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On Friday, Raymond (NS:RYMD) James analysts reduced their rating on Intapp, Inc (NASDAQ: INTA) from Outperform to Market Perform, citing a more balanced risk/reward scenario after a strong performance in the second half of 2024. Intapp's shares soared 69% throughout 2024, with InvestingPro data showing an impressive 77.3% return over the past year. According to InvestingPro's Fair Value analysis, the stock appears to be trading above its Fair Value, with a market capitalization of approximately $5 billion.
The decision to change the stock rating follows Intapp's impressive Cloud Annual Recurring Revenue (ARR) bookings through the fiscal year 2024, and the company's announcement of its "strongest pipeline" in the first quarter of fiscal 2025. These factors have been instrumental in driving the company's growth, with InvestingPro data showing overall revenue growth of 20.1% in the last twelve months. While currently unprofitable, analysts expect the company to achieve profitability this year, according to InvestingPro insights.
Raymond James highlighted several ongoing positive factors that support Intapp's sustained growth potential. These include the expansion of its partner network, notably with Microsoft (NASDAQ:MSFT), which offers complementary solutions, and the development of products with embedded AI functionality, which Raymond James continues to view as a winning strategy for Intapp. Additionally, the firm pointed out Intapp's consistent pricing opportunities as the company transitions more of its ARR base to the cloud, with 26% still pending migration, and its broader monetization efforts.
Despite these growth drivers, the analysts noted that Intapp's shares are currently trading at approximately 10 times their calendar year 2025 estimated sales. This valuation is higher than similar companies, which trade in the 7-9 times range.
While Intapp's premium valuation is supported by its strong financial health score and solid growth metrics, the analysts believe that the case for further multiple expansion is now more challenging, leading to the revised rating. For deeper insights into Intapp's valuation and growth prospects, investors can access comprehensive analysis and additional ProTips through InvestingPro's detailed research reports.
In other recent news, Intapp has demonstrated strong financial performance, with a focus on cloud solutions and artificial intelligence. The company's first quarter results revealed a 27% year-over-year increase in cloud Annual Recurring Revenue (ARR) to $309 million, accounting for 74% of the total ARR of $417 million. SaaS revenue increased by 30%, reaching $77 million, and total revenue grew by 17% to $119 million. However, Intapp noted a 35% year-over-year decrease in net new ARR during the first quarter, attributed to a slowdown in large deal activity.
Truist Securities recently increased the price target for Intapp to $77 from the previous $55 while maintaining a Buy rating, reflecting the company's updated revenue segmentation. In contrast, Oppenheimer maintained its Perform rating for Intapp, highlighting the company's sustained SaaS revenue growth and operating leverage.
In other developments, Intapp's stockholders reelected directors Ralph Baxter (NYSE:BAX), Charles Moran, and George Neble and ratified Deloitte & Touche LLP as the company's independent registered public accounting firm for the fiscal year ending June 30, 2025. Looking ahead, Intapp projects Q2 SaaS revenue between $79.5 million and $80.5 million, and full fiscal year SaaS revenue between $327.6 million and $331.6 million.
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