Intapp(INTA) - 2022 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) The unaudited financial statements for Q3 2021 reflect significant post-IPO changes, including debt repayment, increased equity, and a wider operating loss despite revenue growth - On July 2, 2021, the company completed its IPO, raising $244.8 million in net proceeds from the initial offering and an additional $38.2 million from the underwriter option[30][31] - Upon IPO closing, all outstanding convertible preferred stock converted into 19,034,437 shares of common stock[30] Condensed Consolidated Balance Sheets The balance sheet as of September 30, 2021, reflects a significant post-IPO transformation, with cash increasing, debt eliminated, liabilities decreasing, and equity shifting from a deficit to a positive position Balance Sheet Highlights (in thousands) | Metric | Sep 30, 2021 | Jun 30, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $54,937 | $37,636 | | Total Assets | $447,980 | $459,827 | | Debt, net | $0 | $275,593 | | Total Liabilities | $182,542 | $473,259 | | Total stockholders' equity (deficit) | $265,438 | ($157,580) | Condensed Consolidated Statements of Operations For Q3 2021, total revenues increased 29%, but a significant rise in operating expenses resulted in a wider operating loss and increased net loss, despite improved net loss per share post-IPO Statement of Operations Summary (in thousands, except per share data) | Metric | Q3 2021 | Q3 2020 | | :--- | :--- | :--- | | Total revenues | $62,190 | $48,143 | | Gross profit | $39,814 | $31,160 | | Operating loss | ($23,631) | ($4,276) | | Net loss | ($25,130) | ($10,407) | | Net loss per share, basic and diluted | ($0.42) | ($0.55) | Condensed Consolidated Statements of Cash Flows For Q3 2021, net cash from operating activities significantly improved, with financing activities primarily driven by IPO proceeds offset by substantial debt repayment Cash Flow Summary (in thousands) | Activity | Q3 2021 | Q3 2020 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $4,649 | ($10,827) | | Net cash used in investing activities | ($863) | ($744) | | Net cash provided by financing activities | $13,630 | $27,833 | Notes to Unaudited Condensed Consolidated Financial Statements The notes detail significant financial events, including the IPO, debt extinguishment, substantial increase in stock-based compensation, and the establishment of a new revolving credit facility post-quarter-end - Total stock-based compensation expense for the quarter was $19.0 million, a substantial increase from $4.6 million in the same period of 2020[91] - Following the IPO, the company repaid its $278.0 million Prior Credit Facility in full, resulting in a $2.4 million loss on debt extinguishment from the write-off of unamortized financing costs[83] - As of September 30, 2021, the company has approximately $236.5 million in remaining performance obligations, with 63% expected to be recognized as revenue over the next 12 months[67] - On October 5, 2021, the company entered into a new five-year, $100.0 million senior secured revolving credit facility with JPMorgan Chase Bank, N.A[98] Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes revenue growth to strong SaaS and cloud performance, with Cloud ARR increasing significantly, while operating expenses surged due to stock-based compensation and public company costs post-IPO Key Business Metrics | Metric | Sep 30, 2021 | Sep 30, 2020 | Change | | :--- | :--- | :--- | :--- | | Total ARR | $228.6M | $179.3M | +27% | | Cloud ARR | $125.3M | $80.1M | +56% | | Clients with >$100k ARR | 446 | 371 | +20% | - The company's net revenue retention rate averaged over 110% for the twelve-month periods ending September 30, 2021, and 2020, indicating strong expansion within the existing client base[115] - General and administrative (G&A) expenses increased by 156% YoY, primarily due to a $5.2 million increase in stock-based compensation and higher professional fees and insurance costs associated with being a public company[154] Non-GAAP Operating Profit (Loss) Reconciliation (in thousands) | Metric | Q3 2021 | Q3 2020 | | :--- | :--- | :--- | | Operating loss (GAAP) | ($23,631) | ($4,276) | | Stock-based compensation | 19,028 | 5,096 | | Amortization of intangible assets | 3,309 | 2,744 | | Change in fair value of contingent consideration | 337 | — | | Acquisition-related transaction costs | 81 | — | | Non-GAAP operating profit (loss) | ($876) | $3,564 | Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risks are foreign currency exchange, mainly the British Pound, and credit risk, which is considered low with no significant client concentration - The company's main foreign currency exposure is to the British Pound, where a hypothetical 10% change in the USD/GBP exchange rate could impact operating results by approximately $3.0 million[195] - Credit risk is managed by assessing client creditworthiness, with no single client representing more than 10% of total accounts receivable as of September 30, 2021[196] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of September 30, 2021, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation as of the end of the reporting period, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective[197] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[198] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is vigorously defending a lawsuit filed by Navatar Group, Inc., alleging false advertising by its subsidiary, DealCloud, Inc - Navatar Group, Inc. has filed a lawsuit against the company's subsidiary, DealCloud, Inc., alleging false advertising and related claims, which the company is vigorously defending[203] Item 1A. Risk Factors No material changes have occurred to the risk factors previously disclosed in the Annual Report on Form 10-K for the fiscal year ended June 30, 2021 - No material changes have been made to the risk factors disclosed in the Annual Report on Form 10-K for the fiscal year ended June 30, 2021[204] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company details the use of its July 2021 IPO proceeds, primarily for the full repayment of outstanding borrowings under its Prior Credit Facility - The company received net proceeds of $283.0 million from its IPO[207] - $278.0 million of the IPO proceeds were used to fully repay outstanding borrowings under the Prior Credit Facility[207] Item 3. Defaults Upon Senior Securities No defaults upon senior securities were reported Item 4. Mine Safety Disclosures No mine safety disclosures are applicable Item 5. Other Information No other information is reported in this section Item 6. Exhibits This section lists exhibits filed with the Quarterly Report on Form 10-Q, including the new Credit Agreement and required certifications - Exhibits filed include the Credit Agreement dated October 5, 2021, and certifications pursuant to the Sarbanes-Oxley Act of 2002[212] Signatures The report was duly signed and authorized by the Chief Executive Officer and Chief Financial Officer - The report was duly signed and authorized on November 12, 2021, by John Hall, Chief Executive Officer, and Stephen Robertson, Chief Financial Officer[215][216]