• Appian Announces Second Quarter 2023 Financial Results

    Source: Nasdaq GlobeNewswire / 03 Aug 2023 15:02:00   America/Chicago

    MCLEAN, Va., Aug. 03, 2023 (GLOBE NEWSWIRE) -- Appian (Nasdaq: APPN) today announced financial results for the second quarter ended June 30, 2023.

    “Appian is leading in AI-based process automation. Our practical and private approach to AI is garnering customer and media interest, differentiating us from the competition,” said Matt Calkins, CEO & Founder.

    Second Quarter 2023 Financial Highlights:

    • Revenue: Cloud subscription revenue was $74.4 million, up 30% compared to the second quarter of 2022. Total subscriptions revenue, which includes sales of our cloud subscriptions, on-premises term license subscriptions, and maintenance and support, increased 22% year-over-year to $93.8 million. Professional services revenue was $33.9 million, an increase of 2% compared to the second quarter of 2022. Total revenue was $127.7 million, up 16% compared to the second quarter of 2022. Cloud subscription revenue retention rate was 115% as of June 30, 2023.
    • Operating loss and non-GAAP operating loss: GAAP operating loss was $(40.7) million, compared to $(42.7) million for the second quarter of 2022. Non-GAAP operating loss was $(27.1) million, compared to $(26.8) million for the second quarter of 2022.
    • Net loss and non-GAAP net loss: GAAP net loss was $(42.4) million, compared to $(49.4) million for the second quarter of 2022. GAAP net loss per share was $(0.58) for the second quarter of 2023, compared to $(0.68) for the second quarter of 2022. Non-GAAP net loss was $(28.5) million, compared to $(33.4) million for the second quarter of 2022. Non-GAAP net loss per share was $(0.39), compared to the $(0.46) net loss per share for the second quarter of 2022. GAAP and non-GAAP net loss for the second quarter of 2023 included $1.2 million, or $0.02 per share, of foreign currency exchange gains. GAAP and non-GAAP net loss for the second quarter of 2022 included $6.5 million, or $(0.09) per share, of foreign currency exchange losses. We do not forecast foreign exchange rate movements.
    • Adjusted EBITDA: Adjusted EBITDA loss was $(24.7) million, compared to adjusted EBITDA loss of $(25.0) million for the second quarter of 2022.
    • Balance sheet and cash flows: As of June 30, 2023, Appian had total cash, cash equivalents, and investments of $237.0 million. Net cash used by operating activities was $(11.9) million for the three months ended June 30, 2023, compared to $(29.7) 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 August 3, 2023, guidance for 2023 is as follows:

    • Third Quarter 2023 Guidance:
      • Cloud subscription revenue is expected to be between $75.5 million and $76.5 million, representing year-over-year growth of 25% to 26%.
      • Total revenue is expected to be between $134.0 million and $136.0 million, representing a year-over-year increase of 14% to 15%.
      • Adjusted EBITDA loss is expected to be between $(16.0) million and $(12.0) million.
      • Non-GAAP net loss per share is expected to be between $(0.28) and $(0.23), assuming weighted average common shares outstanding of 73.3 million.
    • Full Year 2023 Guidance:
      • Cloud subscription revenue is expected to be between $299.0 million and $301.0 million, representing year-over-year growth of 26% to 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 $(67.0) million and $(63.0) million.
      • Non-GAAP net loss per share is expected to be between $(1.16) and $(1.10), assuming weighted average common shares outstanding of 73.2 million.

    Conference Call Details:

    Appian will host a conference call today, August 3, 2023, at 4:30 p.m. ET to discuss Appian's financial results for the second quarter ended June 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.

    About Appian

    Appian is a software company that automates business processes. The Appian AI-Powered 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]

    ___________________________________
    1 https://register.vevent.com/register/BI0cede263c5164a2c88812a773ab79ac6

    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 third 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
     June 30, 2023 December 31, 2022
     (unaudited)  
    Assets   
    Current assets   
    Cash and cash equivalents$171,530  $148,132 
    Short-term investments and marketable securities 65,430   47,863 
    Accounts receivable, net of allowance of $2,206 and $2,125, respectively 134,016   165,964 
    Deferred commissions, current 30,389   30,196 
    Prepaid expenses and other current assets 32,720   28,093 
    Restricted cash, current 2,272   2,249 
    Total current assets 436,357   422,497 
    Property and equipment, net of accumulated depreciation of $21,054 and $18,864, respectively 44,514   41,855 
    Goodwill 26,618   26,349 
    Intangible assets, net of accumulated amortization of $3,486 and $2,715, respectively 4,562   5,251 
    Right-of-use assets for operating leases 39,197   37,248 
    Deferred commissions, net of current portion 55,471   55,788 
    Deferred tax assets 2,466   1,940 
    Other assets 3,171   3,286 
    Total assets$612,356  $594,214 
    Liabilities and Stockholders’ Equity   
    Current liabilities   
    Accounts payable$7,104  $7,997 
    Accrued expenses 11,943   12,227 
    Accrued compensation and related benefits 34,630   40,718 
    Deferred revenue 191,672   194,768 
    Debt 65,431   2,740 
    Operating lease liabilities 9,876   8,681 
    Other current liabilities 4,295   3,121 
    Total current liabilities 324,951   270,252 
    Long-term debt 142,874   115,379 
    Operating lease liabilities 60,079   57,225 
    Deferred revenue 3,734   5,556 
    Deferred tax liabilities 86   102 
    Total liabilities 531,724   448,514 
    Stockholders’ equity   
    Class A common stock—par value $0.0001; 500,000,000 shares authorized and 41,615,737 shares issued and outstanding as of June 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 31,497,596 shares issued and outstanding as of June 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 579,378   561,390 
    Accumulated other comprehensive loss (11,118)  (7,246)
    Accumulated deficit (487,635)  (408,451)
    Total stockholders’ equity 80,632   145,700 
    Total liabilities and stockholders’ equity$612,356  $594,214 
            


     
    APPIAN CORPORATION
    CONSOLIDATED STATEMENTS OF OPERATIONS
    (in thousands, except per share data)
        
     Three Months Ended June 30, Six Months Ended June 30,
     2023 2022 2023 2022
     (unaudited)
    Revenue       
    Subscriptions$93,794  $76,668  $192,751  $160,388 
    Professional services 33,921   33,395   70,199   63,941 
    Total revenue 127,715   110,063   262,950   224,329 
    Cost of revenue       
    Subscriptions 10,779   8,528   21,227   16,751 
    Professional services 26,066   24,765   51,711   47,563 
    Total cost of revenue 36,845   33,293   72,938   64,314 
    Gross profit 90,870   76,770   190,012   160,015 
    Operating expenses       
    Sales and marketing 62,581   56,166   125,671   102,192 
    Research and development 39,743   33,842   81,367   63,778 
    General and administrative 29,208   29,509   58,902   60,658 
    Total operating expenses 131,532   119,517   265,940   226,628 
    Operating loss (40,662)  (42,747)  (75,928)  (66,613)
    Other non-operating expense       
    Other (income) expense, net (3,886)  6,153   (6,576)  6,940 
    Interest expense 4,755   60   7,873   134 
    Total other non-operating expense 869   6,213   1,297   7,074 
    Loss before income taxes (41,531)  (48,960)  (77,225)  (73,687)
    Income tax expense (benefit) 824   394   1,959   (1,179)
    Net loss$(42,355) $(49,354) $(79,184) $(72,508)
    Net loss per share:       
    Basic and diluted$(0.58) $(0.68) $(1.09) $(1.00)
    Weighted average common shares outstanding:       
    Basic and diluted 73,041   72,390   72,956   72,272 
                    


     
    APPIAN CORPORATION
    STOCK-BASED COMPENSATION EXPENSE
    (in thousands)
        
     Three Months Ended June 30, Six Months Ended June 30,
     2023
     2022
     2023
     2022
     (unaudited)
    Cost of revenue       
    Subscriptions$230  $249  $502  $428 
    Professional services 1,472   1,330   3,063   2,387 
    Operating expenses       
    Sales and marketing 2,772   2,266   5,217   4,054 
    Research and development 2,910   3,063   6,536   5,377 
    General and administrative 3,764   2,240   6,886   3,845 
    Total stock-based compensation expense$11,148  $9,148  $22,204  $16,091 
                    


     
    APPIAN CORPORATION
    CONSOLIDATED STATEMENTS OF CASH FLOWS
    (unaudited, in thousands)
      
     Six Months Ended June 30,
     2023 2022
    Cash flows from operating activities   
    Net loss$(79,184) $(72,508)
    Adjustments to reconcile net loss to net cash used by operating activities   
    Stock-based compensation 22,204   16,091 
    Depreciation and amortization 4,705   3,573 
    Bad debt expense 419   (1)
    Amortization of debt issuance costs 223    
    Deferred income taxes (518)  (1,302)
    Changes in assets and liabilities   
    Accounts receivable 28,663   12,132 
    Prepaid expenses and other assets (4,924)  (5,334)
    Deferred commissions 123   (1,777)
    Accounts payable and accrued expenses 719   2,098 
    Accrued compensation and related benefits (6,240)  (4,923)
    Other current and non-current liabilities 1,066   (395)
    Deferred revenue (6,574)  2,990 
    Operating lease assets and liabilities 2,116   (905)
    Net cash used by operating activities (37,202)  (50,261)
    Cash flows from investing activities   
    Purchases of investments (53,443)  (31,214)
    Proceeds from investments 35,876   36,473 
    Purchases of property and equipment (7,805)  (4,685)
    Net cash (used by) provided by investing activities (25,372)  574 
    Cash flows from financing activities   
    Proceeds from borrowings 92,000    
    Debt repayments (1,687)   
    Payments for debt issuance costs (411)   
    Payments for employee taxes related to the net share settlement of equity awards (4,775)   
    Proceeds from exercise of common stock options 559   25,030 
    Net cash provided by financing activities 85,686   25,030 
    Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash 309   (205)
    Net increase (decrease) in cash, cash equivalents, and restricted cash 23,421   (24,862)
    Cash, cash equivalents, and restricted cash at beginning of period 150,381   103,960 
    Cash, cash equivalents, and restricted cash at end of period$173,802  $79,098 
        
    Supplemental disclosure of cash flow information   
    Cash paid for interest$2,731  $145 
    Cash paid for income taxes$1,472  $524 
    Supplemental disclosure of non-cash investing and financing activities   
    Accrued capital expenditures$392  $96 
            


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


     GAAP Measure Stock-Based Compensation Litigation Expenses Non-GAAP Measure
    Three Months Ended June 30, 2022       
    Subscriptions cost of revenue$8,528  $(249) $  $8,279 
    Professional services cost of revenue 24,765   (1,330)     23,435 
    Total cost of revenue 33,293   (1,579)     31,714 
    Total operating expense 119,517   (7,569)  (6,831)  105,117 
    Operating loss (42,747)  9,148   6,831   (26,768)
    Net loss (49,354)  9,148   6,831   (33,375)
    Net loss per share, basic and diluted$(0.68) $0.13  $0.09  $(0.46)
            
    Six Months Ended June 30, 2022       
    Subscriptions cost of revenue$16,751  $(428) $  $16,323 
    Professional services cost of revenue 47,563   (2,387)     45,176 
    Total cost of revenue 64,314   (2,815)     61,499 
    Total operating expense 226,628   (13,276)  (18,623)  194,729 
    Operating loss (66,613)  16,091   18,623   (31,899)
    Net loss (72,508)  16,091   18,623   (37,794)
    Net loss per share, basic and diluted$(1.00) $0.22  $0.26  $(0.52)


     Three Months Ended June 30, Six Months Ended June 30,
     2023 2022 2023 2022
    Reconciliation of adjusted EBITDA:       
    GAAP net loss$(42,355) $(49,354) $(79,184) $(72,508)
    Other (income) expense, net (3,886)  6,153   (6,576)  6,940 
    Interest expense 4,755   60   7,873   134 
    Income tax expense (benefit) 824   394   1,959   (1,179)
    Depreciation and amortization 2,364   1,800   4,705   3,573 
    Stock-based compensation expense 11,148   9,148   22,204   16,091 
    Litigation expenses 347   6,831   2,189   18,623 
    Severance costs 2,095      6,299    
    Adjusted EBITDA$(24,708) $(24,968) $(40,531) $(28,326)
                    


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