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Appian Announces First Quarter 2023 Financial Results

Appian Corporation
Appian Corporation

First quarter cloud subscription revenue increased 31% year-over-year to $69.7 million

MCLEAN, Va., May 09, 2023 (GLOBE NEWSWIRE) -- Appian (Nasdaq: APPN) today announced financial results for the first quarter ended March 31, 2023.

“Appian grew cloud subscription revenue 31% in the first quarter 2023. Organizations can manage their entire process lifecycle, optimize with automation tools in a single suite, and unite data silos with our patented Data Fabric technology,” said Matt Calkins, CEO & Founder.

First Quarter 2023 Financial Highlights:

  • Revenue: Cloud subscription revenue was $69.7 million, up 31% compared to the first quarter of 2022. Total subscriptions revenue, which includes sales of our cloud subscriptions, on-premises term license subscriptions, and maintenance and support, increased 18% year-over-year to $99.0 million. Professional services revenue was $36.3 million, an increase of 19% compared to the first quarter of 2022. Total revenue was $135.2 million, up 18% compared to the first quarter of 2022. Cloud subscription revenue retention rate was 115% as of March 31, 2023.

  • Operating loss and non-GAAP operating loss: GAAP operating loss was $(35.3) million, compared to $(23.9) million for the first quarter of 2022. Non-GAAP operating loss was $(18.2) million, compared to $(5.1) million for the first quarter of 2022.

  • Net loss and non-GAAP net loss: GAAP net loss was $(36.8) million, compared to $(23.2) million for the first quarter of 2022. GAAP net loss per share was $(0.51) for the first quarter of 2023, compared to $(0.32) for the first quarter of 2022. Non-GAAP net loss was $(19.7) million, compared to $(4.4) million for the first quarter of 2022. Non-GAAP net loss per share was $(0.27), compared to the $(0.06) net loss per share for the first quarter of 2022. GAAP and non-GAAP net loss for the first quarter of 2023 included $0.6 million, or $0.01 per share, of foreign currency exchange gains. GAAP and non-GAAP net loss for the first quarter of 2022 included $1.9 million, or $0.03 per share, of foreign currency exchange losses. We do not forecast foreign exchange rate movements.

  • Adjusted EBITDA: Adjusted EBITDA loss was $(15.8) million, compared to adjusted EBITDA loss of $(3.4) million for the first quarter of 2022.

  • Balance sheet and cash flows: As of March 31, 2023, Appian had total cash, cash equivalents, and investments of $254.5 million. Net cash used by operating activities was $(25.3) million for the three months ended March 31, 2023 compared to $(20.6) million of net cash used by operating activities for the same period in 2022.

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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 May 9, 2023, guidance for 2023 is as follows:

  • Second Quarter 2023 Guidance:

    • Cloud subscription revenue is expected to be between $72.0 million and $74.0 million, representing year-over-year growth of 26% to 30%.

    • Total revenue is expected to be between $123.0 million and $125.0 million, representing a year-over-year increase of 12% to 14%.

    • Adjusted EBITDA loss is expected to be between $(30.0) million and $(26.0) million.

    • Non-GAAP net loss per share is expected to be between $(0.46) and $(0.40), assuming weighted average common shares outstanding of 73.0 million.

  • Full Year 2023 Guidance:

    • Cloud subscription revenue is expected to be between $296.0 million and $298.0 million, representing year-over-year growth of 25% to 26%.

    • Total revenue is expected to be between $533.0 million and $538.0 million, representing a year-over-year increase of 14% to 15%.

    • Adjusted EBITDA loss is expected to be between $(70.0) million and $(65.0) million.

    • Non-GAAP net loss per share is expected to be between $(1.16) and $(1.09), assuming weighted average common shares outstanding of 73.2 million.

Conference Call Details:

Appian will host a conference call today, May 9, 2023, at 4:30 p.m. ET to discuss Appian's financial results for the first quarter ended March 31, 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://register.vevent.com/register/BI364f7abb4c26460a830a31dac84c3a2a

About Appian

Appian is a software company that automates business processes. The Appian 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, which are not indicative of our core operating performance and are not part of our normal course of business, and severance costs related to involuntary reductions in our workforce. While 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, the Company believes 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 and amortization, (5) stock-based compensation expense, (6) litigation expenses directly associated with the Pegasystems cases, and (7) 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 second quarter and full year 2023, future investment by Appian in its go-to-market initiatives, increased demand for the Appian 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 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

 

March 31, 2023

 

December 31, 2022

 

(unaudited)

 

 

Assets

 

 

 

Current assets

 

 

 

Cash and cash equivalents

$

198,679

 

 

$

148,132

 

Short-term investments and marketable securities

 

55,803

 

 

 

47,863

 

Accounts receivable, net of allowance of $2,182 and $2,125, respectively

 

147,579

 

 

 

165,964

 

Deferred commissions, current

 

30,697

 

 

 

30,196

 

Prepaid expenses and other current assets

 

36,556

 

 

 

28,093

 

Restricted cash, current

 

2,280

 

 

 

2,249

 

Total current assets

 

471,594

 

 

 

422,497

 

Property and equipment, net of accumulated depreciation of $19,128 and $18,864, respectively

 

45,877

 

 

 

41,855

 

Goodwill

 

26,711

 

 

 

26,349

 

Intangible assets, net of accumulated amortization of $3,125 and $2,715, respectively

 

4,950

 

 

 

5,251

 

Right-of-use assets for operating leases

 

35,425

 

 

 

37,248

 

Deferred commissions, net of current portion

 

55,601

 

 

 

55,788

 

Deferred tax assets

 

1,596

 

 

 

1,940

 

Other assets

 

3,064

 

 

 

3,286

 

Total assets

$

644,818

 

 

$

594,214

 

Liabilities and Stockholders’ Equity

 

 

 

Current liabilities

 

 

 

Accounts payable

$

3,872

 

 

$

7,997

 

Accrued expenses

 

15,373

 

 

 

12,227

 

Accrued compensation and related benefits

 

31,443

 

 

 

40,718

 

Deferred revenue

 

193,902

 

 

 

194,768

 

Debt

 

65,432

 

 

 

2,740

 

Operating lease liabilities

 

8,980

 

 

 

8,681

 

Other current liabilities

 

4,763

 

 

 

3,121

 

Total current liabilities

 

323,765

 

 

 

270,252

 

Long-term debt

 

143,728

 

 

 

115,379

 

Operating lease liabilities

 

56,073

 

 

 

57,225

 

Deferred revenue

 

4,750

 

 

 

5,556

 

Deferred tax liabilities

 

103

 

 

 

102

 

Total liabilities

 

528,419

 

 

 

448,514

 

Stockholders’ equity

 

 

 

Class A common stock—par value $0.0001; 500,000,000 shares authorized and 41,457,783 shares issued and outstanding as of March 31, 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 31,497,596 shares issued and outstanding as of March 31, 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

 

569,618

 

 

 

561,390

 

Accumulated other comprehensive loss

 

(7,946

)

 

 

(7,246

)

Accumulated deficit

 

(445,280

)

 

 

(408,451

)

Total stockholders’ equity

 

116,399

 

 

 

145,700

 

Total liabilities and stockholders’ equity

$

644,818

 

 

$

594,214

 



APPIAN CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)

 

 

 

Three Months Ended March 31,

 

 

2023

 

 

 

2022

 

 

(unaudited)

Revenue

 

 

 

Subscriptions

$

98,957

 

 

$

83,720

 

Professional services

 

36,278

 

 

 

30,546

 

Total revenue

 

135,235

 

 

 

114,266

 

Cost of revenue

 

 

 

Subscriptions

 

10,448

 

 

 

8,206

 

Professional services

 

25,645

 

 

 

22,710

 

Total cost of revenue

 

36,093

 

 

 

30,916

 

Gross profit

 

99,142

 

 

 

83,350

 

Operating expenses

 

 

 

Sales and marketing

 

63,090

 

 

 

45,916

 

Research and development

 

41,624

 

 

 

29,839

 

General and administrative

 

29,694

 

 

 

31,461

 

Total operating expenses

 

134,408

 

 

 

107,216

 

Operating loss

 

(35,266

)

 

 

(23,866

)

Other non-operating expense

 

 

 

Other (income) expense, net

 

(2,690

)

 

 

787

 

Interest expense

 

3,118

 

 

 

74

 

Total other non-operating expense

 

428

 

 

 

861

 

Loss before income taxes

 

(35,694

)

 

 

(24,727

)

Income tax expense (benefit)

 

1,135

 

 

 

(1,573

)

Net loss

$

(36,829

)

 

$

(23,154

)

Net loss per share:

 

 

 

Basic and diluted

$

(0.51

)

 

$

(0.32

)

Weighted average common shares outstanding:

 

 

 

Basic and diluted

 

72,869

 

 

 

72,217

 



APPIAN CORPORATION
STOCK-BASED COMPENSATION EXPENSE
(in thousands)

 

 

Three Months Ended March 31,

 

 

2023

 

 

 

2022

 

 

(unaudited)

Cost of revenue

 

 

 

Subscriptions

$

272

 

 

$

179

 

Professional services

 

1,591

 

 

 

1,057

 

Operating expenses

 

 

 

Sales and marketing

 

2,445

 

 

 

1,788

 

Research and development

 

3,626

 

 

 

2,314

 

General and administrative

 

3,122

 

 

 

1,605

 

Total stock-based compensation expense

$

11,056

 

 

$

6,943

 



APPIAN CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)

 

 

Three Months Ended March 31,

 

 

2023

 

 

 

2022

 

Cash flows from operating activities

 

 

 

Net loss

$

(36,829

)

 

$

(23,154

)

Adjustments to reconcile net loss to net cash used by operating activities

 

 

 

Stock-based compensation

 

11,056

 

 

 

6,943

 

Depreciation and amortization

 

2,342

 

 

 

1,773

 

Bad debt expense

 

120

 

 

 

(2

)

Amortization of debt issuance costs

 

70

 

 

 

—

 

Deferred income taxes

 

357

 

 

 

(1,073

)

Changes in assets and liabilities

 

 

 

Accounts receivable

 

17,609

 

 

 

8,416

 

Prepaid expenses and other assets

 

(8,803

)

 

 

(3,579

)

Deferred commissions

 

(314

)

 

 

(1,383

)

Accounts payable and accrued expenses

 

(1,878

)

 

 

2,338

 

Accrued compensation and related benefits

 

(9,369

)

 

 

(6,798

)

Other current and non-current liabilities

 

1,582

 

 

 

129

 

Deferred revenue

 

(2,177

)

 

 

(3,764

)

Operating lease assets and liabilities

 

969

 

 

 

(450

)

Net cash used by operating activities

 

(25,265

)

 

 

(20,604

)

Cash flows from investing activities

 

 

 

Purchases of investments

 

(24,184

)

 

 

(16,240

)

Proceeds from investments

 

16,289

 

 

 

21,729

 

Purchases of property and equipment

 

(4,421

)

 

 

(3,390

)

Net cash (used by) provided by investing activities

 

(12,316

)

 

 

2,099

 

Cash flows from financing activities

 

 

 

Proceeds from borrowings

 

92,000

 

 

 

—

 

Debt repayments

 

(750

)

 

 

—

 

Payments for debt issuance costs

 

(278

)

 

 

—

 

Payments for employee taxes related to the net share settlement of equity awards

 

(2,959

)

 

 

—

 

Proceeds from exercise of common stock options

 

131

 

 

 

24,404

 

Net cash provided by financing activities

 

88,144

 

 

 

24,404

 

Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash

 

15

 

 

 

40

 

Net increase in cash, cash equivalents, and restricted cash

 

50,578

 

 

 

5,939

 

Cash, cash equivalents, and restricted cash at beginning of period

 

150,381

 

 

 

103,960

 

Cash, cash equivalents, and restricted cash at end of period

$

200,959

 

 

$

109,899

 

 

 

 

 

Supplemental disclosure of cash flow information

 

 

 

Cash paid for interest

$

1,233

 

 

$

78

 

Cash paid for income taxes

$

284

 

 

$

197

 

Supplemental disclosure of non-cash investing and financing activities

 

 

 

Accrued capital expenditures

$

2,233

 

 

$

—

 



APPIAN CORPORATION
RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES
(unaudited, in thousands, except per share data)

 

 

 

Three Months Ended March 31,

 

 

2023

 

 

 

2022

 

Reconciliation of non-GAAP operating loss:

 

 

 

GAAP operating loss

$

(35,266

)

 

$

(23,866

)

Add back:

 

 

 

Stock-based compensation expense

 

11,056

 

 

 

6,943

 

Litigation expenses

 

1,842

 

 

 

11,792

 

Severance costs

 

4,204

 

 

 

—

 

Non-GAAP operating loss

$

(18,164

)

 

$

(5,131

)

 

 

 

 

Reconciliation of non-GAAP net loss:

 

 

 

GAAP net loss

$

(36,829

)

 

$

(23,154

)

Add back:

 

 

 

Stock-based compensation expense

 

11,056

 

 

 

6,943

 

Litigation expenses

 

1,842

 

 

 

11,792

 

Severance costs

 

4,204

 

 

 

—

 

Non-GAAP net loss

$

(19,727

)

 

$

(4,419

)

 

 

 

 

Non-GAAP loss per share:

 

 

 

Non-GAAP net loss

$

(19,727

)

 

$

(4,419

)

Weighted average shares used to compute net loss per share, basic and diluted

 

72,869

 

 

 

72,217

 

Non-GAAP net loss per share, basic and diluted

$

(0.27

)

 

$

(0.06

)

 

 

 

 

Reconciliation of non-GAAP net loss per share, basic and diluted:

 

 

 

GAAP net loss per share, basic and diluted

$

(0.51

)

 

$

(0.32

)

Add back:

 

 

 

Non-GAAP adjustments to net loss per share

 

0.24

 

 

 

0.26

 

Non-GAAP net loss per share, basic and diluted

$

(0.27

)

 

$

(0.06

)

 

 

 

 

Reconciliation of adjusted EBITDA:

 

 

 

GAAP net loss

$

(36,829

)

 

$

(23,154

)

Other (income) expense, net

 

(2,690

)

 

 

787

 

Interest expense

 

3,118

 

 

 

74

 

Income tax expense (benefit)

 

1,135

 

 

 

(1,573

)

Depreciation and amortization

 

2,342

 

 

 

1,773

 

Stock-based compensation expense

 

11,056

 

 

 

6,943

 

Litigation expenses

 

1,842

 

 

 

11,792

 

Severance costs

 

4,204

 

 

 

—

 

Adjusted EBITDA

$

(15,822

)

 

$

(3,358

)