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Appian Announces Third Quarter 2023 Financial Results

MCLEAN, Va., Nov. 02, 2023 (GLOBE NEWSWIRE) -- Appian (Nasdaq: APPN) today announced financial results for the third quarter ended September 30, 2023.

“Our private data-centric approach to AI is getting strong support from buyers,” said Matt Calkins, CEO & Founder.

Third Quarter 2023 Financial Highlights:

  • Revenue: Cloud subscription revenue was $77.2 million, up 27% compared to the third quarter of 2022. Total subscriptions revenue, which includes sales of our cloud subscriptions, on-premises term license subscriptions, and maintenance and support, increased 20% year-over-year to $103.8 million. Professional services revenue was $33.3 million, an increase of 6% compared to the third quarter of 2022. Total revenue was $137.1 million, up 16% compared to the third quarter of 2022. Cloud subscription revenue retention rate was 117% as of September 30, 2023.
  • Operating loss and non-GAAP operating loss: GAAP operating loss was $(15.2) million, compared to $(37.8) million for the third quarter of 2022. Non-GAAP operating loss was $(7.7) million, compared to $(24.6) million for the third quarter of 2022.
  • Net loss and non-GAAP net loss: GAAP net loss was $(22.3) million, compared to $(44.0) million for the third quarter of 2022. GAAP net loss per share was $(0.30) for the third quarter of 2023, compared to $(0.61) for the third quarter of 2022. Non-GAAP net loss was $(14.7) million, compared to $(30.9) million for the third quarter of 2022. Non-GAAP net loss per share was $(0.20), compared to the $(0.43) net loss per share for the third quarter of 2022. GAAP and non-GAAP net loss for the third quarter of 2023 included $4.3 million, or $(0.06) per share, of foreign currency exchange losses. GAAP and non-GAAP net loss for the third quarter of 2022 included $6.1 million, or $(0.08) per share, of foreign currency exchange losses. We do not forecast foreign exchange rate movements.
  • Adjusted EBITDA: Adjusted EBITDA loss was $(5.3) million, compared to adjusted EBITDA loss of $(22.9) million for the third quarter of 2022.
  • Balance sheet and cash flows: As of September 30, 2023, Appian had total cash, cash equivalents, and investments of $169.5 million. Net cash used by operating activities was $(65.0) million for the three months ended September 30, 2023, compared to $(43.7) million of net cash used by operating activities for the same period in 2022.


A reconciliation of GAAP to non-GAAP financial measures has been provided in the tables following the financial statements in this press release. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures.”

Recent Business Highlights:


Financial Outlook:

As of November 2, 2023, guidance for 2023 is as follows:

  • Fourth Quarter 2023 Guidance:

    • Cloud subscription revenue is expected to be between $78.6 million and $79.6 million, representing year-over-year growth of 19% to 21%.

    • Total revenue is expected to be between $138.0 million and $143.0 million, representing a year-over-year increase of 10% to 14%.

    • Adjusted EBITDA loss is expected to be between $(16.1) million and $(12.1) million.

    • Non-GAAP net loss per share is expected to be between $(0.29) and $(0.24), assuming weighted average common shares outstanding of 73.3 million.

  • Full Year 2023 Guidance:

    • Cloud subscription revenue is expected to be between $300.0 million and $301.0 million, representing year-over-year growth of 27%.

    • Total revenue is expected to be between $538.0 million and $543.0 million, representing a year-over-year increase of 15% to 16%.

    • Adjusted EBITDA loss is expected to be between $(62.0) million and $(58.0) million.

    • Non-GAAP net loss per share is expected to be between $(1.13) and $(1.07), assuming weighted average common shares outstanding of 73.1 million.


Conference Call Details:

Appian will host a conference call today, November 2, 2023, at 4:30 p.m. ET to discuss Appian's financial results for the third quarter ended September 30, 2023 and business outlook.

To access the call, navigate to the following link(1). Once registered, participants can dial in using their phone with a dial in and PIN, or they can choose the Call Me option for instant dial to their phone. The live webcast of the conference call can also be accessed on the Investor Relations page of our website at http://investors.appian.com.

_______________________________
1 https://edge.media-server.com/mmc/p/48skn964/


About Appian

Appian is a software company that automates business processes. The Appian AI Process Platform includes everything you need to design, automate, and optimize even the most complex processes, from start to finish. The world's most innovative organizations trust Appian to improve their workflows, unify data, and optimize operations—resulting in better growth and superior customer experiences. For more information, visit www.appian.com. [Nasdaq: APPN]

Non-GAAP Financial Measures

To supplement its consolidated financial statements, which are prepared and presented in accordance with GAAP, Appian provides investors with certain non-GAAP financial performance measures. Appian uses these non-GAAP financial performance measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. Appian’s management believes these non-GAAP financial measures provide meaningful supplemental information regarding Appian’s performance by excluding certain expenses that may not be indicative of our recurring core business operating results. Appian believes both management and investors benefit from referring to these non-GAAP financial measures in assessing Appian’s performance and when planning, forecasting, and analyzing future periods. These non-GAAP financial measures also facilitate management’s internal comparisons to historical performance as well as comparisons to competitors’ operating results. Appian believes these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to measures used by management in its financial and operational decision-making and (2) they are used by Appian’s institutional investors and the analyst community to help them analyze the health of Appian’s business.

The non-GAAP financial performance measures include non-GAAP net loss, non-GAAP net loss per share, and non-GAAP operating loss. These non-GAAP financial performance measures exclude the effect of stock-based compensation expense, certain litigation-related expenses consisting of legal and other professional fees associated with the Pegasystems cases (net of insurance reimbursements), amortization of the judgement preservation insurance (“JPI”) policy, and severance costs related to involuntary reductions in our workforce. While some of these items may be recurring in nature and should not be disregarded in evaluation of our earnings performance, it is useful to exclude such items when analyzing current results and trends compared to other periods as these items can vary significantly from period to period depending on specific underlying transactions or events that may occur. Therefore, while we may incur or recognize these types of expenses in the future, we believe removing these items for purposes of calculating the non-GAAP financial measures provides investors with a more focused presentation of our ongoing operating performance.

Appian also discusses adjusted EBITDA, a non-GAAP financial performance measure it believes offers a useful view of the overall operation of its businesses. The company defines adjusted EBITDA as net loss before (1) other (income) expenses, net, (2) interest expense, (3) income tax expense (benefit), (4) depreciation expense and amortization of intangible assets, (5) stock-based compensation expense, (6) litigation expenses (net of insurance reimbursements) directly associated with the Pegasystems cases, (7) JPI amortization, and (8) severance costs. The most directly comparable GAAP financial measure to adjusted EBITDA is net loss. Users should consider the limitations of using adjusted EBITDA, including the fact this measure does not provide a complete measure of our operating performance. Adjusted EBITDA is not intended to purport to be an alternate to net loss as a measure of operating performance or to cash flows from operating activities as a measure of liquidity.

The presentation of these non-GAAP financial measures is not intended to be considered in isolation from, as a substitute for, or superior to the financial information prepared and presented in accordance with GAAP, and Appian’s non-GAAP measures may be different from non-GAAP measures used by other companies. For more information on these non-GAAP financial measures, see the reconciliation of these non-GAAP financial measures to their nearest comparable GAAP measures at the end of this press release. Appian provides guidance ranges for non-GAAP net loss per share and adjusted EBITDA; however, we are not able to reconcile these amounts to their comparable GAAP financial measures without unreasonable efforts because certain information necessary to calculate such measures on a GAAP basis is unavailable, subject to high variability, dependent on future events outside of our control, and cannot be predicted. In addition, Appian believes such reconciliations could imply a degree of precision that might be confusing or misleading to investors. The actual effect of the reconciling items that Appian may exclude from these non-GAAP expense numbers, when determined, may be significant to the calculation of the comparable GAAP measures.

Forward-Looking Statements

This press release includes forward-looking statements. All statements contained in this press release other than statements of historical facts, including statements regarding Appian’s future financial and business performance for the fourth quarter and full year 2023, future investment by Appian in its go-to-market initiatives, increased demand for the Appian AI-Powered Process platform, market opportunity and plans and objectives for future operations, including Appian’s ability to drive continued subscriptions revenue and total revenue growth, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “estimate,” “expect,” “intend,” “may,” “will,” “plan,” and similar expressions are intended to identify forward-looking statements. Appian has based these forward-looking statements on its current expectations and projections about future events and financial trends that Appian believes may affect its financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks and uncertainties, including the risks and uncertainties associated with Appian’s ability to grow its business and manage its growth, Appian’s ability to sustain its revenue growth rate, continued market acceptance of Appian’s AI-Powered Process platform and adoption of low-code solutions to drive digital transformation, the fluctuation of Appian’s operating results due to the length and variability of its sales cycle, competition in the markets in which Appian operates, risks and uncertainties associated with the composition and concentration of Appian’s customer base and their demand for its platform and satisfaction with the services provided by Appian, the potential fluctuation of Appian’s future quarterly results of operations, Appian’s ability to shift its revenue towards subscriptions and away from professional services, Appian’s ability to operate in compliance with applicable laws and regulations, Appian’s strategic relationships with third parties and use of third-party licensed software and its platform’s compatibility with third-party applications, the timing of Appian’s recognition of subscriptions revenue which may delay the effect of near term changes in sales on its operating results, Appian’s ability to meet its financial covenants under its Credit Agreement, and the additional risks and uncertainties set forth in the “Risk Factors” section of Appian’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission on February 16, 2023 and other reports that Appian has filed with the Securities and Exchange Commission. Moreover, Appian operates in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for Appian’s management to predict all risks nor can Appian assess the impact of all factors on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements Appian may make. In light of these risks, uncertainties, and assumptions, Appian cannot guarantee future results, levels of activity, performance, achievements, or events and circumstances reflected in the forward-looking statements will occur. Appian is under no duty to update any of these forward-looking statements after the date of this press release to conform these statements to actual results or revised expectations, except as required by law.

Investor Contact
Srinivas Anantha, CFA
703-442-8844
investors@appian.com

Media Contact
Ben Farrell
703-442-1067
ben.farrell@appian.com 

 
 
APPIAN CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except par value and share data)
 
 As of
 September 30, 2023 December 31, 2022
 (unaudited)  
Assets   
Current assets   
Cash and cash equivalents$        130,761  $        148,132 
Short-term investments and marketable securities         38,726           47,863 
Accounts receivable, net of allowance of $2,268 and $2,125, respectively         133,548           165,964 
Deferred commissions, current         31,107           30,196 
Prepaid expenses and other current assets         51,230           28,093 
Restricted cash, current         —           2,249 
Total current assets         385,372           422,497 
Property and equipment, net of accumulated depreciation of $22,972 and $18,864, respectively         42,444           41,855 
Goodwill         25,991           26,349 
Intangible assets, net of accumulated amortization of $3,618 and $2,715, respectively         4,092           5,251 
Right-of-use assets for operating leases         40,501           37,248 
Deferred commissions, net of current portion         54,932           55,788 
Deferred tax assets         2,688           1,940 
Other assets         41,018           3,286 
Total assets$        597,038  $        594,214 
Liabilities and Stockholders’ Equity   
Current liabilities   
Accounts payable$        5,956  $        7,997 
Accrued expenses         11,275           12,227 
Accrued compensation and related benefits         33,866           40,718 
Deferred revenue         194,602           194,768 
Debt         65,431           2,740 
Operating lease liabilities         11,003           8,681 
Other current liabilities         1,119           3,121 
Total current liabilities         323,252           270,252 
Long-term debt         142,016           115,379 
Non-current operating lease liabilities         60,339           57,225 
Deferred revenue         3,243           5,556 
Deferred tax liabilities         87           102 
Total liabilities         528,937           448,514 
Stockholders’ equity   
Class A common stock—par value $0.0001; 500,000,000 shares authorized and 41,726,634 shares issued and outstanding as of September 30, 2023; 500,000,000 shares authorized and 41,320,091 shares issued and outstanding as of December 31, 2022         4           4 
Class B common stock—par value $0.0001; 100,000,000 shares authorized and 31,497,396 shares issued and outstanding as of September 30, 2023; 100,000,000 shares authorized and 31,497,796 shares issued and outstanding as of December 31, 2022         3           3 
Additional paid-in capital         588,029           561,390 
Accumulated other comprehensive loss         (10,049)          (7,246)
Accumulated deficit         (509,886)          (408,451)
Total stockholders’ equity         68,101           145,700 
Total liabilities and stockholders’ equity$        597,038  $        594,214 


 
APPIAN CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
 
 Three Months Ended September 30, Nine Months Ended September 30,
  2023   2022   2023   2022 
 (unaudited)
Revenue       
Subscriptions$        103,803  $        86,520  $        296,554  $        246,908 
Professional services         33,291           31,356           103,490           95,297 
Total revenue         137,094           117,876           400,044           342,205 
Cost of revenue       
Subscriptions         11,265           9,313           32,492           26,065 
Professional services         24,804           24,447           76,515           72,011 
Total cost of revenue         36,069           33,760           109,007           98,076 
Gross profit         101,025           84,116           291,037           244,129 
Operating expenses       
Sales and marketing         55,667           54,912           181,338           157,104 
Research and development         37,135           37,623           118,502           101,401 
General and administrative         23,440           29,357           82,342           90,014 
Total operating expenses         116,242           121,892           382,182           348,519 
Operating loss         (15,217)          (37,776)          (91,145)          (104,390)
Other non-operating expense       
Other expense (income), net         1,939           5,876           (4,637)          12,815 
Interest expense         4,917           89           12,790           222 
Total other non-operating expense         6,856           5,965           8,153           13,037 
Loss before income taxes         (22,073)          (43,741)          (99,298)          (117,427)
Income tax expense (benefit)         178           255           2,137           (924)
Net loss$        (22,251) $        (43,996) $        (101,435) $        (116,503)
Net loss per share:       
Basic and diluted$        (0.30) $        (0.61) $        (1.39) $        (1.61)
Weighted average common shares outstanding:       
Basic and diluted         73,178           72,503           73,032           72,372 


 
APPIAN CORPORATION
STOCK-BASED COMPENSATION EXPENSE
(in thousands)
 
 Three Months Ended September 30, Nine Months Ended September 30,
  2023   2022   2023   2022 
 (unaudited)
Cost of revenue       
Subscriptions$        211  $        284  $        713  $        712 
Professional services         1,535           1,401           4,598           3,788 
Operating expenses       
Sales and marketing         3,245           2,667           8,462           6,721 
Research and development         2,930           3,454           9,466           8,831 
General and administrative         3,090           3,530           9,976           7,375 
Total stock-based compensation expense$        11,011  $        11,336  $        33,215  $        27,427 


 
APPIAN CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
 
 Nine Months Ended September 30,
  2023   2022 
Cash flows from operating activities   
Net loss$        (101,435) $        (116,503)
Adjustments to reconcile net loss to net cash used by operating activities   
Stock-based compensation         33,215           27,427 
Depreciation expense and amortization of intangible assets         7,046           5,332 
Bad debt expense         690           561 
Amortization of debt issuance costs         342           — 
Deferred income taxes         (808)          (1,549)
Changes in assets and liabilities   
Accounts receivable         30,665           (9,114)
Prepaid expenses and other assets         (61,555)          (6,723)
Deferred commissions         (56)          (5,715)
Accounts payable and accrued expenses         (657)          (3,654)
Accrued compensation and related benefits         (6,671)          1,634 
Other current and non-current liabilities         (2,026)          (383)
Deferred revenue         (3,186)          15,414 
Operating lease assets and liabilities         2,238           (685)
Net cash used by operating activities         (102,198)          (93,958)
Cash flows from investing activities   
Purchases of investments         (53,443)          (31,214)
Proceeds from investments         62,590           57,417 
Purchases of property and equipment         (8,278)          (5,861)
Net cash provided by investing activities         869           20,342 
Cash flows from financing activities   
Proceeds from borrowings         92,000           — 
Debt repayments         (2,625)          — 
Payments for debt issuance costs         (411)          — 
Payments for employee taxes related to the net share settlement of equity awards         (7,240)          — 
Proceeds from exercise of common stock options         664           25,205 
Net cash provided by financing activities         82,388           25,205 
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash         (679)          (1,694)
Net decrease in cash, cash equivalents, and restricted cash         (19,620)          (50,105)
Cash, cash equivalents, and restricted cash at beginning of period         150,381           103,960 
Cash, cash equivalents, and restricted cash at end of period$        130,761  $        53,855 
    
Supplemental disclosure of cash flow information   
Cash paid for interest$        11,960  $        243 
Cash paid for income taxes$        2,944  $        749 
Supplemental disclosure of non-cash investing and financing activities   
Accrued capital expenditures$        27  $        317 


 
APPIAN CORPORATION
RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES
(unaudited, in thousands, except per share data)
 
 GAAP Measure Stock-Based Compensation Litigation Expenses JPI Amortization Severance Costs Non-GAAP Measure
Three Months Ended September 30, 2023
Subscriptions cost of revenue$        11,265  $        (211) $        —  $        —  $        —  $        11,054 
Professional services cost of revenue         24,804           (1,535)          —           —           —           23,269 
Total cost of revenue         36,069           (1,746)          —           —           —           34,323 
Total operating expense         116,242           (9,265)          4,961           (1,485)          —           110,453 
Operating loss         (15,217)          11,011           (4,961)          1,485           —           (7,682)
Income tax impact of above items         178           88           —           —           —           266 
Net loss         (22,251)          11,099           (4,961)          1,485           —           (14,628)
Net loss per share, basic and diluted$        (0.30) $        0.15  $        (0.07) $        0.02  $        —  $        (0.20)
            
Nine Months Ended September 30, 2023
Subscriptions cost of revenue$        32,492  $        (713) $        —  $        —  $        (30) $        31,749 
Professional services cost of revenue         76,515           (4,598)          —           —           (158)          71,759 
Total cost of revenue         109,007           (5,311)          —           —           (188)          103,508 
Total operating expense         382,182           (27,904)          2,772           (1,485)          (6,111)          349,454 
Operating loss         (91,145)          33,215           (2,772)          1,485           6,299           (52,918)
Income tax impact of above items         2,137           731           —           —           139           3,007 
Net loss         (101,435)          33,946           (2,772)          1,485           6,438           (62,338)
Net loss per share, basic and diluted$        (1.39) $        0.46  $        (0.04) $        0.02  $        0.09  $        (0.86)


 GAAP Measure Stock-Based Compensation Litigation Expenses Non-GAAP Measure
Three Months Ended September 30, 2022
Subscriptions cost of revenue$        9,313  $        (284) $        —  $        9,029 
Professional services cost of revenue         24,447           (1,401)          —           23,046 
Total cost of revenue         33,760           (1,685)          —           32,075 
Total operating expense         121,892           (9,651)          (1,810)          110,431 
Operating loss         (37,776)          11,336           1,810           (24,630)
Net loss         (43,996)          11,336           1,810           (30,850)
Net loss per share, basic and diluted$        (0.61) $        0.16  $        0.02  $        (0.43)
        
Nine Months Ended September 30, 2022
Subscriptions cost of revenue$        26,065  $        (712) $        —  $        25,353 
Professional services cost of revenue         72,011           (3,788)          —           68,223 
Total cost of revenue         98,076           (4,500)          —           93,576 
Total operating expense         348,519           (22,927)          (20,432)          305,160 
Operating loss         (104,390)          27,427           20,432           (56,531)
Net loss         (116,503)          27,427           20,432           (68,644)
Net loss per share, basic and diluted$        (1.61) $        0.38  $        0.28  $        (0.95)


 Three Months Ended September 30, Nine Months Ended September 30,
  2023   2022   2023   2022 
Reconciliation of adjusted EBITDA:       
GAAP net loss$        (22,251) $        (43,996) $        (101,435) $        (116,503)
Other expense (income), net         1,939           5,876           (4,637)          12,815 
Interest expense         4,917           89           12,790           222 
Income tax expense (benefit)         178           255           2,137           (924)
Depreciation and amortization of intangibles         2,340           1,759           7,046           5,332 
Stock-based compensation expense         11,011           11,336           33,215           27,427 
Litigation expenses         (4,961)          1,810           (2,772)          20,432 
JPI amortization         1,485           —           1,485           — 
Severance costs         —           —           6,299           — 
Adjusted EBITDA$        (5,342) $        (22,871) $        (45,872) $        (51,199)



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