Appian (Nasdaq: APPN) today announced financial results for the second quarter ended June 30, 2024.

“Due to enhanced functionality launched this quarter, Appian AI usage nearly doubled,” said Matt Calkins, CEO & Founder. “Looking ahead, we are accelerating our path to profitability. We now expect to achieve adjusted EBITDA breakeven for the full year 2024.”

Second Quarter 2024 Financial Highlights:

  • Revenue: Cloud subscription revenue was $88.4 million, up 19% compared to the second quarter of 2023. 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 $113.0 million. Professional services revenue was $33.5 million, a decrease of 1% compared to the second quarter of 2023. Total revenue was $146.5 million, up 15% compared to the second quarter of 2023. Cloud subscription revenue retention rate was 118% as of June 30, 2024.
  • Operating loss and non-GAAP operating loss: GAAP operating loss was $(39.2) million, compared to $(40.7) million for the second quarter of 2023. Non-GAAP operating loss was $(13.1) million, compared to $(27.1) million for the second quarter of 2023.
  • Net loss and non-GAAP net loss: GAAP net loss was $(43.6) million, compared to $(42.4) million for the second quarter of 2023. GAAP net loss per share was $(0.60) for the second quarter of 2024, compared to $(0.58) for the second quarter of 2023. Non-GAAP net loss was $(19.1) million, compared to $(28.5) million for the second quarter of 2023. Non-GAAP net loss per share was $(0.26), compared to $(0.39) net loss per share for the second quarter of 2023. GAAP and non-GAAP net loss for the second quarter of 2024 included $0.2 million of foreign currency exchange losses. GAAP and non-GAAP net loss for the second quarter of 2023 included $1.2 million of foreign currency exchange gains. We do not forecast foreign exchange rate movements.
  • Adjusted EBITDA: Adjusted EBITDA loss was $(10.5) million, compared to adjusted EBITDA loss of $(24.7) million for the second quarter of 2023.
  • Balance sheet and cash flows: As of June 30, 2024, Appian had total cash, cash equivalents, and investments of $149.1 million. Net cash used by operating activities was $(17.6) million for the three months ended June 30, 2024, compared to $(11.9) million of net cash used by operating activities for the same period in 2023.

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:

  • Appian Named a Leader in the 2024 Garner Magic Quadrant For Process Mining Platforms Report
  • Appian and ReleasePoint Partner to Automate Life Insurance Underwriting
  • Victorian Office of Public Prosecutions (OPP) to Accelerate Criminal Case Management with Appian
  • Appian and PwC UK Announce Alliance to Unlock business Value and Drive Innovation in the Insurance Sector

Financial Outlook:

As of August 1, 2024, guidance for 2024 is as follows:

  • Third Quarter 2024 Guidance:
    • Cloud subscription revenue is expected to be between $89.0 million and $91.0 million, representing year-over-year growth of 15% to 18%.
    • Total revenue is expected to be between $149.0 million and $153.0 million, representing a year-over-year increase of 9% to 12%.
    • Adjusted EBITDA is expected to be between breakeven and $3.0 million.
    • Non-GAAP net loss per share is expected to be between $(0.10) and $(0.06), assuming weighted average common shares outstanding of 72.4 million.
  • Full Year 2024 Guidance:
    • Cloud subscription revenue is expected to be between $358.0 million and $360.0 million, representing year-over-year growth of 18%.
    • Total revenue is expected to be between $610.0 million and $615.0 million, representing a year-over-year increase of 12% to 13%.
    • Adjusted EBITDA is expected to be between $(3.0) million and $3.0 million.
    • Non-GAAP net loss per share is expected to be between $(0.61) and $(0.52), assuming weighted average common shares outstanding of 72.6 million.

Conference Call Details:

Appian will host a conference call today, August 1, 2024, at 8:30 a.m. ET to discuss Appian's financial results for the second quarter ended June 30, 2024 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://register.vevent.com/register/BI1cb1198e099247ce9ec1e7337177a690

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 the following: non-GAAP subscriptions cost of revenue, non-GAAP professional services costs of revenue, non-GAAP total cost of revenue, non-GAAP total operating expense, non-GAAP operating loss, non-GAAP income tax (benefit) expense, non-GAAP net loss, and non-GAAP net loss per share, basic and diluted. These non-GAAP financial performance measures exclude the effect of stock-based compensation expense, certain non-ordinary litigation-related expenses consisting of legal and other professional fees associated with the Pegasystems cases (net of insurance reimbursements), or Litigation Expense, amortization of the judgement preservation insurance policy, or JPI Amortization, and severance costs related to involuntary reductions in our workforce, or Severance Costs, and lease impairment charges related to actions taken reduce the footprint of our leased office spaces, or Lease Impairment Charges. While some of these items may be recurring in nature and should not be disregarded in the 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 our 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) expense, net, (2) interest expense, (3) income tax (benefit) expense, (4) depreciation expense and amortization of intangible assets, (5) stock-based compensation expense, (6) Litigation Expense, (7) JPI Amortization, (8) Severance Costs, and (9) Lease Impairment Charges. 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 alternative 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 within the meaning of the Private Securities Litigation Reform Act of 1995. 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 third quarter and full year 2024, 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, AI being a disruptive set of technologies that may affect the markets for Appian’s software dramatically and in unpredictable ways, 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, Appian’s ability to operate in compliance with applicable laws and regulations, Appian’s strategic relationships with third parties, and additional risks and uncertainties set forth in the “Risk Factors” section of Appian’s most recent annual report on Form 10-K, quarterly reports on Form 10-Q, and other filings 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 RelationsJack Andrews 703-442-8844investors@appian.com

Media ContactValerie Verlander703-260-7947valerie.verlander@appian.com

APPIAN CORPORATIONCONSOLIDATED BALANCE SHEETS(in thousands, except par value and share data)
 
  As of
  June 30, 2024   December 31, 2023
  (unaudited)    
Assets      
Current assets      
Cash and cash equivalents $ 120,787     $ 149,351  
Short-term investments and marketable securities   28,345       9,653  
Accounts receivable, net of allowances of $2,652 and $2,606, respectively   131,693       171,561  
Deferred commissions, current   34,899       34,261  
Prepaid expenses and other current assets   48,261       49,529  
Total current assets   363,985       414,355  
Property and equipment, net of accumulated depreciation of $29,011 and $25,141, respectively   40,841       42,682  
Goodwill   26,305       27,106  
Intangible assets, net of accumulated amortization of $4,763 and $4,152, respectively   3,040       3,889  
Right-of-use assets for operating leases   32,848       39,975  
Deferred commissions, net of current portion   56,231       59,764  
Deferred tax assets   4,368       3,453  
Other assets   26,963       36,279  
Total assets $ 554,581     $ 627,503  
Liabilities and Stockholders’ (Deficit) Equity      
Current liabilities      
Accounts payable $ 5,739     $ 6,174  
Accrued expenses   13,797       11,046  
Accrued compensation and related benefits   33,843       38,003  
Deferred revenue   218,233       235,992  
Debt   8,348       66,368  
Operating lease liabilities   12,323       11,698  
Other current liabilities   1,405       1,891  
Total current liabilities   293,688       371,172  
Long-term debt   245,625       140,221  
Non-current operating lease liabilities   55,796       59,067  
Deferred revenue, non-current   4,695       4,700  
Deferred tax liabilities   —       2  
Other non-current liabilities   435       —  
Total liabilities   600,239       575,162  
Stockholders’ (deficit) equity      
Class A common stock—par value $0.0001; 500,000,000 shares authorized as of June 30, 2024 and December 31, 2023 and 42,359,967 and 42,169,970 shares issued of June 30, 2024 and December 31, 2023, respectively   4       4  
Class B common stock—par value $0.0001; 100,000,000 shares authorized as of June 30, 2024 and December 31, 2023 and 31,196,796 and 31,196,796 shares issued as of June 30, 2024 and December 31, 2023, respectively   3       3  
Additional paid-in capital   608,528       595,781  
Accumulated other comprehensive loss   (11,812 )     (23,555 )
Accumulated deficit   (596,407 )     (519,892 )
Treasury stock at cost, 1,213,686 shares as of June 30, 2024   (45,974 )     —  
Total stockholders’ (deficit) equity   (45,658 )     52,341  
Total liabilities and stockholders’ (deficit) equity $ 554,581     $ 627,503  

APPIAN CORPORATIONCONSOLIDATED STATEMENTS OF OPERATIONS(in thousands, except per share data)
 
  Three Months Ended June 30,   Six Months Ended June 30,
    2024       2023       2024       2023  
  (unaudited)
Revenue              
Subscriptions $ 112,974     $ 93,794     $ 230,668     $ 192,751  
Professional services   33,476       33,921       65,617       70,199  
Total revenue   146,450       127,715       296,285       262,950  
Cost of revenue              
Subscriptions   13,262       10,779       25,532       21,227  
Professional services   26,151       26,066       51,878       51,711  
Total cost of revenue   39,413       36,845       77,410       72,938  
Gross profit   107,037       90,870       218,875       190,012  
Operating expenses              
Sales and marketing   66,592       62,581       124,748       125,671  
Research and development   39,446       39,743       79,217       81,367  
General and administrative   40,193       29,208       73,639       58,902  
Total operating expenses   146,231       131,532       277,604       265,940  
Operating loss   (39,194 )     (40,662 )     (58,729 )     (75,928 )
Other non-operating expense              
Other (income) expense, net   (1,545 )     (3,886 )     6,662       (6,576 )
Interest expense   6,107       4,755       11,753       7,873  
Total other non-operating expense   4,562       869       18,415       1,297  
Loss before income taxes   (43,756 )     (41,531 )     (77,144 )     (77,225 )
Income tax (benefit) expense   (164 )     824       (629 )     1,959  
Net loss $ (43,592 )   $ (42,355 )   $ (76,515 )   $ (79,184 )
Net loss per share:              
Basic and diluted $ (0.60 )   $ (0.58 )   $ (1.05 )   $ (1.09 )
Weighted average common shares outstanding:              
Basic and diluted   72,300       73,041       72,800       72,956  

APPIAN CORPORATIONSTOCK-BASED COMPENSATION EXPENSE(in thousands)
 
  Three Months Ended June 30,   Six Months Ended June 30,
  2024   2023   2024   2023
  (unaudited)
Cost of revenue              
Subscriptions $ 217   $ 230   $ 430   $ 502
Professional services   1,461     1,472     3,039     3,063
Operating expenses              
Sales and marketing   1,997     2,772     4,524     5,217
Research and development   2,919     2,910     5,920     6,536
General and administrative   3,306     3,764     6,593     6,886
Total stock-based compensation expense $ 9,900   $ 11,148   $ 20,506   $ 22,204

APPIAN CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWS(unaudited, in thousands)
 
  Six Months Ended June 30,
    2024       2023  
Cash flows from operating activities      
Net loss $ (76,515 )   $ (79,184 )
Adjustments to reconcile net loss to net cash provided by (used by) operating activities      
Stock-based compensation   20,506       22,204  
Depreciation expense and amortization of intangible assets   4,941       4,705  
Lease impairment charges   5,462       —  
Bad debt expense   253       419  
Amortization of debt issuance costs   290       223  
Benefit for deferred income taxes   (982 )     (518 )
Foreign currency transaction losses, net   12,787       —  
Changes in assets and liabilities      
Accounts receivable   37,114       28,663  
Prepaid expenses and other assets   10,524       (4,924 )
Deferred commissions   2,897       123  
Accounts payable and accrued expenses   2,882       719  
Accrued compensation and related benefits   (3,808 )     (6,240 )
Other current and non-current liabilities   121       1,066  
Deferred revenue   (14,267 )     (6,574 )
Operating lease assets and liabilities   (954 )     2,116  
Net cash provided by (used by) operating activities   1,251       (37,202 )
Cash flows from investing activities      
Proceeds from maturities of investments   9,657       35,876  
Payments for investments   (28,354 )     (53,443 )
Purchases of property and equipment   (2,932 )     (7,805 )
Net cash used by investing activities   (21,629 )     (25,372 )
Cash flows from financing activities      
Proceeds from borrowings   50,000       92,000  
Payments for debt issuance costs   (463 )     (411 )
Debt repayments   (2,500 )     (1,687 )
Repurchase of common stock   (50,019 )     —  
Payments for employee taxes related to the net share settlement of equity awards   (4,221 )     (4,775 )
Proceeds from exercise of common stock options   508       559  
Net cash (used by) provided by financing activities   (6,695 )     85,686  
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash   (1,491 )     309  
Net (decrease) increase in cash, cash equivalents, and restricted cash   (28,564 )     23,421  
Cash, cash equivalents, and restricted cash at beginning of period $ 149,351     $ 150,381  
Cash, cash equivalents, and restricted cash at end of period $ 120,787     $ 173,802  
       
Supplemental disclosure of cash flow information      
Cash paid for interest $ 11,168     $ 2,731  
Cash paid for income taxes $ 1,436     $ 1,472  
Supplemental disclosure of non-cash investing and financing activities      
Accrued capital expenditures $ 182     $ 392  

APPIAN CORPORATIONRECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES(unaudited, in thousands, except per share data)
 
  GAAP Measure   Stock-Based Compensation   Litigation Expense   JPI Amortization   Severance Costs   Lease Impairment Charges   Non-GAAP Measure
Three Months Ended June 30, 2024
Subscriptions cost of revenue $ 13,262     $ (217 )   $ —     $ —     $ —     $ —     $ 13,045  
Professional services cost of revenue   26,151       (1,461 )     —       —       (1,398 )     —       23,292  
Total cost of revenue   39,413       (1,678 )     —       —       (1,398 )     —       36,337  
Total operating expense   146,231       (8,222 )     (721 )     (4,504 )     (4,136 )     (5,462 )     123,186  
Operating loss   (39,194 )     9,900       721       4,504       5,534       5,462       (13,073 )
Income tax (benefit) expense   (164 )     537       —       —       1,096       —       1,469  
Net loss   (43,592 )     9,363       721       4,504       4,438       5,462       (19,104 )
Net loss per share, basic and diluted $ (0.60 )   $ 0.13     $ 0.01     $ 0.06     $ 0.06     $ 0.08     $ (0.26 )
                           
Six Months Ended June 30, 2024
Subscriptions cost of revenue $ 25,532     $ (430 )   $ —     $ —     $ —     $ —     $ 25,102  
Professional services cost of revenue   51,878       (3,039 )     —       —       (1,398 )     —       47,441  
Total cost of revenue   77,410       (3,469 )     —       —       (1,398 )     —       72,543  
Total operating expense   277,604       (17,037 )     (1,463 )     (9,008 )     (4,136 )     (5,462 )     240,498  
Operating loss   (58,729 )     20,506       1,463       9,008       5,534       5,462       (16,756 )
Income tax (benefit) expense   (629 )     1,141       —       —       1,096       —       1,608  
Net loss   (76,515 )     19,365       1,463       9,008       4,438       5,462       (36,779 )
Net loss per share, basic and diluted(a) $ (1.05 )   $ 0.27     $ 0.02     $ 0.12     $ 0.06     $ 0.08     $ (0.51 )

(a) Per share amounts do not foot due to rounding.

  GAAP Measure   Stock-Based Compensation   Litigation Expense   Severance Costs   Non-GAAP Measure
Three Months Ended June 30, 2023
Subscriptions cost of revenue $ 10,779     $ (230 )   $ —     $ (19 )   $ 10,530  
Professional services cost of revenue   26,066       (1,472 )     —       (35 )     24,559  
Total cost of revenue   36,845       (1,702 )     —       (54 )     35,089  
Total operating expense   131,532       (9,446 )     (347 )     (2,041 )     119,698  
Operating loss   (40,662 )     11,148       347       2,095       (27,072 )
Income tax expense   824       221       7       42       1,094  
Net loss   (42,355 )     11,369       354       2,137       (28,495 )
Net loss per share, basic and diluted $ (0.58 )   $ 0.16     $ —     $ 0.03     $ (0.39 )
                   
Six Months Ended June 30, 2023
Subscriptions cost of revenue $ 21,227     $ (502 )   $ —     $ (30 )   $ 20,695  
Professional services cost of revenue   51,711       (3,063 )     —       (158 )     48,490  
Total cost of revenue   72,938       (3,565 )     —       (188 )     69,185  
Total operating expense   265,940       (18,639 )     (2,189 )     (6,111 )     239,001  
Operating loss   (75,928 )     22,204       2,189       6,299       (45,236 )
Income tax expense   1,959       563       56       160       2,738  
Net loss   (79,184 )     22,767       2,245       6,459       (47,713 )
Net loss per share, basic and diluted(a) $ (1.09 )   $ 0.31     $ 0.03     $ 0.09     $ (0.65 )

(a) Per share amounts do not foot due to rounding.

  Three Months Ended June 30,   Six Months Ended June 30,
    2024       2023       2024       2023  
Reconciliation of adjusted EBITDA:              
GAAP net loss $ (43,592 )   $ (42,355 )   $ (76,515 )   $ (79,184 )
Other (income) expense, net   (1,545 )     (3,886 )     6,662       (6,576 )
Interest expense   6,107       4,755       11,753       7,873  
Income tax (benefit) expense   (164 )     824       (629 )     1,959  
Depreciation expense and amortization of intangibles assets   2,580       2,364       4,941       4,705  
Stock-based compensation expense   9,900       11,148       20,506       22,204  
Litigation Expense   721       347       1,463       2,189  
JPI Amortization   4,504       —       9,008       —  
Severance Costs   5,534       2,095       5,534       6,299  
Lease Impairment Charges   5,462       —       5,462       —  
Adjusted EBITDA $ (10,493 )   $ (24,708 )   $ (11,815 )   $ (40,531 )
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