Intapp, Inc. — Form 10-Q Summary
Reporting period: Fiscal second quarter and six months ended December 31, 2023; comparisons are with the corresponding 2022 periods. Unless stated otherwise, amounts are in U.S. dollars.
Business context
Intapp provides cloud-based software for professional and financial services firms. Revenue is primarily recurring, from SaaS and support and term subscription licenses; professional services mainly support implementation, upgrades, and migration.
Financial and operating performance
| Metric | Three months ended Dec. 31, 2023 | Six months ended Dec. 31, 2023 | Comparison with prior year |
|---|---|---|---|
| Total revenue | $103.9 million | $205.5 million | Up 23% and 25%, respectively |
| Recurring revenue | $91.3 million | $178.2 million | Up 26% in both periods; 88% and 87% of revenue |
| SaaS and support revenue | $77.1 million | $150.2 million | Up 25% and 27% |
| Gross profit / margin | $73.2 million / 70% | $143.2 million / 70% | Prior-year margins were 68% in each period |
| Operating loss | $11.1 million | $25.0 million | Improved from $19.4 million and $38.6 million |
| Net loss | $9.2 million | $24.5 million | Improved from $19.8 million and $39.8 million |
| GAAP diluted loss per share | $0.13 | $0.35 | Prior-year losses were $0.31 and $0.63 per share |
Professional services remained loss-making at the gross-profit level: losses were $3.7 million for the quarter and $6.2 million for the six months, compared with $2.2 million and $4.7 million a year earlier. Six-month operating expenses rose 12% to $168.2 million, including a 31% increase in research and development. Stock-based compensation was $35.3 million for the six months.
Cash flow and liquidity: For the six months, operating cash flow was $23.6 million versus $13.3 million. Investing cash outflow was $4.8 million, principally capitalized software and equipment; financing cash inflow was $16.3 million. Cash, cash equivalents, and restricted cash rose to $166.6 million from $131.2 million at fiscal year-end. Current assets were $284.1 million and current liabilities $259.1 million.
Debt and commitments: No borrowings were outstanding under the $100 million senior secured revolving facility, and the company reported covenant compliance. The facility includes a $10 million letter-of-credit subfacility. The company had $101.0 million remaining on its Microsoft cloud-services commitment as of December 31, 2023, under a commitment period ending in December 2028.
Material changes and business indicators
- ARR was $365.0 million, up 21% year over year; Cloud ARR was $256.1 million, up 34%, and represented 70% of ARR versus 64% a year earlier.
- Trailing-twelve-month net revenue retention was 115%, within management’s stated expected range of 113%–117%. Intapp reported more than 2,400 clients and 649 clients with contracts exceeding $100,000 ARR, up from 561.
- Remaining performance obligations were approximately $447.6 million; about 58% was expected to be recognized over the next 12 months. These obligations are not a revenue forecast.
- Management attributed recurring-revenue growth to new clients, expansion within existing clients, and continued migration from on-premise products to cloud. Higher cloud hosting and personnel costs contributed to increased cost of revenue.
Outlook, risks, contingencies, and unusual items
- No specific revenue or earnings guidance for future periods is provided in the supplied filing text. Management expects continued investment in research and development and sales and marketing, and expects demand for professional services to increase with client growth and cloud migrations.
- Management stated that cash and the available credit facility should meet working-capital and capital-expenditure needs for at least the next 12 months, while noting that operating losses may continue and future capital needs depend on growth, investment, and potential acquisitions.
- Key risks include sustaining growth and profitability, cloud adoption and client retention, competition (including AI products), cybersecurity and service disruptions, variable sales cycles, hiring and retention, economic and financial-services market conditions, international operations, and access to financing.
- The company reported no litigation that it believed would have a material adverse effect. It indemnifies clients against certain intellectual-property claims; the filing does not identify a material current claim.
- A February 2024 New York office lease has a six-year term and approximately $7.3 million of undiscounted base rent, plus certain operating expenses. In November 2023, existing stockholders sold 5.0 million shares in a secondary offering at $39.01 per share; Intapp received no proceeds.
- On December 31, 2023, non-affiliate market value exceeded $700 million. The company said it would be deemed a large accelerated filer as of June 30, 2024, ending emerging-growth-company exemptions, including the extended accounting-standard adoption timeline and exemption from auditor attestation on internal controls.
- Disclosure controls were assessed as effective at a reasonable assurance level; no material change in internal control over financial reporting was reported for the quarter.
Important facts for investors to verify
- Whether ARR, Cloud ARR, and 115% net revenue retention continue to translate into reported revenue growth and cash generation.
- Cloud and support gross-margin trends, professional-services losses, and the impact of rising hosting, staffing, and research and development costs.
- Cash-flow quality and seasonality, including the effects of advance billings, receivables collections, deferred revenue, and stock-based compensation.
- Future cash obligations, especially the remaining Microsoft cloud commitment, lease commitments, and the new New York office lease.
- Execution and reporting implications of becoming a large accelerated filer, including the required auditor attestation on internal control over financial reporting.