Summary
Intapp reported second quarter fiscal 2023 total revenue of $84.7 million, up 30.9% from the prior-year quarter. Gross profit rose to $57.9 million, up 40.7%, and gross margin reached 68.4%, up 4.8 percentage points. The company still posted a GAAP operating loss of $19.4 million, but that loss narrowed from $24.3 million in the prior-year quarter. GAAP net loss narrowed to $19.8 million from $24.2 million, and GAAP diluted EPS was -$0.31, compared with -$0.40. Operating margin was -22.9%, up 14.6 percentage points.
For the first six months of fiscal 2023, total revenue was $164.2 million, up 29.4% from the prior-year period. Gross profit was $112.1 million, up 38.5%, with a gross margin of 68.3%, up 4.5 percentage points. The six-month GAAP operating loss was $38.6 million, narrowed from $47.9 million. GAAP net loss was $39.8 million, narrowed from $49.4 million, and GAAP diluted EPS was -$0.63, compared with -$0.82. Operating margin for the six months was -23.5%, up 14.3 percentage points.
Operational metrics showed strong cloud momentum. Cloud ARR was $191.8 million as of December 31, 2022, up 42% year-over-year. Total ARR was $301.3 million, up 26%. Cloud ARR represented 64% of total ARR, compared with 56% a year earlier. Net revenue retention for the trailing twelve months was above the projected range of 110% to 114%, and Intapp raised that range to 113% to 117%. The second quarter net revenue retention rate fell within the new range. The company served more than 2,200 clients, including 561 clients that each generated more than $100,000 of ARR. New clients included B Capital, Cuadrilla Capital, LivingBridge, GP Bullhound, and SEB. Intapp also became a Microsoft Top Tier Partner, a designation achieved by less than 1% of partners, and DealCloud won two industry awards.
Cash generation improved. Operating cash flow was $10.1 million in the quarter, up 440.1% from the prior-year quarter. For the six months, operating cash flow was $13.3 million, up 104.6%. Deferred revenue was $164.25 million, up 37.1% from the prior-year quarter. Remaining performance obligations were $390.3 million, up 57.6%. The company had no amounts borrowed under its $100.0 million revolving credit facility as of December 31, 2022.
Guidance points to continued growth. For the third quarter of fiscal 2023, Intapp guided non-GAAP operating profit to $0.5 million to $1.5 million and non-GAAP net income (loss) per share to ($0.01) to $0.01. For full fiscal year 2023, the company guided non-GAAP operating profit to $4.5 million to $8.5 million and non-GAAP net income per share to $0.02 to $0.06. Intapp also issued revenue guidance for the third quarter and the full fiscal year, but did not provide a quantitative reconciliation of the non-GAAP guidance to GAAP because certain items, including stock-based compensation and amortization of intangible assets, could be highly variable.
Risks remain. Intapp said operating losses could continue as it invests in growth. Professional services are currently loss making after allocated overhead costs. Foreign exchange swings affect results, particularly changes in the British Pound. The company continues to manage the business impact of Russia's invasion of Ukraine and COVID-19, including travel and real estate costs. Other risks include competition, long sales cycles, data breaches, talent retention, international expansion complexity, future indebtedness, liquidity needs, and intellectual property protection.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2023 | Q1 FY2023 | QoQ | Q2 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $84.7M | $79.5M | +6.5% | $64.7M | +30.9% |
| Gross profit | $57.9M | $54.2M | +6.8% | $41.1M | +40.7% |
| Gross margin | 68.4% | 68.2% | +0.2 pp | 63.6% | +4.8 pp |
| Research & development | $23.4M | $19.7M | +18.9% | $17.4M | +34.5% |
| Sales & marketing | $33.5M | $31.3M | +7.1% | $26.8M | +25.0% |
| General & administrative | $20.8M | $20.4M | +1.7% | $21.2M | -2.2% |
| Total operating expenses | $77.3M | $73.3M | +5.4% | $65.4M | +18.2% |
| Operating income (loss) | -$19.4M | -$19.1M | -1.5% | -$24.3M | +20.0% |
| Operating margin | -22.9% | -24.1% | +1.1 pp | -37.6% | +14.6 pp |
| Net income (loss) | -$19.8M | -$20.1M | +1.5% | -$24.2M | +18.5% |
| Net margin | -23.3% | -25.2% | +1.9 pp | -37.4% | +14.1 pp |
| Diluted EPS | -$0.31 | -$0.32 | +$0.01 | — | — |
Risks
All revenues are generated from clients in the professional and financial services industry, and these verticals are interdependent because professional services clients rely on revenues from financial services clients. A decline in one vertical can lead to a decline in the other, which could adversely affect Intapp's ability to generate revenues.
Inflation, significant increases to benchmark interest rates, and market volatility directly impact Intapp's professional and financial services clients. Adverse economic and market downturns could reduce demand, lengthen sales cycles, delay or cancel projects, reduce IT spending, and make it difficult to collect receivables if client financial conditions deteriorate.
Future growth depends on winning new professional and financial services clients and expanding within existing clients, primarily through continued acceptance of Intapp's cloud platform. Intapp must convince key decision makers to choose its platform over point solutions, internally developed solutions, and horizontal solutions, and support deployments reliably and securely.
Adverse domestic and global economic and political conditions, including inflation and the adverse economic downturn, could result in significant decreases in demand or lengthened sales cycles for Intapp's solutions, including delay or cancellation of current or anticipated projects.
Intapp's clients in the professional and financial services industry are highly regulated, and changes in applicable laws and regulations could significantly impact the software functionality demanded and require Intapp to expend significant resources to ensure its solutions continue to meet evolving needs.
Industry consolidation or the introduction of competing technology could lead to a significant reduction in the number of clients that use Intapp's solutions within a particular vertical or the services demanded by these clients.
Russia's invasion of Ukraine required contingency plans for contract research and development activity in Ukraine, Russia, and Belarus, including relocation of resources and ending work in Russia and Belarus. Intapp expects a minor increase in research and development expenses due to higher labor rates and relocation costs, partly offset by cost reductions.
Trailing twelve months net revenue retention as of December 31, 2022 was above Intapp's projected range of 110% to 114%. If clients do not continue to see the ability of Intapp's platform to generate return on investment relative to other software alternatives, net revenue retention could suffer and operating results may be adversely affected.
Inflation and government efforts to combat it could push up the costs of labor and Intapp's employee compensation expenses. MD&A notes personnel-related costs increased due to salary raises and increased headcount.
Professional services are currently loss making after allocated overhead costs for facilities and IT and accounted for 14% of total revenues during the six months ended December 31, 2022, compared with 13% in the prior-year period. This could pressure overall margins if the mix of professional services increases.
SaaS KPIs
All quarters →Cloud ARR
Total ARR
Cloud ARR as % of total ARR
Total clients
Non-GAAP gross margin
Summary, forecast, risks and KPIs are extracted from Intapp, Inc.'s SEC filings for Q2 FY2023 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 1, 2026.