Apptio Announces Results for the First Quarter 2018
Apptio Announces Results for the First Quarter 2018
Reported Q1 revenue of $54.1 million, 23% growth year over year
BELLEVUE, Wash., April 30, 2018 /PRNewswire/ -- Apptio, Inc. (NASDAQ: APTI), the business management system of record for hybrid IT, today announced results for the fiscal first quarter ended March 31, 2018.
"Our first quarter subscription revenue growth accelerated to 26%, year over year, and we reached break-even Non-GAAP operating income," said Sunny Gupta, co-founder and CEO, Apptio. "The quarter was driven by large strategic deals, continued momentum in the enterprise segment, solid renewals and upsells, and a strong contribution from the Digital Fuel business."
First Quarter Financial Summary
-- Subscription revenue was $45.5 million, an increase of 26% from the
first quarter of 2017, and comprised 84% of total revenue. Services
revenue was $8.6 million, an increase of 11% from the first quarter of
2017. Total revenue was $54.1 million, an increase of 23% from the first
quarter of 2017.
-- GAAP gross margin was 68%, a significant improvement from the first
quarter of 2017 GAAP gross margin of 65%. Non-GAAP gross margin
improved to 70%, as compared to non-GAAP gross margin of 66% in the
first quarter of 2017.
-- GAAP operating margin was negative 15%, improving from GAAP operating
margin of negative 17% in the first quarter of 2017. Non-GAAP operating
margin improved to 0%, as compared to non-GAAP operating margin of
negative 8% in the first quarter of 2017.
-- GAAP net loss per basic and diluted share was $0.19 based on 42.8
million weighted average shares outstanding, compared to GAAP net loss
per basic and diluted share of $0.19 based on 38.4 million weighted
average shares outstanding in the first quarter of 2017.
-- Non-GAAP net loss per basic and diluted share was $0.00 based on 42.8
million weighted average shares outstanding, compared to non-GAAP net
loss per basic and diluted share of $0.09 based on 38.4 million weighted
average shares outstanding in the first quarter of 2017.
-- Cash, cash equivalents and marketable securities were approximately
$253.4 million as of March 31, 2018.
Business Highlights
-- Saw continued strength in both our Strategic and Enterprise segments in
the quarter
-- Received certification in the Federal Risk and Authorization Management
Program (FedRAMP), perpetuating our momentum at the Federal Government
level
-- Completed successful acquisition and initial integration of Digital Fuel
-- Completed $143.75 million Convertible Notes Offering
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 providing guidance for the second quarter ending June 30, 2018 and for the full year 2018 as follows:
Second quarter of 2018:
-- Total revenue is expected to be in the range of $55.0 to $56.0 million
-- Non-GAAP operating loss between $0.5 and $1.0 million
Full year 2018:
-- Total revenue is expected to be in the range of $225 and $230 million
-- Positive Non-GAAP operating income
All forward-looking non-GAAP financial measures contained in this section titled "Financial Outlook" exclude the effects of stock-based compensation expense, acquisition-related expenses, and amortization of acquisition related intangible assets. Guidance reflects the February 2, 2018 contribution from Digital Fuel and the impact of the full retrospective adoption of Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) on January 1, 2018.
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: 2126329), or if outside North America, by dialing 574-990-1011 (passcode: 2126329). 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 second quarter of, and full year, 2018. 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-K filed with the SEC on February 21, 2018. 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, acquisition-related expenses, and amortization of acquisition-related intangible assets. 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
March 31,
---------
2018 2017
*As Adjusted
------------
Revenue
Subscription $45,471 $36,187
Professional services 8,599 7,744
----- -----
Total revenue 54,070 43,931
Cost of revenue
Subscription 8,949 7,850
Professional services 8,465 7,569
----- -----
Total cost of revenue 17,414 15,419
------ ------
Gross profit 36,656 28,512
------ ------
Operating expenses
Research and development 11,897 9,658
Sales and marketing 22,678 19,617
General and administrative 10,154 6,534
------ -----
Total operating expenses 44,729 35,809
------ ------
Loss from operations (8,073) (7,297)
Other income (expense)
Interest income and other, net 128 236
Foreign exchange gain (loss) 114 (53)
--- ---
Loss before provision for
income taxes (7,831) (7,114)
Provision for income taxes (268) (25)
---- ---
Net loss $(8,099) $(7,139)
======= =======
Net loss per share attributable
to common stockholders, basic
and diluted $(0.19) $(0.19)
====== ======
Weighted-average shares used
to compute net loss per share
attributable to common
stockholders, basic and
diluted 42,762 38,407
====== ======
*As adjusted for the three months ended March 31, 2017 to reflect the adoption of Accounting Standards Update, ASU, No.
2014-09, Revenue from Contracts with Customers (Topic 606).
Apptio, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
March 31, December 31,
2018 2017
*As Adjusted
------------
Assets
Current assets
Cash and cash equivalents $190,066 $55,069
Short-term investments 55,394 93,901
Accounts receivable, net of allowance
for doubtful accounts of $317 and $413 56,022 68,782
Deferred costs 14,906 11,898
Prepaid expenses and other current
assets 4,786 5,079
----- -----
Total current assets 321,174 234,729
Long-term assets
Property and equipment, net of
accumulated depreciation of $23,161 and
$21,924 9,876 10,437
Long-term investments 7,979 --
Deferred costs, net of current portion 15,792 17,182
Acquisition-related intangible assets,
net 19,517 --
Goodwill 30,572 --
Other long-term assets 1,036 983
----- ---
Total assets $405,946 $263,331
======== ========
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $8,100 $5,598
Accrued payroll and other expenses 21,450 16,481
Deferred revenue 116,610 116,831
Deferred rent 919 892
Capital leases 24 21
--- ---
Total current liabilities 147,103 139,823
------- -------
Long-term liabilities
Convertible senior notes, net 106,574 --
Deferred revenue, net of current portion 6,834 2,470
Deferred rent, net of current portion 3,237 3,483
Capital leases, net of current portion 117 26
Asset retirement obligation 205 199
--- ---
Total liabilities 264,070 146,001
------- -------
Stockholders' equity
Class A and Class B Common stock 5 4
Additional paid-in capital 346,888 314,301
Accumulated other comprehensive loss (53) (110)
Accumulated deficit (204,964) (196,865)
-------- --------
Total stockholders' equity 141,876 117,330
------- -------
Total liabilities and stockholders'
equity $405,946 $263,331
======== ========
* As adjusted for the year ended December 31, 2017 to reflect the adoption of Accounting Standards Update, ASU, No. 2014-09, Revenue from
Contracts with Customers (Topic 606).
Apptio, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended
March 31,
---------
2018 2017
*As Adjusted
------------
Cash flows from operating activities
Net loss $(8,099) $(7,139)
Adjustments to reconcile net loss to net cash provided
by operating activities
Depreciation and amortization 1,376 1,530
(Accretion of discounts)/amortization of premiums on
investments (42) 23
Amortization of acquisition-related intangible assets 583 --
Amortization of deferred costs 3,936 3,268
Amortization of debt discount and issuance costs 176 --
Loss (gain) on disposal of property and equipment 47 (7)
Stock-based compensation 4,952 3,625
Impairment of acquired assets 573 --
Accretion of capitalized loan fees -- 9
Foreign exchange gain (114) (174)
Change in operating assets and liabilities
Accounts receivable 19,015 20,098
Prepaid expenses and other assets 1,747 290
Deferred costs (2,908) (2,672)
Accounts payable 2,263 1,795
Accrued expenses (2,792) (958)
Deferred revenue (10,713) (7,570)
Deferred rent (224) (200)
---- ----
Net cash provided by operating activities 9,776 11,918
----- ------
Cash flows from investing activities
Business combinations, net of cash acquired (34,569) --
Purchases of property and equipment (680) (1,545)
Proceeds from sale of equipment -- 9
Proceeds from maturities of investments 49,400 6,800
Purchases of investments (18,793) (21,445)
Payments for security deposits (31) (9)
--- ---
Net cash used in investing activities (4,673) (16,190)
------ -------
Cash flows from financing activities
Proceeds from borrowings on convertible notes, net of
issuance costs 139,438 --
Purchase of capped call (17,092) --
Proceeds from exercises of common stock options 7,515 558
Payment of initial public offering costs -- (243)
Principal payments on capital lease obligations (6) (11)
Net cash provided by financing activities 129,855 304
------- ---
Foreign currency effect on cash, cash equivalents and
restricted cash 39 (135)
Net increase (decrease) in cash, cash equivalents and
restricted cash 134,997 (4,103)
Cash, cash equivalents and restricted cash
Beginning of period 55,069 42,007
------ ------
End of period $190,066 $37,904
======== =======
*As adjusted for the three months ended March 31, 2017 to reflect the adoption of Accounting Standards Update, ASU, No. 2014-09, Revenue from
Contracts with Customers (Topic 606).
Apptio, Inc.
Results of Operations GAAP to Non-GAAP Reconciliation
(In thousands, except per share data)
(Unaudited)
Three Months Ended
March 31,
---------
2018 2017
*As Adjusted
------------
Revenue
Subscription $45,471 $36,187
Professional services 8,599 7,744
----- -----
Total revenue 54,070 43,931
Cost of revenue reconciliation:
GAAP subscription 8,949 7,850
Non-GAAP adjustment:
Stock-based compensation (319) (358)
Amortization of acquisition-related
intangible assets (583) --
---- ---
Non-GAAP subscription cost of revenue 8,047 7,492
----- -----
GAAP professional services 8,465 7,569
Non-GAAP adjustment:
Stock-based compensation (328) (318)
---- ----
Non-GAAP professional
services cost of revenue $8,137 $7,251
------ ------
Gross profit and gross margin
reconciliation:
GAAP subscription gross profit $36,522 $28,337
Non-GAAP adjustment:
Stock-based compensation 319 358
Amortization of acquisition-related
intangible assets 583 --
--- ---
Non-GAAP subscription gross profit 37,424 28,695
------ ------
GAAP subscription gross margin 80.3% 78.3%
Non-GAAP subscription gross margin 82.3% 79.3%
GAAP professional services gross profit 134 175
Non-GAAP adjustment:
Stock-based compensation 328 318
--- ---
Non-GAAP professional services gross
profit 462 493
--- ---
GAAP professional services gross margin 1.6% 2.3%
Non-GAAP professional services gross
margin 5.4% 6.4%
GAAP gross profit 36,656 28,512
Non-GAAP adjustment:
Stock-based compensation 647 676
Amortization of acquisition-related
intangible assets 583 --
--- ---
Non-GAAP gross profit $37,886 $29,188
------- -------
GAAP gross margin 67.8% 64.9%
Non-GAAP gross margin 70.1% 66.4%
Operating expenses reconciliation:
GAAP research and development $11,897 $9,658
Non-GAAP adjustment:
Stock-based compensation (1,393) (1,041)
------ ------
Non-GAAP research and development 10,504 8,617
------ -----
As a % of total revenue, non-GAAP 19.4% 19.6%
GAAP sales and marketing 22,678 19,617
Non-GAAP adjustment:
Stock-based compensation (1,430) (999)
------ ----
Non-GAAP sales and marketing 21,248 18,618
------ ------
As a % of total revenue, non-GAAP 39.3% 42.4%
GAAP General and administrative 10,154 6,534
Non-GAAP adjustment:
Stock-based compensation (1,482) (909)
Acquisition costs and impairment of
acquired assets (2,539) --
------ ---
Non-GAAP general and administrative 6,133 5,625
As a % of total revenue, non-GAAP 11.3% 12.8%
Loss from operations reconciliation:
GAAP loss from operations (8,073) (7,297)
Non-GAAP adjustment:
Stock-based compensation 4,952 3,625
Acquisition costs and impairment of
acquired assets 2,539 --
Amortization of acquisition-related
intangible assets 583 --
--- ---
Non-GAAP income (loss) from
operations $1 $(3,672)
--- -------
Loss from operations as a percentage of
revenue:
GAAP loss from operations (14.9%) (16.6%)
Non-GAAP income (loss) from operations 0.0% (8.4%)
Net loss reconciliation:
GAAP $(8,099) $(7,139)
Non-GAAP adjustment:
Stock-based compensation 4,952 3,625
Acquisition costs and impairment of
acquired assets 2,539 --
Amortization of acquisition-related
intangible assets 583 --
--- ---
Non-GAAP Net loss $(25) $(3,514)
==== =======
Basic and diluted net loss per share
reconciliation:
GAAP $(0.19) $(0.19)
Non-GAAP adjustment:
Stock-based compensation 0.12 0.10
Acquisition costs and impairment of
acquired assets 0.06 0.00
Amortization of acquisition-related
intangible assets 0.01 0.00
---- ----
Non-GAAP $0.00 $(0.09)
===== ======
Shares used to compute basic and diluted
GAAP and Non-GAAP net loss per share
42,762 38,407
*As adjusted for the three months ended March 31, 2017 to reflect the adoption of Accounting Standards Update, ASU, No. 2014-09, Revenue
from Contracts with Customers (Topic 606).
Apptio, Inc.
Free Cash Flow Non-GAAP Reconciliation
(In thousands)
(Unaudited)
Three Months Ended
March 31,
---------
2018 2017
*As Adjusted
------------
Net cash provided by
operating
activities $9,776 $11,918
Less: purchases of
property and
equipment (680) (1,545)
---- ------
Free cash flow $9,096 $10,373
====== =======
*As adjusted for the three months ended March 31, 2017 to reflect the adoption of Accounting Standards Update,
ASU, No. 2014-09, Revenue from Contracts with Customers (Topic 606).
© 2018 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
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