Apptio Taking Its Time To Go Public

According to Forrester, the technology business management (TBM) market is estimated to be worth $800 million this year. The TBM industry focuses on providing IT departments within an organization with tools that help manage operations more effectively and cost efficiently.

Apptio’s Offerings
One of the leading providers within this market is Bellevue, Washington–based Apptio. Apptio’s SaaS offerings help manage cost, quality and value of IT services provided by IT divisions in the organization.

Apptio’s services include an Apptio TBM Suite and the Apptio Platform, The TBM suite is a cloud-based, integrated set of applications that provides IT leaders with visibility into budgets, costs, performance, and variances to help them deliver better return on their investments. The suite comes with applications that include IT Service Costing to help optimize and align costs better; a Bill of IT, which offers interactive look into business costs; IT Planning to streamline and optimize budget and resource plan; IT Business Performance to help manage the performance of the IT organization; and IT Benchmarking to help compare costs of the department with internal and external metrics.

The Apptio Platform is a SaaS-based platform that offers on-demand access to Apptio’s suite through a secure and scalable environment. The platform combines source data from IT operational and financial systems with industry benchmarks and best practices to build a flexible and an actionable budget and operational model for the IT division.

Apptio’s Financials
Apptio earns revenues by charging customers an annual license fee for its services. Its latest financials are not known, but as of 2011, revenues had doubled to $72 million. Apptio expects to continue to double revenues during the current year as well. Meanwhile, the company’s profitability remains a concern as it continues to invest in technology innovation and market expansion. Apptio has a customer base of  more than 125 enterprises worldwide, with names like Boeing, Royal Bank of Scotland, Safeway, Target and Xerox. Its customer list includes 29 of the Fortune 100 companies.

Apptio is venture funded. It recently raised another $45 million through venture investments to bring total funding to $136 million. The latest round of funding, held in May 2013, was led by existing investors, including Andreessen Horowitz, Madrona Venture Group, Greylock Partners, Shasta Ventures, The Hillman Companies and T. Rowe Price. The latest valuation is not known, but a year ago, the company was valued at $600 million. The CFO claims that the new round is a “substantial up round,” suggesting an even higher valuation.

Apptio plans to use these new funds to expand its market reach, specifically in Europe and to continue to build their IT platform. Employee count for the company has been on the rise and in fact has more than tripled in the last year and a half. Apptio is looking to add another 75 employees during the rest of the year to end the year with 425 employees worldwide.

While the market is hopeful that Apptio will come with an IPO soon, Apptio has remained silent on the issue. In an interview with BizJournal a few years ago, CEO and co-founder Sunny Gupta mentioned how the first big vision is to “build the next largest Software as a Service (SaaS) company.” Quite possibly, the company will figure out its profitability equation before jumping into the IPO market with another billion-dollar valuation.