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Why Apptio Inc. (NASDAQ:APTI) Stock is Undervalued.

Apptio Inc (NASDAQ:APTI) provides technology business management software solutions with a focus on a company’s Information Technology ((IT)) spend. The platform can be used on the cloud or off the cloud. Founded by Sunny Gupta, Kurt Shintaffer and Paul McLachlan on October 01, 2007, it is headquartered in Bellevue, Washington, USA. Apptio went public on September 23, 2016, floating at $16.

Cloud market forecast to grow at 21% CAGR to 2020

With the total cloud storage market forecast to reach $141 billion by 2019 and with Software-as-a-Service ((SaaS)) growing to a market size of $11.6b by end 2020, that represents large growth potential from now until 2020 for Apptio. Note that not all of the $11.6b is focused on the IT management spend.





Source 


In 2016, the IT spend was $2.7 trillion on global IT. Apptio sees their IT management addressable market as a $6 billion (0.22% fee x $2.7 trillion) opportunity.



Viewed another way, if Apptio was able to get 5% market share of the forecast,$11.6b SaaS spend by 2020, that would mean they would have revenue of $580m by 2020, around 3.6x their 2016 revenue. Added to this would be their global revenues.


The business

The company was started as a service that could help the Chief Information Officers (CIOs) of organizations manage the business of information technology (IT) more efficiently. With the company's SaaS cloud-based platform, Apptio offers cost transparency, IT planning and benchmarking, business insights, and bill of IT. Or put simply, Apptio software system “manages (automates) the work and operations of IT.”