Apptio Announces Results for the Third Quarter of 2016

Q3 subscription revenue of $33.3 million, up 30% year-over-year

BELLEVUE, Wash., Nov. 2, 2016 /CNW/ -- 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)



















 

© 2016. 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.

Logo - http://photos.prnewswire.com/prnh/20160826/401716LOGO

 

SOURCE Apptio, Inc.

For further information: Investors, Susanna Morgan, (425) 279-6101, ir@apptio.com, or Media, Sarah Vreugdenhil, (425) 974-1331, pr@apptio.com, http://www.Apptio.com

Organization Profile

Apptio, Inc.

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890