New CFO for IPO Run at Quote-to-Cash Firm Apttus

The incoming finance chief must cope with a weak IPO market and new competitive threats in a fast-expanding software niche.
David McCannJuly 11, 2016
New CFO for IPO Run at Quote-to-Cash Firm Apttus

Two weeks into her new job as CFO at fast-growing software company Apttus, Sydney Carey is already looking forward to the first IPO of her career. The event is likely to occur in 2017, Apttus has said.

Sydney Carey

Sydney Carey

Carey, a veteran finance executive in the software industry, has been a public-company finance chief before, at Tibco Software, from 2010 to 2013. After that she served as finance chief for two startups, MongoDB and then Zscaler.

Why make another move now? “One, it’s the basics — the fundamentals around growth and path to profitability, and the relationship I think I can have with the CEO, Kirk [Krappe], in bringing this company public,” Carey says. “But as a CFO, I truly believe in this space,” she adds, referring to the quote-to-cash software niche, in which Apttus is a major player.

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The company, founded in 2006, has recently been averaging year-over-year revenue growth of 80% and expects that to continue, according to Carey. Just three years ago Apttus had 250 employees, and now there are more than 1,300, the company says. Its valuation has surpassed $1 billion, giving it Unicorn status.

“Quote to cash” refers to all the processes that happen between the time a customer becomes interested in a product and revenue is realized. Steps in the quote-to-cash cycle include configuring the components of a sale; pricing the sale, which involves applying discounts, promotions, and bundles; providing a quote; creating, negotiating, and executing a contract; order fulfillment; billing; and revenue recognition. In Apttus’s scheme, customer renewal is the final step in the process.

Apttus is an unusual Silicon Valley company in that it didn’t seek any venture funding for its first seven years. Instead there was an immediate focus on attaining operating profitability, supporting the founders’ hope that the company could avoid giving too much control to investors and then raise bigger sums down the road, after it became established.

That in fact came to pass. After becoming one of the most important partners for, the company secured $186 million of venture capital in three rounds of funding from 2013 to 2015.

The Apttus software was created specifically to work on top of Salesforce’s customer relationship management platform. In fact, it has long been speculated that the company’s exit might come in the form of an acquisition by Salesforce, rather than an IPO.

But Salesforce may have muddied the Apttus’s exit picture last year by acquiring SteelBrick, another quote-to-cash software vendor. In April of this year, Apttus announced it was making its products available to users of the Microsoft Azure cloud computing platform. But it has competition there too, as another quote-to-cash player, Icertis, announced an integration with the computing giant around the same time Apttus did.

As recently as January, Krappe said the company would do its initial public offering in 2016, although he also said, “There’s no reason [Salesforce] can’t buy us too.” The offering is now expected to occur next year, provided that the recently slumbering IPO market wakes up — or that Salesforce doesn’t make an aggressive bid to acquire Apptus after all.

CFO recently spoke with the new CFO, Carey, about her early impressions of her job and the quote-to-cash market. An edited transcript of the conversation follows.

Have you ever been at a company at the time it went public?

No. But Apttus has been prepping for the IPO. Our target is 2017, and I think we’re in a good position. I’ll probably raise the bar a bit on the processes and preparing the internal pieces we need to go public. Hopefully the IPO markets will cooperate and open up a bit.

When that market does open up, I think high-growth SaaS businesses with subscription [business models], like Apttus, that are either profitable or have a very quick sight to profitability are going to do well. The IPO market will want to see a baked ham.

Since the company is selling product to people who do what you do, do you expect to play a role in the sales process?

Absolutely, and I really like that role. I always have to feel passionate about acknowledging the value that comes with what my company is selling, and I think I can bring that passion here because I do see the value. I will definitely be a sales-oriented CFO.

Think about the complexity at companies that have hundreds if not thousands of SKUs. We’re taking what in a lot of cases are manual processes and putting them into an automated environment and creating efficiencies. And we’re doing that in a cycle that’s revenue-generating, which is super exciting, because you can show the ROI very quickly.

Gartner estimated that the potential market for quote-to-cash software was $31 billion in 2015 and will reach $41 billion by 2018. What’s your view of why the growth pace is so extreme?

Companies now have their [customer relationship management] infrastructure in place. I think it’s a natural next step for companies that made investments to look at taking it to the next level. How can we further increase sales? How can we change our business processes?

How does Salesforce’s acquisition of SteelBrick affect Apttus?

SteelBrick is at the low end of the market. If we’re competing with SteelBrick for a deal, one of us is probably in wrong deal, because Apttus plays in the mid-market and up into the Fortune 1,000. Even though we’re still a small company, I can’t even call us a start-up anymore, because there isn’t anybody else that brings the whole stack [of quote-to-cash processes] into a unified platform.

What’s the low end of the scale that Apttus would target?

I define it as 1,000 users and above, although we can go below that depending on [the customer’s] complexity of process.

What are your priorities going to be over the next few months?

For me it’s evaluating exactly where we are with all of our processes that we need to be a public company and putting a road map in place for getting those to be rock solid. From an external perspective, Kirk has done a really good job of getting the message out there around what Apttus does, but I think there’s still work to be done with the investment community.

When we ask CFOs of fast-growth companies what their biggest challenges are, they always say it’s just managing the growth. Is it any different for Apttus?

The company has grown extremely fast in terms of revenue and the number of employees coming in. We have to balance investing for growth with [maintaining] the path to profitability by making sure we’re efficient. I need to spend time with Kirk so that I fully understand the business and all of its components, but anytime a company grows as fast as Apttus has grown, there are probably more efficient processes you can bring in.

How big is your finance and accounting team, and how are you going to scale it in light of the company’s continuing growth and the current shortage of top talent?

We have 35 people right now. There are some additions of key players I need to make, one around investor relations down the road, and one on the [financial planning and analysis] side.

There aren’t a lot of pre-IPO companies in the SaaS business that are as large as Apttus, so I think we’ll be able to attract top talent. Of course key talent is hard to find, but I’m pretty patient about getting the right people.

Do you expect to see an impact from Brexit?

I think it’s disruptive. Maybe we’ll see businesses pause a bit. But most of our sales are in the United States. That doesn’t mean we don’t have an international presence, but I don’t think [Brexit is] going to cause a major hiccup for us, given our size and where our international business is. Larger companies may feel differently.