PROS Holdings (PRO -4.65%), a provider of artificial intelligence-powered pricing and revenue optimization software for global enterprises, reported results for Q2 2025 on July 31, 2025 that surpassed Wall Street estimates both on revenue and earnings. The company delivered GAAP revenue of $88.7 million against an estimate of $87.66 million (GAAP), with non-GAAP earnings per share (EPS) of $0.13—more than double the consensus forecast of $0.06 per share (non-GAAP). Subscription revenue rose by 12% to $73.3 million, slightly accelerating from the previous quarter. While profitability on a non-GAAP basis improved, free cash flow declined from a year earlier. The period reflected solid underlying growth, expansion of recurring revenue, and margin improvement but also highlighted persistent GAAP losses and a drop in cash generation.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $0.13 | $0.06 | $0.07 | 85.7 % |
| Revenue (GAAP) | $88.7 million | $87.66 million | $82.0 million | 8.2 % |
| Gross Profit (Non-GAAP) | $61.3 million | $55.3 million | 10.8 % | |
| Operating Income (Non-GAAP) | $6.5 million | $4.4 million | 47.7% | |
| Free Cash Flow (Non-GAAP) | N/A | $6.2 million | N/A |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
About the Company and Key Growth Areas
PROS Holdings delivers AI-driven enterprise software that helps organizations optimize pricing, quoting, and revenue management. Its platform assists companies operating in complex sectors such as airlines, manufacturing, distribution, and commodities to automate and improve their commercial processes.
The main focus for its business is technological leadership in artificial intelligence (AI) and cloud computing, enabling predictive and prescriptive guidance for pricing and sales. The company invests heavily in research and development, seeking an edge through quick product innovation and the integration of real-time analytics. Key success factors include differentiating with industry-specific solutions, maintaining a diverse customer base across geographies and industries, and continuously strengthening its workforce in data science and engineering.
Quarterly Highlights: Performance and Developments
During the quarter, PROS Holdings outperformed in several financial metrics. GAAP revenue rose 8% in Q2 2025, driven by a 12% increase in subscription revenue, reaching $73.3 million (GAAP). Management highlighted this as an acceleration compared to the prior quarter, with subscription revenue growing 12% year-over-year to $73.3 million, versus 10% year-over-year growth to $70.8 million in Q1 2025. The company continued to win new contracts—such as those with Air Greenland, Lennox, and Louis Dreyfus—while also expanding relationships with existing customers like American Airlines and BASF.
Gross margins on subscription products, a key measure of profitability for software-as-a-service (SaaS) businesses, showed improvement. Non-GAAP subscription gross margin reached 80% in Q2 2025, up from 79.6% in Q2 2024 on a non-GAAP basis. This expansion was attributed to cost efficiencies in cloud infrastructure and automation, while operating income (non-GAAP) improved 49%.
The company invested $23 million in research and development, underscoring its ongoing commitment to AI and cloud innovation. Product highlights for the quarter included the unveiling of "AI Agents" that leverage natural language and data reasoning to automate pricing and sales processes. These new agents form part of its Configure Price Quote (CPQ) software, which helps customers generate price quotes rapidly while analyzing customer data for optimal recommendations. In addition to CPQ, the airline revenue management platform supported airlines in navigating dynamic pricing and passenger demand.
On the operational front, adjusted EBITDA showed strong improvement. However, free cash flow declined, which management attributed in part to timing of collections and increased commercial activity such as the Outperform user conference. GAAP net loss also narrowed significantly—from $7.4 million in Q2 2024 to $1.8 million—though the company remained unprofitable on a strict accounting basis, due largely to recurring non-cash costs like share-based compensation and intangible asset amortization.
Looking Ahead: Financial Guidance and Key Watch Items
Looking to the third quarter of fiscal 2025, management provided firm guidance: PROS Holdings expects GAAP revenue between $90.5 and $91.5 million in Q3 2025, marking roughly 10% growth at the midpoint. Subscription revenue is forecast between $74.8 and $75.3 million. The company is raising its full-year outlook for subscription revenue and subscription ARR, now guiding Subscription ARR for FY2025 to $310–313 million. Non-GAAP EPS for Q3 2025 is forecast to reach $0.15–$0.17, up from this quarter's actual results. Adjusted EBITDA is expected at $11–12 million, with a full-year FY2025 non-GAAP free cash flow target of $40–44 million.
As it moves forward, investors should watch the recent CEO transition to Jeff Cotten.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
