##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2011
 OR
 o
    
    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(State or other jurisdiction of 
incorporation or organization)
    
    76-0168604(I.R.S. Employer Identification No.)
 3100 Main Street, Suite 900, Houston, TX 77002
(713) 335-5151  (Address and telephone number of principal executive offices)
 þ o
 o þ
  Large Accelerated Filer o
    
    Accelerated Filer þ
    
    Non-Accelerated Filer o
    
    Smaller Reporting Company o(do no check if a smaller reporting company)
 o þ




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##### 



PagePART I. Financial InformationItem 1. Unaudited condensed consolidated financial statementsCondensed consolidated balance sheets at March 31, 2011 and December 31, 2010 (Unaudited)
    
    
    3Condensed consolidated statements of operations for the three months ended
March 31, 2011 and 2010 (Unaudited)
    
    
    4Condensed consolidated statements of cash flows for the three months ended March 31,
2011 and 2010 (Unaudited)
    
    
    5Notes to unaudited condensed consolidated financial statements
    
    
    6Item 2. Managements discussion and analysis of financial condition and results of operations
    
    
    10Item 3. Quantitative and qualitative disclosures about market risk
    
    
    15Item 4. Controls and procedures
    
    
    15PART II. Other InformationItem 1. Legal proceedings
    
    
    16Item 1A. Risk factors
    
    
    16Item 2. Unregistered sales of equity securities and use of proceeds
    
    
    27Item 3. Defaults upon senior securities
    
    
    27Item 4. [Removed and Reserved pursuant to SEC Release No. 34-61175A]
    
    
    27Item 5. Other information
    
    
    28Item 6. Exhibits
    
    
    28Signatures
    
    
    31EX-31.1EX-31.2EX-32.1
   Except for the historical financial information contained herein, the matters discussed in
this report on Form 10-Q (as well as documents incorporated herein by reference) may be considered
forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking
statements include declarations regarding the intent, belief or current expectations of PROS
Holdings, Inc. and its management and may be signified by the words expects, anticipates,
target, project, goals, estimates, potential, predicts, may, might, could,
intends, believes or similar language. You are cautioned that any such forward-looking
statements are not guarantees of future performance and involve a number of risks and
uncertainties. Actual results could differ materially from those indicated by such forward-looking
statements. Factors that could cause or contribute to such differences include those discussed
under Risk Factors and elsewhere in this report. PROS Holdings, Inc. disclaims any intention or
obligation to update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
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PART I. Financial Information
 
 Item 1.
    
    Unaudited Condensed Consolidated Financial Statements
 PROS Holdings, Inc.


Condensed Consolidated Balance Sheets
 (In thousands, except share amounts)
(Unaudited)
 March 31,
    
    
    December 31,2011
    
    
    2010Assets:Current assets:Cash and cash equivalents
    
    $
    61,499
    
    
    $
    55,845Short-term investments
    
    
    365
    
    
    
    73Accounts and unbilled receivables, net of allowance
of $900 and $1,020, respectively
    
    
    22,875
    
    
    
    27,402Prepaid and other current assets
    
    
    7,237
    
    
    
    6,170Total current assets
    
    
    91,976
    
    
    
    89,490Restricted cash
    
    
    329
    
    
    
    293Property and equipment, net
    
    
    3,298
    
    
    
    3,248Other long term assets, net
    
    
    5,269
    
    
    
    5,097Total assets
    
    $
    100,872
    
    
    $
    98,128Liabilities and Stockholders Equity:Current liabilities:Accounts payable
    
    $
    1,163
    
    
    $
    2,131Accrued liabilities
    
    
    1,321
    
    
    
    1,998Accrued payroll and other employee benefits
    
    
    3,937
    
    
    
    4,606Deferred revenue
    
    
    30,309
    
    
    
    28,429Total current liabilities
    
    
    36,730
    
    
    
    37,164Long-term deferred revenue
    
    
    1,297
    
    
    
    1,461Total liabilities
    
    
    38,027
    
    
    
    38,625Commitments and contingencies (Note 4)Stockholders 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, 31,190,587 and
30,777,000 shares issued,
respectively,
26,773,002 and 26,359,415
shares outstanding,
respectively
    
    
    31
    
    
    
    31Additional paid-in capital
    
    
    72,330
    
    
    
    69,844Treasury stock, 4,417,585 common shares, at cost
    
    
    (13,938
    )
    
    
    (13,938
    )Accumulated other comprehensive loss
    
    
    (11
    )
    
    
    (11
    )Retained earnings
    
    
    4,433
    
    
    
    3,577Total stockholders equity
    
    
    62,845
    
    
    
    59,503Total liabilities and stockholders equity
    
    $
    100,872
    
    
    $
    98,128
 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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PROS Holdings, Inc.


Condensed Consolidated Statements of Operations
 (In thousands, except share and per share data)
(Unaudited)
 For the Three MonthsEnded March 31,2011
    
    
    2010Revenue:License and implementation
    
    $
    13,793
    
    
    $
    10,372Maintenance and support
    
    
    7,613
    
    
    
    6,955Total revenue
    
    
    21,406
    
    
    
    17,327Cost of revenue:License and implementation
    
    
    4,623
    
    
    
    3,220Maintenance and support
    
    
    1,710
    
    
    
    1,495Total cost of revenue
    
    
    6,333
    
    
    
    4,715Gross profit
    
    
    15,073
    
    
    
    12,612Operating expenses:Selling, general and administrative
    
    
    7,871
    
    
    
    6,632Research and development
    
    
    5,960
    
    
    
    5,214Income from operations
    
    
    1,242
    
    
    
    766Other income:Interest income
    
    
    18
    
    
    
    11Income before income tax provision
    
    
    1,260
    
    
    
    777Income tax provision
    
    
    404
    
    
    
    306Net income
    
    $
    856
    
    
    $
    471Net earnings
attributable to common stockholders per share:Basic
    
    $
    0.03
    
    
    $
    0.02Diluted
    
    $
    0.03
    
    
    $
    0.02Weighted average number of shares:Basic
    
    
    26,594,083
    
    
    
    25,912,444Diluted
    
    
    27,447,436
    
    
    
    26,551,166
 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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PROS Holdings, Inc.  
 Condensed Consolidated Statements of Cash Flows
 (In thousands)
(Unaudited)
 For the Three MonthsEnded March 31,2011
    
    
    2010Operating activities:Net income
    
    $
    856
    
    
    $
    471Adjustments to reconcile net income to net
cash provided by operating activities:Depreciation
    
    
    367
    
    
    
    330Share-based compensation
    
    
    1,756
    
    
    
    1,419Excess tax benefits on vesting of restricted stock units
    
    
    (852
    )
    
    
    (532
    )Deferred taxes, net
    
    
    (201
    )
    
    
    Provision for doubtful accounts
    
    
    38
    
    
    
    Amortization of capitalized costs
    
    
    
    
    
    
    37Changes in operating assets and liabilities:Accounts receivable
    
    
    5,013
    
    
    
    (6,189
    )Unbilled receivables
    
    
    (542
    )
    
    
    (792
    )Prepaid expenses and other
    
    
    (203
    )
    
    
    309Accounts
payable, accrued liabilities and accrued payroll
    
    
    (2,016
    )
    
    
    (627
    )Deferred revenue
    
    
    1,716
    
    
    
    5,189Net cash provided by (used in) operating activities
    
    
    5,932
    
    
    
    (385
    )Investing activities:Purchases of property and equipment
    
    
    (697
    )
    
    
    (240
    )Increase in restricted cash
    
    
    (36
    )
    
    
    (293
    )Increase in short-term investments
    
    
    (292
    )
    
    
    Net cash used in investing activities
    
    
    (1,025
    )
    
    
    (533
    )Financing activities:Exercise of stock options
    
    
    1,066
    
    
    
    76Excess tax benefits on vesting of restricted stock units
    
    
    852
    
    
    
    532Tax withholding related to net share settlement of restricted stock units
    
    
    (1,171
    )
    
    
    (804
    )Net cash provided by (used in) financing activities
    
    
    747
    
    
    
    (196
    )Net increase (decrease) in cash and cash equivalents
    
    
    5,654
    
    
    
    (1,114
    )Cash and cash equivalents:Beginning of period
    
    
    55,845
    
    
    
    62,449End of period
    
    $
    61,499
    
    
    $
    61,335
 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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PROS Holdings, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements
(Unaudited)
 1. Organization and summary of significant accounting policies
 Nature of operations
  Basis of presentation
  Basis of consolidation
  Dollar amounts
  Use of estimates
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Fair value measurements
 Fair Value Measurement and Disclosure
 Deferred revenue and unbilled receivables
  Foreign currency
   Income taxes
  Recent accounting pronouncements
  2. Earnings per share
  7




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For the Three MonthsEnded March 31,2011
    
    
    2010Numerator:Net income attributable to common stockholders
    
    $
    856
    
    
    $
    471Denominator:Weighted average shares (basic)
    
    
    26,594
    
    
    
    25,912Dilutive
effect of stock options, restricted stock units and stock appreciation rights
    
    
    853
    
    
    
    639Weighted average shares (diluted)
    
    
    27,447
    
    
    
    26,551Basic earnings per share
    
    $
    0.03
    
    
    $
    0.02Diluted earnings per share
    
    $
    0.03
    
    
    $
    0.02
 3. Share-based compensation
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For the Three MonthsEnded March 31,2011
    
    
    2010Share-based compensation:Cost of revenue:License and implementation
    
    $
    334
    
    
    $
    233Total included in cost of revenue
    
    
    334
    
    
    
    233Operating expense:Selling, general and administrative
    
    
    1,072
    
    
    
    796Research and development
    
    
    350
    
    
    
    390Total included in operating expenses
    
    
    1,422
    
    
    
    1,186Total share-based compensation expense
    
    $
    1,756
    
    
    $
    1,419
 4. Commitments and contingencies
 Litigation
  5. Subsequent events
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Item 2.
    
    Managements discussion and analysis of financial condition and results of operations
 The terms we, us and our refer to PROS Holdings, Inc. and all of its subsidiaries that
are consolidated in conformity with accounting principles generally accepted in the United States
of America.
 Cautionary statement
 .
 Overview
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Trends and uncertainties
  
    
    Difficult Economic Conditions.We believe the market for pricing and margin
optimization software is underpenetrated. Market interest for our software has
increased over the past several years. While there appears to be some improvement in
the economy, the current economic conditions continue to be challenging and have had
and may continue to have a negative impact on the adoption of pricing and margin
optimization software and may increase the volatility in our business. Due to the
difficult economic conditions, we have experienced longer sales times, increased
scrutiny on purchasing decisions and overall cautiousness taken by customers. In
response to the challenging economic environment, some customer prospects have changed
their purchasing strategies, including, requesting changes to our contract terms that,
in some instances, have affected the timing of revenue recognition or have resulted in
an increase in the number of limited term license agreements. We believe our
solutions provide value to our customers during periods of growth as well as in
recessions, but it is uncertain the extent to which the difficult economic conditions
will further affect our business.
    
    Variability in revenue among industries and geography.We sell our products to
customers in the manufacturing, distribution, services, and travel industries. From a
geographical standpoint, approximately 60% and 56% of our consolidated revenues were
derived from customers outside the United States for the three months ended March 31,
2011 and 2010, respectively. The current economic environment and current political
situation in the Middle East could change our trends of revenue within industries and
across geographies if certain industries or geographies are more impacted than others.
 Critical accounting policies and estimates
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Results of operations
 Comparison of three months ended March 31, 2011 with three months ended March 31, 2010
 Revenue:
 For the Three Months Ended March 31,2011
    
    
    2010As a percentage
    
    
    
    
    
    
    As a percentage(Dollars in thousands)
    
    Amount
    
    
    of total revenue
    
    
    Amount
    
    
    of total revenue
    
    
    Variance $
    
    
    Variance %License and implementation
    
    $
    13,793
    
    
    
    64
    %
    
    $
    10,372
    
    
    
    60
    %
    
    $
    3,421
    
    
    
    33
    %Maintenance and support
    
    
    7,613
    
    
    
    36
    %
    
    
    6,955
    
    
    
    40
    %
    
    
    658
    
    
    
    9
    %Total
    
    $
    21,406
    
    
    
    100
    %
    
    $
    17,327
    
    
    
    100
    %
    
    $
    4,079
    
    
    
    24
    %
 License and implementation.
  Maintenance and support.
 Cost of revenue and gross profit:
 For the Three Months Ended March 31,2011
    
    
    2010As a percentage
    
    
    
    
    
    
    As a percentage(Dollars in thousands)
    
    Amount
    
    
    of related revenue
    
    
    Amount
    
    
    of related revenue
    
    
    Variance $
    
    
    Variance %Cost of license and
implementation
    
    $
    4,623
    
    
    
    34
    %
    
    $
    3,220
    
    
    
    31
    %
    
    $
    1,403
    
    
    
    44
    %Cost of maintenance and
support
    
    
    1,710
    
    
    
    22
    %
    
    
    1,495
    
    
    
    21
    %
    
    
    215
    
    
    
    14
    %Total cost of revenue
    
    $
    6,333
    
    
    
    30
    %
    
    $
    4,715
    
    
    
    27
    %
    
    $
    1,618
    
    
    
    34
    %Gross profit
    
    $
    15,073
    
    
    
    70
    %
    
    $
    12,612
    
    
    
    73
    %
    
    $
    2,461
    
    
    
    20
    %
 Cost of license and implementation.
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Cost of maintenance and support.
 Gross profit.
 Operating expenses:
 For the Three Months Ended March 31,2011
    
    
    2010As a percentage
    
    
    
    
    
    
    As a percentage(Dollars in thousands)
    
    Amount
    
    
    of total revenue
    
    
    Amount
    
    
    of total revenue
    
    
    Variance $
    
    
    Variance %Selling, general and administrative
    
    $
    7,871
    
    
    
    37
    %
    
    $
    6,632
    
    
    
    38
    %
    
    $
    1,239
    
    
    
    19
    %Research and development
    
    
    5,960
    
    
    
    28
    %
    
    
    5,214
    
    
    
    30
    %
    
    
    746
    
    
    
    14
    %Total operating expenses
    
    $
    13,831
    
    
    
    65
    %
    
    $
    11,846
    
    
    
    68
    %
    
    $
    1,985
    
    
    
    17
    %
 Selling, general and administrative expenses.
 Research
and development expenses.
 Income tax provision:
 For the Three MonthsEnded March 31,(Dollars in thousands)
    
    2011
    
    
    2010
    
    
    Variance $
    
    
    Variance %Effective tax rate
    
    
    32
    %
    
    
    39
    %
    
    
    n/a
    
    
    
    (7
    )%Income tax provision
    
    $
    404
    
    
    $
    306
    
    
    $
    98
    
    
    
    32
    %
 Income tax provision.
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Liquidity and capital resources
    For the Three MonthsEnded March 31,(Dollars in thousands)
    
    2011
    
    
    2010Net cash provided by (used in) operating activities
    
    $
    5,932
    
    
    $
    (385
    )Net cash used in investing activities
    
    
    (1,025
    )
    
    
    (533
    )Net cash provided by (used in) financing activities
    
    
    747
    
    
    
    (196
    )Cash and cash equivalents (beginning of period)
    
    
    55,845
    
    
    
    62,449Cash and cash equivalents (end of period)
    
    $
    61,499
    
    
    $
    61,335
 Cash flow analysis:
 Net cash provided by (used in) operating activities.
  Net cash used in investing activities.
 Net cash provided by (used in) financing activities.
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Contractual obligations
  Off-balance sheet arrangements
  Recent accounting pronouncements
  Available information
  
 Item 3. Quantitative and qualitative disclosures about market risk
 Foreign currency risk
  
 Item 4. Controls and procedures
 Evaluation of Disclosure Controls and Procedures
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Changes in Internal Control over Financial Reporting
  
 PART II. Other Information
 
 Item 1. Legal proceedings
  
 Item 1A. Risk factors
  Risks relating to our business and industry:
 The deterioration of general U. S. and global economic conditions could adversely affect our
sales and operating results.
    A significant or prolonged economic downturn in industries in which we focus may result in our
customers or prospects reducing or postponing spending on the products we offer.
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A weakening economy and changing business conditions could result in substantial defaults or
slowing of payments by our customers on our accounts receivable which could have a significant
negative impact on our business, results of operations, financial condition or liquidity.
  Our global growth is subject to economic and political risks.
  We are subject to a lengthy sales cycle and delays or failures to complete sales may harm our
business and cause our revenue and operating income to decline in the future.
  We focus exclusively on the pricing and margin optimization software market, and if this
market develops more slowly than we expect, our business will be harmed.
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Any downturn in sales to our target markets of manufacturing, distribution, services, hotel
and cruise, and airline would adversely affect our operating results.
  
 
 
 
  Our software products require implementation projects that are subject to significant risks
and delays, which if any occurred could negatively impact the effectiveness of our software,
resulting in harm to our reputation, business and financial performance.
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Competition from vendors of pricing solutions and enterprise applications as well as from
companies internally developing their own solutions could adversely affect our ability to sell our
software products and could result in pressure to price our software products in a manner that
reduces our margins and harms our operating results.
  
 
   Our revenue recognition is primarily based upon our ability to estimate the efforts required
to complete our implementation projects, which may be difficult to estimate.
  Failure to sustain our historical maintenance and support renewal rates and pricing would
adversely affect our operating results.
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We might not generate increased business from our current customers, which could limit our
revenue in the future.
  If our cost estimates for fixed-fee arrangements do not accurately anticipate the cost and
complexity of implementing our software products, our profitability could be reduced and we could
experience losses on these arrangements.
  Our revenue recognition policy may cause any decreases in sales not to be reflected in our
revenue immediately.
  We may enter into acquisitions that may be difficult to integrate, fail to achieve our
strategic objectives, disrupt our business, dilute stockholder value or divert management
attention.
  
 
 
 
 
 
 
 
  20




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If we fail to develop or acquire new pricing and margin optimization functionality to enhance
our existing software products, we will not be able to grow our business and it could be harmed.
  
 
 
   Defects or errors in our software products could harm our reputation, impair our ability to
sell our products and result in significant costs to us.
  
 
 
 
 
 
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
  If our executives and other key personnel are unable to effectively manage our business, or if
we fail to attract additional qualified personnel, our operating results could be adversely
affected.
  Intellectual property litigation and infringement claims may cause us to incur significant
expense or prevent us from selling our software products.
  
 
 
 
 
 
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If we fail to protect our proprietary rights and intellectual property adequately, our
business and prospects may be harmed.
      23




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We use open source software in our products that may subject our software products to general
release or require us to re-engineer our products, which may cause harm to our business.
  We utilize third-party software that we incorporate into our software products, and impaired
relations with these third parties, defects in third-party software or a third partys inability or
failure to enhance their software over time could adversely affect our operating performance and
financial condition.
  New accounting standards or interpretations of existing accounting standards, including those
related to revenue recognition, could adversely affect our operating results.
  Our international sales subject us to risks that may adversely affect our operating results.
  
 
 
 
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
 
 
 
 
  Our operations might be affected by the occurrence of a natural disaster or other catastrophic
event in Houston, Texas.
  Our ability to raise capital in the future may be limited, and our failure to raise capital
when needed could prevent us from executing our strategy.
  We incur significant increased costs as a result of operating as a public company, and our
management will be required to devote substantial time to new compliance initiatives.
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Risks relating to ownership of our common stock:
 Market volatility may affect our stock price and the value of your investment.
   
 
 
 
 
 
 
 
 
 
 
  Shares of our common stock are relatively illiquid.
  If equity research analysts cease to publish research or reports about us or if they issue
unfavorable commentary or downgrade our common stock, the price of our common stock could decline.
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Anti-takeover provisions in our Certificate of Incorporation and Bylaws and under Delaware law
could make an acquisition of us, which may be beneficial to our stockholders, more difficult and
may prevent attempts by our stockholders to replace or remove our current management.
  
 
 
 
 
 
  We do not intend to pay dividends on our common stock in the foreseeable future.
  
 Item 2. Unregistered sales of equity securities and use of proceeds.
   
 Item 3. Defaults upon senior securities.
  
 Item 4.
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Item 5. Other information.
  
 Item 6. Exhibits.
  3.1
    
    Amended and Restated Certificate of Incorporation (incorporated
by reference to Exhibit 3.1.1 of the Registrants Form S-1
Registration Statement (Registration No. 333-141884), declared
effective by the Securities and Exchange Commission on June 27,
2007).3.2
    
    Amended and Restated Bylaws (incorporated by reference to
Exhibit 3.3 of the Registrants Form 8-K filed with the
Securities and Exchange Commission on August 27, 2008).4.1
    
    Specimen certificate for shares of common stock (incorporated by
reference to the exhibit of the same number to the Registrants
Form S-1 Registration Statement (Registration No. 333-141884),
declared effective by the Securities and Exchange Commission on
June 27, 2007).10.1
    
    1999 Equity Incentive Plan, as amended to date, and form of
stock option agreement (incorporated by reference to the exhibit
10.2 to the Registrants Form S-1 Registration Statement
(Registration No. 333-141884), declared effective by the
Securities and Exchange Commission on June 27, 2007).10.2
    
    2007 Equity Incentive Plan and form of stock option agreement
(incorporated by reference to the exhibit 10.3 to the
Registrants Form S-1 Registration Statement (Registration No.
333-141884), declared effective by the Securities and Exchange
Commission on June 27, 2007).10.3
    
    Stock Purchase and Stockholders Agreement, dated June 8, 1998,
by and among Registrant (as successor in interest to PROS
Strategic Solutions, Inc.) and certain stockholders
(incorporated by reference to the exhibit 10.4 to the
Registrants Form S-1 Registration Statement (Registration No.
333-141884), declared effective by the Securities and Exchange
Commission on June 27, 2007).10.3.1
    
    Amendment to Stock Purchase and Stockholders Agreement dated
March 26, 2007 by and among Registrant (as successor in interest
to PROS Strategic Solutions, Inc.) and certain stockholders.
(incorporated by reference to the exhibit 10.4.1 to the
Registrants Form S-1 Registration Statement (Registration No.
333-141884), declared effective by the Securities and Exchange
Commission on June 27, 2007).10.5
    
    Registration Rights Agreement, dated May 25, 1999, by and
between Registrant (as successor in interest to PROS Strategic
Solutions, Inc.) and David Samuel Coats (incorporated by
reference to the exhibit 10.6 to the Registrants Form S-1
Registration Statement (Registration No. 333-141884), declared
effective by the Securities and Exchange Commission on June 27,
2007).10.6
    
    Registration Rights Agreement, dated April 13, 2000, by and
between Registrant (as successor in interest to PROS Strategic
Solutions, Inc.) and Robert Salter (incorporated by reference to
the exhibit 10.7 to the Registrants Form S-1 Registration
Statement (Registration No. 333-141884), declared effective by
the Securities and Exchange Commission on June 27, 2007).
 28




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##### Table of Contents



10.7
    
    Registration Rights Agreement, dated June 8, 2007, by and among
Registrant, Mariette M. Woestemeyer and Ronald F. Woestemeyer
(incorporated by reference to the exhibit 10.8 to the
Registrants Form S-1 Registration Statement (Registration No.
333-141884), declared effective by the Securities and Exchange
Commission on June 27, 2007).10.8
    
    Office Lease, dated January 31, 2001, by and between PROS
Revenue Management L.P. and Houston Community College System
(incorporated by reference to the exhibit 10.10 to the
Registrants Form S-1 Registration Statement (Registration No.
333-141884), declared effective by the Securities and Exchange
Commission on June 27, 2007).10.8.1
    
    First Amendment to Office Lease, dated May 31, 2006, by and
between PROS Revenue Management L.P. and Houston Community
College System (incorporated by reference to the exhibit 10.10.1
to the Registrants Form S-1 Registration Statement
(Registration No. 333-141884), declared effective by the
Securities and Exchange Commission on June 27, 2007).10.9*
    
    Employment Agreement, dated September 30, 2005, by and between
PROS Revenue Management L.P. and Charles Murphy (incorporated by
reference to the exhibit 10.12 to the Registrants Form S-1
Registration Statement (Registration No. 333-141884), declared
effective by the Securities and Exchange Commission on June 27,
2007).10.9.1*
    
    Immediately Exercisable Incentive Stock Option Grant, dated
September 30, 2005, by and between Registrant and Charles Murphy
(incorporated by reference to the exhibit 10.12.1 to the
Registrants Form S-1 Registration Statement (Registration No.
333-141884), declared effective by the Securities and Exchange
Commission on June 27, 2007).10.9.2*
    
    Immediately Exercisable Stock Option Grant, dated April 2, 2007,
by and between Registrant and Charles Murphy (incorporated by
reference to the exhibit 10.12.2 to the Registrants Form S-1
Registration Statement (Registration No. 333-141884), declared
effective by the Securities and Exchange Commission on June 27,
2007).10.9.3*
    
    Amendment No.1 to Employment Agreement, dated April 2, 2007, by
and between Registrant and Charles Murphy (incorporated by
reference to the exhibit 10.12.3 to the Registrants Form S-1
Registration Statement (Registration No. 333-141884), declared
effective by the Securities and Exchange Commission on June 27,
2007).10.9.4*
    
    Amendment No. 2 to Employment Agreement, dated March 24, 2009,
by and between PROS Revenue Management L.P. and Charles H.
Murphy. (incorporated by reference to the exhibit 10.4 to the
Registrants Form 8-K filed the Securities and Exchange
Commission on March 26, 2009).10.10*
    
    Employment Agreement, dated January 15, 1999, by and between
PROS Revenue Management L.P. and Ronald Woestemeyer
(incorporated by reference to the exhibit 10.12 to the
Registrants Form S-1 Registration Statement (Registration No.
333-141884), declared effective by the Securities and Exchange
Commission on June 27, 2007).10.10.1*
    
    Amendment No. 1 to Employment Agreement, dated February 2, 2004,
by and between PROS Revenue Management L.P. and Ronald
Woestemeyer (incorporated by reference to the exhibit 10.13.1 to
the Registrants Form S-1 Registration Statement (Registration
No. 333-141884), declared effective by the Securities and
Exchange Commission on June 27, 2007).10.11*
    
    Form of Indemnification Agreement entered into among Registrant,
its affiliates and its
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##### Table of Contents



directors and officers (incorporated by
reference to the exhibit number 10.16 to the Registrants Form
S-1 Registration Statement (Registration No. 333-141884),
declared effective by the Securities and Exchange Commission on
June 27, 2007).10.12*
    
    Employment Agreement, dated February 28, 2011, by and between
PROS Revenue Management L.P. and Andres Reiner  President and
Chief Executive Officer. (incorporated by reference to the
exhibit 10.12 to the Registrants Form 8-K filed the Securities
and Exchange Commission on March 3, 2011).10.13
    
    Settlement Agreement between PROS Holdings, Inc. and Harrahs
Entertainment, Inc., dated September 2, 2010 (incorporated by
reference to Exhibit 10.1 of the Registrants Form 8-K filed
with the Securities and Exchange Commission on September 2,
2010).21.1
    
    List of Subsidiaries (incorporated by reference to Exhibit 21.1
of the Registrants Annual Report on Form 10-K filed with the
Securities and Exchange Commission on February 28, 2011).31.1#
    
    Certification of Chief Executive Officer Pursuant to Exchange
Act Rule 13a-14(a) or 15d-14(a), as Adopted Pursuant to Section
302 of the Sarbanes Oxley Act of 2002.31.2#
    
    Certification of Chief Financial Officer Pursuant to Exchange
Act Rule 13a-14(a) or 15d-14(a), as Adopted Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.32.1#
    
    Certifications 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.
 
 *
    
    Constitutes management contracts or compensatory arrangements#
    
    Filed with this report 30




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##### Table of Contents



SIGNATURES
  PROS HOLDINGS, INC.Date: May 5, 2011
    By:
    /s/ Andres ReinerAndres ReinerPresident and Chief Executive Officer
(Principal Executive Officer)Date: May 5, 2011
    By:
    /s/ Charles H.  MurphyCharles H. MurphyExecutive Vice President and Chief Financial Officer
(Principal Accounting Officer) 31




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##### Table of Contents



Exhibit Index
  3.1
    
    Amended and Restated Certificate of Incorporation (incorporated
by reference to Exhibit 3.1.1 of the Registrants Form S-1
Registration Statement (Registration No. 333-141884), declared
effective by the Securities and Exchange Commission on June 27,
2007).3.2
    
    Amended and Restated Bylaws (incorporated by reference to
Exhibit 3.3 of the Registrants Form 8-K filed with the
Securities and Exchange Commission on August 27, 2008).4.1
    
    Specimen certificate for shares of common stock (incorporated by
reference to the exhibit of the same number to the Registrants
Form S-1 Registration Statement (Registration No. 333-141884),
declared effective by the Securities and Exchange Commission on
June 27, 2007).10.1
    
    1999 Equity Incentive Plan, as amended to date, and form of
stock option agreement (incorporated by reference to the exhibit
10.2 to the Registrants Form S-1 Registration Statement
(Registration No. 333-141884), declared effective by the
Securities and Exchange Commission on June 27, 2007).10.2
    
    2007 Equity Incentive Plan and form of stock option agreement
(incorporated by reference to the exhibit 10.3 to the
Registrants Form S-1 Registration Statement (Registration No.
333-141884), declared effective by the Securities and Exchange
Commission on June 27, 2007).10.3
    
    Stock Purchase and Stockholders Agreement, dated June 8, 1998,
by and among Registrant (as successor in interest to PROS
Strategic Solutions, Inc.) and certain stockholders
(incorporated by reference to the exhibit 10.4 to the
Registrants Form S-1 Registration Statement (Registration No.
333-141884), declared effective by the Securities and Exchange
Commission on June 27, 2007).10.3.1
    
    Amendment to Stock Purchase and Stockholders Agreement dated
March 26, 2007 by and among Registrant (as successor in interest
to PROS Strategic Solutions, Inc.) and certain stockholders.
(incorporated by reference to the exhibit 10.4.1 to the
Registrants Form S-1 Registration Statement (Registration No.
333-141884), declared effective by the Securities and Exchange
Commission on June 27, 2007).10.5
    
    Registration Rights Agreement, dated May 25, 1999, by and
between Registrant (as successor in interest to PROS Strategic
Solutions, Inc.) and David Samuel Coats (incorporated by
reference to the exhibit 10.6 to the Registrants Form S-1
Registration Statement (Registration No. 333-141884), declared
effective by the Securities and Exchange Commission on June 27,
2007).10.6
    
    Registration Rights Agreement, dated April 13, 2000, by and
between Registrant (as successor in interest to PROS Strategic
Solutions, Inc.) and Robert Salter (incorporated by reference to
the exhibit 10.7 to the Registrants Form S-1 Registration
Statement (Registration No. 333-141884), declared effective by
the Securities and Exchange Commission on June 27, 2007).




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##### Table of Contents



10.7
    
    Registration Rights Agreement, dated June 8, 2007, by and among
Registrant, Mariette M. Woestemeyer and Ronald F. Woestemeyer
(incorporated by reference to the exhibit 10.8 to the
Registrants Form S-1 Registration Statement (Registration No.
333-141884), declared effective by the Securities and Exchange
Commission on June 27, 2007).10.8
    
    Office Lease, dated January 31, 2001, by and between PROS
Revenue Management L.P. and Houston Community College System
(incorporated by reference to the exhibit 10.10 to the
Registrants Form S-1 Registration Statement (Registration No.
333-141884), declared effective by the Securities and Exchange
Commission on June 27, 2007).10.8.1
    
    First Amendment to Office Lease, dated May 31, 2006, by and
between PROS Revenue Management L.P. and Houston Community
College System (incorporated by reference to the exhibit 10.10.1
to the Registrants Form S-1 Registration Statement
(Registration No. 333-141884), declared effective by the
Securities and Exchange Commission on June 27, 2007).10.9*
    
    Employment Agreement, dated September 30, 2005, by and between
PROS Revenue Management L.P. and Charles Murphy (incorporated by
reference to the exhibit 10.12 to the Registrants Form S-1
Registration Statement (Registration No. 333-141884), declared
effective by the Securities and Exchange Commission on June 27,
2007).10.9.1*
    
    Immediately Exercisable Incentive Stock Option Grant, dated
September 30, 2005, by and between Registrant and Charles Murphy
(incorporated by reference to the exhibit 10.12.1 to the
Registrants Form S-1 Registration Statement (Registration No.
333-141884), declared effective by the Securities and Exchange
Commission on June 27, 2007).10.9.2*
    
    Immediately Exercisable Stock Option Grant, dated April 2, 2007,
by and between Registrant and Charles Murphy (incorporated by
reference to the exhibit 10.12.2 to the Registrants Form S-1
Registration Statement (Registration No. 333-141884), declared
effective by the Securities and Exchange Commission on June 27,
2007).10.9.3*
    
    Amendment No.1 to Employment Agreement, dated April 2, 2007, by
and between Registrant and Charles Murphy (incorporated by
reference to the exhibit 10.12.3 to the Registrants Form S-1
Registration Statement (Registration No. 333-141884), declared
effective by the Securities and Exchange Commission on June 27,
2007).10.9.4*
    
    Amendment No. 2 to Employment Agreement, dated March 24, 2009,
by and between PROS Revenue Management L.P. and Charles H.
Murphy. (incorporated by reference to the exhibit 10.4 to the
Registrants Form 8-K filed the Securities and Exchange
Commission on March 26, 2009).10.10*
    
    Employment Agreement, dated January 15, 1999, by and between
PROS Revenue Management L.P. and Ronald Woestemeyer
(incorporated by reference to the exhibit 10.12 to the
Registrants Form S-1 Registration Statement (Registration No.
333-141884), declared effective by the Securities and Exchange
Commission on June 27, 2007).10.10.1*
    
    Amendment No. 1 to Employment Agreement, dated February 2, 2004,
by and between PROS Revenue Management L.P. and Ronald
Woestemeyer (incorporated by reference to the exhibit 10.13.1 to
the Registrants Form S-1 Registration Statement (Registration
No. 333-141884), declared effective by the Securities and
Exchange Commission on June 27, 2007).10.11*
    
    Form of Indemnification Agreement entered into among Registrant,
its affiliates and its




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##### Table of Contents



directors and officers (incorporated by
reference to the exhibit number 10.16 to the Registrants Form
S-1 Registration Statement (Registration No. 333-141884),
declared effective by the Securities and Exchange Commission on
June 27, 2007).10.12*
    
    Employment Agreement, dated February 28, 2011, by and between
PROS Revenue Management L.P. and Andres Reiner  President and
Chief Executive Officer. (incorporated by reference to the
exhibit 10.12 to the Registrants Form 8-K filed the Securities
and Exchange Commission on March 3, 2011).10.13
    
    Settlement Agreement between PROS Holdings, Inc. and Harrahs
Entertainment, Inc., dated September 2, 2010 (incorporated by
reference to Exhibit 10.1 of the Registrants Form 8-K filed
with the Securities and Exchange Commission on September 2,
2010).21.1
    
    List of Subsidiaries (incorporated by reference to Exhibit 21.1
of the Registrants Annual Report on Form 10-K filed with the
Securities and Exchange Commission on February 28, 2011).31.1#
    
    Certification of Chief Executive Officer Pursuant to Exchange
Act Rule 13a-14(a) or 15d-14(a), as Adopted Pursuant to Section
302 of the Sarbanes Oxley Act of 2002.31.2#
    
    Certification of Chief Financial Officer Pursuant to Exchange
Act Rule 13a-14(a) or 15d-14(a), as Adopted Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.32.1#
    
    Certifications 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.
 
 *
    
    Constitutes management contracts or compensatory arrangements#
    
    Filed with this report