Press Release

Apptio Announces Results for the Third Quarter of 2017

 

Reported Q3 revenue of $47.0 million and strong cash flow

BELLEVUE, Wash., Oct. 30, 2017 /PRNewswire/ — Apptio, Inc. (NASDAQ: APTI), the business management system of record for hybrid IT, today announced results for the quarter ended September 30, 2017.

“In the third quarter, we achieved record revenue of $47.0 million and returned our trailing twelve months subscription net dollar retention to approximately 100%,” said Sunny Gupta, co-founder and CEO, Apptio. “Our value proposition is resonating with companies of all sizes, as is evidenced by our third quarter customer acquisitions, the early success of our new IT Financial Management (ITFM) Foundation offering, and our strong competitive position.”

Third Quarter Financial Summary

  • Subscription revenue was $39.4 million, an increase of 18% from the third quarter of 2016, and comprised 84% of total revenue. Services revenue was $7.6 million, an increase of 4% from the third quarter of 2016. Total revenue was $47.0 million, an increase of 16% from the third quarter of 2016.
  • GAAP gross margin was 70%, a significant improvement from the third quarter of 2016 GAAP gross margin of 66%.  Non-GAAP gross margin improved to 72%, as compared to non-GAAP gross margin of 67% in the third quarter of 2016.
  • GAAP operating margin was negative 11%, improving from GAAP operating margin of negative 17% in the third quarter of 2016. Non-GAAP operating margin improved to negative 2%, as compared to non-GAAP operating margin of negative 11% in the third quarter of 2016.
  • GAAP net loss per basic and diluted share was $0.13 based on 40.1 million weighted average shares outstanding, compared to a GAAP net loss per basic and diluted share of $0.63 based on 13.9 million weighted average shares outstanding in the third quarter of 2016.
  • Non-GAAP net loss per basic and diluted share was $0.02 based on 40.1 million weighted average shares outstanding, compared to a non-GAAP net loss per basic and diluted share of $0.45 based on 13.9 million weighted average shares outstanding in the third quarter of 2016.
  • For the three months ended September 30, 2017, net cash provided by operating activities was $9.1 million as compared to net cash used in operating activities of $0.8 million in the comparable period last year. Free cash flow was $8.5 million, as compared to negative $2.0 million in the three months ended September 30, 2016.
  • Cash, cash equivalents and marketable securities were approximately $135.5 million as of September 30, 2017.

Business Highlights

  • Launched ITFM Foundation to address the specific needs of IT finance professionals. The offering combines the capabilities from our Cost Transparency and IT Planning applications, allowing IT leaders to make informed planning decisions, reduce risk to the business and shift spending toward innovation.
  • Saw continued momentum in the Public sector, as evidenced by recent customer additions and a commitment from the CIO Council, the General Services Administration, and the Office of the Federal CIO to guide agency adoption of TBM.
  • We are excited about the TBM Conference beginning on November 6 in Las Vegas.  We expect over 1,000 technology and finance leaders to attend.

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, 2017 and for the full year 2017 as follows:

Fourth quarter of 2017:

  • Total revenue is expected to be in the range of $49.5 to $50.0 million
  • Non-GAAP operating loss between $3.5 and $4.0 million

Full year 2017:

  • Total revenue is expected to be in the range of $185.7 and $186.2 million
  • Non-GAAP operating loss between $10.9 and $11.4 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 discuss the results. 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: 95458380), or if outside North America, by dialing 574-990-1011 (passcode: 95458380). 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 business management system of record for hybrid IT. We transform the way IT runs its business and makes decisions. With our cloud-based applications, IT leaders manage, plan and optimize their technology investments across on-premises and cloud. With Apptio, IT leaders become strategic partners to the business by demonstrating the value of IT investments, accelerate innovation and shift their technology investments from running the business to digital innovation. Hundreds of customers choose Apptio as their business system of record for hybrid 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, 2017. 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 Form 10-Q filed with the SEC on August 3, 2017.  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, non-GAAP net loss per basic and diluted share, and free cash flow. In computing these measures, with the exception of free cash flow, 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,

2017

2016

2017

2016

Revenue

Subscription

$

39,426

$

33,314

$

112,860

$

94,995

Professional services

7,570

7,313

23,292

21,254

   Total revenue

46,996

40,627

136,152

116,249

Cost of revenue

Subscription

7,167

6,921

22,269

19,960

Professional services

6,763

7,068

21,599

19,780

   Total cost of revenue

13,930

13,989

43,868

39,740

   Gross profit

33,066

26,638

92,284

76,509

Operating expenses

Research and development

10,139

9,015

30,060

26,072

Sales and marketing

20,863

18,300

60,983

54,256

General and administrative

7,188

6,285

20,342

16,969

   Total operating expenses

38,190

33,600

111,385

97,297

   Loss from operations

(5,124)

(6,962)

(19,101)

(20,788)

Other income (expense)

Interest income (expense) and other, net

311

(1,312)

811

(1,746)

Foreign exchange gain (loss)

105

(367)

173

(774)

Loss before provision for income taxes

(4,708)

(8,641)

(18,117)

(23,308)

Provision for income taxes

(463)

(114)

(614)

(328)

  Net loss

$

(5,171)

$

(8,755)

$

(18,731)

$

(23,636)

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

$

(0.13)

$

(0.63)

$

(0.48)

$

(1.78)

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

40,120

13,884

39,240

13,307

 

 

 

Apptio, Inc.

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

September 30,

December 31,

2017

2016

Assets

Current assets

Cash and cash equivalents

$

29,279

$

42,007

Short-term investments

106,249

36,741

Accounts receivable, net of allowance for doubtful accounts

 of $305 and $122

46,136

58,587

Prepaid expenses and other current assets

5,530

5,440

Total current assets

187,194

142,775

Long-term assets

Property and equipment, net of accumulated depreciation

of $20,982 and $17,091

11,168

12,827

Long-term investments

38,446

Other long-term assets

944

734

Total assets

$

199,306

$

194,782

Liabilities and Stockholders Equity

Current liabilities

Accounts payable

$

3,995

$

3,574

Accrued payroll and other expenses

14,568

14,073

Deferred revenue

96,609

97,885

Deferred rent

868

799

Capital leases

27

43

Total current liabilities

116,067

116,374

Long-term liabilities

Deferred revenue, net of current portion

3,602

2,254

Deferred rent, net of current portion

3,709

4,360

Capital leases, net of current portion

31

51

Asset retirement obligation

194

175

Total liabilities

123,603

123,214

Stockholders’ equity

Class A and Class B Common stock

4

4

Additional paid-in capital

294,848

271,982

Accumulated other comprehensive loss

(94)

(94)

Accumulated deficit

(219,055)

(200,324)

Total stockholders’ equity

75,703

71,568

Total liabilities and stockholders’ equity

$

199,306

$

194,782

 

Apptio, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

Cash flows from operating activities

Net loss

$

(5,171)

$

(8,755)

$

(18,731)

$

(23,636)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities

  Depreciation and amortization

1,575

1,502

4,657

4,487

  Amortization of premiums on investments

5

5

59

20

  Loss on disposal of property and equipment

11

1

7

26

  Stock-based compensation

4,357

2,487

11,667

6,902

  Accretion of expense on line of credit fees

55

18

127

  Loss on extinguishment of debt

722

722

  Remeasurement of preferred stock warrant liability

210

202

  Foreign exchange gain

(105)

(173)

  Change in operating assets and liabilities

Accounts receivable

4,696

1,759

12,026

10,302

Prepaid expenses and other assets

1,779

101

3,260

(660)

Accounts payable

(402)

173

635

1,648

Accrued expenses

(298)

(500)

(2,025)

(2,442)

Deferred revenue

2,892

1,576

72

535

Deferred rent

(198)

(115)

(596)

(421)

Net cash provided by (used in) operating activities

9,141

(779)

10,876

(2,188)

Cash flows from investing activities

  Purchases of property and equipment

(601)

(1,198)

(2,837)

(3,518)

  Proceeds from sale of equipment

2

11

  Proceeds from maturities of investments

15,375

35,075

6,245

  Purchases of investments

(37,298)

(10,826)

(66,196)

(10,826)

  Payment of security deposits

6

9

(23)

(43)

Net cash used in investing activities

(22,516)

(12,015)

(33,970)

(8,142)

Cash flows from financing activities

  Proceeds from exercise of common stock options

3,453

489

8,948

1,000

  Proceeds from purchases of stock under employee stock purchase plan

2,251

  Proceeds from initial public offering

102,672

102,672

  Payment of initial public offering costs

(356)

(243)

(574)

  Proceeds from long-term debt

20,000

  Principal payments on long-term debt

(20,000)

(20,000)

  Payment of debt prepayment fees

(200)

(200)

  Principal payments on capital lease obligations

(11)

(10)

(32)

(33)

  Payment of capitalized loan fees

(12)

(248)

Net cash  provided by financing activities

3,442

82,583

10,924

102,617

  Foreign currency effect on cash, cash equivalents and restricted cash

(622)

(129)

(558)

(331)

Net (decrease) increase in cash, cash equivalents and restricted cash

(10,555)

69,660

(12,728)

91,956

Cash, cash equivalents and restricted cash

  Beginning of period

39,834

42,052

42,007

19,756

  End of period

$

29,279

$

111,712

$

29,279

$

111,712

 

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,

2017

2016

2017

2016

 Revenue

 Subscription

$

39,426

$

33,314

$

112,860

$

94,995

 Professional services

7,570

7,313

23,292

21,254

    Total revenue

46,996

40,627

136,152

116,249

 Cost of revenue reconciliation:

 GAAP subscription

7,167

6,921

22,269

19,960

 Non-GAAP adjustment:

    Stock-based compensation

(330)

(232)

(927)

(564)

      Non-GAAP subscription cost of revenue

6,837

6,689

21,342

19,396

 GAAP professional services

6,763

7,068

21,599

19,780

 Non-GAAP adjustment:

    Stock-based compensation

(294)

(190)

(842)

(557)

      Non-GAAP professional services cost of revenue

$

6,469

$

6,878

$

20,757

$

19,223

 Gross profit and gross margin reconciliation:

 GAAP subscription gross profit

$

32,259

$

26,393

$

90,591

$

75,035

 Non-GAAP adjustment:

    Stock-based compensation

330

232

927

564

      Non-GAAP subscription gross profit

32,589

26,625

91,518

75,599

    GAAP subscription gross margin

81.8

%

79.2

%

80.3

%

79.0

%

    Non-GAAP subscription gross margin

82.7

%

79.9

%

81.1

%

79.6

%

 GAAP professional services gross profit

807

245

1,693

1,474

 Non-GAAP adjustment:

    Stock-based compensation

294

190

842

557

     Non-GAAP professional services gross profit

1,101

435

2,535

2,031

    GAAP professional services gross margin

10.7

%

3.4

%

7.3

%

6.9

%

    Non-GAAP professional services gross margin

14.5

%

5.9

%

10.9

%

9.6

%

 GAAP gross profit

33,066

26,638

92,284

76,509

 Non-GAAP adjustment:

    Stock-based compensation

624

422

1,769

1,121

     Non-GAAP gross profit

$

33,690

$

27,060

$

94,053

$

77,630

    GAAP  gross margin

70.4

%

65.6

%

67.8

%

65.8

%

    Non-GAAP gross margin

71.7

%

66.6

%

69.1

%

66.8

%

 Operating expenses reconciliation:

 GAAP research and development

$

10,139

$

9,015

$

30,060

$

26,072

 Non-GAAP adjustment:

    Stock-based compensation

(1,179)

(698)

(3,332)

(1,965)

     Non-GAAP research and development

8,960

8,317

26,728

24,107

     As a % of total revenue, non-GAAP

19.1

%

20.5

%

19.6

%

20.7

%

 GAAP sales and marketing

20,863

18,300

60,983

54,256

 Non-GAAP adjustment:

    Stock-based compensation

(1,239)

(735)

(3,316)

(2,176)

     Non-GAAP sales and marketing

19,624

17,565

57,667

52,080

     As a % of total revenue, non-GAAP

41.8

%

43.2

%

42.4

%

44.8

%

 GAAP General and administrative

7,188

6,285

20,342

16,969

 Non-GAAP adjustment:

   Stock-based compensation

(1,315)

(632)

(3,250)

(1,640)

     Non-GAAP general and administrative

5,873

5,653

17,092

15,329

     As a % of total revenue, non-GAAP

12.5

%

13.9

%

12.6

%

13.2

%

Loss from operations reconciliation:

 GAAP loss from operations

(5,124)

(6,962)

(19,101)

(20,788)

 Non-GAAP adjustment:

   Stock-based compensation

4,357

2,487

11,667

6,902

     Non-GAAP loss from operations

$

(767)

$

(4,475)

$

(7,434)

$

(13,886)

 Loss from operations as a percentage of revenue:

     GAAP loss from operations

(10.9%)

(17.1%)

(14.0%)

(17.9%)

     Non-GAAP loss from operations

(1.6%)

(11.0%)

(5.5%)

(11.9%)

 Net loss reconciliation:

 GAAP

$

(5,171)

$

(8,755)

$

(18,731)

$

(23,636)

 Non-GAAP adjustment:

   Stock-based compensation

4,357

2,487

11,667

6,902

     Non-GAAP Net loss

$

(814)

$

(6,268)

$

(7,064)

$

(16,734)

 Basic and diluted net loss per share

 reconciliation:

 GAAP

$

(0.13)

$

(0.63)

$

(0.48)

$

(1.78)

 Non-GAAP

$

(0.02)

$

(0.45)

$

(0.18)

$

(1.26)

 Shares used to compute basic and diluted GAAP

 and Non-GAAP net loss per share

40,120

13,884

39,240

13,307

 

Apptio, Inc.

Free Cash Flow Non-GAAP Reconciliation

(In thousands)

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

 Net cash provided by (used in) operating activities

$

9,141

$

(779)

$

10,876

$

(2,188)

 Less: purchases of property and equipment

(601)

(1,198)

(2,837)

(3,518)

 Free cash flow

$

8,540

$

(1,977)

$

8,039

$

(5,706)

 

Apptio, Inc.

Free Cash Flow Non-GAAP Reconciliation

(In thousands)

(Unaudited)

Three Months Ended

Twelve
Months
Ended

December
31,

March 31,

June 30,

September
30,

September
30,

2016

2017

2017

2017

2017

 Net cash (used in) provided by operating activities

$

(1,806)

$

11,913

$

(10,178)

$

9,141

$

9,070

 Less: purchases of property and equipment

(1,884)

(1,545)

(691)

(601)

(4,721)

 Free cash flow

$

(3,690)

$

10,368

$

(10,869)

$

8,540

$

4,349

© 2017 Apptio, Inc. All rights reserved. Apptio and the Apptio logo are registered trademarks of Apptio, Inc. All other brand and product names are trademarks or registered trademarks of their respective holders.

Investor Contact:
Susanna Morgan
(425) 279-6101
ir@apptio.com

Media Contact:
Sarah Vreugdenhil
(425) 279-6097
pr@apptio.com