Market Overview

PROS Holdings, Inc. Announces Pricing of $125 Million Convertible Senior Note Offering

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PROS Holdings, Inc. (NYSE:PRO) today announced the pricing of its $125
million aggregate principal amount of 1.00% convertible senior notes due
2024. The convertible notes are being offered in a private placement to
qualified institutional buyers pursuant to Rule 144A under the
Securities Act of 1933. PROS granted an option to the initial purchasers
to purchase up to an additional $18,750,000 aggregate principal amount
of convertible notes.

The convertible notes will be unsecured, unsubordinated obligations of
PROS and will pay interest semiannually at an annual rate of 1.00%. They
will be convertible into cash, shares of PROS common stock or a
combination of cash and shares of PROS common stock, at PROS' election,
based on the applicable conversion rate at such time. The convertible
notes have an initial conversion rate of 15.1394 shares of PROS common
stock per $1,000 principal amount of convertible notes (which is
equivalent to an initial conversion price of approximately $66.05 per
share of PROS common stock), representing an initial conversion premium
of approximately 30% above the closing price of $50.81 per share of PROS
common stock on May 1, 2019. The conversion rate is subject to
adjustment in certain circumstances, including in connection with
specified fundamental changes. Holders of the convertible notes will
have the right to require PROS to repurchase all or a portion of their
convertible notes upon the occurrence of a fundamental change (as
defined in the indenture governing the convertible notes) at a purchase
price of 100% of their principal amount plus any accrued and unpaid
interest. PROS will not have the right to redeem the convertible notes
prior to May 15, 2022. On or after May 15, 2022, PROS may redeem the
convertible notes at a redemption price of 100% of their principal
amount plus any accrued and unpaid interest if the trading price of the
amount of PROS common stock into which the convertible notes are
convertible equals or exceeds 130% of the convertible notes' principal
amount. Upon any such redemption, holders of the convertible notes
would, subject to specified conditions, be permitted to convert their
convertible notes at an increased conversion rate. The convertible notes
will mature on May 15, 2024, unless converted, redeemed or repurchased
in accordance with their terms prior to such date. Prior to February 15,
2024, the convertible notes will be convertible only upon the
satisfaction of certain conditions and during certain periods, and
thereafter, at any time prior to the close of business on the second
scheduled trading day immediately preceding the maturity date regardless
of these conditions. PROS expects to close the offering on or about May
7, 2019, subject to the satisfaction of various customary closing
conditions.

In connection with the offering, PROS entered into privately negotiated
capped call transactions with option counterparties that may include one
or more of the initial purchasers or their affiliates. The capped call
transactions cover, subject to anti-dilution adjustments, the number of
shares of common stock underlying the convertible notes sold in the
offering. If the initial purchasers exercise their option to purchase
additional notes, PROS may enter into additional capped call
transactions with the option counterparties. The capped call
transactions are generally expected to reduce potential dilution to PROS
common stock upon conversion of the convertible notes and/or offset any
cash payments PROS is required to make in excess of the principal amount
of converted notes, as the case may be.

PROS estimates that it will receive net proceeds from the offering of
approximately $120.6 million (or approximately $138.9 million if the
initial purchasers exercise their option to purchase additional notes in
full). PROS intends to use $14.3 million of the net proceeds of the
offering to pay the cost of the capped call transactions. PROS expects
to use a portion of the remainder of the net proceeds from the
convertible note offering to fund separate transactions to exchange and
retire approximately $122.1 million principal amount of its outstanding
2.0% convertible senior notes due 2019 concurrently with the convertible
note offering. The consideration for these exchange transactions is
expected to consist of approximately $76.8 million in cash and
approximately 2.18 million shares of PROS common stock. PROS intends to
use the remainder of the net proceeds from the offering for general
corporate purposes, including working capital, capital expenditures,
potential acquisitions and strategic transactions, and potentially
additional repurchases of outstanding notes. If the initial purchasers
exercise their option to purchase additional notes, PROS intends to use
a portion of the net proceeds to fund the cost of entering into
additional capped call transactions. Any remaining net proceeds from the
sale of additional notes will be used for general corporate purposes.

This press release is neither an offer to sell nor a solicitation of an
offer to buy the convertible notes or the shares of common stock
issuable upon conversion of the convertible notes, if any, nor shall
there be any sale of these securities in any state or jurisdiction in
which such an offer, solicitation or sale would be unlawful prior to the
registration or qualification under the securities laws of any such
state or jurisdiction.

The convertible notes and the shares of common stock issuable upon
conversion of the convertible notes, if any, have not been registered
under the Securities Act of 1933, or the securities laws of any other
jurisdiction, and may not be offered or sold in the United States absent
registration or an applicable exemption from registration requirements.

Forward-looking Statements

This press release contains "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995
regarding the convertible note offering, capped calls and private
exchanges, business strategies, market potential, future financial and
operational performance and other matters. Words such as "anticipates,"
"estimates," "expects," "projects," "forecasts," "intends," "plans,"
"will," "believes" and words and terms of similar substance used in
connection with any discussion of future operating or financial
performance identify forward-looking statements. These forward-looking
statements are based on management's current expectations and beliefs
about future events and are inherently susceptible to uncertainty and
changes in circumstances. Except as required by law, PROS is under no
obligation to, and expressly disclaims any obligation to, update or
alter any forward-looking statements whether as a result of such
changes, new information, subsequent events or otherwise. With respect
to the planned transactions, such uncertainties and circumstances
include whether PROS will consummate the convertible note offering; the
use of the net proceeds from the offering; whether the capped call
transactions will become effective; and whether the concurrent private
exchanges will be consummated. Various factors could also adversely
affect PROS operations, business or financial results in the future and
cause PROS' actual results to differ materially from those contained in
the forward-looking statements, including those factors discussed in
detail in the "Risk Factors" sections contained in PROS Annual Report on
Form 10-K for the year ended December 31, 2018 (the "Annual Report") and
Quarterly Report on Form 10-Q for the three months ended March 31, 2019
("Quarterly Report"), filed with the Securities and Exchange Commission.
In addition, PROS operates in a highly competitive, rapidly changing and
technology-driven industry. This industry is affected by government
regulation, economic, strategic, political and social conditions,
technological developments and, particularly in view of new
technologies, the continued ability to protect intellectual property
rights. PROS' actual results could differ materially from management's
expectations because of changes in such factors. Achieving PROS'
business and financial objectives, including improved financial results
and maintenance of a strong balance sheet and liquidity position, could
be adversely affected by the factors discussed or referenced under the
"Risk Factors" sections contained in the Annual Report and Quarterly
Report as well as, among other things: (a) threats to the security of
PROS or PROS customer data, (b) potential business or service
disruptions from PROS third party data centers, cloud platform providers
or other unrelated service providers, (c) evolving data privacy, cyber
security and data localization laws and regulations, (d) PROS' ability
to manage its cloud operations, (e) PROS' ability to migrate customers
with on-premise software licenses to its latest cloud solutions; and (f)
PROS' ability to return to profitability following its transition to a
cloud strategy.

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