Intapp, Inc. — Form 10-Q Summary
Reporting period: The filing covers the quarter ended March 31, 2023, and the nine months then ended. Although the request metadata says “2022 Q3,” the filing itself is for fiscal 2023 Q3. Dollar figures below are in U.S. dollars.
Business context
Intapp provides cloud-based software and related services to professional and financial services firms. Revenue is primarily recurring SaaS, subscription-license and support revenue; professional services support implementation, upgrades and migrations.
Financial performance
| Metric | Three months ended March 31, 2023 | Prior-year quarter | Nine months ended March 31, 2023 | Prior-year period |
|---|---|---|---|---|
| Revenue | $92.0 million | $69.7 million | $256.3 million | $196.6 million |
| Recurring revenue | $79.6 million | $60.7 million | $221.3 million | $171.1 million |
| Gross profit / margin | $63.5 million / 69% | $43.7 million / 63% | $175.6 million / 69% | $124.6 million / 63% |
| Operating loss | $18.2 million | $28.7 million | $56.8 million | $76.6 million |
| Net loss | $18.1 million | $28.7 million | $58.0 million | $78.1 million |
| Net loss per share, diluted | $0.28 | $0.47 | $0.91 | $1.28 |
- Quarterly revenue grew 32%; nine-month revenue grew 30%. SaaS and support revenue rose 33% for the quarter and 32% year to date. Management attributed growth to new clients, expansion within existing clients and migrations to cloud.
- Professional services revenue increased 38% in the quarter and 37% year to date, but the service line remained loss-making: nine-month gross loss was $7.1 million, compared with $9.5 million a year earlier.
- Operating losses narrowed year over year. Non-GAAP operating profit was $2.9 million for the quarter and $7.5 million year to date, versus non-GAAP operating losses of $2.2 million and $3.3 million, respectively. These company-defined non-GAAP measures exclude specified items, including stock-based compensation.
- Stock-based compensation was $54.8 million for the nine months. The company reported more than 17.3 million potentially dilutive shares excluded from diluted loss per share because they were anti-dilutive.
Cash, liquidity and obligations
- Cash, cash equivalents and restricted cash totaled $54.0 million at March 31, 2023, versus $54.3 million at June 30, 2022. Nine-month operating cash flow was $16.8 million, compared with $4.6 million a year earlier; investing cash use was $6.4 million.
- There were no borrowings under the $100 million secured revolving credit facility. The company said it was in covenant compliance and believed available cash and the facility would meet working-capital and capital-expenditure needs for at least the next 12 months.
- Deferred revenue was $167.7 million. Remaining performance obligations were approximately $380.3 million, with about 62% expected to be recognized over the next 12 months; these are contracted amounts, not a revenue forecast.
- Operating lease liabilities totaled $19.7 million. The company also has a $110 million minimum cloud-services spending commitment with Microsoft through December 2028, subject to an option to extend remaining commitment into 2029.
Changes, outlook and notable items
- ARR was $315.6 million, up 24% year over year; cloud ARR was $206.3 million, up 40%, and represented 65% of ARR. Trailing-twelve-month net revenue retention was within management’s recently increased range of 113%–117%.
- Management expects continued investment in research and development and sales and marketing. It described professional services as loss-making and said demand for implementation and migration work is expected to increase. The filing provides no formal revenue or earnings guidance.
- In the nine-month period, Intapp recorded a $1.6 million net charge related to exiting part of its Palo Alto office space and modifying the lease; management expected lower rent expense for the remainder of fiscal 2023 and noted further exit charges could occur.
- On May 2, 2023, after quarter-end, Intapp acquired Paragon Data Labs. Consideration included $7.6 million at closing, $2.2 million deferred/held back and up to $10.2 million contingent on performance; some consideration was in shares.
- The company reported risks from economic weakness and volatility in its financial-services customer markets, inflation, longer or delayed sales cycles, foreign exchange, cybersecurity and banking-system disruption. It reported a relatively small deposit relationship with Silicon Valley Bank and regained full access to its deposits shortly after its closure.
- Intapp said the Navatar Group’s claims against its subsidiary were dismissed on February 7, 2023. It stated it was not party to litigation expected to have a material adverse effect.
Important facts for investors to verify
- Confirm the filing period: it is the quarter ended March 31, 2023, not 2022 Q3.
- Track SaaS and cloud ARR growth, retention, renewals and the mix of recurring revenue against recognized revenue and deferred revenue.
- Assess whether gross-margin improvement and narrowing GAAP losses persist, considering high stock-based compensation and continuing operating investment.
- Monitor operating cash generation, collections, deferred-revenue growth, the Microsoft cloud commitment and any use of the revolving credit facility.
- Review the Paragon acquisition’s final accounting, contingent payments and share issuance, and any further lease-exit charges.