In its first earnings report since going public in September, Apptio reported an operating loss of $4.5 million, excluding certain expenses, but the Bellevue, Wash.-based company still exceeded Wall Street expectations.
Apptio, which makes software to help CIOs better understand spending in IT departments, posted a non-GAAP net loss of 45 cents per share on what it said was a record $40.6 million in revenue, an increase of 26 percent over this time last year. A group of seven analysts surveyed in advance by Yahoo Finance expected an average loss of 50 cents per share on about $37.9 million in revenue.
“The momentum continues to build for Apptio and the (technology business management) category,” said Sunny Gupta, Apptio co-founder and CEO, in a statement. 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.”
He added, “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.”
Even though revenues have topped $100 million for the past two years, losses also grew, and the company has yet to turn a profit. But losses appear to be slowing, as Apptio’s third quarter loss of $4.5 million represents a 52 percent decrease from the $7.4 million it lost last year at this time.
In the fourth quarter, Apptio expects total revenue between $41.5 million and $42.5 million, and a non-GAAP operating loss of $8 million to $9 million. For the year, Apptio expects to post between $157.7 million and $158.7 million in revenue and a loss between $21.9 million and $22.9 million.
Becoming profitable is one of Apptio’s goals, and in a conversation with GeekWire shortly after the IPO, Apptio co-founder and Chief Financial Officer Kurt Shintaffer said that will come as the business grows.
First and foremost we think about growth. We think about building a really meaningful company with thousands of customers and serving them all over the world. But we also understand that we do need to generate cash flows from our operations, and we are really excited about our ability to do that in the near term. It primarily comes with scaling our business, that’s the primary driver for a business like Apptio to achieve cash flows, and so our strategy of acquiring customers and building great products so they want to continue to work with us really is the strategy to become cash flow positive.
After setting a price of $16 per share for its initial public offering in late September Apptio stock soared more than 40 percent on its first day. But it came down to earth the following week and has hovered between $19 and $20 per share since. Apptio raised $99.1 million in its IPO.
Part of growing the company is hiring the right people. Last month Apptio brought in former T-Mobile and Telstra CIO Erez Yarkoni as executive vice president of strategy. His focus will be on building the next 1,000 Apptio customers, the company says.