PROS Holdings, Inc. (PRO): Business Model Canvas [Dec-2025 Updated]

You're digging into the mechanics of a pure-play enterprise AI firm, trying to see past the hype to the actual cash flow engine. Honestly, the business model for PROS Holdings, Inc. boils down to selling mission-critical, AI-powered SaaS that directly impacts a customer's top and bottom line-think dynamic pricing and Smart CPQ. This isn't just software; it's a profit-maximizing machine. With subscription revenue hitting $76.0 million in Q3 2025 alone, and full-year ARR expected between $308 million and $311 million, the recurring revenue story is strong. Below, I've mapped out the nine building blocks-from their proprietary AI models to their key airline customers-so you can see exactly how they capture that value.

PROS Holdings, Inc. (PRO) - Canvas Business Model: Key Partnerships

You're looking at the structure that helps PROS Holdings, Inc. scale its AI-powered SaaS pricing and selling solutions across the enterprise landscape. The strength of this model is heavily reliant on deep, integrated partnerships.

Strategic alliance with Commerce (formerly BigCommerce) for B2B e-commerce integration

• The strategic partnership with Commerce, formerly BigCommerce Holdings, Inc., was announced on July 31, 2025.
• This alliance embeds PROS enterprise-grade pricing and Configure, Price, Quote (CPQ) capabilities directly into Commerce's ecosystem.
• The collaboration targets a market gap where 69% of B2B buyers expect dynamic pricing, but only 22% of brands currently offer it.
• The combined offering aims to accelerate time-to-revenue and higher conversion rates for B2B organizations operating in a market projected to reach $36.16 trillion by 2026.

Integration with major ERP ecosystems like SAP and Microsoft Dynamics 365

PROS Holdings, Inc. prioritizes seamless integration into the core systems where customer and transaction data resides. This is critical for feeding the AI models and executing real-time pricing decisions.

Ecosystem Partner	Integration Type/Status (as of late 2025)	Relevant Financial/Operational Metric
Microsoft Dynamics 365	Native integration for Sales; Finalist for the 2025 Microsoft Partner of the Year Award in Dynamics 365 Sales and Customer Insights category.	Recognized among a global field of top Microsoft partners, selected from over 4,600 nominations.
SAP	PROS Smart Price Optimization and Management is available on the SAP® Store.	Effortless integration with ERP systems like SAP S/4HANA and SAP ECC for centralized pricing.

The company's Q3 2025 results showed subscription revenue growth of 13% year-over-year to $76.0 million, with total revenue reaching $91.7 million, up 11% year-over-year, demonstrating the market's appetite for these integrated solutions. Management raised the full-year 2025 subscription Annual Recurring Revenue (ARR) guidance to a range of $310 million to $313 million.

Technology partners for cloud infrastructure and AI development

• PROS leverages its platform, which combines predictive AI and real-time analytics, to deliver results with lower compute requirements, as noted by the expansion of non-GAAP subscription gross margin to 80% in Q2 2025.
• The company announced revolutionary AI Agents at its Outperform 2025 event, combining natural language and numerical reasoning.

Global system integrators and consulting firms for large-scale deployments

While specific names and revenue figures tied to system integrators are not publicly detailed in the latest reports, the strategy involves these firms to facilitate large-scale deployments, especially given the complexity of integrating with global enterprise backends.

Reseller networks to expand market reach, especially in mid-market

The CEO noted in Q2 2025 commentary that doubling down on true strategic platform partnerships is a huge opportunity for broadening distribution, which includes reseller channels. The focus is on expanding reach beyond the current enterprise base into the mid-market segment through these indirect channels.

PROS Holdings, Inc. (PRO) - Canvas Business Model: Key Activities

You're looking at the engine room of PROS Holdings, Inc. (PRO) as of late 2025. These are the core things the company must execute on to keep the revenue flowing and the platform advancing. Honestly, the numbers tell a clear story about where the focus is right now.

Developing and refining proprietary AI/ML models (Agentic AI, Predictive)

The activity here is evidenced by the product evolution and the resulting margin improvements. The platform is clearly getting more efficient, which management attributes to AI.

• Accelerating agentic AI features, specifically naming Sales Assist and Rebate Agents.
• The Summer 2025 Travel Platform release focused on AI agents, dynamic pricing, and NDC automation.
• The Fall 2025 B2B Platform release included smarter pricing tools.

The impact of this development is visible in the gross margins:

Metric	Q1 2025 Value	Q3 2025 Value
Subscription Non-GAAP Gross Margin	81%	Not Explicitly Stated
Total Non-GAAP Gross Margin	70%	71%

Maintaining and scaling the cloud-based PROS Platform SaaS infrastructure

Scaling is directly reflected in the growth of subscription revenue and the associated margin health. The platform is handling more volume, which is the whole point of the SaaS model.

• FY 2025 Subscription Annual Recurring Revenue (ARR) Guidance range: $310 million to $313 million.
• Projected Subscription ARR year-over-year increase for FY 2025: 11%.
• Q3 2025 Subscription Revenue: $76.0 million.
• Q3 2025 Subscription Revenue year-over-year growth: 13%.

The total revenue growth shows the platform is successfully expanding its footprint:

Period Ending	Total Revenue	Year-over-Year Growth
December 31, 2024 (FY)	$330.37 million	8.78%
September 30, 2025 (TTM)	$351.68 million	8.92%
Q3 2025 (Quarterly)	$91.7 million	11%

Sales and marketing to acquire new enterprise and airline customers

Acquisition efforts are tied to the overall revenue growth and specific customer wins. You see the investment in Q2 2025, which is meant to drive the later-year results.

• Management noted increasing investments in selling and marketing in Q2 2025, including the Outperform conference spend.
• Travel segment wins included two of the top-7 U.S. carriers.
• The platform is integrated with SAP offerings, with PROS Smart Price Optimization available on the SAP® Store.

The overall revenue expectation for the full year reflects the success of these sales activities:

Metric	FY 2025 Guidance Range
Total Revenue	$360 million to $362 million
Adjusted EBITDA	$42 million to $44 million

Professional services for complex software implementation and configuration

This activity supports the complex nature of deploying pricing and revenue management systems for large enterprises. While recurring professional services revenue isn't broken out, the costs associated with complex transactions give you a flavor of the required expertise.

• Transaction costs related to the September 2025 acquisition included legal, accounting, financial advisory and other professional services fees.
• The company helps the world's toughest industries quote, price, and sell, spanning Airlines, Distribution, and Manufacturing.

The need for high-touch services is often correlated with the high gross margins achieved, suggesting value capture from complex deployments:

Margin Type	Q3 2025 Value
Total Gross Margin	69%
Non-GAAP Total Gross Margin	71%

Continuous R&D investment in pricing and revenue science

PROS Holdings, Inc. explicitly bases its value proposition on its leadership in revenue and pricing science, which necessitates ongoing R&D. While a specific R&D dollar amount for 2025 isn't isolated in the provided summaries, the amortization of acquisition-related intangibles (which includes acquired R&D) is a non-GAAP add-back, indicating historical investment.

• The core capability is leveraging leadership in revenue and pricing science.
• The platform combines predictive AI, real-time analytics and powerful automation.

The focus on science drives the subscription margin, which is the highest margin component of the business:

Metric	Q1 2025 Value	Q2 2025 Value
Subscription Gross Margin	79%	79%
Subscription Non-GAAP Gross Margin	81%	80%

PROS Holdings, Inc. (PRO) - Canvas Business Model: Key Resources

You're looking at the core assets that make PROS Holdings, Inc. a leader in revenue science software. These aren't just line items on a balance sheet; they are the engine driving that strong subscription growth we saw through 2025.

Proprietary AI Model Library and algorithms for pricing and revenue science

The foundation here is the intellectual capital embedded in the software. PROS Holdings, Inc. continues to build on its leadership in revenue and pricing science, which is evident in the market recognition they earned in 2025. For instance, the company achieved the highest ranking in G2's Fall 2025 Enterprise Grid for Pricing Software. Also, they earned recognition as a Leader in ISG's 2025 CPQ Buyers Guide, which is their fourth consecutive leadership designation from an industry analyst in just three quarters. The platform leverages predictive AI, real-time analytics, and automation to dynamically match offers and prices.

At their Outperform 2025 event, PROS Holdings, Inc. unveiled revolutionary AI Agents that combine natural language and numerical reasoning for intelligent, goal-oriented automation.

Highly skilled data scientists and software engineering talent

The human capital is substantial, directly supporting the AI-driven value proposition. As of 2025, PROS Holdings, Inc. employed a total of 2,665 people. This team is responsible for maintaining and advancing the complex algorithms and the multi-tenant SaaS architecture.

The demand for this expertise is high, as evidenced by the doubling of submissions for the 2025 Customer Outperformer Awards compared to 2024, highlighting the growing need for companies to strategically use AI-powered solutions like those developed by this talent pool.

The PROS Platform, a scalable, multi-tenant SaaS architecture

The PROS Platform is the delivery mechanism for all the intelligence. Its success is reflected in the company's financial stability, with recurring revenue making up 85% of total revenue in the first quarter of 2025. This subscription focus requires a highly reliable and scalable architecture.

Here's a look at the platform's financial output as of the third quarter of 2025:

Metric	Q3 2025 Value (Millions USD)	Year-over-Year Change
Subscription Revenue	$76.0	13% Growth
Total Revenue	$91.7	11% Growth
Total Gross Margin (Reported)	69%	300 basis points expansion
Non-GAAP Total Gross Margin	71%	N/A

Extensive historical transaction data for model training

While the exact volume of historical transaction data used to train the models isn't public, the effectiveness of the AI is demonstrated by the company's margin expansion. The non-GAAP subscription gross margin reached 80% in the second quarter of 2025, up from 79% in Q2 2024, and the Q1 2025 non-GAAP subscription gross margin was 81%. This operational efficiency suggests the models are highly tuned using vast, relevant datasets.

Strong intellectual property portfolio in dynamic pricing and CPQ

The company's focus on innovation is protected by its IP. PROS Holdings, Inc. has raised a total of $181M in financing over its history, which supports ongoing R&D and patent defense/acquisition. The market recognizes this focus, as seen by the industry analyst leadership positions in 2025 for both Pricing Software and CPQ (Configure, Price, Quote) solutions.

The platform's reach is global, serving customers across industry verticals in more than nearly 80 countries.

• Customer wins in Q3 2025 included Bleckmann, Greene King, and Kraft Heinz.
• Expanded adoption within existing customers like Adobe, AutoZone, and Turkish Airlines.
• The company won the 2025 CSO Award for cybersecurity excellence.

PROS Holdings, Inc. (PRO) - Canvas Business Model: Value Propositions

You're looking at how PROS Holdings, Inc. creates value for its customers right now, late in 2025. It's all about using AI to make commercial transactions smarter, faster, and more profitable. This isn't just about software; it's about measurable financial uplift.

Dynamic, real-time price optimization to maximize profit margins

PROS Holdings, Inc. delivers pricing science that moves at the speed of the market. The value here is moving away from static price lists to dynamic, account-specific pricing driven by neural network-based technology. This is designed to protect margins while still winning deals. For instance, the PROS Platform is proven to drive more than 400 million prices and 1.7 billion forecasts every single day across its customer base. You see the financial commitment to this area reflected in the company's own performance; in Q2 2025, the non-GAAP subscription gross margin stood at 80%, showing the high-value nature of their core recurring offerings. Also, the firm was recognized as a Leader in G2's Fall 2025 Enterprise Grid for Pricing Software, which underscores customer validation of this value.

AI-powered Smart CPQ (Configure, Price, Quote) for sales efficiency

The Smart CPQ (Configure, Price, Quote) solution helps your sales teams handle complex product configurations and deliver accurate quotes instantly. This directly attacks slow sales cycles. The market recognizes this capability; PROS Holdings, Inc. earned recognition as a Leader in ISG's 2025 CPQ Buyers Guide, their fourth consecutive leadership designation from an industry analyst in just three quarters. This is key for B2B selling, where complexity is rising. The platform enables sales teams to respond at the speed of customer demand, maintaining consistency and profitability at scale. You can see the momentum in their subscription growth, which hit $76.0 million in Q3 2025, up 13% year-over-year.

Revenue Management solutions for the Travel industry (airlines)

For the travel sector, especially airlines, the value proposition centers on moving from reactive to predictive revenue management. This means identifying demand pattern changes a year in advance, allowing for proactive commercial strategy adjustments. You can see this in recent customer activity; in Q1 2025, PROS Holdings, Inc. saw strong demand in travel, including wins at two of the top seven US carriers by domestic market share. Furthermore, a domestic carrier expanded its partnership by selecting PROS revenue management advantage powered by their market-leading AI. This focus on high-value, complex industries contributes to the overall financial health, as total revenue reached $91.7 million in Q3 2025.

Intelligent commerce platform to optimize omnichannel selling experiences

The platform is designed to unify selling experiences across all channels, bridging direct sales and self-service portals-what some call hybrid selling. This is about delivering consistent, market-driven quotes whether the buyer is talking to a salesperson or using a portal. The strategic partnership announced with Commerce (formerly BigCommerce) in Q2 2025 aims to bring PROS enterprise-grade pricing and CPQ directly into e-commerce environments. This focus on the entire transaction lifecycle is driving solid top-line results, with full-year 2025 total revenue guidance projected between $360 million to $362 million, representing about 9% growth.

Delivering winning offers to customers to accelerate conversion

The core promise is helping businesses win more deals by matching the right offer to the right buyer dynamically. This is supported by AI agents and prescriptive analytics that guide the selling process. This focus on winning is evident in the financial acceleration; the company raised its full-year outlook for subscription revenue and subscription Annual Recurring Revenue (ARR) following Q2 2025 results, projecting ARR between $310 million to $313 million for the full year 2025. You want to see the impact of these winning offers reflected in the bottom line, and the Q3 2025 non-GAAP total gross margin improved to 71%, showing better profitability on the revenue generated.

Here's a quick look at the scale and financial context supporting these value propositions as of the latest reporting periods:

Metric	Value (Latest Reported Period)	Period/Context
Subscription Revenue	$76.0 million	Q3 2025
Total Revenue	$91.7 million	Q3 2025
Year-over-Year Subscription Revenue Growth	13%	Q3 2025
Non-GAAP Total Gross Margin	71%	Q3 2025
Projected Full Year 2025 Subscription ARR	$310 million to $313 million	2025 Outlook
CPQ Vendors Evaluated by ISG	18	2025 CPQ Buyers Guide

What this estimate hides is the impact of the pending acquisition by Thoma Bravo, announced in September 2025, which led to the suspension of further financial guidance. Still, the Q3 2025 results show strong operational performance leading up to that point, with new customers like Kraft Heinz and expanded adoption with American Airlines.

Finance: draft 13-week cash view by Friday.

PROS Holdings, Inc. (PRO) - Canvas Business Model: Customer Relationships

You're looking at how PROS Holdings, Inc. keeps its enterprise customers locked in and growing with their AI-powered SaaS platform. The relationships here are built on high-value, mission-critical software, which means the sales and support process is anything but hands-off.

Dedicated, high-touch enterprise sales and account management is the starting point. This isn't about self-service sign-ups; it's about landing major deals and then expanding them. For instance, in the second quarter of 2025, PROS Holdings welcomed new enterprise customers like Air Greenland, Lennox, and Louis Dreyfus, while simultaneously expanding relationships with existing giants such as American Airlines and BASF. This expansion within the installed base is a key indicator of perceived value realization from the platform.

The core of the long-term relationship is the subscription-based model fostering long-term, recurring relationships. This structure is what drives stability, as evidenced by the financial results through late 2025. You can see the recurring nature clearly in the revenue breakdown:

Metric	Q1 2025 Value	Q2 2025 Value	Q3 2025 Value
Subscription Revenue (Millions USD)	$70.8	$73.3	$76.0
Subscription Revenue YoY Growth	10%	12%	13%
Recurring Revenue as % of Total Revenue	85%	86%	N/A
Trailing 12-Month Gross Revenue Retention	Better than 93%	Better than 93%	N/A

That trailing 12-month gross revenue retention figure, consistently better than 93%, tells you that once a customer is on board, they are defintely sticking around and paying their subscription fees.

To ensure customers actually get value, customer success teams focused on platform adoption and value realization are critical. While specific headcount isn't public, the focus on services shows where investment is going to help adoption. The non-GAAP services gross margin improved significantly year-over-year, moving from 10% in Q2 2024 to 11% in Q2 2025, and even hitting 13% in Q1 2025. That Q1 2025 margin represented an improvement of over 460 basis points year-over-year, showing efficiency gains in the teams helping customers implement and use the software deeply.

Community and feedback loops are formalized through the annual customer conference (Outperform) for community and product feedback. The Outperform with PROS 2025 event, held May 12-14, 2025, in Las Vegas, NV, was a key touchpoint. This event featured a record number of customer speakers, showing high engagement from the user base. Furthermore, the company saw a substantial increase in community involvement, with applications for the 2025 Customer Outperformer Awards doubling from 2024.

For those needing more than the standard subscription support, professional services and consulting for deep, tailored integration are offered. This is the high-touch component that supports the complex, AI-driven deployments PROS specializes in. The financial performance of this segment supports this effort:

• Non-GAAP services gross margin was 13% in Q1 2025.
• Non-GAAP services gross margin was 11% in Q2 2025.
• The Q1 2025 services margin showed an improvement of over 460 basis points year-over-year.

These services help ensure the AI-powered pricing and selling solutions are deeply integrated into the customer's commercial processes.

PROS Holdings, Inc. (PRO) - Canvas Business Model: Channels

You're looking at how PROS Holdings, Inc. gets its AI-powered pricing and selling solutions into the hands of large enterprises and the broader market as of late 2025. The channel strategy is clearly focused on high-touch enterprise sales supplemented by strategic digital and partner routes to scale the recurring revenue base.

Direct enterprise sales force for large B2B and Travel accounts

The direct sales force remains critical for landing and expanding large, complex deals, especially within the Travel sector where PROS Holdings has deep expertise. The success of this direct motion is reflected in the overall financial health, where subscription revenue, the primary output of these sales efforts, is projected to hit between $295.5 million and $297.5 million for the full year 2025, representing 11% year-over-year growth. This focus on high-value, sticky recurring revenue is supported by a trailing twelve-month gross revenue retention rate that continues to be better than 93%.

Cloud marketplaces and app stores, like the SAP® Store

PROS Holdings, Inc. is actively embedding its solutions within major enterprise ecosystems to capture transactions where they occur. Specifically, PROS Smart Price Optimization and Management is now available on the SAP® Store. This availability means the solution integrates directly with core SAP platforms, including SAP S/4HANA Cloud and SAP Business Technology Platform. This placement transforms pricing into a connected capability within the SAP ecosystem, aiming to drive real-time omnichannel commerce.

Strategic technology partners who embed PROS solutions (e.g., Commerce)

Strategic alliances are a key lever for broadening distribution and driving top-of-funnel demand. PROS Holdings, Inc. recently formed a strategic partnership with Commerce (formerly BigCommerce). This relationship is structured to start with a co-sell motion, with a stated path toward a reseller agreement later on. Management noted that early customer conversations were underway for this specific partnership in the third quarter of 2025.

Global reseller and channel partner network for broader distribution

While specific revenue attribution for the entire global reseller network isn't broken out, the push toward channel expansion is evident through the Commerce partnership structure, which includes a path to reselling. The overall strategy is to use these partners to extend reach beyond the core direct sales capacity, supporting the full-year total revenue guidance of $360 million to $362 million.

Digital marketing and thought leadership content

Thought leadership is used to position PROS Holdings, Inc. as the leader in AI-powered enterprise transformation. The company hosted its flagship industry event, Outperform 2025, bringing together global leaders to discuss AI in intelligent commerce. Furthermore, the company received industry validation, being named a finalist for the 2025 Microsoft Dynamics 365 Sales and Customer Insights Partner of the Year Award.

Here's a quick look at the financial context supporting the channel strategy's output:

Metric	Value (Q2 2025 or FY 2025 Projection)	Context
Subscription Revenue (Q2 2025)	$73.3 million	Represents 86% of total Q2 2025 revenue
Full Year 2025 Subscription ARR Guidance	$310 million to $313 million	Reflects 11% year-over-year growth projection
Full Year 2025 Total Revenue Guidance	$360 million to $362 million	Represents 9% year-over-year growth projection
Trailing Twelve Month Gross Revenue Retention	Better than 93%	Indicates high customer satisfaction/stickiness across channels
Acquisition Price (Announced Q3 2025)	$1.4 billion	Valuation of the company, suggesting confidence in future growth via channels

The success of these channels is also measured by platform adoption, with recent customer wins including Air Greenland, Aurigny Air, and Louis Dreyfus, alongside expanded adoption at existing clients like American Airlines and BASF.

• Direct sales targets large B2B and Travel accounts.
• SAP Store integration provides access via the SAP ecosystem.
• Commerce partnership aims for co-sell and future reselling.
• Recognition as a Leader in ISG's 2025 CPQ Buyers Guide.
• AI Agents pilot launching for customers in Q3 2025 to drive faster value realization.

Finance: review the Q4 2025 channel sales forecast against the Q3 performance by end of next week.

PROS Holdings, Inc. (PRO) - Canvas Business Model: Customer Segments

PROS Holdings, Inc. serves a global customer base across various complex B2B sectors, with a clear focus on large enterprises that require sophisticated pricing and sales optimization, evidenced by their Q3 2025 total revenue of $91.7 million and subscription revenue reaching $76.0 million.

The core customer base is characterized by high-volume, high-complexity transaction environments where dynamic pricing is mission critical for margin protection and revenue capture.

The specific customer segments targeted by PROS Holdings, Inc. include:

• Large B2B enterprises across manufacturing, chemicals, and distribution
• Global airlines and travel companies (e.g., American Airlines, Southwest)
• Companies with complex product catalogs and high transaction volumes
• Mid-market companies targeted via strategic partner channels
• Life sciences and auto parts distribution enterprises

The platform's adoption is visible across key accounts in the identified verticals. For instance, in Q2 2025, PROS Holdings, Inc. expanded adoption within existing customers such as American Airlines, BASF, Carrier, Holcim, and Saint-Gobain.

New customers welcomed in Q2 2025 further illustrate the segment focus, including Air Greenland, Aurigny Air, HellermannTyton, Lennox, Louis Dreyfus, and RHI Magnesita.

Here's a breakdown mapping the evidence to the required segments:

Customer Segment	Supporting Evidence/Example Companies (as of mid-2025)	Financial Context (Q3 2025)
Large B2B enterprises (Manufacturing, Chemicals, Distribution)	BASF, Holcim, Saint-Gobain, Louis Dreyfus, RHI Magnesita	Subscription revenue growth of 13% year-over-year, indicating strong enterprise commitment.
Global airlines and travel companies	American Airlines, Air Greenland, Aurigny Air, Scoot	Full-year subscription Annual Recurring Revenue (ARR) forecast for 2025 is between $310 million and $313 million.
Companies with complex product catalogs and high transaction volumes	General industry focus; solutions include CPQ (configure, price, quote)	Total revenue for Q3 2025 was $91.7 million, with non-GAAP total gross margin at 71%.
Mid-market companies targeted via strategic partner channels	Strategic partnership with Commerce (formerly BigCommerce) announced in Q2 2025.	PROS Holdings, Inc. has approximately 1,501 employees as of 2024, supporting a global footprint.
Life sciences and auto parts distribution enterprises	HellermannTyton (distribution/components), Louis Dreyfus (agribusiness/distribution)	Subscription revenue was $76.0 million in Q3 2025, representing 83% of total revenue.

The company's focus on recurring revenue is substantial; in Q1 2025, recurring revenue was 85% of total revenue.

The trailing 12-month gross revenue retention was reported as better than 93% as of Q1 2025, showing high stickiness within these large customer bases.

The overall financial health supports continued investment in these enterprise segments, with Q3 2025 Adjusted EBITDA expected to be between $11,000,000 and $12,000,000 for the quarter, representing 24% growth year-over-year at the midpoint.

PROS Holdings, Inc. (PRO) - Canvas Business Model: Cost Structure

The Cost Structure for PROS Holdings, Inc. (PRO) as of late 2025 is heavily weighted toward personnel and the continuous investment required to maintain its lead in AI-powered SaaS solutions. Given the pending acquisition by Thoma Bravo, the focus remains on operational efficiency, as evidenced by margin expansion, even as GAAP profitability remains negative.

The total cost structure is dominated by the expenses required to deliver and develop the core subscription service. For the third quarter ended September 30, 2025, the company reported a GAAP Gross Profit of $63.1 million on Total Revenue of $91.7 million, resulting in a GAAP Gross Margin of 69%. This implies a Total Cost of Revenue of approximately $28.6 million for the quarter.

The operating expenses, which drive the majority of the cost structure, resulted in a GAAP Operating Loss of $2.9 million for Q3 2025. The non-GAAP measures, which exclude certain items like stock-based compensation and transaction costs, show a much healthier picture, with Adjusted EBITDA reaching $15.0 million in Q3 2025.

Here's a breakdown of the major cost components, using the most recent available quarterly data for the operating expense categories:

Cost Component Category	Q3 2025 GAAP Amount (Millions USD)	Notes / Proxies
Total Cost of Revenue (Implied)	$28.6	Calculated from $91.7M Revenue and 69% GAAP Gross Margin.
Research and Development (R&D)	~$23.0	Using Q2 2025 actual spend of $23 million as a proxy for AI innovation investment. [cite: 5 from previous search]
Sales and Marketing (S&M)	~$26.8	Using Q2 2025 actual spend of $26,791 thousand as a proxy. [cite: 1 from previous search]
General and Administrative (G&A) (Implied)	~$16.4	Implied by Total Operating Expenses less R&D and S&M proxies.
Total Operating Expenses (Implied)	$66.2	Calculated from $63.1M Gross Profit - (-$2.9M) Operating Loss.

Significant investment in Research and Development (R&D) for AI innovation

• The commitment to AI innovation is a primary cost driver, with R&D spending remaining substantial to support the PROS Platform.
• The company is actively working to lower infrastructure costs, noting in Q1 2025 that engineering teams were focused on delivering real-time response by using less compute. [cite: 13 from previous search]

Sales and Marketing expenses, including commissions and the Outperform event

• Selling and Marketing is a major expense line, reflecting the cost of acquiring and retaining enterprise customers.
• The Q2 2025 results noted that free cash flow was impacted in part by increased commercial activity, specifically mentioning the Outperform user conference. [cite: 5 from previous search]
• For the nine months ended September 30, 2025, amortization of deferred costs was included within the Selling and Marketing expense line. [cite: 3 from previous search]

Cloud computing and infrastructure costs (Cost of Subscription Revenue)

• Cloud costs are embedded within the Cost of Revenue, which was approximately $28.6 million in Q3 2025.
• The non-GAAP subscription gross margin improvement to 71% in Q3 2025 (up from 69% GAAP total GM) reflects successful efforts to manage the underlying cloud infrastructure costs.
• In Q1 2025, the non-GAAP subscription gross margin reached 81%, aided by lower compute requirements. [cite: 13 from previous search]

Personnel costs for engineering, sales, and professional services teams

• Personnel costs are the largest component of the R&D, S&M, and G&A buckets.
• The company's GAAP Net Loss for Q3 2025 was $4.2 million, impacted by stock-based compensation and transaction costs, which are often personnel-related or tied to the acquisition.
• The professional services team costs are a known drag relative to higher-margin subscription growth, with management leaning on implementation automation and AI to improve services margins. [cite: 3 from previous search]

General and administrative overhead, plus amortization of intangibles

• General and Administrative (G&A) overhead is estimated to be around $16.4 million for Q3 2025 based on implied calculations.
• Amortization of Acquisition-Related Intangibles is explicitly excluded from non-GAAP metrics, meaning it is a significant component of the GAAP Net Loss, as it is a static, non-cash expense arising from past acquisitions. [cite: 1, 4 from previous search]
• Transaction costs related to the Thoma Bravo acquisition were also a factor impacting Q3 2025 GAAP results. [cite: 1, 3 from previous search]

Finance: draft the Q4 2025 cash flow projection by next Wednesday.

PROS Holdings, Inc. (PRO) - Canvas Business Model: Revenue Streams

You're looking at the core ways PROS Holdings, Inc. brings in money as of late 2025, which is heavily weighted toward recurring software fees. This structure shows a clear focus on locking in long-term, predictable revenue streams.

Subscription Revenue (SaaS fees) is the engine here. For the third quarter of 2025, this primary stream grew to $76.0 million, marking a 13% increase year-over-year. This growth in the core cloud business is what drives the company's valuation trajectory.

The full-year 2025 Subscription Annual Recurring Revenue (ARR) expectation, based on guidance maintained in Q1 2025, was set between $308 million to $311 million, representing 10% growth year-over-year at the time of that guidance. Note that in Q2 2025, PROS Holdings, Inc. stated they were raising this full-year outlook, though a new specific range wasn't provided before the acquisition agreement was announced and guidance was suspended.

The table below breaks down the key revenue components for the third quarter of 2025, showing the relative size of the subscription versus services components:

Revenue Component	Q3 2025 Amount (in millions)	Year-over-Year Growth
Total Revenue	$91.7 million	11%
Subscription Revenue	$76.0 million	13%
Professional Services Revenue (Derived)	$15.7 million	Implied lower growth than Subscription

Professional Services Revenue, which covers implementation, training, and consulting to get customers using the AI-powered SaaS pricing and selling solutions, accounted for the remainder of the top line. For Q3 2025, this was approximately $15.7 million ($91.7 million Total Revenue minus $76.0 million Subscription Revenue). Management has consistently looked to shift this mix toward the higher-margin subscription revenue, often relying on partners for deployment.

Revenue from customer expansion and upsells is a critical indicator of product stickiness and value realization. While a specific dollar amount for upsells isn't always broken out, the health of this stream is suggested by other metrics. For instance, the trailing 12-month Gross Revenue Retention was reported as better than 93% as of Q1 2025. This retention rate suggests that existing customers are not only staying but are continuing to consume and pay for the core service, which is the foundation for adding modules like Smart CPQ or Offer Marketing.

Here are some other relevant financial data points that frame the revenue performance:

• Q1 2025 Subscription Revenue was $70.8 million.
• Q2 2025 Subscription Revenue grew to $73.3 million.
• Q3 2025 Subscription Revenue growth rate was 13% year-over-year.
• The pending acquisition by Thoma Bravo, L.P. was valued at approximately $1.4 billion, or $23.25 per share.
• Free Cash Flow for Q3 2025 improved significantly to $11.5 million from $1.4 million in the prior year period.