BELLEVUE, Wash., April 30, 2018 /PRNewswire/ -- Apptio, Inc. (NASDAQ: APTI), the business management system of record for hybrid IT, today announced results for the fiscal first quarter ended March 31, 2018.

"Our first quarter subscription revenue growth accelerated to 26%, year over year, and we reached break-even Non-GAAP operating income," said Sunny Gupta, co-founder and CEO, Apptio. "The quarter was driven by large strategic deals, continued momentum in the enterprise segment, solid renewals and upsells, and a strong contribution from the Digital Fuel business."

First Quarter Financial Summary

  • Subscription revenue was $45.5 million, an increase of 26% from the first quarter of 2017, and comprised 84% of total revenue. Services revenue was $8.6 million, an increase of 11% from the first quarter of 2017. Total revenue was $54.1 million, an increase of 23% from the first quarter of 2017.
  • GAAP gross margin was 68%, a significant improvement from the first quarter of 2017 GAAP gross margin of 65%.  Non-GAAP gross margin improved to 70%, as compared to non-GAAP gross margin of 66% in the first quarter of 2017.
  • GAAP operating margin was negative 15%, improving from GAAP operating margin of negative 17% in the first quarter of 2017. Non-GAAP operating margin improved to 0%, as compared to non-GAAP operating margin of negative 8% in the first quarter of 2017. 
  • GAAP net loss per basic and diluted share was $0.19 based on 42.8 million weighted average shares outstanding, compared to GAAP net loss per basic and diluted share of $0.19 based on 38.4 million weighted average shares outstanding in the first quarter of 2017.
  • Non-GAAP net loss per basic and diluted share was $0.00 based on 42.8 million weighted average shares outstanding, compared to non-GAAP net loss per basic and diluted share of $0.09 based on 38.4 million weighted average shares outstanding in the first quarter of 2017.
  • Cash, cash equivalents and marketable securities were approximately $253.4 million as of March 31, 2018.

Business Highlights

  • Saw continued strength in both our Strategic and Enterprise segments in the quarter
  • Received certification in the Federal Risk and Authorization Management Program (FedRAMP), perpetuating our momentum at the Federal Government level
  • Completed successful acquisition and initial integration of Digital Fuel
  • Completed $143.75 million Convertible Notes Offering

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 second quarter ending June 30, 2018 and for the full year 2018 as follows:

Second quarter of 2018:

  • Total revenue is expected to be in the range of $55.0 to $56.0 million
  • Non-GAAP operating loss between $0.5 and $1.0 million

Full year 2018:

  • Total revenue is expected to be in the range of $225 and $230 million
  • Positive Non-GAAP operating income

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: 2126329), or if outside North America, by dialing 574-990-1011 (passcode: 2126329). 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 second quarter of, and full year, 2018. 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-K filed with the SEC on February 21, 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





March 31,





2018



2017









*As Adjusted






Revenue










Subscription


$

45,471



$

36,187



Professional services



8,599




7,744



   Total revenue



54,070




43,931



Cost of revenue










Subscription



8,949




7,850



Professional services



8,465




7,569



   Total cost of revenue



17,414




15,419



   Gross profit



36,656




28,512



Operating expenses










Research and development



11,897




9,658



Sales and marketing



22,678




19,617



General and administrative



10,154




6,534



   Total operating expenses



44,729




35,809



   Loss from operations



(8,073)




(7,297)



Other income (expense)










Interest income and other, net



128




236



Foreign exchange gain (loss)



114




(53)



   Loss before provision for income taxes



(7,831)




(7,114)



Provision for income taxes



(268)




(25)



   Net loss


$

(8,099)



$

(7,139)



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


$

(0.19)



$

(0.19)



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



42,762




38,407













 *As adjusted for the three months ended March 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 Balance Sheets

(In thousands)

(Unaudited)




March 31,



December 31,




2018



2017








*As Adjusted


Assets









Current assets









Cash and cash equivalents


$

190,066



$

55,069


Short-term investments



55,394




93,901


Accounts receivable, net of allowance for doubtful accounts of $317 and $413



56,022




68,782


Deferred costs



14,906




11,898


Prepaid expenses and other current assets



4,786




5,079


Total current assets



321,174




234,729


Long-term assets









Property and equipment, net of accumulated depreciation of $23,161 and $21,924



9,876




10,437


Long-term investments



7,979




--


Deferred costs, net of current portion



15,792




17,182


Acquisition-related intangible assets, net



19,517




--


Goodwill



30,572




--


Other long-term assets



1,036




983


Total assets


$

405,946



$

263,331


Liabilities and Stockholders' Equity









Current liabilities









Accounts payable


$

8,100



$

5,598


Accrued payroll and other expenses



21,450




16,481


Deferred revenue



116,610




116,831


Deferred rent



919




892


Capital leases



24




21


Total current liabilities



147,103




139,823


Long-term liabilities









Convertible senior notes, net



106,574




--


Deferred revenue, net of current portion



6,834




2,470


Deferred rent, net of current portion



3,237




3,483


Capital leases, net of current portion



117




26


Asset retirement obligation



205




199


Total liabilities



264,070




146,001











Stockholders' equity









Class A and Class B Common stock



5




4


Additional paid-in capital



346,888




314,301


Accumulated other comprehensive loss



(53)




(110)


Accumulated deficit



(204,964)




(196,865)


Total stockholders' equity



141,876




117,330


Total liabilities and stockholders' equity


$

405,946



$

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





March 31,





2018



2017









*As Adjusted



Cash flows from operating activities










Net loss


$

(8,099)



$

(7,139)



Adjustments to reconcile net loss to net cash provided by operating activities










   Depreciation and amortization



1,376




1,530



   (Accretion of discounts)/amortization of premiums on investments



(42)




23



   Amortization of acquisition-related intangible assets



583




--



   Amortization of deferred costs



3,936




3,268



   Amortization of debt discount and issuance costs



176




--



   Loss (gain) on disposal of property and equipment



47




(7)



   Stock-based compensation



4,952




3,625



   Impairment of acquired assets



573




--



   Accretion of capitalized loan fees



--




9



   Foreign exchange gain



(114)




(174)



   Change in operating assets and liabilities










Accounts receivable



19,015




20,098



Prepaid expenses and other assets



1,747




290



Deferred costs



(2,908)




(2,672)



Accounts payable



2,263




1,795



Accrued expenses



(2,792)




(958)



Deferred revenue



(10,713)




(7,570)



Deferred rent



(224)




(200)



Net cash provided by operating activities



9,776




11,918



Cash flows from investing activities










Business combinations, net of cash acquired



(34,569)




--



Purchases of property and equipment



(680)




(1,545)



Proceeds from sale of equipment



--




9



Proceeds from maturities of investments



49,400




6,800



Purchases of investments



(18,793)




(21,445)



Payments for security deposits



(31)




(9)



Net cash used in investing activities



(4,673)




(16,190)



Cash flows from financing activities










Proceeds from borrowings on convertible notes, net of issuance costs



139,438




--



Purchase of capped call



(17,092)




--



Proceeds from exercises of common stock options



7,515




558



Payment of initial public offering costs



--




(243)



Principal payments on capital lease obligations



(6)




(11)



Net cash provided by financing activities



129,855




304



Foreign currency effect on cash, cash equivalents and restricted cash



39




(135)



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



134,997




(4,103)



Cash, cash equivalents and restricted cash










Beginning of period



55,069




42,007



End of period


$

190,066



$

37,904













 *As adjusted for the three months ended March 31, 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



March 31,



2018



2017







*As Adjusted


 Revenue








 Subscription

$

45,471



$

36,187


 Professional services


8,599




7,744


    Total revenue


54,070




43,931










 Cost of revenue reconciliation:








 GAAP subscription


8,949




7,850


 Non-GAAP adjustment:








    Stock-based compensation


(319)




(358)


    Amortization of acquisition-related intangible assets


(583)




--


    Non-GAAP subscription cost of revenue


8,047




7,492










 GAAP professional services


8,465




7,569


 Non-GAAP adjustment:








    Stock-based compensation


(328)




(318)


    Non-GAAP professional services cost of revenue

$

8,137



$

7,251










 Gross profit and gross margin reconciliation:








 GAAP subscription gross profit

$

36,522



$

28,337


 Non-GAAP adjustment:








    Stock-based compensation


319




358


    Amortization of acquisition-related intangible assets


583




--


    Non-GAAP subscription gross profit


37,424




28,695


    GAAP subscription gross margin


80.3

%



78.3

%

    Non-GAAP subscription gross margin


82.3

%



79.3

%









 GAAP professional services gross profit


134




175


 Non-GAAP adjustment:








    Stock-based compensation


328




318


    Non-GAAP professional services gross profit


462




493


    GAAP professional services gross margin


1.6

%



2.3

%

    Non-GAAP professional services gross margin


5.4

%



6.4

%









 GAAP gross profit


36,656




28,512


 Non-GAAP adjustment:








    Stock-based compensation


647




676


    Amortization of acquisition-related intangible assets


583




--


    Non-GAAP gross profit

$

37,886



$

29,188


    GAAP gross margin


67.8

%



64.9

%

    Non-GAAP gross margin


70.1

%



66.4

%









 Operating expenses reconciliation:








 GAAP research and development

$

11,897



$

9,658


 Non-GAAP adjustment:








    Stock-based compensation


(1,393)




(1,041)


    Non-GAAP research and development


10,504




8,617


    As a % of total revenue, non-GAAP


19.4

%



19.6

%









 GAAP sales and marketing


22,678




19,617


 Non-GAAP adjustment:








    Stock-based compensation


(1,430)




(999)


    Non-GAAP sales and marketing


21,248




18,618


    As a % of total revenue, non-GAAP


39.3

%



42.4

%









 GAAP General and administrative


10,154




6,534


 Non-GAAP adjustment:








    Stock-based compensation


(1,482)




(909)


    Acquisition costs and impairment of acquired assets


(2,539)




--


    Non-GAAP general and administrative


6,133




5,625


    As a % of total revenue, non-GAAP


11.3

%



12.8

%









 Loss from operations reconciliation:








 GAAP loss from operations


(8,073)




(7,297)


 Non-GAAP adjustment:








    Stock-based compensation


4,952




3,625


    Acquisition costs and impairment of acquired assets


2,539




--


    Amortization of acquisition-related intangible assets


583




--


    Non-GAAP income (loss) from operations

$

1



$

(3,672)


 Loss from operations as a percentage of revenue:








    GAAP loss from operations


(14.9%)




(16.6%)


    Non-GAAP income (loss) from operations


0.0

%



(8.4%)










 Net loss reconciliation:








 GAAP

$

(8,099)



$

(7,139)


 Non-GAAP adjustment:








    Stock-based compensation


4,952




3,625


    Acquisition costs and impairment of acquired assets


2,539




--


    Amortization of acquisition-related intangible assets


583




--


    Non-GAAP Net loss

$

(25)



$

(3,514)










 Basic and diluted net loss per share








 reconciliation:








 GAAP

$

(0.19)



$

(0.19)


    Non-GAAP adjustment:








       Stock-based compensation


0.12




0.10


       Acquisition costs and impairment of acquired assets


0.06




0.00


       Amortization of acquisition-related intangible assets


0.01




0.00


   Non-GAAP

$

0.00



$

(0.09)










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









42,762




38,407










 *As adjusted for the three months ended March 31, 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




March 31,




2018



2017








*As Adjusted






 Net cash provided by operating activities


$

9,776



$

11,918


 Less: purchases of property and equipment



(680)




(1,545)


 Free cash flow


$

9,096



$

10,373











 *As adjusted for the three months ended March 31, 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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