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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.

Apptio (PRNewsFoto/Apptio)

"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

 

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