PR Newswire

BELLEVUE, Wash., Aug. 2, 2017 /PRNewswire/ -- Apptio, Inc. (NASDAQ: APTI), the business management system of record for hybrid IT, today announced results for the quarter ended June 30, 2017.

"In the second quarter, we achieved record revenue of $45.2 million, strong gross margins, and an improving bottom line," said Sunny Gupta, co-founder and CEO, Apptio. "We were pleased with continued progress toward our goals of accessing a broad market, shortening deployment times, and innovating on our hybrid IT and public cloud capabilities."

 

Second Quarter Financial Summary

  • Subscription revenue was $37.2 million, an increase of 19% from the second quarter of 2016, and comprised 82% of total revenue. Services revenue was $8.0 million, an increase of 8% from the second quarter of 2016. Total revenue was $45.2 million, an increase of 17% from the second quarter of 2016.
  • GAAP gross margin was 68%, higher than the second quarter of 2016 GAAP gross margin of 66%.  Non-GAAP gross margin improved to 69%, as compared to non-GAAP gross margin of 67% in the second quarter of 2016.
  • GAAP operating margin was negative 16%, improving from GAAP operating margin of negative 21% in the second quarter of 2016. Non-GAAP operating margin improved to negative 8%, as compared to non-GAAP operating margin of negative 15% in the second quarter of 2016. 
  • GAAP net loss per basic and diluted share was $0.18 based on 39.2 million weighted average shares outstanding, compared to a GAAP net loss per basic and diluted share of $0.69 based on 13.0 million weighted average shares outstanding in the second quarter of 2016.
  • Non-GAAP net loss per basic and diluted share was $0.08 based on 39.2 million weighted average shares outstanding, compared to a non-GAAP net loss per basic and diluted share of $0.50 based on 13.0 million weighted average shares outstanding in the second quarter of 2016.
  • For the three months ended June 30, 2017, net cash used in operating activities was $10.2 million as compared to $11.4 million in the comparable period last year. Free cash flow was negative $10.9 million, as compared to negative $13.5 million in the three months ended June 30, 2016.
  • Cash, cash equivalents and marketable securities were approximately $124.1 million as of June 30, 2017.

Recent Business Highlights

  • Announced new real-time cloud analytics for AWS, which provides IT leaders hourly, daily, and monthly visibility into the cost and consumption of their public cloud environments alongside private cloud and on-premises investments. 
  • Completed the European TBM Summit, which was attended by more than 350 senior IT leaders in London, demonstrating Apptio's increased momentum in Europe.
  • Continued to strengthen our Board of Directors with the addition of Kathleen Philips, Zillow Group CFO.

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 third quarter ending September 30, 2017 and for the full year 2017 as follows:

Third quarter of 2017:

  • Total revenue is expected to be in the range of $44.5 to $45.0 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 $180.0 and $183.0 million
  • Non-GAAP operating loss between $14.0 and $16.0 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: 50339694), or if outside North America, by dialing 574-990-1011 (passcode: 50339694). 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, 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 May 5, 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

 

Six Months Ended

   

June 30,

 

June 30,

   

2017

 

2016

 

2017

 

2016

                         

Revenue

                       

Subscription

 

$

37,247

 

$

31,404

 

$

73,434

 

$

61,681

Professional services

   

7,978

   

7,375

   

15,722

   

13,941

   Total revenue

   

45,225

   

38,779

   

89,156

   

75,622

Cost of revenue

                       

Subscription

   

7,252

   

6,559

   

15,102

   

13,039

Professional services

   

7,267

   

6,596

   

14,836

   

12,712

   Total cost of revenue

   

14,519

   

13,155

   

29,938

   

25,751

   Gross profit

   

30,706

   

25,624

   

59,218

   

49,871

Operating expenses

                       

Research and development

   

10,263

   

8,626

   

19,921

   

17,057

Sales and marketing

   

21,094

   

19,669

   

40,120

   

35,956

General and administrative

   

6,620

   

5,504

   

13,154

   

10,684

   Total operating expenses

   

37,977

   

33,799

   

73,195

   

63,697

   Loss from operations

   

(7,271)

   

(8,175)

   

(13,977)

   

(13,826)

Other income (expense)

                       

Interest income (expense) and other, net

   

264

   

(377)

   

500

   

(434)

Foreign exchange gain (loss)

   

120

   

(295)

   

68

   

(407)

   Loss before provision for income taxes

   

(6,887)

   

(8,847)

   

(13,409)

   

(14,667)

Provision for income taxes

   

(126)

   

(138)

   

(151)

   

(214)

   Net loss

 

$

(7,013)

 

$

(8,985)

 

$

(13,560)

 

$

(14,881)

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

 

$

(0.18)

 

$

(0.69)

 

$

(0.35)

 

$

(1.14)

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

   

39,175

   

13,036

   

38,793

   

13,016

 

Apptio, Inc.

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

 
   

June 30,

 

December 31,

   

2017

 

2016

Assets

           

Current assets

           

Cash and cash equivalents

 

$

39,834

 

$

42,007

Short-term investments

   

84,275

   

36,741

Accounts receivable, net of allowance for doubtful accounts

           

 of $492 and $122

   

50,763

   

58,587

Prepaid expenses and other current assets

   

5,776

   

5,440

Total current assets

   

180,648

   

142,775

Long-term assets

           

Property and equipment, net of accumulated depreciation

           

of $19,897 and $17,091

   

12,300

   

12,827

Long-term investments

   

--

   

38,446

Other long-term assets

   

971

   

734

Total assets

 

$

193,919

 

$

194,782

Liabilities and Stockholders' Equity

           

Current liabilities

           

Accounts payable

 

$

4,550

 

$

3,574

Accrued payroll and other expenses

   

14,015

   

14,073

Deferred revenue

   

93,450

   

97,885

Deferred rent

   

843

   

799

Capital leases

   

32

   

43

Total current liabilities

   

112,890

   

116,374

Long-term liabilities

           

Deferred revenue, net of current portion

   

3,868

   

2,254

Deferred rent, net of current portion

   

3,927

   

4,360

Capital leases, net of current portion

   

36

   

51

Asset retirement obligation

   

187

   

175

Total liabilities

   

120,908

   

123,214

             

Stockholders' equity

           

Class A and Class B Common stock

   

4

   

4

Additional paid-in capital

   

287,038

   

271,982

Accumulated other comprehensive loss

   

(147)

   

(94)

Accumulated deficit

   

(213,884)

   

(200,324)

Total stockholders' equity

   

73,011

   

71,568

Total liabilities and stockholders' equity

 

$

193,919

 

$

194,782

 

Apptio, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 
   

Three Months Ended

 

Six Months Ended

   

June 30,

 

June 30,

   

2017

 

2016

 

2017

 

2016

Cash flows from operating activities

                       

Net loss

 

$

(7,013)

 

$

(8,985)

 

$

(13,560)

 

$

(14,881)

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

                       

Depreciation and amortization

   

1,552

   

1,502

   

3,082

   

2,985

Amortization of premiums on investments

   

31

   

2

   

54

   

15

Loss (gain) on disposal of property and equipment

   

3

   

5

   

(4)

   

25

Stock-based compensation

   

3,685

   

2,510

   

7,310

   

4,415

Accretion of expense on line of credit fees

   

9

   

42

   

18

   

72

Remeasurement of preferred stock warrant liability

   

--

   

7

   

--

   

(8)

Foreign exchange loss (gain)

   

107

   

--

   

(68)

   

--

Change in operating assets and liabilities

                       

Accounts receivable

   

(12,768)

   

(14,811)

   

7,330

   

8,543

Prepaid expenses and other assets

   

1,191

   

56

   

1,481

   

(761)

Accounts payable

   

(758)

   

1,030

   

1,037

   

1,475

Accrued expenses

   

(769)

   

3,694

   

(1,727)

   

(1,942)

Deferred revenue

   

4,750

   

3,726

   

(2,820)

   

(1,041)

Deferred rent

   

(198)

   

(167)

   

(398)

   

(306)

Net cash (used in) provided by operating activities

   

(10,178)

   

(11,389)

   

1,735

   

(1,409)

Cash flows from investing activities

                       

Purchases of property and equipment

   

(691)

   

(2,128)

   

(2,236)

   

(2,320)

Proceeds from sale of equipment

   

--

   

--

   

9

   

--

Proceeds from maturities of investments

   

12,900

   

6,245

   

19,700

   

6,245

Purchases of investments

   

(7,453)

   

--

   

(28,898)

   

--

Payment of security deposits

   

(20)

   

(25)

   

(29)

   

(52)

Net cash provided by (used in) investing activities

   

4,736

   

4,092

   

(11,454)

   

3,873

Cash flows from financing activities

                       

Proceeds from exercise of common stock options

   

4,937

   

124

   

5,495

   

511

Proceeds from purchases of stock under employee stock purchase plan

   

2,251

   

--

   

2,251

   

--

Payment of initial public offering costs

   

--

   

(40)

   

(243)

   

(218)

Proceeds from long-term debt

   

--

   

10,000

   

--

   

20,000

Principal payments on capital lease obligations

   

(10)

   

(13)

   

(21)

   

(23)

Payment of capitalized loan fees

   

--

   

(236)

   

--

   

(236)

Net cash  provided by financing activities

   

7,178

   

9,835

   

7,482

   

20,034

Foreign currency effect on cash, cash equivalents and restricted cash

   

194

   

(209)

   

64

   

(202)

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

   

1,930

   

2,329

   

(2,173)

   

22,296

Cash, cash equivalents and restricted cash

                       

Beginning of period

   

37,904

   

39,723

   

42,007

   

19,756

End of period

 

$

39,834

 

$

42,052

 

$

39,834

 

$

42,052

 

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,

 
 

2017

   

2016

   

2017

   

2016

 

Revenue

                             

Subscription

$

37,247

   

$

31,404

   

$

73,434

   

$

61,681

 

Professional services

 

7,978

     

7,375

     

15,722

     

13,941

 

Total revenue

 

45,225

     

38,779

     

89,156

     

75,622

 
                               

Cost of revenue reconciliation:

                             

GAAP subscription

 

7,252

     

6,559

     

15,102

     

13,039

 

Non-GAAP adjustment:

                             

Stock-based compensation

 

(240)

     

(191)

     

(597)

     

(332)

 

Non-GAAP subscription cost of revenue

 

7,012

     

6,368

     

14,505

     

12,707

 
                               

GAAP professional services

 

7,267

     

6,596

     

14,836

     

12,712

 

Non-GAAP adjustment:

                             

Stock-based compensation

 

(230)

     

(213)

     

(548)

     

(367)

 

Non-GAAP professional services cost of revenue

$

7,037

   

$

6,383

   

$

14,288

   

$

12,345

 
                               

Gross profit and gross margin reconciliation:

                             

GAAP subscription gross profit

$

29,995

   

$

24,845

   

$

58,332

   

$

48,642

 

Non-GAAP adjustment:

                             

 Stock-based compensation

 

240

     

191

     

597

     

332

 

Non-GAAP subscription gross profit

 

30,235

     

25,036

     

58,929

     

48,974

 

GAAP subscription gross margin

 

80.5%

     

79.1%

     

79.4%

     

78.9%

 

Non-GAAP subscription gross margin

 

81.2%

     

79.7%

     

80.2%

     

79.4%

 
                               

GAAP professional services gross profit

 

711

     

779

     

886

     

1,229

 

Non-GAAP adjustment:

                             

Stock-based compensation

 

230

     

213

     

548

     

367

 

Non-GAAP professional services gross profit

 

941

     

992

     

1,434

     

1,596

 

GAAP professional services gross margin

 

8.9%

     

10.6%

     

5.6%

     

8.8%

 

Non-GAAP professional services gross margin

 

11.8%

     

13.5%

     

9.1%

     

11.4%

 
                               

GAAP gross profit

 

30,706

     

25,624

     

59,218

     

49,871

 

Non-GAAP adjustment:

                             

Stock-based compensation

 

470

     

404

     

1,145

     

699

 

Non-GAAP gross profit

$

31,176

   

$

26,028

   

$

60,363

   

$

50,570

 

GAAP  gross margin

 

67.9%

     

66.1%

     

66.4%

     

65.9%

 

Non-GAAP gross margin

 

68.9%

     

67.1%

     

67.7%

     

66.9%

 
                               

Operating expenses reconciliation:

                             

GAAP research and development

$

10,263

   

$

8,626

   

$

19,921

   

$

17,057

 

Non-GAAP adjustment:

                             

Stock-based compensation

 

(1,112)

     

(714)

     

(2,153)

     

(1,267)

 

Non-GAAP research and development

 

9,151

     

7,912

     

17,768

     

15,790

 

As a % of total revenue, non-GAAP

 

20.2%

     

20.4%

     

19.9%

     

20.9%

 
                               

GAAP sales and marketing

 

21,094

     

19,669

     

40,120

     

35,956

 

Non-GAAP adjustment:

                             

Stock-based compensation

 

(1,077)

     

(806)

     

(2,077)

     

(1,441)

 

Non-GAAP sales and marketing

 

20,017

     

18,863

     

38,043

     

34,515

 

As a % of total revenue, non-GAAP

 

44.3%

     

48.6%

     

42.7%

     

45.6%

 
                               

GAAP General and administrative

 

6,620

     

5,504

     

13,154

     

10,684

 

Non-GAAP adjustment:

                             

Stock-based compensation

 

(1,026)

     

(586)

     

(1,935)

     

(1,008)

 

Non-GAAP general and administrative

 

5,594

     

4,918

     

11,219

     

9,676

 

As a % of total revenue, non-GAAP

 

12.4%

     

12.7%

     

12.6%

     

12.8%

 
                               

Loss from operations reconciliation:

                             

GAAP loss from operations

 

(7,271)

     

(8,175)

     

(13,977)

     

(13,826)

 

Non-GAAP adjustment:

                             

Stock-based compensation

 

3,685

     

2,510

     

7,310

     

4,415

 

Non-GAAP loss from operations

$

(3,586)

   

$

(5,665)

   

$

(6,667)

   

$

(9,411)

 

Loss from operations as a percentage of revenue:

                             

GAAP loss from operations

 

(16.1%)

     

(21.1%)

     

(15.7%)

     

(18.3%)

 

Non-GAAP loss from operations

 

(7.9%)

     

(14.6%)

     

(7.5%)

     

(12.4%)

 
                               

Net loss reconciliation:

                             

GAAP

$

(7,013)

   

$

(8,985)

   

$

(13,560)

   

$

(14,881)

 

Non-GAAP adjustment:

                             

Stock-based compensation

 

3,685

     

2,510

     

7,310

     

4,415

 

Non-GAAP Net loss

$

(3,328)

   

$

(6,475)

   

$

(6,250)

   

$

(10,466)

 
                               

Basic and diluted net loss per share reconciliation:

                             
                             

GAAP

$

(0.18)

   

$

(0.69)

   

$

(0.35)

   

$

(1.14)

 

Non-GAAP

$

(0.08)

   

$

(0.50)

   

$

(0.16)

   

$

(0.80)

 
                               

 

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

 

39,175

     

13,036

     

38,793

     

13,016

 

 

Apptio, Inc.

Free Cash Flow Non-GAAP Reconciliation

(In thousands)

(Unaudited)

 
   

Three Months Ended

 

Six Months Ended

   

June 30,

 

June 30,

   

2017

 

2016

 

2017

 

2016

     

Net cash (used in) provided by operating activities

 

$

(10,178)

 

$

(11,389)

 

$

1,735

 

$

(1,409)

Less: purchases of property and equipment

   

(691)

   

(2,128)

   

(2,236)

   

(2,320)

Free cash flow

 

$

(10,869)

 

$

(13,517)

 

$

(501)

 

$

(3,729)

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

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