PR News Wire

BELLEVUE, Wash., Nov. 2, 2016 /PRNewswire/ -- Apptio, Inc. (NASDAQ: APTI), the leading provider of cloud-based Technology Business Management (TBM) software, today announced results for the third quarter ended September 30, 2016.

 

"The momentum continues to build for Apptio and the TBM category. This quarter, we generated record quarterly revenues of over $40 million and significantly improved operating margins while acquiring new customers across the Global 10,000" said Sunny Gupta, co-founder and CEO, Apptio. "The global trends of digitalization and cloud migration are a tailwind for our large and growing market.  In the third quarter, we successfully completed our IPO, continued to innovate across our product portfolio and extended our market leadership."

Third Quarter Financial Summary

  • Subscription revenue was $33.3 million, an increase of 30% from the third quarter of 2015, and comprised 82% of total revenue. Services revenue was $7.3 million, an increase of 10% from the third quarter of 2015.  Total revenues were $40.6 million, an increase of 26% from the third quarter of 2015.
  • GAAP gross margins grew to 66% as compared to 60% in the third quarter of 2015.  Non-GAAP gross margins grew to 67%, as compared to 61% in the third quarter of 2015.
  • GAAP operating loss was $7.0 million, an improvement from an operating loss of $9.4 million in the third quarter of 2015. Non-GAAP operating loss was $4.5 million, compared to a Non-GAAP operating loss of $7.4 million in the third quarter of 2015. 
  • GAAP net loss per basic and diluted share was $0.63 based on 13.9 million weighted average shares outstanding, compared to a GAAP net loss per basic and diluted share of $0.77 based on 12.8 million weighted average shares outstanding in the third quarter of 2015.
  • Non-GAAP net loss per basic and diluted share was $0.45 based on 13.9 million weighted average shares outstanding, compared to a non-GAAP net loss per basic and diluted share of $0.61 based on 12.8 million weighted average shares outstanding in the third quarter of 2015.
  • For the nine months ended September 30, 2016, net cash used in operating activities was $2.2 million as compared to $8.8 million in the comparable period last year.  Free cash flow was negative $5.7 million, as compared to negative $15.4 million in the nine months ended September 30, 2015.
  • Cash, cash equivalents and marketable securities were approximately $122.5 million as of September 30, 2016.  As of September 30, 2016 there was no outstanding bank debt.

Recent Business Highlights

  • Completed our initial public offering and began trading on the NASDAQ on September 23, 2016. Net proceeds from the IPO were approximately $99.1 million, after underwriting discounts and commissions and other offering expenses.
  • Experienced continued success selling additional applications to existing accounts and expanding customers' spend managed through Apptio. 
  • Released significant enhancements to our SaaS platform and Cost Transparency application to increase user productivity, improve our visual cost modeling and data management capabilities, and continue lowering deployment times.
  • Released our new Apptio Vendor Insights product, which provides IT leaders with a single location for all vendor spend and contract details.
  • Experienced a significant increase in the adoption of cloud Infrastructure as a Service functionality across both our new and existing customers. With our cloud solution, customers can see an integrated view across all IT spend, including cloud.

Financial Outlook
Apptio provides guidance based on current market conditions and expectations and actual results may differ materially. Please refer to the company's comments below regarding Forward Looking Statements. Apptio is initiating guidance for the fourth quarter ending December 31, 2016 and for the full year 2016 as follows:

Fourth quarter of 2016:

  • Total revenue is expected to be in the range of $41.5 to $42.5 million
  • Non-GAAP operating loss between $8.0 and $9.0 million

Full year 2016:

  • Total revenue is expected to be in the range of $157.7 and $158.7 million
  • Non-GAAP operating loss between $21.9 and $22.9 million

All forward-looking non-GAAP financial measures contained in this section titled "Financial Outlook" exclude the effects of stock-based compensation expense.

Conference Call Information
Apptio plans to host a conference call today to review its third quarter financial results and to discuss its financial outlook. The call is scheduled to begin at 2:00 p.m. PT/ 5:00 p.m. ET and can be accessed by dialing 844-233-0116 (passcode: 98784993), or if outside North America, by dialing 574-990-1011 (passcode: 98784993). Individuals may also access the live teleconference from the investor relations section of the Apptio website at investors.apptio.com. A replay will be available following completion of the live broadcast.

About Apptio
Apptio (NASDAQ: APTI) is the CIO's business management system. We build advanced data and analytics applications that help IT leaders make informed decisions about their technology investments, capitalize on the cloud transformation and drive innovation within their organizations. We call it Technology Business Management. Our applications help companies align technology spending to business outcomes and automate IT processes like cost transparency, benchmarking, charge-back and planning. Hundreds of customers, including more than 40 percent of the Fortune 100, use Apptio as their business system of record for IT. For more information, please visit www.Apptio.com.

Forward-Looking Statements
This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements regarding our strategy, prospects, customer demand, application adoption and our financial outlook for the fourth quarter of, and full year, 2016.  Forward-looking statements are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. Actual results may differ materially from the results predicted, and reported results should not be considered as an indication of future performance. The potential risks and uncertainties that could cause actual results to differ from the results predicted include, among others, those risks and uncertainties included under the caption "Risk Factors" and elsewhere in our filings with the U.S. Securities and Exchange Commission, including, without limitation, the prospectus filed pursuant to Rule 424(b) under the Securities Act of 1993 with the SEC on September 23, 2016.  All information provided in this release and in the attachments is as of the date hereof, and we undertake no duty to update this information unless required by law.

Non-GAAP Financial Measures 
To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with Generally Accepted Accounting Principles in the United States of America (GAAP), we use the following non-GAAP financial measures: non-GAAP gross margin, non-GAAP operating loss and free cash flow. In computing non-GAAP operating loss and non-GAAP gross margin, we exclude the effects of stock-based compensation expense.  We define free cash flow as net cash used in operating activities, less the purchases of property and equipment. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP, and our non-GAAP measures may be different from non-GAAP measures used by other companies.

We use these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. Our management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain expenses and expenditures that may not be indicative of our ongoing core business operating results. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when analyzing historical performance and liquidity and planning, forecasting, and analyzing future periods.

For a reconciliation of these non-GAAP financial measures to GAAP measures, please see the tables captioned "Results of Operations GAAP to Non-GAAP Reconciliation" included at the end of this release. We have not reconciled guidance for non-GAAP metrics to their most directly comparable GAAP measures because such items that impact these measures are not within our control or cannot be reasonably predicted.

 

 

Apptio, Inc.

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

 
   

Three Months Ended

   

Nine Months Ended

 
   

September 30,

   

September 30,

 
   

2016

   

2015

   

2016

   

2015

 
       

Revenue

                               

Subscription

 

$

33,314

   

$

25,594

   

$

94,995

   

$

72,836

 

Professional services

   

7,313

     

6,660

     

21,254

     

21,573

 

Total revenue

   

40,627

     

32,254

     

116,249

     

94,409

 

Cost of revenue

                               

Subscription

   

6,921

     

6,173

     

19,960

     

17,315

 

Professional services

   

7,068

     

6,684

     

19,780

     

19,720

 

Total cost of revenue

   

13,989

     

12,857

     

39,740

     

37,035

 

Gross profit

   

26,638

     

19,397

     

76,509

     

57,374

 

Operating expenses

                               

Research and development

   

9,015

     

7,928

     

26,072

     

22,602

 

Sales and marketing

   

18,300

     

15,855

     

54,256

     

49,129

 

General and administrative

   

6,285

     

5,023

     

16,969

     

12,721

 

Total operating expenses

   

33,600

     

28,806

     

97,297

     

84,452

 

Loss from operations

   

(6,962)

     

(9,409)

     

(20,788)

     

(27,078)

 

Other income (expense)

                               

Interest (expense) income and other, net

   

(1,312)

     

(18)

     

(1,746)

     

1

 

Foreign exchange loss

   

(367)

     

(351)

     

(774)

     

(958)

 

Loss before provision for income taxes

   

(8,641)

     

(9,778)

     

(23,308)

     

(28,035)

 

Provision for income taxes

   

(114)

     

(87)

     

(328)

     

(236)

 

  Net loss

 

$

(8,755)

   

$

(9,865)

   

$

(23,636)

   

$

(28,271)

 

Net loss per share attributable to common stockholders, basic and diluted

 

$

(0.63)

   

$

(0.77)

   

$

(1.78)

   

$

(2.25)

 

Weighted-average shares used to compute net loss per share attributable to common stockholders, basic and diluted

   

13,884

     

12,754

     

13,307

     

12,575

 
                                 

 

 

Apptio, Inc.

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

 
   

September 30,

   

December 31,

 
   

2016

   

2015

 

Assets

               

Current assets

               

Cash and cash equivalents

 

$

111,712

   

$

17,256

 

Short-term investments

   

10,818

     

6,260

 

Accounts receivable, net of allowance for doubtful accounts

               

 of $215 and $289

   

42,585

     

52,887

 

Prepaid expenses and other current assets

   

5,249

     

3,990

 

Total current assets

   

170,364

     

80,393

 

Long-term assets

               

Property and equipment, net

   

13,058

     

13,487

 

Restricted cash

   

--

     

2,500

 

Deferred initial public offering costs

   

--

     

1,973

 

Other long-term assets, net

   

616

     

798

 

Total assets

 

$

184,038

   

$

99,151

 

Liabilities, Convertible Preferred Stock and Stockholders' Equity (Deficit)

               

Current liabilities

               

Accounts payable

 

$

6,375

   

$

3,462

 

Accrued payroll and other expenses

   

12,456

     

14,732

 

Deferred revenue

   

81,415

     

82,422

 

Deferred rent

   

784

     

613

 

Capital leases

   

42

     

42

 

Total current liabilities

   

101,072

     

101,271

 

Long-term liabilities

               

Deferred revenue, net of current portion

   

2,346

     

803

 

Deferred rent, net of current portion

   

4,540

     

4,810

 

Capital leases, net of current portion

   

62

     

95

 

Preferred stock warrant liability

   

--

     

414

 

Asset retirement obligation

   

184

     

210

 

Total liabilities

   

108,204

     

107,603

 

Convertible preferred stock

   

--

     

133,809

 

Stockholders' equity (deficit)

               

Class A and Class B Common stock

   

4

     

1

 

Additional paid-in capital

   

268,240

     

26,509

 

Accumulated other comprehensive loss

   

(3)

     

--

 

Accumulated deficit

   

(192,407)

     

(168,771)

 

Total stockholders' equity (deficit)

   

75,834

     

(142,261)

 

Total liabilities, convertible preferred stock and stockholders' equity (deficit)

 

$

184,038

   

$

99,151

 
                 

 

Apptio, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 
   

Three Months Ended

   

Nine Months Ended

 
   

September 30,

   

September 30,

 
   

2016

   

2015

   

2016

   

2015

 

Cash flows from operating activities

                               

Net loss

 

$

(8,755)

   

$

(9,865)

   

$

(23,636)

   

$

(28,271)

 

Adjustments to reconcile net loss to net cash used in operating activities

                               

  Depreciation and amortization

   

1,502

     

1,728

     

4,487

     

4,916

 

  Amortization of premiums on investments

   

5

     

23

     

20

     

67

 

  Loss (gain) on disposal of property and equipment

   

1

     

--

     

26

     

(12)

 

  Stock-based compensation

   

2,487

     

2,022

     

6,902

     

5,877

 

  Accretion of expense on line of credit fees

   

55

     

27

     

127

     

39

 

  Loss on extinguishment of debt

   

722

     

--

     

722

     

--

 

  Remeasurement of preferred stock warrant liability

   

210

     

10

     

202

     

57

 

  Change in operating assets and liabilities

                               

Accounts receivable

   

1,759

     

(1,075)

     

10,302

     

14,689

 

Prepaid expenses and other assets

   

101

     

(651)

     

(660)

     

(2,167)

 

Accounts payable

   

173

     

2,193

     

1,648

     

812

 

Accrued expenses

   

(500)

     

(2,020)

     

(2,442)

     

(2,199)

 

Deferred revenue

   

1,576

     

2,105

     

535

     

(2,959)

 

Deferred rent

   

(115)

     

55

     

(421)

     

391

 

Net cash used in operating activities

   

(779)

     

(5,448)

     

(2,188)

     

(8,760)

 

Cash flows from investing activities

                               

Purchases of property and equipment

   

(1,198)

     

(1,877)

     

(3,518)

     

(6,636)

 

Proceeds from maturities of investments

   

--

     

2,200

     

6,245

     

13,309

 

Purchases of investments

   

(10,826)

     

--

     

(10,826)

     

(2,017)

 

(Payment) return of security deposits

   

9

     

7

     

(43)

     

157

 

Return of restricted cash

   

--

     

--

     

2,500

     

85

 

Net cash (used in) provided by investing activities

   

(12,015)

     

330

     

(5,642)

     

4,898

 

Cash flows from financing activities

                               

Proceeds from initial public offering, net of underwriting discounts

   

102,672

     

--

     

102,672

     

--

 

Payment of deferred initial public offering costs

   

(356)

     

(418)

     

(574)

     

(418)

 

Proceeds from long-term debt

   

--

     

--

     

20,000

     

--

 

Principal payments on long-term debt

   

(20,000)

     

--

     

(20,000)

     

--

 

Payment of debt prepayment fees

   

(200)

     

--

     

(200)

     

--

 

Proceeds from exercise of common stock options

   

489

     

613

     

1,000

     

2,335

 

Principal payments on capital lease obligations

   

(10)

     

(9)

     

(33)

     

(36)

 

Payment of capitalized loan fees

   

(12)

     

(9)

     

(248)

     

(78)

 

Net cash provided by financing activities

   

82,583

     

177

     

102,617

     

1,803

 

Foreign currency effect on cash and cash equivalents

   

(129)

     

(26)

     

(331)

     

(77)

 

Net increase (decrease) in cash and cash equivalents

   

69,660

     

(4,967)

     

94,456

     

(2,136)

 

Cash and cash equivalents

                               

Beginning of year

   

42,052

     

22,517

     

17,256

     

19,686

 

End of year

 

$

111,712

   

$

17,550

   

$

111,712

   

$

17,550

 

Supplemental disclosures

                               

Purchases under capital lease obligations

 

$

--

   

$

--

   

$

--

   

$

102

 

Property and furniture additions in accounts payable and accrued expenses

   

419

     

37

     

419

     

37

 

Leasehold improvements paid directly by lessor

   

356

     

--

     

356

     

--

 

Non-cash debt issuance costs

   

--

     

--

     

285

     

90

 

Deferred initial public offering cost accruals

   

794

     

1,163

     

1,004

     

1,163

 

Non-cash preferred stock warrant exercise

   

616

     

--

     

616

     

--

 

 

Apptio, Inc.

Results of Operations GAAP to Non-GAAP Reconciliation

(In thousands, except per share data)

(Unaudited)

 
 

Three Months Ended

   

Nine Months Ended

 
 

September 30,

   

September 30,

 
 

2016

   

2015

   

2016

   

2015

 

 Revenue

                             

 Subscription

$

33,314

   

$

25,594

   

$

94,995

   

$

72,836

 

 Professional services

 

7,313

     

6,660

     

21,254

     

21,573

 

   Total revenue

 

40,627

     

32,254

     

116,249

     

94,409

 
                               

 Cost of revenue reconciliation:

                             

 GAAP Subscription

 

6,921

     

6,173

     

19,960

     

17,315

 

 Non-GAAP adjustment:

                             

   Stock-based compensation

 

(232)

     

(145)

     

(564)

     

(341)

 

   Non-GAAP subscription cost of revenue

 

6,689

     

6,028

     

19,396

     

16,974

 
                               

 GAAP Professional services

 

7,068

     

6,684

     

19,780

     

19,720

 

 Non-GAAP adjustment:

                             

   Stock-based compensation

 

(190)

     

(179)

     

(557)

     

(574)

 

   Non-GAAP professional services cost of revenue

$

6,878

   

$

6,505

   

$

19,223

   

$

19,146

 
                               

 Gross profit and gross margin reconciliation:

                             

 GAAP Subscription gross profit

$

26,393

   

$

19,421

   

$

75,035

   

$

55,521

 

 Non-GAAP adjustment:

                             

   Stock-based compensation

 

232

     

145

     

564

     

341

 

   Non-GAAP Subscription gross profit

 

26,625

     

19,566

     

75,599

     

55,862

 

   GAAP Subscription gross margin

 

79.2%

     

75.9%

     

79.0%

     

76.2%

 

   Non-GAAP Subscription gross margin

 

79.9%

     

76.4%

     

79.6%

     

76.7%

 
                               

 GAAP Professional services gross profit

 

245

     

(24)

     

1,474

     

1,853

 

 Non-GAAP adjustment:

                             

   Stock-based compensation

 

190

     

179

     

557

     

574

 

   Non-GAAP Professional services gross profit

 

435

     

155

     

2,031

     

2,427

 

   GAAP Professional services gross margin

 

3.4%

     

(0.4%)

     

6.9%

     

8.6%

 

   Non-GAAP Professional services gross margin

 

5.9%

     

2.3%

     

9.6%

     

11.3%

 
                               

 GAAP gross profit

 

26,638

     

19,397

     

76,509

     

57,374

 

 Non-GAAP adjustment:

                             

   Stock-based compensation

 

422

     

324

     

1,121

     

915

 

   Non-GAAP gross profit

$

27,060

   

$

19,721

   

$

77,630

   

$

58,289

 

   GAAP  gross margin

 

65.6%

     

60.1%

     

65.8%

     

60.8%

 

   Non-GAAP gross margin

 

66.6%

     

61.1%

     

66.8%

     

61.7%

 
                               

 Operating expenses reconciliation:

                             

 GAAP Research and development

$

9,015

   

$

7,928

   

$

26,072

   

$

22,602

 

 Non-GAAP adjustment:

                             

   Stock-based compensation

 

(698)

     

(577)

     

(1,965)

     

(1,737)

 

   Non-GAAP research and development

 

8,317

     

7,351

     

24,107

     

20,865

 

   As a % of total revenue, non-GAAP

 

20.5%

     

22.8%

     

20.7%

     

22.1%

 
                               

 GAAP Sales and marketing

 

18,300

     

15,855

     

54,256

     

49,129

 

 Non-GAAP adjustment:

                             

   Stock-based compensation

 

(735)

     

(623)

     

(2,176)

     

(1,833)

 

   Non-GAAP sales and marketing

 

17,565

     

15,232

     

52,080

     

47,296

 

   As a % of total revenue, non-GAAP

 

43.2%

     

47.2%

     

44.8%

     

50.1%

 
                               

 GAAP General and administrative

 

6,285

     

5,023

     

16,969

     

12,721

 

 Non-GAAP adjustment:

                             

   Stock-based compensation

 

(632)

     

(498)

     

(1,640)

     

(1,392)

 

   Non-GAAP General and administrative

 

5,653

     

4,525

     

15,329

     

11,329

 

   As a % of total revenue, non-GAAP

 

13.9%

     

14.0%

     

13.2%

     

12.0%

 
                               

 Loss from operations reconciliation:

                             

 GAAP loss from operations

 

(6,962)

     

(9,409)

     

(20,788)

     

(27,078)

 

 Non-GAAP adjustment:

                             

   Stock-based compensation

 

2,487

     

2,022

     

6,902

     

5,877

 

   Non-GAAP loss from operations

$

(4,475)

   

$

(7,387)

   

$

(13,886)

   

$

(21,201)

 

 Loss from operations as a percentage of revenue:

                             

   GAAP loss from operations

 

(17.1%)

     

(29.2%)

     

(17.9%)

     

(28.7%)

 

   Non-GAAP loss from operations

 

(11.0%)

     

(22.9%)

     

(11.9%)

     

(22.5%)

 
                               

 Net loss reconciliation:

                             

 GAAP

$

(8,755)

   

$

(9,865)

   

$

(23,636)

   

$

(28,271)

 

 Non-GAAP adjustment:

                             

   Stock-based compensation

 

2,487

     

2,022

     

6,902

     

5,877

 

   Non-GAAP Net loss

$

(6,268)

   

$

(7,843)

   

$

(16,734)

   

$

(22,394)

 
                               

 Basic and diluted net loss per share

                             

 reconciliation:

                             

 GAAP

$

(0.63)

   

$

(0.77)

   

$

(1.78)

   

$

(2.25)

 

 Non-GAAP

$

(0.45)

   

$

(0.61)

   

$

(1.26)

   

$

(1.78)

 
                               

Shares used to compute basic and diluted GAAP and Non-GAAP net loss per share

 

13,884

     

12,754

     

13,307

     

12,575

 
                               

 

Apptio, Inc.

Free Cash Flow Non-GAAP Reconciliation

(In thousands)

(Unaudited)

 
   

Three Months Ended

   

Nine Months Ended

 
   

September 30,

   

September 30,

 
   

2016

   

2015

   

2016

   

2015

 
       

 Net cash used in operating activities

 

$

(779)

   

$

(5,448)

   

$

(2,188)

   

$

(8,760)

 

 Less: purchases of property and equipment

   

(1,198)

     

(1,877)

     

(3,518)

     

(6,636)

 

 Free cash flow

 

$

(1,977)

   

$

(7,325)

   

$

(5,706)

   

$

(15,396)

 
                                 

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