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Apigee Announces Fourth Quarter and Fiscal 2016 Results
 

San Jose, Calif. – September 14, 2016 – Apigee(r) (NASDAQ: APIC), the API company, today announced financial results for its fourth quarter and fiscal year ended July 31, 2016.

Fiscal Year 2016
For FY 16, Apigee reported total revenue of $92.0 million, up 34% compared to $68.6 million in FY 15. Apigee reported FY 16 product revenue (defined as license revenue plus subscription and support revenue) of $75.3 million, up 46% compared to $51.6 million in FY 15.

Apigee reported FY 16 GAAP gross margin of 70.1%, up from 63.6% in FY 15, and non-GAAP gross margin of 71.8% compared to 65.3% in FY 15. Apigee reported an FY 16 GAAP operating loss of $40.9 million, compared to $49.5 million in FY 15. FY 16 non-GAAP operating loss was $31.5 million compared to $44.9 million in FY 15. FY 16 GAAP net loss per share was $1.39, compared to $4.73 in FY 15, and FY 16 non-GAAP net loss per share was $1.08 compared to $1.81 in FY 15. FY 16 operating cash flow improved to $(21.7) million compared to $(37.4) million in FY 15. Total deferred revenue was $53.9 million at the end of FY 16 up 32% from $40.8 million at the end of FY 15. The balance of cash and cash equivalents at the end of FY 16 was $68.3 million.

A reconciliation of GAAP to non-GAAP financial measures has been provided in the financial statement tables included in this press release. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures.”
Fourth Quarter Fiscal 2016
For Q4 16, Apigee reported total revenue of $25.1 million, up 34% from $18.7 million in Q4 15. Apigee reported Q4 16 product revenue (defined as license revenue plus subscription and support revenue) of $20.2 million, up 39% from $14.5 million in Q4 15.
Apigee reported Q4 16 GAAP gross margin of 70.9%, up from 66.4% in Q4 15, and Q4 16 non-GAAP gross margin of 72.7%, up from 68.1% in Q4 15. Apigee reported a Q4 16 GAAP operating loss of $9.6 million, compared to $12.4 million in Q4 15. Q4 16 non-GAAP operating loss was $6.3 million, compared to $11.0 million in Q4 15. Q4 16 GAAP net loss per share was $0.32, compared to $0.43 in Q4 15. Q4 16 non-GAAP net loss per share was $0.21, compared to $0.38 in Q4 15. Q4 16 operating cash flow was $(2.6) million, compared to $(13.9) million in Q4 15.
Recent Business Updates:
 
•
Apigee now has more than 335 customers, up more than 130 compared to the end of Q4 15. In Q4 16, we did expansion deals with 50 customers.
•
Key customers in the quarter included Allstate, CLEAR, digitalSTROM, Du, Emaratech, Lego, MindBody, Morrisons, SEI Investments, Shutterfly, T-Mobile, Telstra, Thomson Reuters, Uptake and Western Union.
•
Our FY 16 simple dollar-based renewal rate exceeded 90%.
•
For FY 16, Apigee reported gross billings of $105.1 million, up 29% from $81.2 million in FY 15. FY 16 product gross billings were $84.1 million, up 33% from $63.4 million a year ago.
•
We announced Apigee Open Banking APIx, a new software accelerator designed to help banks within the European Union more quickly and easily embrace open banking requirements set out in the revised Payment Services Directive (PSD2).
•
Apigee and Pivotal announced that Apigee Edge's Microgateway capability is now supported by Pivotal Cloud Foundry, enabling developers to more easily leverage Apigee's API management software to share, monitor and secure APIs and microservices for applications developed with Pivotal's cloud native platform.
•
We entered into new or expanded partnership agreements in the quarter with Acclaim Consulting Group, Algorism, Cloud Elements, Data Factory Labs, DigitalAPICraft, finRenaissance, Incentro, Juggernaut Innovations, Okta, Pivotal, PromptNow, Tata America International, Tavant Technologies, The APIfoundry, The Coral Edge, and Winning Edge Solutions.




Guidance:
On September 8, 2016, Apigee announced that it had entered into a definitive agreement to be acquired by Google. As a result, Apigee will not provide an outlook for our future financial results. Any previous statements that could be interpreted to project our future financial performance should no longer be relied upon.

Conference Call Details:
As a result of the acquisition announcement, the conference call previously scheduled for today to discuss our financial results has been canceled. 
About Apigee
Apigee® (NASDAQ: APIC) provides a leading API platform for digital business. Many of the world's largest organizations select Apigee to power their digital business. Apigee customers include global enterprises such as Walgreens, Burberry, Morningstar, and First Data. Apigee is headquartered in San Jose, California. For more information go to http://apigee.com.
Forward-Looking Statements
This communication contains certain forward-looking statements within the meaning of the Private Securities Lititgation Reform Act of 1995 with respect to the proposed transaction and business combination between Google and Apigee. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many factors could cause actual results to differ materially from the forward-looking statements in this press release, including but not limited to: (i) the risk that the transaction may not be completed in a timely manner or at all, which may adversely affect Apigee's business and the price of the common stock of Apigee, (ii) the failure to satisfy the conditions to the consummation of the transaction, including the adoption of the merger agreement by the stockholders of Apigee and the receipt of certain governmental and regulatory approvals, (iii) the occurrence of any event, change or other circumstance that could give rise to termination of the merger agreement, (iv) the effect of the announcement or pendency of the transaction on Apigee's business relationships, operating results, and business generally, (v) risks that the proposed transaction disrupts current plans and operations of Google or Apigee, including disruptions to relationships with customers, licensees, and other business partners of Apigee and potential difficulties in Apigee employee retention as a result of the transaction, (vi) risks related to diverting management's attention from Apigee's ongoing business operations, and (vii) the outcome of any legal proceedings that may be instituted against Google or against Apigee related to the merger agreement or the transaction.
The foregoing list of factors is not exclusive. Additional risks and uncertainties that could affect Apigee’s financial and operating results are included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in Apigee’s Quarterly Report on Form 10-Q filed with the SEC on May 27, 2016. Apigee’s SEC filings are available on the Investor Relations section of the Company’s website at http://investors.apigee.com and on the SEC’s website at www.sec.gov. While Apigee may elect to update forward-looking statements at some point in the future, Apigee specifically disclaims any obligation to update the forward-looking statements provided to reflect any change in its expectations or any change in events, conditions, or circumstances on which any such statement is based, and, therefore, you should not rely on these forward-looking statements as representing Apigee's views as of any date subsequent to today.
Non-GAAP Financial Measures
Apigee provides the following non-GAAP financial measures in this release: gross billings, product gross billings, non-GAAP gross margin, non-GAAP operating loss, non-GAAP net loss, and non-GAAP net loss per share. These non-GAAP items are key measures used by our management to understand and evaluate our operating performance and trends. In particular, because a number of these measures exclude certain non-cash expenses, they can provide useful measures for period-to-period comparisons of our business.
Apigee uses these non-GAAP financial measures internally in analyzing its operating results and believes they are useful to investors, as a supplement to GAAP measures, in evaluating its ongoing operational performance. Apigee believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends.

Non-GAAP financial measures should not be considered in isolation from, or as substitutes for, their most directly comparable financial measure prepared in accordance with GAAP. A reconciliation of the historical non-GAAP financial measures to their




most directly comparable GAAP measures has been provided in the financial statement tables included below in this press release. Investors are encouraged to review the reconciliation of these historical non-GAAP financial measures to their most directly comparable GAAP financial measures.
We calculate non-GAAP gross margin, non-GAAP operating loss and non-GAAP net loss as the respective GAAP balances, adjusted for: (1) stock-based compensation and (2) the amortization of intangible assets. Non-GAAP net loss per share is calculated as non-GAAP net loss divided by GAAP weighted average shares outstanding, except with respect to FY 15.  For FY 15, non-GAAP net loss per share is calculated as non-GAAP net loss divided by non-GAAP weighted average shares outstanding. The non-GAAP weighted average shares outstanding are adjusted to assume the conversion of outstanding preferred shares to common shares as of the beginning of the period.
We define gross billings as our total revenue plus the change in our deferred revenue in a period. We define product gross billings as our total product revenue (where product is defined as license, subscription and support) plus the change in our license, subscription and support deferred revenue in a period. Gross billings and product gross billings in any period consists of sales to new customers plus renewals and additional sales to existing customers. Our management uses gross billings and product gross billings as a performance measurement because we believe that gross billings and product gross billings provide valuable insight into the sales of our solutions and the performance of our business. On certain transactions, a portion of gross billings will be recognized as revenue over a period of more than 12 months. We do not consider gross billings as a substitute for revenue recognition or revenue measurement.
Investor Relations Contact:
Kevin Faulkner
kfaulkner@apigee.com
1-408-816-1658
Media Contact:
press@apigee.com






Apigee Corporation
Consolidated Balance Sheets
(in thousands)
 
 
 
July 31,
 
July 31,
 
 
2016
 
2015
 
 
(Unaudited)
 
 
Assets
 
 
 
 
Current assets
 
 
 
 
Cash and cash equivalents
 
$
68,303

 
$
89,562

Accounts receivable, net
 
25,958

 
21,451

Prepaid expenses and other current assets
 
5,092

 
5,806

Total current assets
 
99,353

 
116,819

Property and equipment, net
 
1,923

 
3,144

Goodwill
 
14,744

 
14,744

Intangible assets, net
 
2,165

 
3,200

Other assets
 
652

 
799

Total assets
 
$
118,837

 
$
138,706

Liabilities and stockholders’ equity
 
 
 
 
Current liabilities
 
 
 
 
Accounts payable
 
$
368

 
$
2,015

Accrued expenses and other current liabilities
 
11,247

 
9,796

Deferred revenue, current portion
 
44,833

 
35,648

Term debt, current portion
 
1,318

 
2,079

Total current liabilities
 
57,766

 
49,538

Non-current liabilities
 
 
 
 
Deferred revenue, non-current
 
9,056

 
5,154

Deferred rent, non-current
 
1,038

 
1,550

Other liabilities, non-current
 
645

 
773

Term debt, non-current
 
882

 
1,787

Total non-current liabilities
 
11,621

 
9,264

Total liabilities
 
69,387

 
58,802

Commitments and contingencies
 
 
 
 
Stockholders’ equity
 
 
 
 
Common stock
 
30

 
29

Additional paid-in capital
 
287,156

 
276,099

Accumulated deficit
 
(237,736
)
 
(196,224
)
Total stockholders’ equity
 
49,450

 
79,904

Total liabilities and stockholders’ equity
 
$
118,837

 
$
138,706






Apigee Corporation
Consolidated Statements of Comprehensive Loss
(in thousands, except per share amounts)
 
 
 
Three Months Ended 
 July 31,
 
Year Ended 
 July 31,
 
 
2016
 
2015
 
2016
 
2015
 
 
(Unaudited)
 
(Unaudited)
Revenue
 
 
 
 
 
 
 
 
License
 
$
8,582

 
$
5,538

 
$
32,345

 
$
20,757

Subscription and support
 
11,604

 
9,007

 
42,936

 
30,865

Professional services and other
 
4,930

 
4,157

 
16,746

 
16,985

Total revenue
 
25,116

 
18,702

 
92,027

 
68,607

Cost of revenue
 
 
 
 
 
 
 
 
License
 
136

 
128

 
521

 
514

Subscription and support
 
3,168

 
2,887

 
12,469

 
11,062

Professional services and other
 
4,007

 
3,268

 
14,535

 
13,415

Total cost of revenue
 
7,311

 
6,283

 
27,525

 
24,991

Gross profit
 
17,805

 
12,419

 
64,502

 
43,616

Operating expenses
 
 
 
 
 
 
 
 
Research and development
 
10,281

 
8,435

 
37,795

 
30,387

Sales and marketing
 
12,166

 
12,937

 
50,178

 
49,250

General and administrative
 
4,963

 
3,450

 
17,436

 
13,453

Total operating expenses
 
27,410

 
24,822

 
105,409

 
93,090

Loss from operations
 
(9,605
)
 
(12,403
)
 
(40,907
)
 
(49,474
)
Other income (expense), net
 
11

 
(69
)
 
(390
)
 
(452
)
Loss before provision for income taxes
 
(9,594
)
 
(12,472
)
 
(41,297
)
 
(49,926
)
Provision for income taxes
 
(65
)
 
84

 
215

 
427

Net loss and comprehensive loss
 
$
(9,529
)
 
$
(12,556
)
 
$
(41,512
)
 
$
(50,353
)
Net loss per share:
 
 
 
 
 
 
 
 
Basic and diluted
 
$
(0.32
)
 
$
(0.43
)
 
$
(1.39
)
 
$
(4.73
)
Weighted-average shares outstanding used in calculating net loss per share:
 
 
 
 
 
 
 
 
Basic and diluted
 
30,211

 
29,313

 
29,769

 
10,651






Apigee Corporation
Consolidated Statements of Cash Flows
(in thousands)

 
 
Three Months Ended 
 July 31,
 
Year Ended 
 July 31,
 
 
2016
 
2015
 
2016
 
2015
 
 
(Unaudited)
 
(Unaudited)
Cash flows from operating activities
 
 
 
 
 
 
 
 
Net loss
 
$
(9,529
)
 
$
(12,556
)
 
$
(41,512
)
 
$
(50,353
)
Adjustments to reconcile net loss to net cash used in operating activities
 
 
 
 
 
 
 
 
Depreciation and amortization
 
611

 
627

 
2,401

 
2,436

Provision for doubtful accounts
 
(80
)
 
4

 
(14
)
 
42

Amortization of debt discount
 
14

 
8

 
39

 
46

Deferred income taxes
 
—

 
—

 
—

 
—

Stock-based compensation expense
 
3,010

 
1,182

 
8,388

 
3,451

Loss (gain) on disposal of fixed assets
 
—

 
10

 
—

 
10

Loss on lease abandonment
 
—

 
—

 
—

 
—

Changes in operating assets and liabilities
 
 
 
 
 
 
 
 
Accounts receivable
 
1,638

 
(5,363
)
 
(4,493
)
 
(5,090
)
Prepaid expenses and other assets
 
(259
)
 
(1,771
)
 
841

 
(1,733
)
Accounts payable
 
(152
)
 
433

 
(1,400
)
 
(996
)
Accrued expenses, other liabilities and deferred rent
 
(810
)
 
1,131

 
968

 
2,209

Deferred revenue
 
2,979

 
2,422

 
13,087

 
12,611

Net cash used in operating activities
 
(2,578
)
 
(13,873
)
 
(21,695
)
 
(37,367
)
Cash flows from investing activities
 
 
 
 
 
 
 
 
Purchase of property and equipment
 
(105
)
 
(131
)
 
(241
)
 
(966
)
Net cash used in investing activities
 
(105
)
 
(131
)
 
(241
)
 
(966
)
Cash flows from financing activities
 
 
 
 
 
 
 
 
Proceeds from issuance of debt, net of issuance costs
 
—

 
—

 
2,648

 
4,000

Repayments of debt obligations
 
(331
)
 
(524
)
 
(4,489
)
 
(5,382
)
Proceeds from initial public offering, net of offering costs
 
—

 
—

 
(152
)
 
77,092

Payment of deferred costs related to initial public offering
 
—

 
(1,172
)
 
 
 
—

Repurchase of Series G-1 convertible preferred stock
 
 
 
 
 
(18
)
 
 
Cash paid for fractional shares
 
(18
)
 
(8
)
 
—

 
(8
)
Distribution of vested Restricted stock units (net)
 
 
 
 
 
(531
)
 
 
Taxes paid related to net share settlement of equity awards
 
(531
)
 
—

 
—

 
—

Proceeds from exercise of stock options, net of taxes paid
 
555

 
25

 
1,162

 
434

Proceeds from issuance of Employee Stock Purchase Plan shares
 
1,096

 
—

 
2,057

 
—

Net cash provided by (used in) financing activities
 
771

 
(1,679
)
 
677

 
76,136

Net increase (decrease) in cash and cash equivalents
 
(1,912
)
 
(15,683
)
 
(21,259
)
 
37,803

Cash and cash equivalents
 
 
 
 
 
 
 
 
Beginning of period
 
70,215

 
105,245

 
89,562

 
51,759

End of period
 
68,303

 
89,562

 
68,303

 
89,562






Apigee Corporation
Reconciliation of GAAP to Non-GAAP Financial Measures
(in thousands, except per share amounts)
 
 
 
Three Months Ended 
 July 31,
 
Year Ended 
 July 31,
 
 
2016
 
2015
 
2016
 
2015
Gross billings
 
 
 
 
 
 
 
 
Total revenue
 
$
25,116

 
$
18,702

 
$
92,027

 
$
68,607

Total deferred revenue, end of period
 
53,889

 
40,802

 
53,889

 
40,802

Less: Total deferred revenue, beginning of period
 
(50,909
)
 
(38,379
)
 
(40,802
)
 
(28,190
)
Total change in deferred revenue
 
2,980

 
2,423

 
13,087

 
12,612

Gross billings
 
$
28,096

 
$
21,125

 
$
105,114

 
$
81,219

Product gross billings
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
License
 
$
8,582

 
$
5,538

 
$
32,345

 
20,757

Subscription and support
 
11,604

 
9,007

 
42,936

 
30,865

Total product revenue
 
20,186

 
14,545

 
75,281

 
51,622

Total license, subscription and support deferred revenue, end of period
 
45,492

 
36,638

 
45,492

 
36,638

Less: Total license, subscription and support deferred revenue, beginning of period
 
(43,177
)
 
(34,749
)
 
(36,638
)
 
(24,848
)
Total change in license, subscription and support deferred revenue
 
2,315

 
1,889

 
8,854

 
11,790

Product gross billings
 
$
22,501

 
$
16,434

 
$
84,135

 
$
63,412

Non-GAAP gross margin
 
 
 
 
 
 
 
 
Gross margin
 
70.9
%
 
66.4
%
 
70.1
%
 
63.6
%
Add: Stock-based compensation expense
 
0.8
%
 
0.5
%
 
0.7
%
 
0.4
%
Add: Amortization of intangible assets
 
1.0
%
 
1.2
%
 
1.0
%
 
1.3
%
Non-GAAP gross margin
 
72.7
%
 
68.1
%
 
71.8
%
 
65.3
%
Non-GAAP license gross profit:
 
 
 
 
 
 
 
 
License gross profit
 
$
8,446

 
$
5,410

 
$
31,824

 
$
20,243

License gross margin
 
98.4
%
 
97.7
%
 
98.4
%
 
97.5
%
Add: Amortization of intangible assets
 
121

 
114

 
463

 
454

Non-GAAP license gross profit
 
$
8,567

 
$
5,524

 
$
32,287

 
$
20,697

Non-GAAP license gross margin
 
99.8
%
 
99.7
%
 
99.8
%
 
99.7
%
Non-GAAP subscription and support gross profit:
 
 
 
 
 
 
 
 
Subscription and support gross profit
 
$
8,436

 
$
6,120

 
$
30,467

 
$
19,803

Subscription and support gross margin
 
72.7
%
 
67.9
%
 
71.0
%
 
64.2
%
Add: Stock-based compensation expense
 
33

 
23

 
147

 
44

Add: Amortization of intangible assets
 
121

 
113

 
460

 
454

Non-GAAP subscription and support gross profit
 
$
8,590

 
$
6,256

 
$
31,074

 
$
20,301

Non-GAAP subscription and support gross margin
 
74.0
%
 
69.5
%
 
72.4
%
 
65.8
%
Non-GAAP professional services and other gross profit:
 
 
 
 
 
 
 
 
Professional services and other gross profit
 
$
923

 
$
889

 
$
2,211

 
$
3,570

Professional services and other gross margin
 
18.7
%
 
21.4
%
 
13.2
%
 
21.0
%
Add: Stock-based compensation expense
 
192

 
78

 
520

 
223





Non-GAAP professional services and other gross profit
 
$
1,115

 
$
967

 
$
2,731

 
$
3,793

Non-GAAP professional services and other gross margin
 
22.6
%
 
23.3
%
 
16.3
%
 
22.3
%
Non-GAAP research and development expense:
 
 
 
 
 
 
 
 
GAAP research and development expense
 
$
10,281

 
$
8,435

 
$
37,795

 
$
30,387

Less: Stock-based compensation expense
 
(1,457
)
 
(436
)
 
(3,592
)
 
(1,195
)
Less: Amortization of intangible assets
 
(6
)
 
(44
)
 
(112
)
 
(176
)
Non-GAAP research and development expense
 
$
8,818

 
$
7,955

 
$
34,091

 
$
29,016

Non-GAAP sales and marketing expense:
 
 
 
 
 
 
 
 
GAAP sales and marketing expense
 
$
12,166

 
$
12,937

 
$
50,178

 
$
49,250

Less: Stock-based compensation expense
 
(583
)
 
(285
)
 
(1,808
)
 
(777
)
Less: Amortization of intangible assets
 
—

 
—

 
—

 
(58
)
Non-GAAP sales and marketing expense
 
$
11,583

 
$
12,652

 
$
48,370

 
$
48,415

Non-GAAP general and administrative expense:
 
 
 
 
 
 
 
 
GAAP general and administrative expense
 
$
4,963

 
$
3,450

 
$
17,436

 
$
13,453

Less : Stock-based compensation expense
 
(745
)
 
(360
)
 
(2,321
)
 
(1,212
)
Non-GAAP general and administrative expense
 
$
4,218

 
$
3,090

 
$
15,115

 
$
12,241

Non-GAAP operating loss:
 
 
 
 
 
 
 
 
Operating loss
 
$
(9,605
)
 
$
(12,403
)
 
$
(40,907
)
 
$
(49,474
)
Add: Stock-based compensation expense
 
3,010

 
1,182

 
8,388

 
3,451

Add: Amortization of intangible assets
 
248

 
271

 
1,035

 
1,142

Non-GAAP operating loss
 
$
(6,347
)
 
$
(10,950
)
 
$
(31,484
)
 
$
(44,881
)
Non-GAAP net loss:
 
 
 
 
 
 
 
 
Net loss
 
$
(9,529
)
 
$
(12,556
)
 
$
(41,513
)
 
$
(50,353
)
Add: Stock-based compensation expense
 
3,010

 
1,182

 
8,388

 
3,451

Add: Amortization of intangible assets
 
248

 
271

 
1,035

 
1,142

Non-GAAP net loss
 
$
(6,271
)
 
$
(11,103
)
 
$
(32,090
)
 
$
(45,760
)
Non-GAAP net loss per share:
 
 
 
 
 
 
 
 
GAAP net loss per share
 
$
(0.32
)
 
$
(0.43
)
 
$
(1.39
)
 
$
(4.73
)
Non-GAAP adjustments to net loss per share
 
0.11

 
0.05

 
0.32

 
0.43

Non-GAAP adjustments to weighted average shares used in calculating net loss per share
 
—

 
—

 
—

 
2.49

Non-GAAP net loss per share
 
$
(0.21
)
 
$
(0.38
)
 
$
(1.08
)
 
$
(1.81
)
Non-GAAP weighted average shares outstanding:
 
 
 
 
 
 
 
 
Weighted-average shares outstanding used in calculating net loss per share, basic and diluted
 
30,211

 
29,313

 
29,769

 
10,651

Conversion of preferred convertible stock
 
—

 
—

 
—

 
14,665

Non-GAAP Weighted-average shares outstanding used in calculating net loss per share
 
30,211

 
29,313

 
29,769

 
25,316