracts with customers. The Company's standard billing terms are that payment is due upon receipt of invoice, payable generally within thirty to sixty days. The carrying value of such receivables, net of the allowance for credit losses, represents their estimated net realizable value. When developing its estimate of expected credit losses on trade and other receivables, the Company considers the available information relevant to assessing the

8

collectability of cash flows, which includes a combination of both internal and external information relating to past events, current conditions, and future forecasts as well as relevant qualitative and quantitative factors that relate to the environment in which the Company operates.

    Contract assets represent conditional rights to consideration that have been recognized as revenue in advance of billing the customer. Unbilled receivables represent unconditional rights to consideration arising from revenue that have been recognized in advance of billing the customer.

Deferred costs

Sales commissions earned by the Company's sales representatives are considered incremental and recoverable costs of obtaining a customer contract. Sales commissions are deferred and amortized on a straight-line basis over the period of benefit, which the Company has determined to be five to eight years. The Company determined the period of benefit by taking into consideration its customer contracts, expected renewals of those customer contracts (as the Company currently does not pay an incremental sales commission for renewals), the Company's technology and other factors. The Company also defers amounts earned by employees other than sales representatives who earn incentive payments under compensation plans also tied to the value of customer contracts acquired. Deferred costs were $14.4 million and $14.8 million as of March 31, 2023 and December 31, 2022, respectively. Amortization expense for the deferred costs was $1.5 million and $1.4 million for the three months ended March 31, 2023 and 2022, respectively. Amortization of deferred costs is included in selling and marketing expense in the accompanying unaudited condensed consolidated statements of comprehensive loss.

    Deferred implementation costs

The Company capitalizes certain contract fulfillment costs, including personnel and other costs (such as hosting, employee salaries, benefits and payroll taxes), that are associated with arrangements where professional services are not distinct from other undelivered performance obligations in its customer contracts. The Company analyzes implementation costs and capitalizes those costs that are directly related to customer contracts expected to be recoverable to satisfy the undelivered performance obligations in those contracts. Deferred implementation costs are amortized ratably over the remaining contract term once the revenue recognition criteria for the respective performance obligation has been met and revenue recognition commences. Deferred implementation costs were $1.5 million and $1.6 million as of March 31, 2023 and December 31, 2022, respectively. Amortization expense for the deferred implementation costs was $0.2 million and $0.3 million for the three months ended March 31, 2023 and 2022, respectively. Deferred implementation costs are included in prepaid and other current assets and other assets, noncurrent in the unaudited condensed consolidated balance sheets. Amortization of deferred implementation costs is included in cost of subscription and cost of services revenues in the accompanying unaudited condensed consolidated statements of comprehensive loss.

Impairment of Long-Lived Assets

Long-lived assets are reviewed for impairment whenever an event or change in circumstances indicates that the carrying amount of an asset or group of assets may not be recoverable. The impairment review includes comparison of future cash flows expected to be generated by the asset or group of assets with the associated assets’ carrying value. If the carrying value of the asset or group of assets exceeds its expected future cash flows (undiscounted and without interest charges), an impairment loss is recognized to the extent that the carrying amount of the asset exceeds its fair value. During the three months ended March 31, 2023 and 2022, the Company recorded zero and $1.6 million, respectively, of impairment charge related to fixed assets. The 2022 impairment resulted from the Company's changed intentions for these assets in connection with a new agreement with a software vendor.

Recently issued accounting pronouncements not yet adopted

There have been no recent accounting pronouncements or changes in accounting pronouncements during the three months ended March 31, 2023, as compared to the recent accounting pronouncements described in the Company's Annual Report, that are of significance or potential significance to the Company.

9

3. Deferred Revenue and Performance Obligations

    Deferred Revenue

For the three months ended March 31, 2023 and 2022, the Company recognized approximately $49.4 million and $44.3 million, respectively, of revenue that was included in the deferred revenue balances at the beginning of the respective periods and primarily related to subscription, maintenance and support, and services.

    Performance Obligations

As of March 31, 2023, the Company expects to recognize approximately $430.6 million of revenue from remaining performance obligations. The Company expects, based on the terms of the related, underlying contractual arrangements, to recognize revenue on approximately $210.0 million of these performance obligations over the next 12 months, with the balance recognized thereafter. Remaining performance obligations represent contractually committed revenue that has not yet been recognized, which includes deferred revenue and unbilled amounts that will be recognized as revenue in future periods.

4. Disaggregation of Revenue

    Revenue by Geography

    The geographic information in the table below is presented for the three months ended March 31, 2023 and 2022. The Company categorizes geographic revenues based on the location of the customer's headquarters. Because the Company's contracts are predominately denominated in U.S. dollars, it has limited exposure to foreign currency exchange risk as discussed under "Foreign Currency Exchange Risk" of Part I, Item 3 below.

	Three Months Ended March 31,
	2023				2022
(in thousands)	Revenue		Percent		Revenue		Percent
United States of America	$	26,232	36	%	$	23,194	35	%
Europe	22,949		31	%	20,823		31	%
The rest of the world	24,001		33	%	22,475		34	%
Total revenue	$	73,182	100	%	$	66,492	100	%

5. Leases

    The Company has operating leases for data centers, computer infrastructure, corporate offices and certain equipment. These leases have remaining lease terms ranging from 1 year to 10 years. Some of these leases include options to extend for up to 15 years, and some include options to terminate within 1 year.

    As of March 31, 2023, the Company did not have any finance leases.

    Supplemental cash flow information related to leases was as follows (in thousands):

	Three Months Ended March 31,
	2023		2022
Cash paid for operating lease liabilities	$	2,251	$	1,842
Right-of-use asset obtained in exchange for operating lease liability	$	—	$	—

10

    In January 2023 and 2022, an existing operating lease was modified due to a change in future payments. The result of the 2023 modification was a decrease in the related right-of-use asset and corresponding lease liability of $1 million and the result of the 2022 modification was a decrease in the related right-of-use asset and corresponding lease liability of $2.7 million.

As of March 31, 2023, maturities of lease liabilities were as follows (in thousands):

Year Ending December 31,	Amount
Remaining 2023	$	6,649
2024	4,869
2025	4,057
2026	4,039
2027	3,965
2028	4,029
Thereafter	19,223
Total operating lease payments	46,831
Less: Imputed interest	(14,235)
Total operating lease liabilities	$	32,596

6. Earnings per Share

    The following table sets forth the computation of basic and diluted earnings per share for the three months ended March 31, 2023 and 2022:

	Three Months Ended March 31,
(in thousands, except per share data)	2023		2022
Numerator:
Net loss	$	(19,002)	$	(28,640)
Denominator:
Weighted average shares (basic)	45,926		45,085
Dilutive effect of potential common shares	—		—
Weighted average shares (diluted)	45,926		45,085
Basic loss per share	$	(0.41)	$	(0.64)
Diluted loss per share	$	(0.41)	$	(0.64)

    Dilutive potential common shares consist of shares issuable upon the vesting of restricted stock units ("RSUs"), market stock units ("MSUs") and equity consideration related to the EveryMundo LLC acquisition. Potential common shares determined to be antidilutive and excluded from diluted weighted average shares outstanding were approximately 2.4 million and 2.2 million for the three months ended March 31, 2023 and 2022, respectively. In addition, potential common shares related to the convertible notes determined to be antidilutive and excluded from diluted weighted average shares outstanding were 5.8 million for both the three months ended March 31, 2023 and 2022.

7. Noncash Share-based Compensation

The Company's 2017 Equity Incentive Plan (as amended and restated, the "2017 Stock Plan") has an aggregate authorized limit of 7,650,000 shares for issuance. As of March 31, 2023, 1,344,949 shares remain available for issuance under the 2017 Stock Plan.

11

    The following table presents the number of shares or units outstanding for each award type as of March 31, 2023 and December 31, 2022, respectively, (in thousands): 

Award type	March 31, 2023	December 31, 2022
Restricted stock units (time-based)	3,209	2,235
Market stock units	358	216
EveryMundo equity consideration	137	137

During the three months ended March 31, 2023, the Company granted 1,547,607 RSUs (time-based) with a weighted average grant-date fair value of $25.59 per share. The Company also granted 142,386 MSUs with a weighted average grant-date fair value of $30.42 to certain executive employees during the three months ended March 31, 2023. These MSUs vest on January 31, 2026 and the actual number of MSUs that will be eligible to vest is based on the total stockholder return of the Company relative to the total stockholder return of the Index over the performance period, as defined by each award's plan documents or individual award agreements. The maximum number of shares issuable upon vesting is 200% of the MSUs initially granted.

The assumptions used to value the MSUs granted during the three months ended March 31, 2023 were as follows:

	Three Months Ended March 31, 2023
Volatility	63.26	%
Risk-free interest rate	3.76	%
Expected award life in years	2.97
Dividend yield	—	%

Share-based compensation expense is allocated to expense categories on the unaudited condensed consolidated statements of comprehensive loss. The following table summarizes share-based compensation expense included in the Company's unaudited condensed consolidated statements of comprehensive loss for the three months ended March 31, 2023 and 2022:

	Three Months Ended March 31,
	2023		2022
Share-based compensation:
Cost of revenue	$	832	$	825
Operating expenses:
Selling and marketing	2,928		3,240
Research and development	2,350		3,713
General and administrative	3,794		3,447
Total included in operating expenses	9,072		10,400
Total share-based compensation expense	$	9,904	$	11,225

    At March 31, 2023, the Company had an estimated $100.7 million of total unrecognized compensation costs related to share-based compensation arrangements. These costs will be recognized over a weighted average period of 3.0 years.

    The Company's Employee Stock Purchase Plan (as amended, the "ESPP") permits eligible employees to purchase Company shares on an after-tax basis in an amount between 1% and 10% of their annual pay: (i) on June 30 of each year at a 15% discount of the fair market value of the Company's common stock on January 1 or June 30, whichever is lower, and (ii) on December 31 of each year at a 15% discount of the fair market value of the Company's common stock on July 1 or December 31, whichever is lower. An employee may not purchase more than $5,000 in either of the six-month measurement periods described above or more than $10,000 annually. In May 2021, the Company's stockholders approved an amendment to the ESPP Plan increasing the aggregate amount of shares available for issuance under the ESPP to 1,000,000. During the three months ended March 31, 2023, the Company issued 55,149 shares under the ESPP. As of March 31, 2023, 331,976 shares remain authorized and available for issuance under the ESPP. As of March 31, 2023, the Company held approximately $0.7 million on behalf of employees for future purchases under the ESPP, and this amount was recorded in accrued payroll and other employee benefits in the Company's unaudited condensed consolidated balance sheet.

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8. Convertible Senior Notes

The following is a summary of the Company's convertible senior notes as of March 31, 2023 (in thousands):

	Date of Issuance	Unpaid Principal Balance		Net Carrying Amount				Contractual Interest Rates
				Current		Noncurrent
1% Convertible Notes due in 2024 ("2024 Notes")	May 2019	$	143,750	$	—	$	142,779	1%
2.25% Convertible Notes due in 2027 ("2027 Notes")	September 2020	$	150,000	$	—	$	147,373	2.25%

The 2027 and 2024 Notes (collectively, the "Notes") are general unsecured obligations and rank senior in right of payment to all of the Company's indebtedness that is expressly subordinated in right of payment to the Notes, rank equally in right of payment with all of the Company's existing and future liabilities that are not so subordinated, are effectively junior to any of the Company's secured indebtedness to the extent of the value of the assets securing such indebtedness and are structurally subordinated to all indebtedness and other liabilities of the Company's subsidiaries (including trade payables but excluding intercompany obligations owed to the Company or its subsidiaries).

Interest related to the 2027 Notes is payable semiannually in arrears in cash on March 15 and September 15 of each year, beginning on March 15, 2021. Interest related to the 2024 Notes is payable semi-annually in arrears on May 15 and November 15 of each year, beginning on November 15, 2019.

The 2027 Notes mature on September 15, 2027 and the 2024 Notes mature on May 15, 2024, unless redeemed or converted in accordance with their terms prior to such date. At March 31, 2023, the Company had $192.4 million of cash and cash equivalents. The Company believes its existing cash and cash equivalents will provide adequate liquidity and capital resources to meet its operational requirements, anticipated capital expenditures and coupon interest payments for the Notes for the next twelve months. Capital markets have tightened recently in response to the macroeconomic environment making new financing more difficult and/or expensive and the Company may not be able to obtain such financing on terms acceptable to it or at all.

Each $1,000 of principal of the 2027 Notes will initially be convertible into 23.9137 shares of the Company’s common stock, which is equivalent to an initial conversion price of approximately $41.82 per share. Each $1,000 of principal of the 2024 Notes will initially be convertible into 15.1394 shares of the Company’s common stock, which is equivalent to an initial conversion price of approximately $66.05 per share. The initial conversion price for the 2027 and the 2024 Notes is subject to adjustment upon the occurrence of certain specified events.

As of March 31, 2023, the 2027 and 2024 Notes are not yet convertible and their remaining term is approximately 53 months and 13 months, respectively.

As of March 31, 2023 and December 31, 2022, the fair value of the principal amount of the Notes in the aggregate was $277.3 million and $263.7 million, respectively. The estimated fair value was determined based on inputs that are observable in the market or that could be derived from, or corroborated with, observable market data, including the Company's stock price and interest rates, which represents level 2 in the fair value hierarchy.

The Notes consist of the following (in thousands):

	March 31, 2023		December 31, 2022
Principal	$	293,750	$	293,750
Less: debt issuance cost, net of amortization	(3,598)		(3,971)
Net carrying amount	$	290,152	$	289,779

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The following table sets forth total interest expense recognized related to the Notes (in thousands):

	Three Months Ended March 31,
	2023		2022
Coupon interest	$	1,203	$	1,203
Amortization of debt issuance costs	373		373
Total	$	1,576	$	1,576

    Capped Call Transactions

    In September 2020 and in May 2019, in connection with the offering of the 2027 and 2024 Notes, respectively, the Company entered into privately negotiated capped call transactions (collectively, the "Capped Call") with certain option counterparties. The Capped Call transactions cover, subject to customary anti-dilution adjustments, the number of shares of the Company’s common stock initially underlying the Notes, at a strike price that corresponds to the initial conversion price of the Notes, also subject to adjustment, and are exercisable upon conversion of the Notes. The Capped Call transactions are intended to reduce potential dilution to the Company’s common stock and/or offset any cash payments the Company will be required to make in excess of the principal amounts upon any conversion of Notes, and to effectively increase the overall conversion price of the 2027 Notes from $41.82 to $78.90 per share, and for the 2024 Notes from $66.05 to $101.62 per share. As the Capped Call transactions meet certain accounting criteria, they are recorded in stockholders’ equity and are not accounted for as derivatives. The cost of the Capped Call was $25.3 million and $16.4 million for the 2027 and 2024 Notes, respectively, and was recorded as part of additional paid-in capital.

9. Commitments and Contingencies

    Litigation

    In the ordinary course of business, the Company regularly becomes involved in contract and other negotiations and, in more limited circumstances, becomes involved in legal proceedings, claims and litigation. The outcomes of these matters are inherently unpredictable. The Company is not currently involved in any outstanding litigation that it believes, individually or in the aggregate, will have a material adverse effect on its business, financial condition, results of operations or cash flows.

Purchase commitments

In the ordinary course of business, the Company enters into various purchase commitments for goods and services, mainly related to infrastructure platforms, business technology software and support, and other services. In January 2023, the Company entered into a noncancelable agreement for software support services with a four-year term. The remaining purchase commitment as of March 31, 2023 was $3.5 million and the agreement expires in March 2027. There were no other material changes outside the ordinary course of business to the noncancellable purchase commitments disclosed in the Annual Report.

10. Severance and Other Related Costs

In the quarter ended March 31, 2023, the Company made additional organizational changes and incurred approximately $3.6 million of severance, employee benefits, outplacement and related costs during the period. These costs were recorded primarily as operating expenses in the unaudited condensed consolidated statements of comprehensive loss, mainly research and development, and sales and marketing. During the quarter ended March 31, 2023, cash payments of $3.2 million were recorded for the incurred costs. The Company expects to settle the remaining accrued expense of approximately $1.3 million during 2023.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

    The terms “we,” “us,” “PROS” and “our” refer to PROS Holdings, Inc. and all of its subsidiaries that are consolidated in conformity with generally accepted accounting principles in the United States.

    This management's discussion and analysis of financial condition and results of operations should be read along with the unaudited condensed consolidated financial statements and unaudited notes to unaudited condensed consolidated financial statements included in Part I, Item 1 ("Interim Condensed Consolidated Financial Statements (Unaudited)"), as well as the audited consolidated financial statements and notes to consolidated financial statements and management's discussion and analysis of financial condition and results of operations set forth in our Annual Report.

Q1 2023 Financial Overview

In the first quarter of 2023, we continued to grow our subscription revenue. For the three months ended March 31, 2023, our subscription revenue increased 15% and total revenue increased 10% for the three months ended March 31, 2023, each as compared to the same period in 2022. Recurring revenue (which consists of subscription revenue and maintenance and support revenue) as a percentage of total revenue accounted for 84% and 85% of total revenue for the three months ended March 31, 2023 and 2022, respectively. Our gross revenue retention rates remained above 93% during the trailing twelve months ended March 31, 2023.

Cash used in operating activities was $6.1 million for the three months ended March 31, 2023, as compared to $11.0 million for the three months ended March 31, 2022. The improvement was primarily attributable to increased cash collections during the period and a lower annual incentive payment in 2023 as compared to prior year.

Free cash flow is a key metric to assess the strength of our business. We define free cash flow, a non-GAAP financial measure, as net cash provided by (used in) operating activities, excluding severance payments, less capital expenditures, purchases of other (non-acquisition-related) intangible assets and capitalized internal-use software development costs. We believe free cash flow may be useful to investors and other users of our financial information in evaluating the amount of cash generated by our business operations. Free cash flow used during the three months ended March 31, 2023 was $4.5 million, compared to $11.5 million for the three months ended March 31, 2022. The improvement was primarily attributable to increased cash collections during the period and a lower annual incentive payment in 2023 as compared to prior year. The following is a reconciliation of free cash flow to the most comparable GAAP measure, net cash used in operating activities (in thousands):

	Three Months Ended March 31,
	2023		2022
Net cash used in operating activities	$	(6,143)	$	(11,014)
Severance	3,170		—
Purchase of property and equipment	(1,546)		(461)
Free Cash Flow	$	(4,519)	$	(11,475)

Factors Affecting Our Performance

    Key factors and trends that have affected, and we believe will continue to affect, our operating results include:

•Macroeconomic Environment. We believe the combination of increased inflation, rising interest rates, volatile capital and financial markets, supply chain disruptions, tight labor markets, pricing volatility, the Russia-Ukraine conflict, and other macroeconomic conditions increases corporate focus on profitable growth. Despite this challenging environment, we remain confident in our ability to help optimize shopping and selling experiences for our customers. For example, pricing volatility and inflation are catalysts for demand for our price management and optimization solutions. Uncertain macroeconomic and industry conditions in countries and regions in which we operate create a challenging selling environment for large enterprise technology deployment and we believe in the near term will lead new customers to increasingly emphasize smaller scope initial purchases with faster implementations. While our recurring revenue and earnings are relatively predictable as a result of our subscription-based business model, the broader implications of these macroeconomic events on our business, results of operations, cash flows and overall financial position, particularly in the long term, remain uncertain. Under this model, our lower subscription bookings during the pandemic has adversely impacted our subscription revenue growth rates due to the timing lag between subscription

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bookings and the revenue recognized on those bookings. However, despite the impact of the pandemic on our prior revenue growth rates, we had double digit growth for both subscription revenue and total revenue in the first quarter of 2023. For a full discussion on the risks and uncertainties to our business, please see the "Risk Factors" section in our Annual Report.

•Profitable Growth as a Priority. We believe our market opportunity is large and underpenetrated and intend to continue investing in our business to create awareness for our solutions, acquire new customers, and expand within our existing customer base globally, while focusing on cash flow and profitability. We intend to continue investing for growth and also seek opportunities to mitigate the growth in our costs and reduce our existing cost structure. We also plan to continue investing in product development to enhance our existing technologies, including initiatives to accelerate customer time-to-value, improve efficiency, provide out-of-the-box integration with third-party commerce solutions and develop new applications and technologies.

•Travel Industry Recovering. Despite operational headwinds and regional variances in the timing of travel restrictions being lifted, the travel industry, particularly the airline industry, continues to recover from the unprecedented disruption caused by the pandemic. While global capacity has not fully returned to pre-pandemic levels, demand for air travel continues to increase as restrictions have been lifted. Travel in North America has led this recovery with Asia Pacific lagging, particularly as China has only recently lifted international travel restrictions. The International Air Transport Association is forecasting airline industry profitability in 2023 with certain U.S.-based airlines already publicly reporting profitable quarters. Still, the rate of airline industry recovery could be impacted negatively if inflation impacts consumer disposable income or limits business travel. Despite geographic variation, we expect airlines to increasingly prioritize technology investments as travel returns to pre-COVID levels.

•Digital Purchasing Driving Technology Adoption. We believe the long-term trends toward digital purchasing by both consumers and corporate buyers will increasingly drive demand for technology that provides fast, frictionless and personalized buying experiences across direct sales, partner, online, mobile and emerging channels. Buyers often prefer not to interact with sales representatives as their primary source of research, and increasingly prefer to buy online when they have already decided what to buy. For example, in the airline industry, the pandemic accelerated a long-term trend towards direct booking channels, and we anticipate airlines continuing to invest in technology, including mobile device-enabled solutions, to enhance their ability to capture a greater percentage of bookings through their own channels such as their websites. We believe companies must adopt technologies which power these types of experiences across sales channels as they modernize their sales process to compete in digital commerce. Increasingly, companies are looking to AI to deliver actionable insights from their data, improve and customize their offerings and drive process efficiencies. Our AI-powered solutions enable buyers to move fluidly and with personalized experiences across our customers’ sales channels, and our digital offer marketing solutions help our customers drive their buyers directly into their direct selling channels.

•Cloud Migrations. As we continue to migrate our on-premises customers from our legacy licensed solutions to our current cloud solutions, we expect our future maintenance and support revenue to continue to decline and subscription revenue to increase. We continue to encourage our customers to migrate to our cloud solutions as we have announced end of support dates for certain of our on-premises solutions.

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Results of Operations

The following table sets forth certain items in our unaudited condensed consolidated statements of comprehensive loss as a percentage of total revenues for the three months ended March 31, 2023 and 2022:

	Three Months Ended March 31,
	2023		2022
Revenue:
Subscription	76	%	73	%
Maintenance and support	8		12
Total subscription, maintenance and support	84		85
Services	16		15
Total revenue	100		100
Cost of revenue:
Subscription	19		21
Maintenance and support	3		3
Total cost of subscription, maintenance and support	22		24
Services	18		17
Total cost of revenue	40		41
Gross profit	60		59
Operating Expenses:
Selling and marketing	36		38
Research and development	30		37
General and administrative	19		22
Impairment of fixed assets	—		2
Total operating expenses	85		99
Convertible debt interest and amortization	(2)		(2)
Other income (expense), net	2		(1)
Loss before income tax provision	(26)		(43)
Income tax provision	—		—
Net loss	(26)	%	(43)	%

Revenue:

	Three Months Ended March 31,				Variance
(Dollars in thousands)	2023		2022		$		%
Subscription	$	55,969	$	48,765	$	7,204	15	%
Maintenance and support	5,712		7,855		(2,143)		(27)	%
Total subscription, maintenance and support	61,681		56,620		5,061		9	%
Services	11,501		9,872		1,629		17	%
Total revenue	$	73,182	$	66,492	$	6,690	10	%

Subscription revenue. Subscription revenue increased primarily due to an increase in new and existing customer subscription contracts and a recovery of approximately $1 million from a customer that previously declared bankruptcy.

Maintenance and support revenue. Maintenance and support revenue decreased primarily as a result of existing maintenance customers migrating to our cloud solutions and, to a lesser extent, customer maintenance churn. We expect maintenance revenue to continue to decline as we continue to migrate maintenance customers to our cloud solutions.

Services revenue. Services revenue increased primarily as a result of higher sales of professional services related to our subscription contracts and follow-on professional services to existing customers. Services revenue varies from period to period depending on different factors, including the level of professional services required to implement our solutions, the timing of

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services revenue recognition on certain subscription contracts and efficiencies in our solutions implementations requiring less professional services during a particular period.

Cost of revenue and gross profit:

	Three Months Ended March 31,				Variance
(Dollars in thousands)	2023		2022		$		%
Cost of subscription	$	14,093	$	13,779	$	314	2	%
Cost of maintenance and support	2,282		2,167		115		5	%
Total cost of subscription, maintenance and support	16,375		15,946		429		3	%
Cost of services	13,167		11,415		1,752		15	%
Total cost of revenue	29,542		27,361		2,181		8	%
Gross profit	$	43,640	$	39,131	$	4,509	12	%

Cost of subscription. Cost of subscription increased slightly primarily due to increased infrastructure cost to support our current subscription customer base and higher employee-related costs mainly due to increase in headcount. The increase was partially offset by a decrease in amortization expense for intangible assets and internal-use software. Our subscription gross profit percentages were 75% and 72% for the three months ended March 31, 2023 and 2022, respectively.

Cost of maintenance and support. Cost of maintenance and support remained relatively unchanged. Maintenance and support gross profit percentages were 60% and 72% for the three months ended March 31, 2023 and 2022, respectively. The decrease in gross profit percentages was primarily due to lower maintenance and support revenue as we continue to migrate customers to our subscription solutions and the cost of maintenance and support being relatively fixed.

Cost of services. Cost of services increased primarily due to higher personnel costs to support the increase in our services revenue during the period. Services gross profit percentages were (14)% and (16)% for the three months ended March 31, 2023 and 2022, respectively. Services gross profit percentages vary period to period depending on different factors, including the level of professional services required to implement our solutions, the utilization of our employees and our effective man-day rates.

Operating expenses:

	Three Months Ended March 31,				Variance
(Dollars in thousands)	2023		2022		$		%
Selling and marketing	$	26,010	$	25,287	$	723	3	%
Research and development	22,291		24,467		(2,176)		(9)	%
General and administrative	14,135		14,329		(194)		(1)	%
Impairment of fixed assets	—		1,551		(1,551)		(100)	%
Total operating expenses	$	62,436	$	65,634	$	(3,198)	(5)	%

Selling and marketing expenses. During the three months ended March 31, 2023, selling and marketing expenses increased primarily due to an increase in sales and marketing initiatives and travel expenses. The increase was partially offset by a decrease in employee-related costs mainly due to organizational changes.

Research and development expenses. Research and development expenses decreased primarily due to a decrease in noncash share-based compensation and contractors expense. The noncash share-based compensation was higher in prior year mainly due to the acceleration of equity awards related to the retirement of a senior officer in the first quarter of 2022.

General and administrative expenses. General and administrative expenses remained relatively consistent with prior year.

Impairment of fixed assets. During the three months ended March 31, 2023 and 2022, we recorded zero and $1.6 million impairment charge related to fixed assets, respectively. The 2022 impairment resulted from changes to our intentions for these assets in connection with a new agreement with a software vendor.

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Non-operating expenses:

	Three Months Ended March 31,				Variance
(Dollars in thousands)	2023		2022		$		%
Convertible debt interest and amortization	$	(1,576)	$	(1,576)	$	—	—	%
Other income (expense), net	$	1,451	$	(418)	$	1,869	(447)	%

Convertible debt interest and amortization. Convertible debt expense for the three months ended March 31, 2023 and 2022 related to coupon interest and amortization of debt issuance costs attributable to our Notes.

Other income (expense), net. The change in other income (expense), net for the three months ended March 31, 2023, primarily related to higher interest income and to a smaller extent due to the impact of foreign currency fluctuations.

Income tax provision:

	Three Months Ended March 31,						Variance
(Dollars in thousands)	2023			2022			$		%
Effective tax rate	(0.4)		%	(0.5)		%	n/a		n/a
Income tax provision	$	81		$	143		$	(62)	(43)	%

Income tax provision. The tax provision for the three months ended March 31, 2023 included both foreign income and withholding taxes. No tax benefit was recognized on jurisdictions with a projected loss for the year due to the valuation allowances on our deferred tax assets.

Our effective tax rate was (0.4)% and (0.5)% for the three months ended March 31, 2023 and 2022, respectively. The income tax rate varies from the 21% federal statutory rate primarily due to the valuation allowances on our deferred tax assets. While our expected tax rate would be 0% due to the full valuation allowance on our deferred tax assets, the income tax provision and related effective tax rates is due to foreign income and withholding taxes.

Jurisdictions with a projected loss for the year where no tax benefit can be recognized due to the valuation allowances on our deferred tax assets are excluded from the estimated annual federal effective tax rate. The impact of such an exclusion could result in a higher or lower effective tax rate during a particular quarter depending on the mix and timing of actual earnings versus annual projections.

Liquidity and Capital Resources

At March 31, 2023, we had $192.4 million of cash and cash equivalents and $95.9 million of working capital as compared to $203.6 million of cash and cash equivalents and $106.3 million of working capital at December 31, 2022.

Our principal sources of liquidity are our cash and cash equivalents. In addition, we could access capital markets to supplement our liquidity position. Our material drivers or variants of operating cash flow are net income (loss), noncash expenses (principally share-based compensation, intangible amortization and amortization of debt issuance costs) and the timing of invoicing and cash collections from our customers. Our operating cash flows are also impacted by the timing of payments to our vendors and the payments of other liabilities.

    We believe our existing cash and cash equivalents will provide adequate liquidity and capital resources to meet our operational requirements, anticipated capital expenditures and coupon interest payments for our Notes for the next twelve months. Our future working capital requirements depend on many factors, including the operations of our existing business, growth of our customer subscription services, future acquisitions we might undertake, expansion into complementary businesses, timing of adoption and implementation of our solutions and customer churn. Capital markets have tightened recently in response to the macroeconomic environment making new financing more difficult and/or expensive and we may not be able to obtain such financing on terms acceptable to us or at all. During the first quarter of 2023, the financial markets experienced disruption due to certain bank failures. We have not experienced any material impact from the disruption but will continue to monitor the situation and take action accordingly.

Our 2024 Notes, with a principal amount of $143.8 million, mature on May 15, 2024, unless redeemed or converted in accordance with their terms prior to such date.

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    The following table presents key components of our unaudited condensed consolidated statements of cash flows for the three months ended March 31, 2023 and 2022: 

	Three Months Ended March 31,
(Dollars in thousands)	2023		2022
Net cash used in operating activities	$	(6,143)	$	(11,014)
Net cash used in investing activities	(1,546)		(461)
Net cash (used in) provided by financing activities	(3,573)		1,231
Cash and cash equivalents (beginning of period)	203,627		227,553
Cash and cash equivalents (end of period)	$	192,376	$	217,393

Operating Activities

    Net cash used in operating activities for the three months ended March 31, 2023 was $6.1 million. The $4.9 million improvement over last year was primarily attributable to increased cash collections during the period and a lower annual incentive payment in 2023 as compared to prior year.

Investing Activities

Net cash used in investing activities for the three months ended March 31, 2023 was $1.5 million. The increase was due to higher capital expenditures, primarily related to third-party software license renewal, in 2023 as compared to the same period in prior year.

Financing Activities

Net cash used in financing activities for the three months ended March 31, 2023 was $3.6 million. The increase was primarily attributable to higher tax withholding payments on the vesting of employee share-based awards.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material. We do not have any relationships with unconsolidated entities or financial partnerships, such as variable interest entities, that would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Contractual Obligations and Commitments

    Other than changes described in Note 9 above, there have been no material changes to our contractual obligations and commitments disclosed in our Annual Report.

Recent Accounting Pronouncements

    See "Recently issued accounting pronouncements not yet adopted" in Note 2 above for discussion of recent accounting pronouncements including the respective expected dates of adoption, if any.

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Critical accounting policies and estimates

    Our consolidated financial statements are prepared in accordance with GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses, and related disclosures. Actual results could differ from those estimates. The complexity and judgment required in our estimation process, as well as issues related to the assumptions, risks and uncertainties inherent in determining the nature and timing of satisfaction of performance obligations and determining the standalone selling price of performance obligations, affect the amounts of revenue, expenses, unbilled receivables and deferred revenue. Estimates are also used for, but not limited to, receivables, allowance for credit losses, operating lease right-of-use assets and operating lease liabilities, useful lives of assets, depreciation, income taxes and deferred tax asset valuation, valuation of stock awards, other current liabilities and accrued liabilities. Numerous internal and external factors can affect estimates. Our critical accounting policies related to the estimates and judgments are discussed in our Annual Report under management's discussion and analysis of financial condition and results of operations.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign Currency Exchange Risk

    Although our contracts are predominately denominated in U.S. dollars, we are exposed to foreign currency exchange risk because we also have some contracts denominated in foreign currencies. The effect of a hypothetical 10% adverse change in exchange rates on our foreign denominated receivables as of March 31, 2023 would result in a loss of approximately $0.9 million. We are also exposed to foreign currency risk due to our operating subsidiaries in France, United Kingdom, Canada, Germany, Ireland, Australia, Bulgaria, Ecuador and United Arab Emirates. A hypothetical 10% adverse change in the value of the U.S. dollar in relation to the euro, which is our single most significant foreign currency exposure, would have decreased revenue for the three months ended March 31, 2023 by approximately $1.1 million. However, due to the relatively low volume of payments made and received through our foreign subsidiaries, we do not believe that we have significant exposure to foreign currency exchange risks. Fluctuations in foreign currency exchange rates could harm our financial results in the future.

    We currently do not use derivative financial instruments to mitigate foreign currency exchange risks. We continue to review this matter and may consider hedging certain foreign exchange risks through the use of currency derivatives in future years.

Interest Rate Risk

    As of March 31, 2023, we had outstanding principal amounts of $150.0 million and $143.8 million of the 2027 and the 2024 Notes, respectively, which are fixed rate instruments. Therefore, our results of operations are not subject to fluctuations in interest rates. The fair value of the Notes may change when the market price of our stock fluctuates.

    We believe that we do not have any material exposure to changes in the fair value as a result of changes in interest rates due to the short-term nature of our cash equivalents.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

    Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act) as of March 31, 2023. Based on our evaluation of our disclosure controls and procedures as of March 31, 2023, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

    There have been no changes in our internal control over financial reporting during the three months ended March 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we are a party to legal proceedings and claims arising in the ordinary course of business. We are not currently aware of any such proceedings or claims that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition, results of operations or cash flows.

ITEM 1A. RISK FACTORS

    There have been no material changes in the Company's risk factors from those disclosed in Part I, Item 1A, of our Annual Report.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

We have an ongoing authorization from our board of directors to repurchase up to $15.0 million in shares of our common stock in the open market or through privately negotiated transactions. As of March 31, 2023, $10.0 million remained available for repurchase under the existing repurchase authorization. We did not make any purchases of our common stock under this program for the three months ended March 31, 2023.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURE

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Index to Exhibits
		Provided	Incorporated by Reference
Exhibit No.	Description	Herewith	Form	Filing Date
31.1	Certification of Chief Executive Officer Pursuant to Exchange Act Rule 13a-14(a)/15d-14(a).	X
31.2	Certification of Chief Financial Officer Pursuant to Exchange Act Rule 13a-14(a)/ 15d-14(a).	X
32.1*	Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350.	X
Exhibit No.	Description
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema Document.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.

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* This certification shall not be deemed “filed” for purposes of Section 18 of the Securities Act of 1934, or otherwise subject to the liability of that Section, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		PROS HOLDINGS, INC.
May 2, 2023	By:	/s/ Andres Reiner
		Andres Reiner
		President and Chief Executive Officer (Principal Executive Officer)
May 2, 2023	By:	/s/ Stefan Schulz
		Stefan Schulz
		Executive Vice President and Chief Financial Officer (Principal Financial Officer)

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EX-31.1

EXHIBIT 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Andres Reiner, certify that:

1.I have reviewed this quarterly report on Form 10-Q of PROS Holdings, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

May 2, 2023	/s/ Andres Reiner
	Andres Reiner
	President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Stefan Schulz, certify that:

1.I have reviewed this quarterly report on Form 10-Q of PROS Holdings, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

May 2, 2023	/s/ Stefan Schulz
	Stefan Schulz
	Executive Vice President and Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Andres Reiner, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the quarterly report of PROS Holdings, Inc., on Form 10-Q for the period ended March 31, 2023 fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and the information contained in such Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of PROS Holdings, Inc.

May 2, 2023	/s/ Andres Reiner
	Andres Reiner
	President and Chief Executive Officer

I, Stefan Schulz, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the quarterly report of PROS Holdings, Inc., on Form 10-Q for the period ended March 31, 2023 fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and the information contained in such Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of PROS Holdings, Inc. 

May 2, 2023	/s/ Stefan Schulz
	Stefan Schulz
	Executive Vice President and Chief Financial Officer

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to PROS Holdings, Inc. and will be retained by PROS Holdings, Inc. and furnished to the Securities and Exchange Commission or its staff upon request. This certification "accompanies" the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2023	Apr. 25, 2023
Entity Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2023
Document Transition Report	false
Entity File Number	001-33554
Entity Registrant Name	PROS HOLDINGS, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	76-0168604
Entity Address, Address Line One	3200 Kirby Drive, Suite 600
Entity Address, City or Town	Houston
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	77098
City Area Code	(713)
Local Phone Number	335-5151
Title of 12(b) Security	Common stock $0.001 par value per share
Trading Symbol	PRO
Security Exchange Name	NYSE
Entity Central Index Key	0001392972
Amendment Flag	false
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q1
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		46,044,260
Former Address [Member]
Entity Information [Line Items]
Entity Address, Address Line One
Entity Address, City or Town
Entity Address, State or Province
Entity Address, Postal Zip Code

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 192,376	$ 203,627
Trade and Other Receivables, Net, Current	45,787	48,178
Deferred Costs, Current	6,433	6,032
Prepaid and other current assets	12,149	9,441
Total current assets	256,745	267,278
Property and equipment, net	25,442	25,012
Operating Lease, Right-of-Use Asset	14,797	17,474
Deferred Costs, Noncurrent	7,938	8,764
Intangible Assets, Net (Excluding Goodwill)	16,046	17,851
Goodwill	107,717	107,561
Other long term assets, net	8,872	9,012
Total assets	437,557	452,952
Current liabilities:
Accounts payable	4,197	7,964
Accrued liabilities	13,356	12,854
Accrued payroll and other employee benefits	15,624	23,797
Operating Lease, Liability, Current	5,461	7,662
Deferred Revenue, Current	122,192	108,659
Total current liabilities	160,830	160,936
Long-term deferred revenue	6,161	8,298
Convertible Debt, Noncurrent	290,152	289,779
Operating Lease, Liability, Noncurrent	27,135	28,184
Other Liabilities, Noncurrent	1,247	1,228
Total liabilities	485,525	488,425
Commitments and contingencies (see Note 9)
Stockholders' equity:
Preferred Stock, Value, Issued	0	0
Common Stock, Value, Issued	51	50
Additional paid-in capital	596,805	590,475
Treasury Stock, Value	(29,847)	(29,847)
Retained Earnings (Accumulated Deficit)	(609,900)	(590,898)
Accumulated Other Comprehensive Income (Loss), Net of Tax	(5,077)	(5,253)
Total stockholders' equity	(47,968)	(35,473)
Total liabilities and stockholders' equity	$ 437,557	$ 452,952
Preferred stock - shares authorized	5,000,000	5,000,000
Preferred stock - par value	$ 0.001	$ 0.001
Preferred stock - shares issued	0	0
Common stock - shares authorized	75,000,000	75,000,000
Common stock - par value	$ 0.001	$ 0.001
Treasury Stock, Common, Shares	4,680,723	4,680,723

XML

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($)	Mar. 31, 2023	Dec. 31, 2022
Allowance for bad debts	$ 722,000	$ 609,000
Preferred stock - par value	$ 0.001	$ 0.001
Preferred stock - shares authorized	5,000,000	5,000,000
Preferred stock - shares issued	0	0
Common stock - par value	$ 0.001	$ 0.001
Common stock - shares authorized	75,000,000	75,000,000
Common stock - shares issued	50,711,964	50,318,726
Common stock - shares outstanding	46,031,241	45,638,003
Treasury Stock, Common, Shares	4,680,723	4,680,723

XML

Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Revenue from Contract with Customer, Including Assessed Tax	$ 73,182	$ 66,492
Cost of Goods and Services Sold	29,542	27,361
Gross Profit	43,640	39,131
Operating Expenses
Selling and Marketing Expense	26,010	25,287
Research and development	22,291	24,467
General and Administrative Expense	14,135	14,329
Asset Impairment Charges	0	1,551
Income from operations	(18,796)	(26,503)
Other income (expense):
Convertible debt interest and amortization	(1,576)	(1,576)
Other Nonoperating Income (Expense)	1,451	(418)
Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest, Total	(18,921)	(28,497)
Income tax provision (benefit)	81	143
Net income (loss)	$ (19,002)	$ (28,640)
Income (Loss) from Continuing Operations, Basic and Diluted	$ (0.41)	$ (0.64)
Weighted average number of shares:
Weighted Average Number of Shares Outstanding, Basic	45,926	45,085
Weighted Average Number of Shares Outstanding, Basic and Diluted	45,926	45,085
Other comprehensive income, net of tax:
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax	$ 176	$ (222)
Other comprehensive income	176	(222)
Comprehensive income (loss)	(18,826)	(28,862)
Accumulated Other Comprehensive Income, net of tax [Member]
Other comprehensive income, net of tax:
Other comprehensive income	176	(222)
Subscription, maintenance and support
Revenue from Contract with Customer, Including Assessed Tax	61,681	56,620
Cost of Goods and Services Sold	16,375	15,946
Subscription and Circulation [Member]
Revenue from Contract with Customer, Including Assessed Tax	55,969	48,765
Cost of Goods and Services Sold	14,093	13,779
Maintenance [Member]
Revenue from Contract with Customer, Including Assessed Tax	5,712	7,855
Cost of Goods and Services Sold	2,282	2,167
Service [Member]
Revenue from Contract with Customer, Including Assessed Tax	11,501	9,872
Cost of Goods and Services Sold	$ 13,167	$ 11,415

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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Operating activities:
Net income (loss)	$ (19,002)	$ (28,640)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, Depletion and Amortization	3,001	4,647
Amortization of Financing Costs and Discounts	373	373
Share-based compensation	9,904	11,225
Provision for doubtful accounts	108	(91)
Loss on Disposition of Other Assets	35	0
Asset Impairment Charges	0	1,551
Changes in operating assets and liabilities:
Accounts and unbilled receivables	2,239	(12,130)
Increase (Decrease) in Deferred Costs	425	(48)
Prepaid expenses and other assets	(2,505)	(262)
Increase (Decrease) in Other Noncurrent Assets and Liabilities, Net	(591)	(739)
Accounts payable	(3,793)	3,903
Accrued liabilities	504	(109)
Accrued payroll and other employee benefits	(8,174)	(13,246)
Deferred revenue	11,333	22,552
Net cash provided by (used in) operating activities	(6,143)	(11,014)
Investing activities:
Purchases of property and equipment	(1,546)	(461)
Net cash provided by (used in) investing activities	(1,546)	(461)
Financing activities:
Proceeds from Stock Plans	1,137	1,443
Tax withholding related to net share settlement of restricted stock units	(4,710)	(212)
Net cash provided by (used in) financing activities	(3,573)	1,231
Effect of Exchange Rate on Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents, Continuing Operations	11	84
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Period Increase (Decrease), Including Exchange Rate Effect	(11,251)	(10,160)
Cash and cash equivalents:
Beginning of period	203,627	227,553
End of period	192,376	217,393
Capital Expenditures Incurred but Not yet Paid	$ 136	$ 45

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Condensed Consolidated Statement of Stockholders' Equity Statement - USD ($) $ in Thousands	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Treasury Stock, Common [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income, net of tax [Member]
Common Stock, Shares, Outstanding, Beginning Balance at Dec. 31, 2021		44,520,542
Stockholders' Equity Attributable to Parent- Beginning Balance at Dec. 31, 2021	$ 3,584	$ 49	$ 546,693	$ (29,847)	$ (508,652)	$ (4,659)
Treasury Stock, Common, Shares, Beginning Balance at Dec. 31, 2021				4,680,723
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures		609,397
Stock Issued During Period, Value, Restricted Stock Award, Gross	(212)	$ 1	(213)
Stock Issued During Period, Shares, Employee Stock Purchase Plans		49,245
Proceeds from Stock Plans	1,443		1,443
APIC, Share-based Payment Arrangement, Increase for Cost Recognition	11,225		11,225
Other Comprehensive Income (Loss), Net of Tax	(222)					(222)
Net Income (Loss) Attributable to Parent	(28,640)				(28,640)
Stockholders' Equity Attributable to Parent- Ending Balance at Mar. 31, 2022	$ (12,822)	$ 50	559,148	$ (29,847)	(537,292)	(4,881)
Common Stock, Shares, Outstanding, Ending Balance at Mar. 31, 2022		45,179,184
Treasury Stock, Common, Shares, Ending Balance at Mar. 31, 2022				4,680,723
Common Stock, Shares, Outstanding, Beginning Balance at Dec. 31, 2022	45,638,003	45,638,003
Stockholders' Equity Attributable to Parent- Beginning Balance at Dec. 31, 2022	$ (35,473)	$ 50	590,475	$ (29,847)	(590,898)	(5,253)
Treasury Stock, Common, Shares, Beginning Balance at Dec. 31, 2022	4,680,723			4,680,723
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures		338,089
Stock Issued During Period, Value, Restricted Stock Award, Gross	$ (4,710)	$ 1	(4,711)
Stock Issued During Period, Shares, Employee Stock Purchase Plans	55,149	55,149
Proceeds from Stock Plans	$ 1,137		1,137
APIC, Share-based Payment Arrangement, Increase for Cost Recognition	9,904		9,904
Other Comprehensive Income (Loss), Net of Tax	176					176
Net Income (Loss) Attributable to Parent	(19,002)				(19,002)
Stockholders' Equity Attributable to Parent- Ending Balance at Mar. 31, 2023	$ (47,968)	$ 51	$ 596,805	$ (29,847)	$ (609,900)	$ (5,077)
Common Stock, Shares, Outstanding, Ending Balance at Mar. 31, 2023	46,031,241	46,031,241
Treasury Stock, Common, Shares, Ending Balance at Mar. 31, 2023	4,680,723			4,680,723

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Organization and Nature of Operations

3 Months Ended

Mar. 31, 2023

Organization and Nature of Operations [Abstract]

Organization and nature of operations

Organization and Nature of Operations

PROS Holdings, Inc., a Delaware corporation, through its operating subsidiaries (collectively, the "Company"), provides solutions that optimize shopping and selling experiences. PROS solutions leverage artificial intelligence ("AI"), self-learning and automation to ensure that every transactional experience is fast, frictionless and personalized for every shopper, supporting both business-to-business ("B2B") and business-to-consumer ("B2C") companies across industry verticals. Companies can use these selling, pricing, revenue optimization, distribution and retail, and digital offer marketing solutions to assess their market environments in real time to deliver customized prices and offers. The Company's solutions enable their customers to provide the buyers of their products the ability to move fluidly from one sales channel to another, whether direct, partner, online, mobile or other emerging channels, each with a personalized experience regardless of which channel is used. The Company's decades of data science and AI expertise are infused into its solutions and are designed to reduce time and complexity through actionable intelligence.

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Summary of Significant Accounting Policies (Notes)

3 Months Ended

Mar. 31, 2023

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

Summary of Significant Accounting Policies

Basis of presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States ("GAAP") for interim financial reporting and applicable quarterly reporting regulations of the Securities and Exchange Commission ("SEC"). In management's opinion, the accompanying interim unaudited condensed consolidated financial statements include all adjustments necessary for a fair statement of the financial position of the Company as of March 31, 2023, the results of operations for the three months ended March 31, 2023 and 2022, cash flows for the three months ended March 31, 2023 and 2022, and stockholders' (deficit) equity for the three months ended March 31, 2023 and 2022.

Certain information and disclosures normally included in the notes to the annual financial statements prepared in accordance with GAAP have been omitted from these interim unaudited condensed consolidated financial statements pursuant to the rules and regulations of the SEC. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022 ("Annual Report") filed with the SEC. The unaudited condensed consolidated balance sheet as of December 31, 2022 was derived from the Company's audited consolidated financial statements but does not include all disclosures required under GAAP.

Changes in accounting policies

There have been no material changes in the Company’s significant accounting policies and their application as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

Fair value measurement

The Company's financial assets that are included in cash and cash equivalents and that are measured at fair value on a recurring basis consisted of $176.5 million and $168.1 million at March 31, 2023 and December 31, 2022, respectively, and were invested in treasury money market funds. The fair value of the treasury money market funds is determined based on quoted market prices, which represents level 1 in the fair value hierarchy as defined by ASC 820.

Trade and other receivables

Trade and other receivables are primarily comprised of trade receivables, net of allowance for credit losses, contract assets and unbilled receivables. The Company records trade accounts receivable for its unconditional rights to consideration arising from the Company's performance under contracts with customers. The Company's standard billing terms are that payment is due upon receipt of invoice, payable generally within thirty to sixty days. The carrying value of such receivables, net of the allowance for credit losses, represents their estimated net realizable value. When developing its estimate of expected credit losses on trade and other receivables, the Company considers the available information relevant to assessing the

collectability of cash flows, which includes a combination of both internal and external information relating to past events, current conditions, and future forecasts as well as relevant qualitative and quantitative factors that relate to the environment in which the Company operates.

    Contract assets represent conditional rights to consideration that have been recognized as revenue in advance of billing the customer. Unbilled receivables represent unconditional rights to consideration arising from revenue that have been recognized in advance of billing the customer.

Deferred costs

Sales commissions earned by the Company's sales representatives are considered incremental and recoverable costs of obtaining a customer contract. Sales commissions are deferred and amortized on a straight-line basis over the period of benefit, which the Company has determined to be five to eight years. The Company determined the period of benefit by taking into consideration its customer contracts, expected renewals of those customer contracts (as the Company currently does not pay an incremental sales commission for renewals), the Company's technology and other factors. The Company also defers amounts earned by employees other than sales representatives who earn incentive payments under compensation plans also tied to the value of customer contracts acquired. Deferred costs were $14.4 million and $14.8 million as of March 31, 2023 and December 31, 2022, respectively. Amortization expense for the deferred costs was $1.5 million and $1.4 million for the three months ended March 31, 2023 and 2022, respectively. Amortization of deferred costs is included in selling and marketing expense in the accompanying unaudited condensed consolidated statements of comprehensive loss.

    Deferred implementation costs

The Company capitalizes certain contract fulfillment costs, including personnel and other costs (such as hosting, employee salaries, benefits and payroll taxes), that are associated with arrangements where professional services are not distinct from other undelivered performance obligations in its customer contracts. The Company analyzes implementation costs and capitalizes those costs that are directly related to customer contracts expected to be recoverable to satisfy the undelivered performance obligations in those contracts. Deferred implementation costs are amortized ratably over the remaining contract term once the revenue recognition criteria for the respective performance obligation has been met and revenue recognition commences. Deferred implementation costs were $1.5 million and $1.6 million as of March 31, 2023 and December 31, 2022, respectively. Amortization expense for the deferred implementation costs was $0.2 million and $0.3 million for the three months ended March 31, 2023 and 2022, respectively. Deferred implementation costs are included in prepaid and other current assets and other assets, noncurrent in the unaudited condensed consolidated balance sheets. Amortization of deferred implementation costs is included in cost of subscription and cost of services revenues in the accompanying unaudited condensed consolidated statements of comprehensive loss.

Impairment of Long-Lived Assets

Long-lived assets are reviewed for impairment whenever an event or change in circumstances indicates that the carrying amount of an asset or group of assets may not be recoverable. The impairment review includes comparison of future cash flows expected to be generated by the asset or group of assets with the associated assets’ carrying value. If the carrying value of the asset or group of assets exceeds its expected future cash flows (undiscounted and without interest charges), an impairment loss is recognized to the extent that the carrying amount of the asset exceeds its fair value. During the three months ended March 31, 2023 and 2022, the Company recorded zero and $1.6 million, respectively, of impairment charge related to fixed assets. The 2022 impairment resulted from the Company's changed intentions for these assets in connection with a new agreement with a software vendor.

Recently issued accounting pronouncements not yet adopted

There have been no recent accounting pronouncements or changes in accounting pronouncements during the three months ended March 31, 2023, as compared to the recent accounting pronouncements described in the Company's Annual Report, that are of significance or potential significance to the Company.

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Deferred Revenue and Performance Obligation (Notes)

3 Months Ended

Mar. 31, 2023

Deferred Revenue and Performance Obligation [Abstract]

Deferred revenue and performance obligation [Text Block]

Deferred Revenue and Performance Obligations

    Deferred Revenue

For the three months ended March 31, 2023 and 2022, the Company recognized approximately $49.4 million and $44.3 million, respectively, of revenue that was included in the deferred revenue balances at the beginning of the respective periods and primarily related to subscription, maintenance and support, and services.

    Performance Obligations

As of March 31, 2023, the Company expects to recognize approximately $430.6 million of revenue from remaining performance obligations. The Company expects, based on the terms of the related, underlying contractual arrangements, to recognize revenue on approximately $210.0 million of these performance obligations over the next 12 months, with the balance recognized thereafter. Remaining performance obligations represent contractually committed revenue that has not yet been recognized, which includes deferred revenue and unbilled amounts that will be recognized as revenue in future periods.

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Disaggregation of Revenue (Notes)

3 Months Ended

Mar. 31, 2023

Disaggregation of Revenue [Abstract]

Disaggregation of Revenue [Text Block]

Disaggregation of Revenue

    Revenue by Geography

    The geographic information in the table below is presented for the three months ended March 31, 2023 and 2022. The Company categorizes geographic revenues based on the location of the customer's headquarters. Because the Company's contracts are predominately denominated in U.S. dollars, it has limited exposure to foreign currency exchange risk as discussed under "Foreign Currency Exchange Risk" of Part I, Item 3 below.

	Three Months Ended March 31,
	2023				2022
(in thousands)	Revenue		Percent		Revenue		Percent
United States of America	$	26,232	36	%	$	23,194	35	%
Europe	22,949		31	%	20,823		31	%
The rest of the world	24,001		33	%	22,475		34	%
Total revenue	$	73,182	100	%	$	66,492	100	%

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Leases (Notes)

3 Months Ended

Mar. 31, 2022

Leases [Abstract]

Lessee, Operating Leases [Text Block]

Leases

    The Company has operating leases for data centers, computer infrastructure, corporate offices and certain equipment. These leases have remaining lease terms ranging from 1 year to 10 years. Some of these leases include options to extend for up to 15 years, and some include options to terminate within 1 year.

    As of March 31, 2023, the Company did not have any finance leases.

    Supplemental cash flow information related to leases was as follows (in thousands):

	Three Months Ended March 31,
	2023		2022
Cash paid for operating lease liabilities	$	2,251	$	1,842
Right-of-use asset obtained in exchange for operating lease liability	$	—	$	—

    In January 2023 and 2022, an existing operating lease was modified due to a change in future payments. The result of the 2023 modification was a decrease in the related right-of-use asset and corresponding lease liability of $1 million and the result of the 2022 modification was a decrease in the related right-of-use asset and corresponding lease liability of $2.7 million.

As of March 31, 2023, maturities of lease liabilities were as follows (in thousands):

Year Ending December 31,	Amount
Remaining 2023	$	6,649
2024	4,869
2025	4,057
2026	4,039
2027	3,965
2028	4,029
Thereafter	19,223
Total operating lease payments	46,831
Less: Imputed interest	(14,235)
Total operating lease liabilities	$	32,596

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Earnings per Share (Note)

3 Months Ended

Mar. 31, 2023

Earnings Per Share [Abstract]

Earnings per Share

Earnings per Share

    The following table sets forth the computation of basic and diluted earnings per share for the three months ended March 31, 2023 and 2022:

	Three Months Ended March 31,
(in thousands, except per share data)	2023		2022
Numerator:
Net loss	$	(19,002)	$	(28,640)
Denominator:
Weighted average shares (basic)	45,926		45,085
Dilutive effect of potential common shares	—		—
Weighted average shares (diluted)	45,926		45,085
Basic loss per share	$	(0.41)	$	(0.64)
Diluted loss per share	$	(0.41)	$	(0.64)

    Dilutive potential common shares consist of shares issuable upon the vesting of restricted stock units ("RSUs"), market stock units ("MSUs") and equity consideration related to the EveryMundo LLC acquisition. Potential common shares determined to be antidilutive and excluded from diluted weighted average shares outstanding were approximately 2.4 million and 2.2 million for the three months ended March 31, 2023 and 2022, respectively. In addition, potential common shares related to the convertible notes determined to be antidilutive and excluded from diluted weighted average shares outstanding were 5.8 million for both the three months ended March 31, 2023 and 2022.

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Noncash Share-based Compensation (Note)

3 Months Ended

Mar. 31, 2023

Noncash Share-based Compensation [Abstract]

Noncash Share-based Compensation

Noncash Share-based Compensation

The Company's 2017 Equity Incentive Plan (as amended and restated, the "2017 Stock Plan") has an aggregate authorized limit of 7,650,000 shares for issuance. As of March 31, 2023, 1,344,949 shares remain available for issuance under the 2017 Stock Plan.

    The following table presents the number of shares or units outstanding for each award type as of March 31, 2023 and December 31, 2022, respectively, (in thousands): 

Award type	March 31, 2023	December 31, 2022
Restricted stock units (time-based)	3,209	2,235
Market stock units	358	216
EveryMundo equity consideration	137	137

During the three months ended March 31, 2023, the Company granted 1,547,607 RSUs (time-based) with a weighted average grant-date fair value of $25.59 per share. The Company also granted 142,386 MSUs with a weighted average grant-date fair value of $30.42 to certain executive employees during the three months ended March 31, 2023. These MSUs vest on January 31, 2026 and the actual number of MSUs that will be eligible to vest is based on the total stockholder return of the Company relative to the total stockholder return of the Index over the performance period, as defined by each award's plan documents or individual award agreements. The maximum number of shares issuable upon vesting is 200% of the MSUs initially granted.

The assumptions used to value the MSUs granted during the three months ended March 31, 2023 were as follows:

	Three Months Ended March 31, 2023
Volatility	63.26	%
Risk-free interest rate	3.76	%
Expected award life in years	2.97
Dividend yield	—	%

Share-based compensation expense is allocated to expense categories on the unaudited condensed consolidated statements of comprehensive loss. The following table summarizes share-based compensation expense included in the Company's unaudited condensed consolidated statements of comprehensive loss for the three months ended March 31, 2023 and 2022:

	Three Months Ended March 31,
	2023		2022
Share-based compensation:
Cost of revenue	$	832	$	825
Operating expenses:
Selling and marketing	2,928		3,240
Research and development	2,350		3,713
General and administrative	3,794		3,447
Total included in operating expenses	9,072		10,400
Total share-based compensation expense	$	9,904	$	11,225

    At March 31, 2023, the Company had an estimated $100.7 million of total unrecognized compensation costs related to share-based compensation arrangements. These costs will be recognized over a weighted average period of 3.0 years.

    The Company's Employee Stock Purchase Plan (as amended, the "ESPP") permits eligible employees to purchase Company shares on an after-tax basis in an amount between 1% and 10% of their annual pay: (i) on June 30 of each year at a 15% discount of the fair market value of the Company's common stock on January 1 or June 30, whichever is lower, and (ii) on December 31 of each year at a 15% discount of the fair market value of the Company's common stock on July 1 or December 31, whichever is lower. An employee may not purchase more than $5,000 in either of the six-month measurement periods described above or more than $10,000 annually. In May 2021, the Company's stockholders approved an amendment to the ESPP Plan increasing the aggregate amount of shares available for issuance under the ESPP to 1,000,000. During the three months ended March 31, 2023, the Company issued 55,149 shares under the ESPP. As of March 31, 2023, 331,976 shares remain authorized and available for issuance under the ESPP. As of March 31, 2023, the Company held approximately $0.7 million on behalf of employees for future purchases under the ESPP, and this amount was recorded in accrued payroll and other employee benefits in the Company's unaudited condensed consolidated balance sheet.

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Convertible debt (Notes)

3 Months Ended

Mar. 31, 2023

Debt Disclosure [Abstract]

Long-term Debt [Text Block]

Convertible Senior Notes

The following is a summary of the Company's convertible senior notes as of March 31, 2023 (in thousands):

	Date of Issuance	Unpaid Principal Balance		Net Carrying Amount				Contractual Interest Rates
				Current		Noncurrent
1% Convertible Notes due in 2024 ("2024 Notes")	May 2019	$	143,750	$	—	$	142,779	1%
2.25% Convertible Notes due in 2027 ("2027 Notes")	September 2020	$	150,000	$	—	$	147,373	2.25%

The 2027 and 2024 Notes (collectively, the "Notes") are general unsecured obligations and rank senior in right of payment to all of the Company's indebtedness that is expressly subordinated in right of payment to the Notes, rank equally in right of payment with all of the Company's existing and future liabilities that are not so subordinated, are effectively junior to any of the Company's secured indebtedness to the extent of the value of the assets securing such indebtedness and are structurally subordinated to all indebtedness and other liabilities of the Company's subsidiaries (including trade payables but excluding intercompany obligations owed to the Company or its subsidiaries).

Interest related to the 2027 Notes is payable semiannually in arrears in cash on March 15 and September 15 of each year, beginning on March 15, 2021. Interest related to the 2024 Notes is payable semi-annually in arrears on May 15 and November 15 of each year, beginning on November 15, 2019.

The 2027 Notes mature on September 15, 2027 and the 2024 Notes mature on May 15, 2024, unless redeemed or converted in accordance with their terms prior to such date. At March 31, 2023, the Company had $192.4 million of cash and cash equivalents. The Company believes its existing cash and cash equivalents will provide adequate liquidity and capital resources to meet its operational requirements, anticipated capital expenditures and coupon interest payments for the Notes for the next twelve months. Capital markets have tightened recently in response to the macroeconomic environment making new financing more difficult and/or expensive and the Company may not be able to obtain such financing on terms acceptable to it or at all.

Each $1,000 of principal of the 2027 Notes will initially be convertible into 23.9137 shares of the Company’s common stock, which is equivalent to an initial conversion price of approximately $41.82 per share. Each $1,000 of principal of the 2024 Notes will initially be convertible into 15.1394 shares of the Company’s common stock, which is equivalent to an initial conversion price of approximately $66.05 per share. The initial conversion price for the 2027 and the 2024 Notes is subject to adjustment upon the occurrence of certain specified events.

As of March 31, 2023, the 2027 and 2024 Notes are not yet convertible and their remaining term is approximately 53 months and 13 months, respectively.

As of March 31, 2023 and December 31, 2022, the fair value of the principal amount of the Notes in the aggregate was $277.3 million and $263.7 million, respectively. The estimated fair value was determined based on inputs that are observable in the market or that could be derived from, or corroborated with, observable market data, including the Company's stock price and interest rates, which represents level 2 in the fair value hierarchy.

The Notes consist of the following (in thousands):

	March 31, 2023		December 31, 2022
Principal	$	293,750	$	293,750
Less: debt issuance cost, net of amortization	(3,598)		(3,971)
Net carrying amount	$	290,152	$	289,779

The following table sets forth total interest expense recognized related to the Notes (in thousands):

	Three Months Ended March 31,
	2023		2022
Coupon interest	$	1,203	$	1,203
Amortization of debt issuance costs	373		373
Total	$	1,576	$	1,576

    Capped Call Transactions

    In September 2020 and in May 2019, in connection with the offering of the 2027 and 2024 Notes, respectively, the Company entered into privately negotiated capped call transactions (collectively, the "Capped Call") with certain option counterparties. The Capped Call transactions cover, subject to customary anti-dilution adjustments, the number of shares of the Company’s common stock initially underlying the Notes, at a strike price that corresponds to the initial conversion price of the Notes, also subject to adjustment, and are exercisable upon conversion of the Notes. The Capped Call transactions are intended to reduce potential dilution to the Company’s common stock and/or offset any cash payments the Company will be required to make in excess of the principal amounts upon any conversion of Notes, and to effectively increase the overall conversion price of the 2027 Notes from $41.82 to $78.90 per share, and for the 2024 Notes from $66.05 to $101.62 per share. As the Capped Call transactions meet certain accounting criteria, they are recorded in stockholders’ equity and are not accounted for as derivatives. The cost of the Capped Call was $25.3 million and $16.4 million for the 2027 and 2024 Notes, respectively, and was recorded as part of additional paid-in capital.

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2023

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

    Litigation

    In the ordinary course of business, the Company regularly becomes involved in contract and other negotiations and, in more limited circumstances, becomes involved in legal proceedings, claims and litigation. The outcomes of these matters are inherently unpredictable. The Company is not currently involved in any outstanding litigation that it believes, individually or in the aggregate, will have a material adverse effect on its business, financial condition, results of operations or cash flows.

Purchase commitments

In the ordinary course of business, the Company enters into various purchase commitments for goods and services, mainly related to infrastructure platforms, business technology software and support, and other services. In January 2023, the Company entered into a noncancelable agreement for software support services with a four-year term. The remaining purchase commitment as of March 31, 2023 was $3.5 million and the agreement expires in March 2027. There were no other material changes outside the ordinary course of business to the noncancellable purchase commitments disclosed in the Annual Report.

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Severance and other related costs	3 Months Ended
	Mar. 31, 2023
Restructuring and Related Activities [Abstract]
Restructuring, Impairment, and Other Activities Disclosure	Severance and Other Related CostsIn the quarter ended March 31, 2023, the Company made additional organizational changes and incurred approximately $3.6 million of severance, employee benefits, outplacement and related costs during the period. These costs were recorded primarily as operating expenses in the unaudited condensed consolidated statements of comprehensive loss, mainly research and development, and sales and marketing. During the quarter ended March 31, 2023, cash payments of $3.2 million were recorded for the incurred costs. The Company expects to settle the remaining accrued expense of approximately $1.3 million during 2023.

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2023

Accounting Policies [Abstract]

Basis of presentation

Basis of presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States ("GAAP") for interim financial reporting and applicable quarterly reporting regulations of the Securities and Exchange Commission ("SEC"). In management's opinion, the accompanying interim unaudited condensed consolidated financial statements include all adjustments necessary for a fair statement of the financial position of the Company as of March 31, 2023, the results of operations for the three months ended March 31, 2023 and 2022, cash flows for the three months ended March 31, 2023 and 2022, and stockholders' (deficit) equity for the three months ended March 31, 2023 and 2022.

Certain information and disclosures normally included in the notes to the annual financial statements prepared in accordance with GAAP have been omitted from these interim unaudited condensed consolidated financial statements pursuant to the rules and regulations of the SEC. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022 ("Annual Report") filed with the SEC. The unaudited condensed consolidated balance sheet as of December 31, 2022 was derived from the Company's audited consolidated financial statements but does not include all disclosures required under GAAP.

Accounting Standards Update and Change in Accounting Principle

Changes in accounting policies

There have been no material changes in the Company’s significant accounting policies and their application as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

Fair value measurement

Fair value measurement

The Company's financial assets that are included in cash and cash equivalents and that are measured at fair value on a recurring basis consisted of $176.5 million and $168.1 million at March 31, 2023 and December 31, 2022, respectively, and were invested in treasury money market funds. The fair value of the treasury money market funds is determined based on quoted market prices, which represents level 1 in the fair value hierarchy as defined by ASC 820.

Trade and Other Accounts Receivable, Unbilled Receivables, Policy [Policy Text Block]

Trade and other receivables

Trade and other receivables are primarily comprised of trade receivables, net of allowance for credit losses, contract assets and unbilled receivables. The Company records trade accounts receivable for its unconditional rights to consideration arising from the Company's performance under contracts with customers. The Company's standard billing terms are that payment is due upon receipt of invoice, payable generally within thirty to sixty days. The carrying value of such receivables, net of the allowance for credit losses, represents their estimated net realizable value. When developing its estimate of expected credit losses on trade and other receivables, the Company considers the available information relevant to assessing the

collectability of cash flows, which includes a combination of both internal and external information relating to past events, current conditions, and future forecasts as well as relevant qualitative and quantitative factors that relate to the environment in which the Company operates.

    Contract assets represent conditional rights to consideration that have been recognized as revenue in advance of billing the customer. Unbilled receivables represent unconditional rights to consideration arising from revenue that have been recognized in advance of billing the customer.

Revenue Recognition, Customer Acquisitions [Policy Text Block]

Deferred costs

Sales commissions earned by the Company's sales representatives are considered incremental and recoverable costs of obtaining a customer contract. Sales commissions are deferred and amortized on a straight-line basis over the period of benefit, which the Company has determined to be five to eight years. The Company determined the period of benefit by taking into consideration its customer contracts, expected renewals of those customer contracts (as the Company currently does not pay an incremental sales commission for renewals), the Company's technology and other factors. The Company also defers amounts earned by employees other than sales representatives who earn incentive payments under compensation plans also tied to the value of customer contracts acquired. Deferred costs were $14.4 million and $14.8 million as of March 31, 2023 and December 31, 2022, respectively. Amortization expense for the deferred costs was $1.5 million and $1.4 million for the three months ended March 31, 2023 and 2022, respectively. Amortization of deferred costs is included in selling and marketing expense in the accompanying unaudited condensed consolidated statements of comprehensive loss.

Deferred Charges, Policy [Policy Text Block]

Deferred implementation costsThe Company capitalizes certain contract fulfillment costs, including personnel and other costs (such as hosting, employee salaries, benefits and payroll taxes), that are associated with arrangements where professional services are not distinct from other undelivered performance obligations in its customer contracts. The Company analyzes implementation costs and capitalizes those costs that are directly related to customer contracts expected to be recoverable to satisfy the undelivered performance obligations in those contracts. Deferred implementation costs are amortized ratably over the remaining contract term once the revenue recognition criteria for the respective performance obligation has been met and revenue recognition commences. Deferred implementation costs were $1.5 million and $1.6 million as of March 31, 2023 and December 31, 2022, respectively. Amortization expense for the deferred implementation costs was $0.2 million and $0.3 million for the three months ended March 31, 2023 and 2022, respectively. Deferred implementation costs are included in prepaid and other current assets and other assets, noncurrent in the unaudited condensed consolidated balance sheets. Amortization of deferred implementation costs is included in cost of subscription and cost of services revenues in the accompanying unaudited condensed consolidated statements of comprehensive loss.

Impairment or Disposal of Long-Lived Assets, Policy

Impairment of Long-Lived AssetsLong-lived assets are reviewed for impairment whenever an event or change in circumstances indicates that the carrying amount of an asset or group of assets may not be recoverable. The impairment review includes comparison of future cash flows expected to be generated by the asset or group of assets with the associated assets’ carrying value. If the carrying value of the asset or group of assets exceeds its expected future cash flows (undiscounted and without interest charges), an impairment loss is recognized to the extent that the carrying amount of the asset exceeds its fair value. During the three months ended March 31, 2023 and 2022, the Company recorded zero and $1.6 million, respectively, of impairment charge related to fixed assets. The 2022 impairment resulted from the Company's changed intentions for these assets in connection with a new agreement with a software vendor.

New Accounting Pronouncements, Policy [Policy Text Block]

Recently issued accounting pronouncements not yet adopted

There have been no recent accounting pronouncements or changes in accounting pronouncements during the three months ended March 31, 2023, as compared to the recent accounting pronouncements described in the Company's Annual Report, that are of significance or potential significance to the Company.

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Disaggregation of Revenue (Tables)

3 Months Ended

Mar. 31, 2023

Disaggregation of Revenue [Abstract]

Schedule of Disaggregation Of Revenue [Table Text Block]

The geographic information in the table below is presented for the three months ended March 31, 2023 and 2022. The Company categorizes geographic revenues based on the location of the customer's headquarters. Because the Company's contracts are predominately denominated in U.S. dollars, it has limited exposure to foreign currency exchange risk as discussed under "Foreign Currency Exchange Risk" of Part I, Item 3 below.

	Three Months Ended March 31,
	2023				2022
(in thousands)	Revenue		Percent		Revenue		Percent
United States of America	$	26,232	36	%	$	23,194	35	%
Europe	22,949		31	%	20,823		31	%
The rest of the world	24,001		33	%	22,475		34	%
Total revenue	$	73,182	100	%	$	66,492	100	%

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Leases (Tables)

3 Months Ended

Mar. 31, 2023

Leases [Abstract]

Supplemental Lease Information [Table Text Block]

Supplemental cash flow information related to leases was as follows (in thousands):

	Three Months Ended March 31,
	2023		2022
Cash paid for operating lease liabilities	$	2,251	$	1,842
Right-of-use asset obtained in exchange for operating lease liability	$	—	$	—

Lessee, Operating Lease, Liability, Maturity [Table Text Block]

As of March 31, 2023, maturities of lease liabilities were as follows (in thousands):

Year Ending December 31,	Amount
Remaining 2023	$	6,649
2024	4,869
2025	4,057
2026	4,039
2027	3,965
2028	4,029
Thereafter	19,223
Total operating lease payments	46,831
Less: Imputed interest	(14,235)
Total operating lease liabilities	$	32,596

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Earnings per Share (Table)

3 Months Ended

Mar. 31, 2023

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

The following table sets forth the computation of basic and diluted earnings per share for the three months ended March 31, 2023 and 2022:

	Three Months Ended March 31,
(in thousands, except per share data)	2023		2022
Numerator:
Net loss	$	(19,002)	$	(28,640)
Denominator:
Weighted average shares (basic)	45,926		45,085
Dilutive effect of potential common shares	—		—
Weighted average shares (diluted)	45,926		45,085
Basic loss per share	$	(0.41)	$	(0.64)
Diluted loss per share	$	(0.41)	$	(0.64)

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Noncash Share-based Compensation (Tables)

3 Months Ended

Mar. 31, 2023

Noncash Share-based Compensation [Abstract]

Awards outstanding [Table Text Block]

The following table presents the number of shares or units outstanding for each award type as of March 31, 2023 and December 31, 2022, respectively, (in thousands): 

Award type	March 31, 2023	December 31, 2022
Restricted stock units (time-based)	3,209	2,235
Market stock units	358	216
EveryMundo equity consideration	137	137

Schedule of Share-based Compensation Expense

The following table summarizes share-based compensation expense included in the Company's unaudited condensed consolidated statements of comprehensive loss for the three months ended March 31, 2023 and 2022:

	Three Months Ended March 31,
	2023		2022
Share-based compensation:
Cost of revenue	$	832	$	825
Operating expenses:
Selling and marketing	2,928		3,240
Research and development	2,350		3,713
General and administrative	3,794		3,447
Total included in operating expenses	9,072		10,400
Total share-based compensation expense	$	9,904	$	11,225

Market Stock Units Valuation Assumptions

The assumptions used to value the MSUs granted during the three months ended March 31, 2023 were as follows:

	Three Months Ended March 31, 2023
Volatility	63.26	%
Risk-free interest rate	3.76	%
Expected award life in years	2.97
Dividend yield	—	%

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Convertible debt (Tables)

3 Months Ended

Mar. 31, 2023

Debt Disclosure [Abstract]

Schedule of Debt [Table Text Block]

The following is a summary of the Company's convertible senior notes as of March 31, 2023 (in thousands):

	Date of Issuance	Unpaid Principal Balance		Net Carrying Amount				Contractual Interest Rates
				Current		Noncurrent
1% Convertible Notes due in 2024 ("2024 Notes")	May 2019	$	143,750	$	—	$	142,779	1%
2.25% Convertible Notes due in 2027 ("2027 Notes")	September 2020	$	150,000	$	—	$	147,373	2.25%

Convertible Debt [Table Text Block]

The Notes consist of the following (in thousands):

	March 31, 2023		December 31, 2022
Principal	$	293,750	$	293,750
Less: debt issuance cost, net of amortization	(3,598)		(3,971)
Net carrying amount	$	290,152	$	289,779

The following table sets forth total interest expense recognized related to the Notes (in thousands):

	Three Months Ended March 31,
	2023		2022
Coupon interest	$	1,203	$	1,203
Amortization of debt issuance costs	373		373
Total	$	1,576	$	1,576

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Summary of Significant Accounting Policies Significant Accounting Policies (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Accounting Policies [Abstract]
Treasury money market funds, at fair value	$ 176,500		$ 168,100
Deferred Costs	14,400		14,800
Amortization of Deferred Charges	1,500	$ 1,400
Capitalized Contract Cost, Net	1,500		$ 1,600
Capitalized Contract Cost, Amortization	200	300
Asset Impairment Charges	$ 0	$ 1,551

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Deferred Revenue and Performance Obligation (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Deferred Revenue and Performance Obligation [Abstract]
Deferred Revenue, Revenue Recognized	$ 49.4	$ 44.3
Revenue, Remaining Performance Obligation, Amount	430.6
Revenue Remaining Performance Obligation, to be recognized within 12 months	$ 210.0

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Disaggregation of Revenue Revenue by Geography (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Revenues	$ 73,182	$ 66,492
Percentage of total revenue	100.00%	100.00%
UNITED STATES
Revenues	$ 26,232	$ 23,194
Percentage of total revenue	36.00%	35.00%
Europe [Member]
Revenues	$ 22,949	$ 20,823
Percentage of total revenue	31.00%	31.00%
The rest of the world [Member]
Revenues	$ 24,001	$ 22,475
Percentage of total revenue	33.00%	34.00%

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Leases (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Lessee, Lease, Description [Line Items]
Lessee, Operating Lease, Option to Renew	15 years
Lessee, Operating Lease, Termination Option	1 year
Operating Lease, Payments	$ 2,251	$ 1,842
Right-of-use Asset Obtained in Exchange for Operating Lease Liability	0	0
Decrease in right-of-use asset and related lease liability due to modification	$ 1,000	$ 2,700
Minimum [Member]
Lessee, Lease, Description [Line Items]
Lessee, Operating Lease, Term of Contract	1 year
Maximum [Member]
Lessee, Lease, Description [Line Items]
Lessee, Operating Lease, Term of Contract	10 years

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Leases Schedule of lease liability maturities (Details) $ in Thousands	Mar. 31, 2023 USD ($)
Lessee, Operating Lease, Liability, to be Paid [Abstract]
Remaining 2023	$ 6,649
2024	4,869
2025	4,057
2026	4,039
2027	3,965
2028	4,029
Thereafter	19,223
Operating Leases, Payments Due	46,831
Lessee, Operating Lease, Liability, Undiscounted Excess Amount	(14,235)
Operating Lease, Liability	$ 32,596

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Earnings per Share (Details) - shares shares in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Share-based Payment Arrangement [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive potential common shares excluded from computation of earnings per share	2.4	2.2
Convertible Debt Securities [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive potential common shares excluded from computation of earnings per share	5.8	5.8

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Earnings per Share Basis and Diluted (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Numerator
Net income (loss)	$ (19,002)	$ (28,640)
Denominator
Weighted average shares (basic)	45,926	45,085
Dilutive effect of potential common shares	0	0
Weighted average shares (diluted)	45,926	45,085
Basic Earnings Per Share	$ (0.41)	$ (0.64)
Diluted earnings per share	$ (0.41)	$ (0.64)

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Noncash Share-based Compensation (Details)	3 Months Ended
	Mar. 31, 2023 USD ($) $ / shares shares
Noncash Share-based Compensation (Narrative) [Line Items]
Unrecognized compensation cost related to share-based compensation | $	$ 100,700,000
Weighted average period to recognize cost, in years	3 years
Share-based compensation arrangement by share-based payment, Minimum Employee Subscription rate	1.00%
Share-based Compensation Arrangement by Share-based Payment Award, Maximum Employee Subscription Rate	10.00%
Share-based Compensation Arrangement by Share-based Payment Award, Discount from Market Price, Offering Date	15.00%
Maximum Amount Contributable by employees under ESPP- Half yearly | $	$ 5,000
Maximum Amount Contributable By Employees Under ESPP- Annually | $	$ 10,000
Stock Issued During Period, Shares, Employee Stock Purchase Plans	55,149
ESPP contributions by Employees | $	$ 700,000
RSUs
Noncash Share-based Compensation (Narrative) [Line Items]
Awards, other than options, granted in period	1,547,607
Weighted average grant date fair value, per share, of awards granted in period | $ / shares	$ 25.59
Employee Stock [Member]
Noncash Share-based Compensation (Narrative) [Line Items]
Shares reserved for issuance under Plan	1,000,000
Shares available for future grants	331,976
Performance Shares [Member]
Noncash Share-based Compensation (Narrative) [Line Items]
Awards, other than options, granted in period	142,386
Weighted average grant date fair value, per share, of awards granted in period | $ / shares	$ 30.42
2017 Equity Incentive Plan [Member] [Member]
Noncash Share-based Compensation (Narrative) [Line Items]
Shares available for future grants	1,344,949
2017 Amended Equity Incentive Plan [Member]
Noncash Share-based Compensation (Narrative) [Line Items]
Shares reserved for issuance under Plan	7,650,000

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Noncash Share-based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation expense	$ 9,904	$ 11,225
Cost of Sales [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation expense	832	825
Selling and Marketing Expense [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation expense	2,928	3,240
General and Administrative Expense [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation expense	3,794	3,447
Research and development
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation expense	2,350	3,713
Operating Expense [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation expense	$ 9,072	$ 10,400

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Noncash Share-based Compensation Awards outstanding (Details) - shares shares in Thousands	Mar. 31, 2023	Dec. 31, 2022
Restricted Stock Unit - time based [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding, Number	3,209	2,235
Market Share Units (MSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding, Number	358	216
Equity Consideration
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding, Number	137	137

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Noncash Share-based Compensation Assumptions (Details) - Market Share Units (MSUs) [Member]	3 Months Ended
	Mar. 31, 2023
Assumptions For Fair Value Calculation of Market Stock Units [Line Items]
Volatility	63.26%
Risk-free interest rate	3.76%
Expected life, in years	2 years 11 months 19 days
Dividend yield	0.00%

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Convertible debt (Details) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2023 USD ($) $ / shares	Mar. 31, 2022 USD ($)	Dec. 31, 2022 USD ($)
Debt Instrument [Line Items]
Debt Instrument, Face Amount	$ 293,750		$ 293,750
Convertible Debt, Noncurrent	290,152		289,779
Debt Instrument, Fair Value Disclosure	277,300		263,700
Debt Instrument, Debt Issuance Costs, Net	(3,598)		(3,971)
Convertible Debt	290,152		289,779
Debt Instrument, Periodic Payment, Interest	1,203	$ 1,203
Amortization of Financing Costs	373	373
Interest Expense, Debt	1,576	1,576
Cash and cash equivalents	192,376	$ 217,393	$ 203,627
Notes due 2024 [Member]
Debt Instrument [Line Items]
Debt Instrument, Face Amount	143,750
Convertible Debt, Current	0
Convertible Debt, Noncurrent	$ 142,779
Debt Instrument, Interest Rate, Stated Percentage	1.00%
Debt Instrument, Convertible, Conversion Ratio	15.1394
Debt Instrument, Convertible, Stock Price Trigger | $ / shares	$ 66.05
Debt Instrument, Convertible, Remaining Discount Amortization Period	13 months
Debt Instrument, Convertible, Conversion Price | $ / shares	$ 101.62
Purchase of convertible bond hedge	$ 16,400
Notes due 2027
Debt Instrument [Line Items]
Debt Instrument, Face Amount	150,000
Convertible Debt, Current	0
Convertible Debt, Noncurrent	$ 147,373
Debt Instrument, Interest Rate, Stated Percentage	2.25%
Debt Instrument, Convertible, Conversion Ratio	23.9137
Debt Instrument, Convertible, Stock Price Trigger | $ / shares	$ 41.82
Debt Instrument, Convertible, Remaining Discount Amortization Period	53 months
Debt Instrument, Convertible, Conversion Price | $ / shares	$ 78.90
Purchase of convertible bond hedge	$ 25,300

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Commitments and Contingencies Purchase commitments (Details) $ in Millions	Mar. 31, 2023 USD ($)
Software Support Services Commitment
Long-term Purchase Commitment [Line Items]
Purchase Obligation	$ 3.5

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Severance and other related costs (Details) $ in Millions	3 Months Ended
	Mar. 31, 2023 USD ($)
Restructuring and Related Activities [Abstract]
Severance Costs	$ 3.6
Cash Payments for Severance and other related	3.2
Severance and Other Liabilities	$ 1.3