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Apptio Announces Results for the Fiscal Fourth Quarter and Full Year 2017

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Apptio Announces Results for the Fiscal Fourth Quarter and Full Year 2017
Reported Q4 revenue of $52.4 million and positive cash flow for the fiscal year

BELLEVUE, Wash., Feb. 5, 2018 /PRNewswire/ -- Apptio, Inc. (NASDAQ: APTI), the business management system of record for hybrid IT, today announced results for the fiscal fourth quarter and full year ended December 31, 2017.

Apptio (PRNewsFoto/Apptio)

"In the fourth quarter, we achieved record revenue of $52.4 million and we also exceeded our cash flow goals for the year," said Sunny Gupta, co-founder and CEO, Apptio. "As we look into 2018, we aim to continue driving broader customer adoption as we capitalize on shifts in the IT landscape across hybrid IT, digitization and agile."

Fourth Quarter Financial Summary

  • Subscription revenue was $42.6 million, an increase of 21% from the fourth quarter of 2016, and comprised 81% of total revenue. Services revenue was $9.8 million, an increase of 6% from the fourth quarter of 2016. Total revenue was $52.4 million, an increase of 18% from the fourth quarter of 2016.
  • GAAP gross margin was 72%, a significant improvement from the fourth quarter of 2016 GAAP gross margin of 67%.  Non-GAAP gross margin improved to 73%, as compared to non-GAAP gross margin of 69% in the fourth quarter of 2016.
  • GAAP operating margin was negative 14%, improving from GAAP operating margin of negative 17% in the fourth quarter of 2016. Non-GAAP operating margin improved to negative 5%, as compared to non-GAAP operating margin of negative 9% in the fourth quarter of 2016. 
  • GAAP net loss per basic and diluted share was $0.17 based on 41.3 million weighted average shares outstanding, compared to GAAP net loss per basic and diluted share of $0.21 based on 38.3 million weighted average shares outstanding in the fourth quarter of 2016.
  • Non-GAAP net loss per basic and diluted share was $0.06 based on 41.3 million weighted average shares outstanding, compared to non-GAAP net loss per basic and diluted share of $0.11 based on 38.3 million weighted average shares outstanding in the fourth quarter of 2016.
  • For the three months ended December 31, 2017, net cash used in operating activities was $1.5 million as compared to net cash used in operating activities of $1.8 million in the comparable period last year. Free cash flow was negative $2.3 million, as compared to negative $3.7 million in the three months ended December 31, 2016.
  • Cash, cash equivalents and marketable securities were approximately $149.0 million as of December 31, 2017.

Fiscal Year 2017 Financial Summary

  • Subscription revenue was $155.4 million, an increase of 19% from fiscal year 2016, and comprised 82% of total revenue. Services revenue was $33.1 million, an increase of 9% from fiscal year 2016. Total revenue was $188.5 million, an increase of 17% from fiscal year 2016.
  • GAAP gross margin was 69% an improvement from fiscal year 2016 GAAP gross margin of 66%.  Non-GAAP gross margin improved to 70%, as compared to non-GAAP gross margin of 67% for fiscal year 2016.
  • GAAP operating margin was negative 14%, improving from GAAP operating margin of negative 18% for fiscal year 2016. Non-GAAP operating margin improved to negative 5%, as compared to non-GAAP operating margin of negative 11% for fiscal year 2016. 
  • GAAP net loss per basic and diluted share was $0.64 based on 39.8 million weighted average shares outstanding, compared to GAAP net loss per basic and diluted share of $1.61 based on 19.6 million weighted average shares outstanding for fiscal year 2016.
  • Non-GAAP net loss per basic and diluted share was $0.24 based on 39.8 million weighted average shares outstanding, compared to non-GAAP net loss per basic and diluted share of $1.08 based on 19.6 million weighted average shares outstanding for fiscal year 2016.
  • For fiscal year ended December 31, 2017, net cash provided by operating activities was $9.4 million as compared to net cash used in operating activities of $4.0 million in the comparable period last year. Free cash flow was $5.8 million, as compared to negative $9.4 million in the fiscal year ended December 31, 2016.

Business Highlights

  • Improved our trailing twelve months subscription net dollar retention to approximately 102%.
  • Saw continued momentum with our new product packages, including IT Financial Management Foundation and Cloud Cost Management.
  • Added the most new customers in company history during 2017, and ended the year with approximately 440 total customers.
  • Completed the acquisition of Digital Fuel on February 2, 2018 to further extend our leadership in the Technology Business Management market.

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 first quarter ending March 31, 2018 and for the full year 2018 as follows:

First quarter of 2018:

  • Total revenue is expected to be in the range of $51.0 to $52.0 million
  • Non-GAAP operating loss between $2.5 and $3.0 million

Full year 2018:

  • Total revenue is expected to be in the range of $220 and $225 million
  • Approximately break-even 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. Guidance reflects the February 2, 2018 acquisition of Digital Fuel and the adoption of ASC 606 on January 1, 2018. Non-GAAP operating income guidance excludes transaction expenses related to the acquisition of Digital Fuel.

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: 4795737), or if outside North America, by dialing 574-990-1011 (passcode: 4795737). 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 first 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-Q filed with the SEC on October 31, 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



Year Ended



December 31,



December 31,



2017



2016



2017



2016




Revenue
















Subscription


$

42,557



$

35,066



$

155,417



$

130,061

Professional services



9,810




9,254




33,102




30,508

Total revenue



52,367




44,320




188,519




160,569

Cost of revenue
















Subscription



7,381




7,338




29,650




27,298

Professional services



7,304




7,082




28,903




26,862

Total cost of revenue



14,685




14,420




58,553




54,160

Gross profit



37,682




29,900




129,966




106,409

Operating expenses
















Research and development



10,490




9,403




40,550




35,475

Sales and marketing



26,966




21,600




87,949




75,856

General and administrative



7,364




6,260




27,706




23,229

Total operating expenses



44,820




37,263




156,205




134,560

Loss from operations



(7,138)




(7,363)




(26,239)




(28,151)

Other income (expense)
















Interest income (expense) and other, net



393




213




1,204




(1,533)

Foreign exchange loss



(198)




(643)




(25)




(1,417)

Loss before provision for income taxes



(6,943)




(7,793)




(25,060)




(31,101)

Income tax benefit (provision)



53




(124)




(561)




(452)

Net loss


$

(6,890)



$

(7,917)



$

(25,621)



$

(31,553)

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


$

(0.17)



$

(0.21)



$

(0.64)



$

(1.61)

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



41,276




38,323




39,754




19,595


 

Apptio, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)




December 31,



December 31,



2017



2016

Assets








Current assets








Cash and cash equivalents


$

55,069



$

42,007

Short-term investments



93,901




36,741

Accounts receivable, net of allowance for doubtful accounts








 of $413 and $122



68,782




58,587

Prepaid expenses and other current assets



5,079




5,440

Total current assets



222,831




142,775

Long-term assets








Property and equipment, net of accumulated depreciation








of $21,924 and $17,091



10,437




12,827

Long-term investments



--




38,446

Other long-term assets



983




734

Total assets


$

234,251



$

194,782

Liabilities and Stockholders' Equity








Current liabilities








Accounts payable


$

5,598



$

3,574

Accrued payroll and other expenses



16,481




14,073

Deferred revenue



116,831




97,885

Deferred rent



892




799

Capital leases



21




43

Total current liabilities



139,823




116,374

Long-term liabilities








Deferred revenue, net of current portion



2,470




2,254

Deferred rent, net of current portion



3,483




4,360

Capital leases, net of current portion



26




51

Asset retirement obligation



199




175

Total liabilities



146,001




123,214









Stockholders' equity








Class A and Class B Common stock



4




4

Additional paid-in capital



314,301




271,982

Accumulated other comprehensive loss



(110)




(94)

Accumulated deficit



(225,945)




(200,324)

Total stockholders' equity



88,250




71,568

Total liabilities and stockholders' equity


$

234,251



$

194,782

 

Apptio, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)




Three Months Ended



Year Ended



December 31,



December 31,



2017



2016



2017



2016

Cash flows from operating activities
















Net loss


$

(6,890)



$

(7,917)



$

(25,621)



$

(31,553)

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
















Depreciation and amortization



1,444




1,501




6,101




5,988

Amortization of premiums on investments



(24)




18




35




38

Loss (gain) on disposal of property and equipment



(11)




(1)




(4)




25

Stock-based compensation



4,403




3,557




16,070




10,459

Accretion of expense on line of credit fees



--




9




18




136

Loss on extinguishment of debt



--




--




--




722

Remeasurement of preferred stock warrant liability



--




--




--




202

Foreign exchange loss



198




412




25




412

Change in operating assets and liabilities
















Accounts receivable



(22,810)




(16,067)




(10,784)




(5,765)

Prepaid expenses and other assets



78




(2,946)




3,338




(3,606)

Accounts payable



1,607




(1,370)




2,242




278

Accrued expenses



1,597




4,068




(428)




1,626

Deferred revenue



19,091




16,373




19,163




16,908

Deferred rent



(203)




557




(799)




136

Net cash (used in) provided by operating activities



(1,520)




(1,806)




9,356




(3,994)

Cash flows from investing activities
















Purchases of property and equipment



(766)




(1,884)




(3,603)




(5,402)

Proceeds from sale of equipment



13




--




24




--

Proceeds from maturities of investments



15,382




--




50,457




6,245

Purchases of investments



(3,026)




(64,477)




(69,222)




(75,303)

Payment of security deposits



(39)




(141)




(62)




(184)

Net cash provided by (used in) investing activities



11,564




(66,502)




(22,406)




(74,644)

Cash flows from financing activities
















Proceeds from exercise of common stock options



12,920




333




21,868




1,333

Proceeds from purchases of stock under employee stock purchase plan



2,130




--




4,381




--

Proceeds from initial public offering



--




--




--




102,672

Payment of initial public offering costs



--




(1,788)




(243)




(2,362)

Proceeds from long-term debt



--




--




--




20,000

Principal payments on long-term debt



--




--




--




(20,000)

Payment of debt prepayment fees



--




--




--




(200)

Principal payments on capital lease obligations



(11)




(10)




(43)




(43)

Payment of capitalized loan fees



--




--




--




(248)

Net cash  provided by (used in) financing activities



15,039




(1,465)




25,963




101,152

Foreign currency effect on cash, cash equivalents and restricted cash



707




68




149




(263)

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



25,790




(69,705)




13,062




22,251

Cash, cash equivalents and restricted cash
















Beginning of period



29,279




111,712




42,007




19,756

End of period


$

55,069



$

42,007



$

55,069



$

42,007

 

Apptio, Inc.
Results of Operations GAAP to Non-GAAP Reconciliation
(In thousands, except per share data)
(Unaudited)



Three Months Ended



Year Ended



December 31,



December 31,



2017



2016



2017



2016


 Revenue
















 Subscription

$

42,557



$

35,066



$

155,417



$

130,061


 Professional services


9,810




9,254




33,102




30,508


 Total revenue


52,367




44,320




188,519




160,569


















 Cost of revenue reconciliation:
















 GAAP subscription


7,381




7,338




29,650




27,298


 Non-GAAP adjustment:
















 Stock-based compensation


(291)




(327)




(1,218)




(891)


 Non-GAAP subscription cost of revenue


7,090




7,011




28,432




26,407


















 GAAP professional services


7,304




7,082




28,903




26,862


 Non-GAAP adjustment:
















 Stock-based compensation


(289)




(263)




(1,131)




(820)


 Non-GAAP professional services cost of revenue

$

7,015



$

6,819



$

27,772



$

26,042


















 Gross profit and gross margin reconciliation:
















 GAAP subscription gross profit

$

35,176



$

27,728



$

125,767



$

102,763


 Non-GAAP adjustment:
















 Stock-based compensation


291




327




1,218




891


 Non-GAAP subscription gross profit


35,467




28,055




126,985




103,654


GAAP subscription gross margin


82.7

%



79.1

%



80.9

%



79.0

%

Non-GAAP subscription gross margin


83.3

%



80.0

%



81.7

%



79.7

%

















 GAAP professional services gross profit


2,506




2,172




4,199




3,646


 Non-GAAP adjustment:
















 Stock-based compensation


289




263




1,131




820


 Non-GAAP professional services gross profit


2,795




2,435




5,330




4,466


 GAAP professional services gross margin


25.5

%



23.5

%



12.7

%



12.0

%

 Non-GAAP professional services gross margin


28.5

%



26.3

%



16.1

%



14.6

%

















 GAAP gross profit


37,682




29,900




129,966




106,409


 Non-GAAP adjustment:
















 Stock-based compensation


580




590




2,349




1,711


 Non-GAAP gross profit

$

38,262



$

30,490



$

132,315



$

108,120


 GAAP  gross margin


72.0

%



67.5

%



68.9

%



66.3

%

 Non-GAAP gross margin


73.1

%



68.8

%



70.2

%



67.3

%

















 Operating expenses reconciliation:
















 GAAP research and development

$

10,490



$

9,403



$

40,550



$

35,475


 Non-GAAP adjustment:
















 Stock-based compensation


(1,159)




(1,012)




(4,491)




(2,977)


 Non-GAAP research and development


9,331




8,391




36,059




32,498


 As a % of total revenue, non-GAAP


17.8

%



18.9

%



19.1

%



20.2

%

















 GAAP sales and marketing


26,966




21,600




87,949




75,856


 Non-GAAP adjustment:
















 Stock-based compensation


(1,298)




(956)




(4,614)




(3,132)


 Non-GAAP sales and marketing


25,668




20,644




83,335




72,724


 As a % of total revenue, non-GAAP


49.0

%



46.6

%



44.2

%



45.3

%

















 GAAP General and administrative


7,364




6,260




27,706




23,229


 Non-GAAP adjustment:
















 Stock-based compensation


(1,366)




(999)




(4,616)




(2,639)


 Non-GAAP general and administrative


5,998




5,261




23,090




20,590


 As a % of total revenue, non-GAAP


11.5

%



11.9

%



12.2

%



12.8

%

















 

Loss from operations reconciliation:
















 GAAP loss from operations


(7,138)




(7,363)




(26,239)




(28,151)


 Non-GAAP adjustment:
















 Stock-based compensation


4,403




3,557




16,070




10,459


 Non-GAAP loss from operations

$

(2,735)



$

(3,806)



$

(10,169)



$

(17,692)


 Loss from operations as a percentage of revenue:
















 GAAP loss from operations


(13.6)

%



(16.6)

%



(13.9)

%



(17.5)

%

 Non-GAAP loss from operations


(5.2)

%



(8.6)

%



(5.4)

%



(11.0)

%

















 Net loss reconciliation:
















 GAAP

$

(6,890)



$

(7,917)



$

(25,621)



$

(31,553)


 Non-GAAP adjustment:
















 Stock-based compensation


4,403




3,557




16,070




10,459


 Non-GAAP Net loss

$

(2,487)



$

(4,360)



$

(9,551)



$

(21,094)


















 Basic and diluted net loss per share
















 reconciliation:
















 GAAP

$

(0.17)



$

(0.21)



$

(0.64)



$

(1.61)


 Non-GAAP

$

(0.06)



$

(0.11)



$

(0.24)



$

(1.08)


















 Shares used to compute basic and diluted GAAP
















 and Non-GAAP net loss per share


41,276




38,323




39,754




19,595


 

Apptio, Inc.
Free Cash Flow Non-GAAP Reconciliation
(In thousands)
(Unaudited)




Three Months Ended



Year Ended



December 31,



December 31,



2017



2016



2017



2016




 Net cash (used in) provided by operating activities


$

(1,520)



$

(1,806)



$

9,356



$

(3,994)

 Less: purchases of property and equipment



(766)




(1,884)




(3,603)




(5,402)

 Free cash flow


$

(2,286)



$

(3,690)



$

5,753



$

(9,396)

© 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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