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Apptio Announces Results for the Second Quarter of 2017
Record Q2 revenue of $45.2 million and introduced new public cloud analytics

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.

Apptio (PRNewsFoto/Apptio)

"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)

© 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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SOURCE Apptio, Inc.