Apptio Announces Results for the Second Quarter 2018
BELLEVUE, Wash., Aug. 1, 2018 /PRNewswire/ -- Apptio, Inc. (NASDAQ:APTI), the business management system of record for hybrid IT, today announced results for the fiscal second quarter ended June 30, 2018.
"Our second quarter subscription revenue growth accelerated to 32% year over year and we generated positive non-GAAP operating income," said Sunny Gupta, co-founder and CEO, Apptio. "The quarter was driven by momentum with our IT Financial Management Foundation application, solid renewals and upsells, and strength in the public sector. The growth of cloud spending, the complexity of hybrid IT, and the shift toward digital and agile are all serving as market tailwinds for Apptio."
Second Quarter Financial Summary
-- Subscription revenue was $49.2 million, an increase of 32% from the
second quarter of 2017, and comprised 83% of total revenue. Services
revenue was $9.8 million, an increase of 23% from the second quarter of
2017. Total revenue was $59.0 million, an increase of 31% from the
second quarter of 2017.
-- GAAP gross margin was 67.5%, in line with the second quarter of 2017
GAAP gross margin of 67.9%. Non-GAAP gross margin of 70.3% improved
from non-GAAP gross margin of 68.9% in the second quarter of 2017.
-- GAAP operating margin was negative 6.6%, improving from GAAP operating
margin of negative 15.9% in the second quarter of 2017. Non-GAAP
operating margin improved to 3.4%, as compared to non-GAAP operating
margin of negative 7.7% in the second quarter of 2017.
-- GAAP net loss per basic and diluted share was $0.12 based on 43.9
million weighted average shares outstanding, compared to GAAP net loss
per basic and diluted share of $0.18 based on 39.2 million weighted
average shares outstanding in the second quarter of 2017.
-- Non-GAAP net income per diluted share was $0.01 based on 48.6 million
weighted average shares outstanding, compared to non-GAAP net loss per
basic and diluted share of $0.08 based on 39.2 million weighted average
shares outstanding in the second quarter of 2017.
-- Cash, cash equivalents and marketable securities were approximately
$254.9 million as of June 30, 2018.
Business Highlights
-- First Public Sector Summit in Washington, DC, involving close to 400
federal IT leaders
-- Launched early adopter program for federal agencies looking to leverage
machine learning in Apptio deployments
-- Announced a new application, Apptio for Hybrid IT
-- Completed the fifth TBM European Summit in London, involving more than
400 customers and prospects across Europe
-- Welcomed Rebecca Jacoby to the Apptio Board of Directors
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 third quarter ending September 30, 2018 and for the full year 2018 as follows:
Third quarter of 2018:
-- Total revenue is expected to be in the range of $57.5 to $58.5 million
-- Non-GAAP operating income between $1.0 and $2.0 million
Full year 2018:
-- Total revenue is expected to be in the range of $230 and $233 million
-- Non-GAAP operating income between $3.0 and $5.0 million
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: 8357219), or if outside North America, by dialing 574-990-1011 (passcode: 8357219). 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 third quarter of, and full year, 2018. Forward-looking statements are subject to 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 May 7, 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 Six Months Ended
June 30, June 30,
-------- --------
2018 2017 2018 2017
*As Adjusted *As Adjusted
------------ ------------
Revenue
Subscription $49,206 $37,247 $94,677 $73,434
Professional services 9,839 7,978 18,438 15,722
----- ----- ------ ------
Total revenue 59,045 45,225 113,115 89,156
Cost of revenue
Subscription 9,671 7,252 18,620 15,102
Professional services 9,544 7,267 18,009 14,836
----- ----- ------ ------
Total cost of revenue 19,215 14,519 36,629 29,938
------ ------ ------ ------
Gross profit 39,830 30,706 76,486 59,218
------ ------ ------ ------
Operating expenses
Research and development 12,177 10,263 24,074 19,921
Sales and marketing 24,024 20,992 46,702 40,609
General and administrative 7,499 6,620 17,653 13,154
----- ----- ------ ------
Total operating expenses 43,700 37,875 88,429 73,684
------ ------ ------ ------
Loss from operations (3,870) (7,169) (11,943) (14,466)
Other (expense) income
Interest expense (1,912) (10) (2,124) (20)
Interest income 871 275 1,249 533
Other income (expense), net 10 (1) (28) (13)
Foreign exchange (loss) gain (576) 119 (462) 66
---- --- ---- ---
Loss before income taxes (5,477) (6,786) (13,308) (13,900)
Benefit from (provision for)
income taxes 180 (126) (88) (151)
--- ---- --- ----
Net loss $(5,297) $(6,912) $(13,396) $(14,051)
======= ======= ======== ========
Net loss per share attributable
to common stockholders, basic
and diluted $(0.12) $(0.18) $(0.31) $(0.36)
====== ====== ====== ======
Weighted-average shares used to
compute net loss per share
attributable to common
stockholders, basic and diluted 43,921 39,175 43,345 38,793
====== ====== ====== ======
*As adjusted for the three
and six months ended June
30, 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)
June 30, December 31,
2018 2017
*As Adjusted
------------
Assets
Current assets
Cash and cash equivalents $174,994 $55,069
Short-term investments 74,390 93,901
Accounts receivable, net of allowance for
doubtful accounts
of $444 and $413 59,136 68,782
Deferred costs 13,705 11,898
Prepaid expenses and other current assets 4,824 5,079
----- -----
Total current assets 327,049 234,729
Long-term assets
Property and equipment, net of accumulated
depreciation
of $24,257 and $21,924 9,352 10,437
Long-term investments 5,493 --
Deferred costs, net of current portion 18,155 17,182
Acquisition-related intangible assets, net 19,008 --
Goodwill 31,004 --
Other long-term assets 989 983
--- ---
Total assets $411,050 $263,331
======== ========
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $6,753 $5,598
Accrued payroll and other expenses 16,484 16,481
Deferred revenue 118,346 116,831
Deferred rent 940 892
Capital leases 25 21
--- ---
Total current liabilities 142,548 139,823
------- -------
Long-term liabilities
Convertible senior notes, net 108,153 --
Deferred revenue, net of current portion 6,022 2,470
Deferred rent, net of current portion 2,987 3,483
Capital leases, net of current portion 110 26
Asset retirement obligation 198 199
--- ---
Total liabilities 260,018 146,001
------- -------
Stockholders' equity
Class A and Class B Common stock 5 4
Additional paid-in capital 361,277 314,301
Accumulated other comprehensive income
(loss) 11 (110)
Accumulated deficit (210,261) (196,865)
-------- --------
Total stockholders' equity 151,032 117,330
------- -------
Total liabilities and stockholders' equity $411,050 $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 Six Months Ended
June 30, June 30,
-------- --------
2018 2017 2018 2017
*As Adjusted *As Adjusted
------------ ------------
Cash flows from operating activities
Net loss $(5,297) $(6,912) $(13,396) $(14,051)
Adjustments to reconcile net loss to net cash provided by operating activities
Depreciation and amortization 1,308 1,552 2,684 3,082
(Accretion of discounts)/amortization of premiums (195) 31 (237) 54
on investments
Amortization of acquisition-related intangible assets 909 -- 1,492 --
Amortization of deferred costs 4,014 3,348 7,950 6,616
Amortization of debt discount and issuance costs 1,598 9 1,774 18
Loss (gain) on disposal of property and equipment -- 3 47 (4)
Stock-based compensation 5,579 3,685 10,531 7,310
Other (573) -- -- --
Foreign exchange loss (gain) 576 108 462 (66)
Change in operating assets and liabilities, net of impact of
business combination
Accounts receivable (3,507) (12,768) 15,508 7,330
Prepaid expenses and other assets (1,658) 1,191 89 1,481
Deferred costs (5,255) (3,447) (8,163) (6,119)
Accounts payable (1,424) (758) 839 1,037
Accrued expenses 1,464 (769) (1,328) (1,727)
Deferred revenue 1,039 4,750 (9,674) (2,820)
Deferred rent (222) (198) (446) (398)
---- ---- ---- ----
Net cash (used in) provided by operating (1,644) (10,175) 8,132 1,743
activities
Cash flows from investing activities
Business combination, net of cash acquired (4,472) -- (39,041) --
Purchases of property and equipment (716) (691) (1,396) (2,236)
Proceeds from sale of equipment -- -- -- 9
Proceeds from maturities of investments 32,150 12,900 81,550 19,700
Purchases of investments (48,425) (7,453) (67,218) (28,898)
Return of (payments for) security deposits 81 (20) 50 (29)
--- --- --- ---
Net cash (used in) provided by investing (21,382) 4,736 (26,055) (11,454)
activities
Cash flows from financing activities
Proceeds from borrowings on convertible notes, net of discounts and issuance costs -- -- 139,438 --
Purchase of capped calls -- -- (17,092) --
Proceeds from exercises of common stock options 6,427 4,937 13,942 5,495
Payment of debt issuance fees (465) -- (465) --
Proceeds from purchases of stock under employee stock purchase plan 2,391 2,251 2,391 2,251
Payment of initial public offering costs -- -- -- (243)
Principal payments on capital lease obligations (7) (10) (13) (21)
--- --- --- ---
Net cash provided by financing activities 8,346 7,178 138,201 7,482
----- ----- ------- -----
Foreign currency effect on cash, cash equivalents and restricted cash (392) 191 (353) 56
---- --- ---- ---
Net (decrease) increase in cash, cash equivalents and restricted cash (15,072) 1,930 119,925 (2,173)
Cash, cash equivalents and restricted cash
Beginning of period 190,066 37,904 55,069 42,007
------- ------ ------ ------
End of period $174,994 $39,834 $174,994 $39,834
======== ======= ======== =======
*As adjusted for the three
and six months ended June
30, 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 Six Months Ended
June 30, June 30,
-------- --------
2018 2017 2018 2017
*As Adjusted *As Adjusted
------------ ------------
Revenue
Subscription $49,206 $37,247 $94,677 $73,434
Professional services 9,839 7,978 18,438 15,722
----- ----- ------ ------
Total revenue 59,045 45,225 113,115 89,156
Cost of revenue reconciliation:
GAAP subscription 9,671 7,252 18,620 15,102
Non-GAAP adjustment:
Stock-based compensation (289) (240) (608) (597)
Amortization of acquisition-related intangible assets (909) -- (1,492) --
---- --- ------ ---
Non-GAAP subscription cost of revenue 8,473 7,012 16,520 14,505
----- ----- ------ ------
GAAP professional services 9,544 7,267 18,009 14,836
Non-GAAP adjustment:
Stock-based compensation (479) (230) (807) (548)
---- ---- ---- ----
Non-GAAP professional services cost of revenue $9,065 $7,037 $17,202 $14,288
------ ------ ------- -------
Gross profit and gross margin reconciliation:
GAAP subscription gross profit $39,535 $29,995 $76,057 $58,332
Non-GAAP adjustment:
Stock-based compensation 289 240 608 597
Amortization of acquisition-related intangible assets 909 -- 1,492 --
--- --- ----- ---
Non-GAAP subscription gross profit 40,733 30,235 78,157 58,929
------ ------ ------ ------
GAAP subscription gross margin 80.3% 80.5% 80.3% 79.4%
Non-GAAP subscription gross margin 82.8% 81.2% 82.6% 80.2%
GAAP professional services gross profit 295 711 429 886
Non-GAAP adjustment:
Stock-based compensation 479 230 807 548
--- --- --- ---
Non-GAAP professional services gross profit 774 941 1,236 1,434
--- --- ----- -----
GAAP professional services gross margin 3.0% 8.9% 2.3% 5.6%
Non-GAAP professional services gross margin 7.9% 11.8% 6.7% 9.1%
GAAP gross profit 39,830 30,706 76,486 59,218
Non-GAAP adjustment:
Stock-based compensation 768 470 1,415 1,145
Amortization of acquisition-related intangible assets 909 -- 1,492 --
--- --- ----- ---
Non-GAAP gross profit $41,507 $31,176 $79,393 $60,363
------- ------- ------- -------
GAAP gross margin 67.5% 67.9% 67.6% 66.4%
Non-GAAP gross margin 70.3% 68.9% 70.2% 67.7%
Operating expenses reconciliation:
GAAP research and development $12,177 $10,263 $24,074 $19,921
Non-GAAP adjustment:
Stock-based compensation (1,399) (1,112) (2,792) (2,153)
------ ------ ------ ------
Non-GAAP research and development 10,778 9,151 21,282 17,768
------ ----- ------ ------
As a % of total revenue, non-GAAP 18.3% 20.2% 18.8% 19.9%
GAAP sales and marketing 24,024 20,992 46,702 40,609
Non-GAAP adjustment:
Stock-based compensation (1,706) (1,077) (3,136) (2,077)
------ ------ ------ ------
Non-GAAP sales and marketing 22,318 19,915 43,566 38,532
------ ------ ------ ------
As a % of total revenue, non-GAAP 37.8% 44.0% 38.5% 43.2%
GAAP General and administrative 7,499 6,620 17,653 13,154
Non-GAAP adjustment:
Stock-based compensation (1,706) (1,026) (3,188) (1,935)
Acquisition-related expenses and purchase 590 -- (1,949) --
accounting adjustment
Non-GAAP general and administrative 6,383 5,594 12,516 11,219
----- ----- ------ ------
As a % of total revenue, non-GAAP 10.8% 12.4% 11.1% 12.6%
Loss from operations reconciliation:
GAAP loss from operations (3,870) (7,169) (11,943) (14,466)
Non-GAAP adjustment:
Stock-based compensation 5,579 3,685 10,531 7,310
Acquisition-related expenses and purchase (590) -- 1,949 --
accounting adjustment
Amortization of acquisition-related intangible assets 909 -- 1,492 --
--- --- ----- ---
Non-GAAP income (loss) from operations $2,028 $(3,484) $2,029 $(7,156)
------ ------- ------ -------
Loss from operations as a percentage of revenue:
GAAP loss from operations (6.6)% (15.9)% (10.6)% (16.2)%
Non-GAAP income (loss) from operations 3.4% (7.7)% 1.8% (8.0)%
Net income (loss) reconciliation:
GAAP $(5,297) $(6,912) $(13,396) $(14,051)
Non-GAAP adjustment:
Stock-based compensation 5,579 3,685 10,531 7,310
Acquisition-related expenses and purchase (590) -- 1,949 --
accounting adjustment
Amortization of acquisition-related intangible 909 -- 1,492 --
assets
Non-GAAP Net income (loss) $601 $(3,227) $576 $(6,741)
==== ======= ==== =======
Weighted-average shares used in Non-GAAP basic net
income (loss) per share
43,921 39,175 43,345 38,793
Effect of potentially dilutive shares 4,668 -- 4,794 --
----- --- ----- ---
Weighted-average shares used in Non-GAAP diluted 48,589 39,175 48,139 38,793
net income (loss) per share
Non-GAAP net income (loss) per share:
Basic $0.01 $(0.08) $0.01 $(0.17)
Diluted $0.01 $(0.08) $0.01 $(0.17)
*As adjusted for the three
and six months ended June
30, 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 Six Months Ended
June 30, June 30,
-------- --------
2018 2017 2018 2017
*As Adjusted *As Adjusted
------------ ------------
Net cash (used in)
provided by operating
activities $(1,644) $(10,175) $8,132 $1,743
Less: purchases of
property and
equipment (716) (691) (1,396) (2,236)
---- ---- ------ ------
Free cash flow $(2,360) $(10,866) $6,736 $(493)
======= ======== ====== =====
*As adjusted for the three
and six months ended June
30, 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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