Billion Dollar Unicorns: Apptio Decides To Go Back To Being Privately Held

IT Business Management firm Apptio has had a roller coaster ride in the past few years. Founded in 2007, Apptio (APTI) had listed on the Nasdaq in 2016. The company continued to gain valuation while being listed. But last year, it agreed to be acquired by private equity firm Vista Equity Partners in a move that has been questioned by shareholders. Late last year, shareholders even filed a lawsuit challenging the acquisition.

Apptio’s Financials

Prior to getting acquired, Apptio had announced its third quarter results that surpassed market expectations. Revenues for the quarter grew 26% over the year to $59.2 million compared with the Street’s forecast of $58 million. The company continued to incur losses and ended the quarter with a net loss of $4.6 million. Adjusted earnings came in at $0.05 per share, compared with the Street’s forecast of $0.03 per share.

By segment, Subscription revenues grew 26% to $49.6 million and accounted for 84% of total revenues. Services revenue grew 27% over the year to $9.6 million.

For the fourth quarter, Apptio forecast revenues of $61-$62 million with non-GAAP earnings of $1 million. It expected to end the year with revenues of $233.3-$234.3 million and a break-even non-GAAP operating income of $7.4 million. The market was looking for revenues of $60.77 million for the quarter and revenues of $231.85 million for the year.

Apptio’s Merger

Despite the impressive results, in a surprising move, Apptio announced plans to be acquired by private equity firm Vista Equity Partners for an estimated $1.94 billion. As part of the deal, Apptio shareholders were to receive $38 per share, translating to a 53% premium at the time of the announcement. According to Apptio’s management, the merger will help Apptio provide immediate liquidity to its shareholders at a significant premium while ensuring that it continues to deliver product innovation and geographical expansion. It planned to leverage Vista’s expertise in growing SaaS businesses, along with the added flexibility that accompanies a private company to help with its growth. Vista will benefit from the acquisition as Apptio’s services complement its existing portfolio in IT business management and offer it inroads into smaller customers with annual revenue of less than $1 billion.

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