Apigee Announces Fourth Quarter and Fiscal 2016 Results

SAN JOSE, Calif., Sept. 14, 2016 (GLOBE NEWSWIRE) — Apigee® (NASDAQ:APIC), the API company, today announced financial results for its fourth quarter and fiscal year ended July 31, 2016.

Fiscal Year 2016

For FY 16, Apigee reported total revenue of $92.0 million, up 34% compared to $68.6 million in FY 15.  Apigee reported FY 16 product revenue (defined as license revenue plus subscription and support revenue) of $75.3 million, up 46% compared to $51.6 million in FY 15.

Apigee reported FY 16 GAAP gross margin of 70.1%, up from 63.6% in FY 15, and non-GAAP gross margin of 71.8% compared to 65.3% in FY 15.  Apigee reported an FY 16 GAAP operating loss of $40.9 million, compared to $49.5 million in FY 15.  FY 16 non-GAAP operating loss was $31.5 million compared to $44.9 million in FY 15.  FY 16 GAAP net loss per share was $1.39, compared to $4.73 in FY 15, and FY 16 non-GAAP net loss per share was  $1.08 compared to $1.81 in FY 15.  FY 16 operating cash flow improved to $(21.7) million compared to $(37.4) million in FY 15.  Total deferred revenue was $53.9 million at the end of FY 16 up 32% from $40.8 million at the end of FY 15.  The balance of cash and cash equivalents at the end of FY 16 was $68.3 million.

A reconciliation of GAAP to non-GAAP financial measures has been provided in the financial statement tables included in this press release. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures.”

Fourth Quarter Fiscal 2016

For Q4 16, Apigee reported total revenue of $25.1 million, up 34% from $18.7 million in Q4 15.  Apigee reported Q4 16 product revenue (defined as license revenue plus subscription and support revenue) of $20.2 million, up 39% from $14.5 million in Q4 15.

Apigee reported Q4 16 GAAP gross margin of 70.9%, up from 66.4% in Q4 15, and Q4 16 non-GAAP gross margin of 72.7%, up from 68.1% in Q4 15. Apigee reported a Q4 16 GAAP operating loss of $9.6 million, compared to $12.4 million in Q4 15. Q4 16 non-GAAP operating loss was $6.3 million, compared to $11.0 million in Q4 15. Q4 16 GAAP net loss per share was $0.32, compared to $0.43 in Q4 15. Q4 16 non-GAAP net loss per share was $0.21, compared to $0.38 in Q4 15. Q4 16 operating cash flow was $(2.6) million, compared to $(13.9) million in Q4 15.

Recent Business Updates:

  • Apigee now has more than 335 customers, up more than 130 compared to the end of Q4 15.  In Q4 16, we did expansion deals with 50 customers.
  • Key customers in the quarter included Allstate, CLEAR, digitalSTROM, Du, Emaratech, Lego, MindBody, Morrisons, SEI Investments, Shutterfly, T-Mobile, Telstra, Thomson Reuters, Uptake and Western Union.
  • Our FY 16 simple dollar-based renewal rate exceeded 90%.
  • For FY 16, Apigee reported gross billings of $105.1 million, up 29% from $81.2 million in FY 15.  FY 16 product gross billings were $84.1 million, up 33% from $63.4 million a year ago.
  • We announced Apigee Open Banking APIx, a new software accelerator designed to help banks within the European Union more quickly and easily embrace open banking requirements set out in the revised Payment Services Directive (PSD2).
  • Apigee and Pivotal announced that Apigee Edge’s Microgateway capability is now supported by Pivotal Cloud Foundry, enabling developers to more easily leverage Apigee’s API management software to share, monitor and secure APIs and microservices for applications developed with Pivotal’s cloud native platform.
  • We entered into new or expanded partnership agreements in the quarter with Acclaim Consulting Group, Algorism, Cloud Elements, Data Factory Labs, DigitalAPICraft, finRenaissance, Incentro, Juggernaut Innovations, Okta, Pivotal, PromptNow, Tata America International, Tavant Technologies, The APIfoundry, The Coral Edge, and Winning Edge Solutions.

Guidance:

On September 8, 2016, Apigee announced that it had entered into a definitive agreement to be acquired by Google.  As a result, Apigee will not provide an outlook for our future financial results.  Any previous statements that could be interpreted to project our future financial performance should no longer be relied upon.

Conference Call Details:

As a result of the acquisition announcement, the conference call previously scheduled for today to discuss our financial results has been canceled.

About Apigee

Apigee® (NASDAQ:APIC) provides a leading API platform for digital business.  Many of the world’s largest organizations select Apigee to power their digital business. Apigee customers include global enterprises such as Walgreens, Burberry, Morningstar, and First Data.  Apigee is headquartered in San Jose, California. For more information go to http://apigee.com.

Forward-Looking Statements

This communication contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the proposed transaction and business combination between Google and Apigee.  Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many factors could cause actual results to differ materially from the forward-looking statements in this press release, including but not limited to: (i) the risk that the transaction may not be completed in a timely manner or at all, which may adversely affect Apigee’s business and the price of the common stock of Apigee, (ii) the failure to satisfy the conditions to the consummation of the transaction, including the adoption of the merger agreement by the stockholders of Apigee and the receipt of certain governmental and regulatory approvals, (iii) the occurrence of any event, change or other circumstance that could give rise to termination of the merger agreement, (iv) the effect of the announcement or pendency of the transaction on Apigee’s business relationships, operating results, and business generally, (v) risks that the proposed transaction disrupts current plans and operations of Google or Apigee, including disruptions to relationships with customers, licensees, and other business partners of Apigee and potential difficulties in Apigee employee retention as a result of the transaction, (vi) risks related to diverting management’s attention from Apigee’s ongoing business operations, and (vii) the outcome of any legal proceedings that may be instituted against Google or against Apigee related to the merger agreement or the transaction.

The foregoing list of factors is not exclusive. Additional risks and uncertainties that could affect Apigee’s financial and operating results are included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in Apigee’s Quarterly Report on Form 10-Q filed with the SEC on May 27, 2016. Apigee’s SEC filings are available on the Investor Relations section of the Company’s website at http://investors.apigee.com and on the SEC’s website at www.sec.gov. While Apigee may elect to update forward-looking statements at some point in the future, Apigee specifically disclaims any obligation to update the forward-looking statements provided to reflect any change in its expectations or any change in events, conditions, or circumstances on which any such statement is based, and, therefore, you should not rely on these forward-looking statements as representing Apigee’s views as of any date subsequent to today.

Non-GAAP Financial Measures

Apigee provides the following non-GAAP financial measures in this release: gross billings, product gross billings, non-GAAP gross margin, non-GAAP operating loss, non-GAAP net loss, and non-GAAP net loss per share. These non-GAAP items are key measures used by our management to understand and evaluate our operating performance and trends. In particular, because a number of these measures exclude certain non-cash expenses, they can provide useful measures for period-to-period comparisons of our business.

Apigee uses these non-GAAP financial measures internally in analyzing its operating results and believes they are useful to investors, as a supplement to GAAP measures, in evaluating its ongoing operational performance. Apigee believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends.

Non-GAAP financial measures should not be considered in isolation from, or as substitutes for, their most directly comparable financial measure prepared in accordance with GAAP. A reconciliation of the historical non-GAAP financial measures to their most directly comparable GAAP measures has been provided in the financial statement tables included below in this press release. Investors are encouraged to review the reconciliation of these historical non-GAAP financial measures to their most directly comparable GAAP financial measures.

We calculate non-GAAP gross margin, non-GAAP operating loss and non-GAAP net loss as the respective GAAP balances, adjusted for: (1) stock-based compensation and (2) the amortization of intangible assets. Non-GAAP net loss per share is calculated as non-GAAP net loss divided by GAAP weighted average shares outstanding, except with respect to FY 15.  For FY 15, non-GAAP net loss per share is calculated as non-GAAP net loss divided by non-GAAP weighted average shares outstanding. The non-GAAP weighted average shares outstanding are adjusted to assume the conversion of outstanding preferred shares to common shares as of the beginning of the period.

We define gross billings as our total revenue plus the change in our deferred revenue in a period. We define product gross billings as our total product revenue (where product is defined as license, subscription and support) plus the change in our license, subscription and support deferred revenue in a period. Gross billings and product gross billings in any period consists of sales to new customers plus renewals and additional sales to existing customers. Our management uses gross billings and product gross billings as a performance measurement because we believe that gross billings and product gross billings provide valuable insight into the sales of our solutions and the performance of our business. On certain transactions, a portion of gross billings will be recognized as revenue over a period of more than 12 months. We do not consider gross billings as a substitute for revenue recognition or revenue measurement.

 
Apigee Corporation
Consolidated Balance Sheets
(in thousands)
         
    July 31,   July 31,
    2016   2015
    (Unaudited)    
Assets        
Current assets        
Cash and cash equivalents   $ 68,303     $ 89,562  
Accounts receivable, net   25,958     21,451  
Prepaid expenses and other current assets   5,092     5,806  
Total current assets   99,353     116,819  
Property and equipment, net   1,923     3,144  
Goodwill   14,744     14,744  
Intangible assets, net   2,165     3,200  
Other assets   652     799  
Total assets   $ 118,837     $ 138,706  
Liabilities and stockholders’ equity        
Current liabilities        
Accounts payable   $ 368     $ 2,015  
Accrued expenses and other current liabilities   11,247     9,796  
Deferred revenue, current portion   44,833     35,648  
Term debt, current portion   1,318     2,079  
Total current liabilities   57,766     49,538  
Non-current liabilities        
Deferred revenue, non-current   9,056     5,154  
Deferred rent, non-current   1,038     1,550  
Other liabilities, non-current   645     773  
Term debt, non-current   882     1,787  
Total non-current liabilities   11,621     9,264  
Total liabilities   69,387     58,802  
Commitments and contingencies        
Stockholders’ equity        
Common stock   30     29  
Additional paid-in capital   287,156     276,099  
Accumulated deficit   (237,736 )   (196,224 )
Total stockholders’ equity   49,450     79,904  
Total liabilities and stockholders’ equity   $ 118,837     $ 138,706  
                 

Apigee Corporation
Consolidated Statements of Comprehensive Loss
(in thousands, except per share amounts)
         
    Three Months Ended
 July 31,
  Year Ended
 July 31,
    2016   2015   2016   2015
    (Unaudited)   (Unaudited)
Revenue                
License   $ 8,582     $ 5,538     $ 32,345     $ 20,757  
Subscription and support   11,604     9,007     42,936     30,865  
Professional services and other   4,930     4,157     16,746     16,985  
Total revenue   25,116     18,702     92,027     68,607  
Cost of revenue                
License   136     128     521     514  
Subscription and support   3,168     2,887     12,469     11,062  
Professional services and other   4,007     3,268     14,535     13,415  
Total cost of revenue   7,311     6,283     27,525     24,991  
Gross profit   17,805     12,419     64,502     43,616  
Operating expenses                
Research and development   10,281     8,435     37,795     30,387  
Sales and marketing   12,166     12,937     50,178     49,250  
General and administrative   4,963     3,450     17,436     13,453  
Total operating expenses   27,410     24,822     105,409     93,090  
Loss from operations   (9,605 )   (12,403 )   (40,907 )   (49,474 )
Other income (expense), net   11     (69 )   (390 )   (452 )
Loss before provision for income taxes   (9,594 )   (12,472 )   (41,297 )   (49,926 )
Provision for income taxes   (65 )   84     215     427  
Net loss and comprehensive loss   $ (9,529 )   $ (12,556 )   $ (41,512 )   $ (50,353 )
Net loss per share:                
Basic and diluted   $ (0.32 )   $ (0.43 )   $ (1.39 )   $ (4.73 )
Weighted-average shares outstanding used in calculating net loss per share:                
Basic and diluted   30,211     29,313     29,769     10,651  
                         

Apigee Corporation
Consolidated Statements of Cash Flows
(in thousands)
         
    Three Months Ended
 July 31,
  Year Ended
 July 31,
    2016   2015   2016   2015
    (Unaudited)   (Unaudited)
Cash flows from operating activities                
Net loss   $ (9,529 )   $ (12,556 )   $ (41,512 )   $ (50,353 )
Adjustments to reconcile net loss to net cash used in operating activities                
Depreciation and amortization   611     627     2,401     2,436  
Provision for doubtful accounts   (80 )   4     (14 )   42  
Amortization of debt discount   14     8     39     46  
Deferred income taxes                
Stock-based compensation expense   3,010     1,182     8,388     3,451  
Loss (gain) on disposal of fixed assets       10         10  
Loss on lease abandonment                
Changes in operating assets and liabilities                
Accounts receivable   1,638     (5,363 )   (4,493 )   (5,090 )
Prepaid expenses and other assets   (259 )   (1,771 )   841     (1,733 )
Accounts payable   (152 )   433     (1,400 )   (996 )
Accrued expenses, other liabilities and deferred rent   (810 )   1,131     968     2,209  
Deferred revenue   2,979     2,422     13,087     12,611  
Net cash used in operating activities   (2,578 )   (13,873 )   (21,695 )   (37,367 )
Cash flows from investing activities                
Purchase of property and equipment   (105 )   (131 )   (241 )   (966 )
Net cash used in investing activities   (105 )   (131 )   (241 )   (966 )
Cash flows from financing activities                
Proceeds from issuance of debt, net of issuance costs           2,648     4,000  
Repayments of debt obligations   (331 )   (524 )   (4,489 )   (5,382 )
Proceeds from initial public offering, net of offering costs           (152 )   77,092  
Payment of deferred costs related to initial public offering       (1,172 )        
Repurchase of Series G-1 convertible preferred stock           (18 )    
Cash paid for fractional shares   (18 )   (8 )       (8 )
Distribution of vested Restricted stock units (net)           (531 )    
Taxes paid related to net share settlement of equity awards   (531 )            
Proceeds from exercise of stock options, net of taxes paid   555     25     1,162     434  
Proceeds from issuance of Employee Stock Purchase Plan shares   1,096         2,057      
Net cash provided by (used in) financing activities   771     (1,679 )   677     76,136  
Net increase (decrease) in cash and cash equivalents   (1,912 )   (15,683 )   (21,259 )   37,803  
Cash and cash equivalents                
Beginning of period   70,215     105,245     89,562     51,759  
End of period   68,303     89,562     68,303     89,562  
                         

Apigee Corporation
Reconciliation of GAAP to Non-GAAP Financial Measures
(in thousands, except per share amounts)
         
    Three Months Ended
 July 31,
  Year Ended
 July 31,
    2016   2015   2016   2015
Gross billings                
Total revenue   $ 25,116     $ 18,702     $ 92,027     $ 68,607  
Total deferred revenue, end of period   53,889     40,802     53,889     40,802  
Less: Total deferred revenue, beginning of period   (50,909 )   (38,379 )   (40,802 )   (28,190 )
Total change in deferred revenue   2,980     2,423     13,087     12,612  
Gross billings   $ 28,096     $ 21,125     $ 105,114     $ 81,219  
Product gross billings                
                 
License   $ 8,582     $ 5,538     $ 32,345     20,757  
Subscription and support   11,604     9,007     42,936     30,865  
Total product revenue   20,186     14,545     75,281     51,622  
Total license, subscription and support deferred revenue, end of period   45,492     36,638     45,492     36,638  
Less: Total license, subscription and support deferred revenue, beginning of period   (43,177 )   (34,749 )   (36,638 )   (24,848 )
Total change in license, subscription and support deferred revenue   2,315     1,889     8,854     11,790  
Product gross billings   $ 22,501     $ 16,434     $ 84,135     $ 63,412  
Non-GAAP gross margin                
Gross margin   70.9 %   66.4 %   70.1 %   63.6 %
Add: Stock-based compensation expense   0.8 %   0.5 %   0.7 %   0.4 %
Add: Amortization of intangible assets   1.0 %   1.2 %   1.0 %   1.3 %
Non-GAAP gross margin   72.7 %   68.1 %   71.8 %   65.3 %
Non-GAAP license gross profit:                
License gross profit   $ 8,446     $ 5,410     $ 31,824     $ 20,243  
License gross margin   98.4 %   97.7 %   98.4 %   97.5 %
Add: Amortization of intangible assets   121     114     463     454  
Non-GAAP license gross profit   $ 8,567     $ 5,524     $ 32,287     $ 20,697  
Non-GAAP license gross margin   99.8 %   99.7 %   99.8 %   99.7 %
Non-GAAP subscription and support gross profit:                
Subscription and support gross profit   $ 8,436     $ 6,120     $ 30,467     $ 19,803  
Subscription and support gross margin   72.7 %   67.9 %   71.0 %   64.2 %
Add: Stock-based compensation expense   33     23     147     44  
Add: Amortization of intangible assets   121     113     460     454  
Non-GAAP subscription and support gross profit   $ 8,590     $ 6,256     $ 31,074     $ 20,301  
Non-GAAP subscription and support gross margin   74.0 %   69.5 %   72.4 %   65.8 %
Non-GAAP professional services and other gross profit:                
Professional services and other gross profit   $ 923     $ 889     $ 2,211     $ 3,570  
Professional services and other gross margin   18.7 %   21.4 %   13.2 %   21.0 %
Add: Stock-based compensation expense   192     78     520     223  
Non-GAAP professional services and other gross profit   $ 1,115     $ 967     $ 2,731     $ 3,793  
Non-GAAP professional services and other gross margin   22.6 %   23.3 %   16.3 %   22.3 %
Non-GAAP research and development expense:                
GAAP research and development expense   $ 10,281     $ 8,435     $ 37,795     $ 30,387  
Less: Stock-based compensation expense   (1,457 )   (436 )   (3,592 )   (1,195 )
Less: Amortization of intangible assets   (6 )   (44 )   (112 )   (176 )
Non-GAAP research and development expense   $ 8,818     $ 7,955     $ 34,091     $ 29,016  
Non-GAAP sales and marketing expense:                
GAAP sales and marketing expense   $ 12,166     $ 12,937     $ 50,178     $ 49,250  
Less: Stock-based compensation expense   (583 )   (285 )   (1,808 )   (777 )
Less: Amortization of intangible assets               (58 )
Non-GAAP sales and marketing expense   $ 11,583     $ 12,652     $ 48,370     $ 48,415  
Non-GAAP general and administrative expense:                
GAAP general and administrative expense   $ 4,963     $ 3,450     $ 17,436     $ 13,453  
Less : Stock-based compensation expense   (745 )   (360 )   (2,321 )   (1,212 )
Non-GAAP general and administrative expense   $ 4,218     $ 3,090     $ 15,115     $ 12,241  
Non-GAAP operating loss:                
Operating loss   $ (9,605 )   $ (12,403 )   $ (40,907 )   $ (49,474 )
Add: Stock-based compensation expense   3,010     1,182     8,388     3,451  
Add: Amortization of intangible assets   248     271     1,035     1,142  
Non-GAAP operating loss   $ (6,347 )   $ (10,950 )   $ (31,484 )   $ (44,881 )
Non-GAAP net loss:                
Net loss   $ (9,529 )   $ (12,556 )   $ (41,513 )   $ (50,353 )
Add: Stock-based compensation expense   3,010     1,182     8,388     3,451  
Add: Amortization of intangible assets   248     271     1,035     1,142  
Non-GAAP net loss   $ (6,271 )   $ (11,103 )   $ (32,090 )   $ (45,760 )
Non-GAAP net loss per share:                
GAAP net loss per share   $ (0.32 )   $ (0.43 )   $ (1.39 )   $ (4.73 )
Non-GAAP adjustments to net loss per share   0.11     0.05     0.32     0.43  
Non-GAAP adjustments to weighted average shares used in calculating net loss per share               2.49  
Non-GAAP net loss per share   $ (0.21 )   $ (0.38 )   $ (1.08 )   $ (1.81 )
Non-GAAP weighted average shares outstanding:                
Weighted-average shares outstanding used in calculating net loss per share, basic and diluted   30,211     29,313     29,769     10,651  
Conversion of preferred convertible stock               14,665  
Non-GAAP Weighted-average shares outstanding used in calculating net loss per share   30,211     29,313     29,769     25,316  
                 

 

CONTACT: Investor Relations Contact:

Kevin Faulkner
kfaulkner@apigee.com
1-408-816-1658

Media Contact:

press@apigee.com