Intapp(US:INTA)2023-05-09 20:39PART I. FINANCIAL INFORMATION This section presents the unaudited financial statements, management's analysis of financial condition and operations, market risk disclosures, and internal controls Item 1. Financial Statements (Unaudited) This section presents Intapp, Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations, and cash flows, along with detailed accounting policy notes Condensed Consolidated Balance Sheets Total assets increased to $515.3 million by March 31, 2023, driven by receivables and property, while total liabilities rose to $250.5 million, leading to higher stockholders' equity Condensed Consolidated Balance Sheet Data (in thousands) | Account | March 31, 2023 (in thousands) | June 30, 2022 (in thousands) | | :--- | :--- | :--- | | Total Current Assets | $156,040 | $147,391 | | Total Assets | $515,346 | $494,413 | | Total Current Liabilities | $227,250 | $223,519 | | Total Liabilities | $250,451 | $238,531 | | Total Stockholders' Equity | $264,895 | $255,882 | Condensed Consolidated Statements of Operations Total revenues for the three months ended March 31, 2023, increased 32% to $92.0 million, narrowing the operating loss to $(18.2) million and improving net loss per share Statement of Operations Highlights (in thousands, except per share data) | Metric | Q3 2023 (in thousands) | Q3 2022 (in thousands) | Nine Months 2023 (in thousands) | Nine Months 2022 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $92,024 | $69,663 | $256,254 | $196,550 | | SaaS and support | $66,051 | $49,808 | $184,469 | $140,267 | | Gross Profit | $63,534 | $43,663 | $175,645 | $124,621 | | Operating Loss | $(18,245) | $(28,696) | $(56,819) | $(76,626) | | Net Loss | $(18,147) | $(28,736) | $(57,955) | $(78,091) | | Net Loss Per Share | $(0.28) | $(0.47) | $(0.91) | $(1.28) | Condensed Consolidated Statements of Cash Flows Net cash provided by operating activities significantly improved to $16.8 million for the nine months ended March 31, 2023, while cash was used in investing and financing activities Cash Flow Summary (in thousands) | Activity | Nine Months Ended March 31, 2023 (in thousands) | Nine Months Ended March 31, 2022 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $16,834 | $4,570 | | Net cash used in investing activities | $(6,430) | $(3,333) | | Net cash provided by (used in) financing activities | $(10,327) | $3,353 | | Net increase (decrease) in cash | $(345) | $4,750 | Notes to Unaudited Condensed Consolidated Financial Statements This section details significant accounting policies, including lease accounting and revenue recognition, and provides information on goodwill, debt, stock-based compensation, and a subsequent acquisition - The company adopted the new lease accounting standard (ASC 842) on July 1, 2022, recognizing Right-of-Use (ROU) assets of $21.3 million and lease liabilities of $24.7 million6366 - As of March 31, 2023, the company has approximately $380.3 million in remaining performance obligations, with 62% expected to be recognized as revenue in the next 12 months73 - On May 2, 2023, the company acquired Paragon Data Labs, Inc. for total consideration including $7.6 million at closing, $2.2 million deferred, and up to $10.2 million in contingent consideration113 Revenue by Geography (in thousands) | Region | Nine Months Ended March 31, 2023 (in thousands) | Nine Months Ended March 31, 2022 (in thousands) | | :--- | :--- | :--- | | United States | $178,205 | $136,107 | | United Kingdom | $40,029 | $33,363 | | Rest of the world | $38,020 | $27,080 | | Total | $256,254 | $196,550 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial performance, highlighting strong ARR growth and a shift to cloud, alongside an analysis of operations, liquidity, and non-GAAP measures Key Business Metrics The company demonstrates strong growth in key business metrics, with Annual Recurring Revenue (ARR) increasing 24% to $315.6 million and Cloud ARR growing 40% Annual Recurring Revenue (ARR) Growth | Metric | As of March 31, 2023 (in millions) | As of March 31, 2022 (in millions) | Growth | | :--- | :--- | :--- | :--- | | Total ARR | $315.6 | $253.5 | 24% | | Cloud ARR | $206.3 | $147.8 | 40% | - Cloud ARR constituted 65% of total ARR as of March 31, 2023, up from 58% in the prior year, indicating a successful shift to SaaS130 - The number of clients with over $100,000 in ARR grew to 572 from 484 year-over-year, demonstrating success in securing larger contracts132 - The trailing twelve months' net revenue retention rate was within the recently increased range of 113% to 117% as of March 31, 2023122 Results of Operations Total revenues increased 30% to $256.3 million for the nine months ended March 31, 2023, driven by SaaS growth, while the operating loss significantly narrowed Revenue Comparison (in thousands) | Revenue Type | Nine Months Ended March 31, 2023 (in thousands) | Nine Months Ended March 31, 2022 (in thousands) | Change % | | :--- | :--- | :--- | :--- | | SaaS and support | $184,469 | $140,267 | 32% | | Subscription license | $36,804 | $30,811 | 19% | | Professional services | $34,981 | $25,472 | 37% | | Total revenues | $256,254 | $196,550 | 30% | Operating Expense Comparison (in thousands) | Expense Category | Nine Months Ended March 31, 2023 (in thousands) | Nine Months Ended March 31, 2022 (in thousands) | Change % | | :--- | :--- | :--- | :--- | | Research and development | $68,352 | $54,781 | 25% | | Sales and marketing | $99,796 | $81,244 | 23% | | General and administrative | $62,715 | $65,222 | (4)% | | Total operating expenses | $232,464 | $201,247 | 16% | - Gross profit margin improved from 63% to 69% for the nine-month period year-over-year, driven by strong recurring revenue growth and cost management149162 Liquidity and Capital Resources The company maintains $54.0 million in cash and equivalents, with $16.8 million generated from operations, and believes its liquidity is sufficient, supported by an undrawn $100.0 million credit facility - The company has a $100.0 million senior secured revolving credit facility, which was undrawn as of March 31, 2023179 - During the nine months ended March 31, 2023, the company made significant payments for prior acquisitions, including $9.3 million for Repstor contingent consideration and $11.2 million for Billstream deferred consideration191192 Non-GAAP Financial Measures The company presents non-GAAP financial measures, reporting a non-GAAP operating profit of $7.5 million for the nine months ended March 31, 2023, a significant improvement from the prior year's loss Reconciliation of GAAP Operating Loss to Non-GAAP Operating Profit (Loss) (in thousands) | Description | Nine Months Ended March 31, 2023 (in thousands) | Nine Months Ended March 31, 2022 (in thousands) | | :--- | :--- | :--- | | GAAP operating loss | $(56,819) | $(76,626) | | Stock-based compensation | $54,795 | $62,295 | | Amortization of intangible assets | $8,092 | $10,137 | | Lease modification and impairment | $1,601 | $— | | Change in fair value of contingent consideration | $(873) | $727 | | Acquisition-related transaction costs | $703 | $206 | | Non-GAAP operating profit (loss) | $7,499 | $(3,261) | Item 3. Quantitative and Qualitative Disclosures About Market Risk The company faces market risks including foreign currency, credit, inflation, and interest rates, with foreign currency and interest rate risks currently deemed immaterial due to an undrawn credit facility - The company's primary market risks are foreign currency exchange, credit, inflation, and interest rates210 - Interest rate risk exists due to a $100.0 million variable-rate credit facility, but there was no outstanding balance as of March 31, 2023215 - As of June 30, 2022, one client accounted for 20% of total accounts receivable, but by March 31, 2023, no single client accounted for 10% or more57213 Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2023, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2023217 - No changes occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting218 PART II. OTHER INFORMATION This section addresses legal proceedings, key risk factors, unregistered equity sales, and other relevant disclosures Item 1. Legal Proceedings The company is subject to ordinary course legal proceedings, noting the dismissal of a lawsuit filed by Navatar Group, Inc. against its subsidiary, DealCloud, Inc. - The lawsuit filed by Navatar Group, Inc. against DealCloud, Inc. for false advertising was dismissed on February 7, 2023223 Item 1A. Risk Factors This section highlights key risks, including the company's dependence on the professional and financial services industries and the potential impact of economic downturns and financial market volatility - The company's revenue is entirely dependent on clients in the professional and financial services industry, making it vulnerable to downturns affecting these sectors225 - Recent events like the failure of Silicon Valley Bank (SVB) and broader financial institution instability are cited as risks that could reduce client demand, even though the company's direct exposure to SVB was minimal229231 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds On May 2, 2023, the company issued 27,104 common shares, valued at approximately $1.2 million, as partial consideration for the acquisition of Paragon Data Labs, Inc. - The company issued 27,104 shares of common stock as part of the acquisition of Paragon Data Labs, Inc. on May 2, 2023233 Item 3. Defaults Upon Senior Securities This section is not applicable to the company's current reporting requirements - Not applicable235 Item 4. Mine Safety Disclosures This section is not applicable to the company's operations - Not applicable236 Item 5. Other Information No other material information is required to be reported in this section - None237 Item 6. Exhibits This section provides an index of exhibits filed with the Quarterly Report on Form 10-Q, including officer certifications and Inline XBRL data files - Lists the exhibits filed with the report, such as officer certifications (31.1, 31.2, 32.1, 32.2) and XBRL data files239