Intapp, Inc. — FY2022 Form 10-K
Reporting period: Fiscal year ended June 30, 2022, compared primarily with the year ended June 30, 2021. Although the request references “2021 Q4,” this filing reports FY2022 annual results, not a standalone quarterly period.
Business context and performance
Intapp sells subscription software and related professional services to professional and financial services firms, including legal, accounting, consulting, investment banking and private capital firms. Its DealCloud and OnePlace offerings are delivered through a cloud-based platform. The company reported more than 2,100 clients at year-end.
Revenue was $272.1 million, up 27% from $214.6 million. Recurring revenue was $237.2 million (87% of revenue), including SaaS and support revenue of $193.0 million, up 34%; subscription-license revenue was $44.2 million, down 4%. Professional services revenue rose 42% to $34.9 million.
Financial results and liquidity
| Metric | FY2022 | FY2021 |
|---|---|---|
| Revenue | $272.1 million | $214.6 million |
| Gross profit / gross margin | $173.0 million / 64% | $140.3 million / 65% |
| Operating loss | $99.5 million | $23.0 million |
| Net loss | $99.7 million | $46.8 million |
| Net cash from operating activities | $14.2 million | $(9.7) million |
| Cash, cash equivalents and restricted cash at year-end | $54.3 million | $41.5 million |
Operating expenses increased 67% to $272.4 million, including research and development of $74.4 million, sales and marketing of $111.9 million, and general and administrative expense of $86.1 million. Stock-based compensation rose to $77.5 million from $18.6 million, materially contributing to the higher GAAP loss. Non-GAAP operating loss was $7.1 million, versus non-GAAP operating profit of $8.0 million in FY2021; these company-defined measures exclude specified items and are not GAAP results.
Operating cash flow improved primarily through noncash adjustments and increased deferred revenue; deferred revenue increased $35.3 million during FY2022. Investing cash outflow was $7.3 million and financing cash inflow was $6.6 million. Current assets were $147.4 million and current liabilities $223.5 million at June 30, 2022. The company reported no borrowings under its $100 million senior secured revolving credit facility and stated existing cash and the facility should meet working-capital and capital-expenditure needs for at least 12 months.
ARR was $270.5 million, up 27%; Cloud ARR was $162.9 million, up 48%, or 60% of ARR. Net revenue retention averaged more than 114%, compared with more than 110% in FY2021. These are company-defined operating measures, not GAAP revenue.
Material changes and unusual items
- Revenue growth reflected new-client sales, expansion within existing clients, and migration from on-premise software to SaaS. SaaS and support rose to 71% of revenue from 67%; subscription licenses declined to 16% from 21%.
- Operating loss widened substantially as operating expenses grew faster than revenue. The filing attributes much of the expense increase to hiring and growth investment, higher stock-based compensation, public-company costs, and greater marketing activity.
- The July 2021 IPO generated approximately $283.0 million in net proceeds; $278.0 million repaid the prior credit facility. A $2.4 million debt-extinguishment loss was recorded in FY2022 for unamortized financing costs.
- FY2022 acquisitions included Billstream, acquired for total consideration of approximately $18.5 million. The company also paid $10.7 million of Repstor contingent consideration.
- Following Russia’s invasion of Ukraine, Intapp relocated development and services functions previously in Russia and Belarus and shifted resources from the conflict region. Management expected a minor increase in R&D costs from relocation and higher labor rates.
Outlook, risks and contingencies
The filing provides no specific revenue or earnings guidance. Management expects continued investment in product development, sales and marketing, and operations, and says operating losses could continue. It expects most future ARR growth to come from SaaS subscriptions and anticipates higher cost of revenue as its cloud client base expands.
- Commitments: Total disclosed cash requirements were $186.4 million, including $30.3 million of lease obligations, $132.7 million of purchase obligations, and acquisition-related obligations. The purchase obligations include a $110 million minimum commitment for Microsoft cloud services, with payments expected to begin in January 2023.
- Execution and market risks: Lengthy, variable sales cycles; subscription renewal and expansion dependence; competition; potential economic weakness in client industries; and the company’s history of losses.
- Operational and regulatory risks: Cybersecurity, cloud-service availability, privacy and data-protection compliance, international operations, and continued disruption or cost impacts from the Ukraine conflict.
- Contingency: DealCloud subsidiary is defending a Navatar Group lawsuit alleging false advertising and related claims. Intapp says the allegations are without merit; the filing says the company does not believe current litigation would have a material adverse effect.
- Ownership and dilution: Anderson and Great Hill beneficially owned approximately 35% and 29% of common stock, respectively, as of August 26, 2022. Stock-based compensation was $77.5 million in FY2022; substantial stock awards and future plan issuances may dilute shareholders.
The independent auditor gave an unqualified opinion on the financial statements. Management concluded disclosure controls and internal control over financial reporting were effective; the auditor was not required to attest to internal control because Intapp was an emerging growth company.
Important facts for investors to verify
- Whether ARR growth, cloud migration, and net revenue retention continue, and how these measures reconcile with recognized revenue and client renewals.
- Whether expense growth and stock-based compensation moderate, and what path management expects toward GAAP profitability.
- Cash conversion and liquidity, including collections, deferred-revenue movements, the $110 million Microsoft commitment, and acquisition-related payments.
- Progress and costs of relocating affected development and services resources, and any resulting impact on product delivery or client service.
- Developments in the Navatar litigation, cybersecurity and privacy matters, and other contingencies.
- Potential dilution and governance implications of concentrated ownership and outstanding equity awards.