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Appian Announces Second Quarter 2022 Financial Results

August 4, 2022 at 4:02 PM EDT
Second quarter cloud subscription revenue increased 34% year-over-year to $57.1 million

MCLEAN, Va., Aug. 04, 2022 (GLOBE NEWSWIRE) -- Appian (Nasdaq: APPN) today announced financial results for the second quarter ended June 30, 2022.

"Appian grew cloud subscription revenue 34% in Q2, exceeding our guidance. Appian's loyal customers, broad partner ecosystem, and efficiency-centric platform give us advantages in times of economic uncertainty," said Matt Calkins, CEO & Founder.

Second Quarter 2022 Financial Highlights:

  • Revenue: Cloud subscription revenue was $57.1 million, up 34% compared to the second quarter of 2021. Total subscriptions revenue increased 35% year-over-year to $76.7 million. Professional services revenue was $33.4 million, an increase of 28% compared to the second quarter of 2021. Total revenue was $110.1 million, up 33% compared to the second quarter of 2021. Cloud subscription revenue retention rate was 116% as of June 30, 2022.
  • Operating loss and non-GAAP operating loss: GAAP operating loss was $(42.7) million, compared to $(24.6) million for the second quarter of 2021. Non-GAAP operating loss was $(26.8) million, compared to $(17.6) million for the second quarter of 2021.
  • Net loss and non-GAAP net loss: GAAP net loss was $(49.4) million, compared to $(23.8) million for the second quarter of 2021. GAAP net loss per share was $(0.68) for the second quarter of 2022, compared to $(0.34) for the second quarter of 2021. Non-GAAP net loss was $(33.4) million, compared to $(16.9) million for the second quarter of 2021. Non-GAAP net loss per share was $(0.46), compared to the $(0.24) net loss per share for the second quarter of 2021. 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 $(25.0) million, compared to adjusted EBITDA loss of $(16.3) million for the second quarter of 2021.
  • Balance sheet and cash flows: As of June 30, 2022, Appian had total cash and investments of $138.0 million. Net cash used in operating activities was $(29.7) million for the three months ended June 30, 2022 compared to $(6.6) million of net cash used in operating activities for the same period in 2021.

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 4, 2022, guidance for 2022 is as follows:

  • Third Quarter 2022 Guidance:

    • Cloud subscription revenue is expected to be between $60.8 million and $61.3 million, representing year-over-year growth of 30% to 31%.
    • Total revenue is expected to be between $115.0 million and $117.0 million, representing a year-over-year increase of 24% to 27%.
    • Adjusted EBITDA loss is expected to be between $(15.0) million and $(13.0) million.
    • Non-GAAP net loss per share is expected to be between $(0.23) and $(0.20), assuming weighted average common shares outstanding of 72.5 million.
  • Full Year 2022 Guidance:

    • Cloud subscription revenue is expected to be between $236.0 million and $238.0 million, representing year-over-year growth of 32% to 33%.
    • Total revenue is expected to be between $466.0 million and $470.0 million, representing a year-over-year increase of 26% to 27%.
    • Adjusted EBITDA loss is expected to be between $(53.0) million and $(50.0) million.
    • Non-GAAP net loss per share is expected to be between $(0.91) and $(0.86), assuming weighted average common shares outstanding of 72.5 million.

Conference Call Details:

Appian will host a conference call today, August 4, 2022, at 4:30 p.m. ET to discuss Appian's financial results for the second quarter ended June 30, 2022 and business outlook.

The live webcast of the conference call can be accessed on the Investor Relations page of Appian’s website at http://investors.appian.com. To access the call, please dial (800) 715-9871 in the U.S. or (646) 307-1963 internationally (Conference ID: 7329632). Following the call, an archived webcast will be available at the same location on the Investor Relations page. A telephone replay will be available for one week at (800) 770-2030 in the U.S. or (609) 800-9909 internationally with recording access code 7329632.

About Appian

Appian is the unified platform for change. We accelerate customers’ businesses by discovering, designing, and automating their most important processes. The Appian Low-Code Platform combines the key capabilities needed to get work done faster, Process Mining + Workflow + Automation, in a unified low-code platform. Appian is open, enterprise grade, and trusted by industry leaders. For more information, visit www.appian.com.

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 its 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 Adjusted EBITDA. These non-GAAP financial performance measures exclude the effect of stock-based compensation expense and certain litigation-related expenses consisting of legal and other professional fees which are not indicative of our core operating performance and are not part of our normal course of business. 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 expenses, net, (2) interest expense, (3) income tax expense (benefit), (4) depreciation and amortization, (5) stock-based compensation expense, and (6) litigation expenses. 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 2022, 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,” 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, 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, 2021 filed with the Securities and Exchange Commission on February 17, 2022 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, 2022   December 31, 2021
  (unaudited)    
Assets      
Current assets      
Cash and cash equivalents $ 76,185     $ 100,796  
Short-term investments and marketable securities   59,748       55,179  
Accounts receivable, net of allowance of $1,401 and $1,400, respectively   120,424       130,049  
Deferred commissions, current   26,792       24,668  
Prepaid expenses and other current assets   31,515       26,781  
Restricted cash, current   728       791  
Total current assets   315,392       338,264  
Property and equipment, net of accumulated depreciation of $16,845 and $14,106, respectively   38,539       36,913  
Long-term investments   2,022       12,044  
Goodwill   25,597       27,795  
Intangible assets, net of accumulated amortization of $1,899 and $1,260, respectively   5,840       7,144  
Right-of-use assets for operating leases   27,113       27,897  
Deferred commissions, net of current portion   48,671       49,017  
Deferred tax assets   2,035       1,025  
Restricted cash, net of current portion   2,185       2,373  
Other assets   2,235       2,047  
Total assets $ 469,629     $ 504,519  
Liabilities and Stockholders’ Equity      
Current liabilities      
Accounts payable $ 6,783     $ 5,766  
Accrued expenses   16,378       15,483  
Accrued compensation and related benefits   29,330       35,126  
Deferred revenue, current   151,266       150,169  
Operating lease liabilities, current   7,988       8,110  
Other current liabilities   581       1,067  
Total current liabilities   212,326       215,721  
Operating lease liabilities, net of current portion   47,210       48,784  
Deferred revenue, net of current portion   1,786       2,430  
Deferred tax liabilities   85       209  
Other non-current liabilities   3,162       3,458  
Total liabilities   264,569       270,602  
Stockholders’ equity      
Class A common stock—par value $0.0001; 500,000,000 shares authorized and 40,946,718 shares issued and outstanding as of June 30, 2022; 500,000,000 shares authorized and 39,964,298 shares issued and outstanding as of December 31, 2021   4       4  
Class B common stock—par value $0.0001; 100,000,000 shares authorized and 31,497,796 shares issued and outstanding as of June 30, 2022; 100,000,000 shares authorized and 31,497,796 shares issued and outstanding as of December 31, 2021   3       3  
Additional paid-in capital   538,249       497,128  
Accumulated other comprehensive loss   (3,157 )     (5,687 )
Accumulated deficit   (330,039 )     (257,531 )
Total stockholders’ equity   205,060       233,917  
Total liabilities and stockholders’ equity $ 469,629     $ 504,519  


APPIAN CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share data)
 
  Three Months Ended June 30,   Six Months Ended June 30,
    2022       2021       2022       2021  
Revenue              
Subscriptions $ 76,668     $ 56,946     $ 160,388     $ 120,712  
Professional services   33,395       26,053       63,941       51,142  
Total revenue   110,063       82,999       224,329       171,854  
Cost of revenue              
Subscriptions   8,528       6,860       16,751       12,714  
Professional services   24,765       18,975       47,563       36,650  
Total cost of revenue   33,293       25,835       64,314       49,364  
Gross profit   76,770       57,164       160,015       122,490  
Operating expenses              
Sales and marketing   56,166       40,520       102,192       76,504  
Research and development   33,842       23,862       63,778       44,552  
General and administrative   29,509       17,358       60,658       36,500  
Total operating expenses   119,517       81,740       226,628       157,556  
Operating loss   (42,747 )     (24,576 )     (66,613 )     (35,066 )
Other non-operating expense (income)              
Other expense (income), net   6,153       (1,081 )     6,940       1,812  
Interest expense   60       80       134       161  
Total other non-operating expense (income)   6,213       (1,001 )     7,074       1,973  
Loss before income taxes   (48,960 )     (23,575 )     (73,687 )     (37,039 )
Income tax expense (benefit)   394       250       (1,179 )     373  
Net loss $ (49,354 )   $ (23,825 )   $ (72,508 )   $ (37,412 )
Net loss per share:              
Basic and diluted $ (0.68 )   $ (0.34 )   $ (1.00 )   $ (0.53 )
Weighted average common shares outstanding:              
Basic and diluted   72,390       70,953       72,272       70,842  


APPIAN CORPORATION
STOCK-BASED COMPENSATION EXPENSE
(unaudited, in thousands)
 
  Three Months Ended June 30,   Six Months Ended June 30,
  2022   2021   2022   2021
Cost of revenue              
Subscriptions $ 249   $ 295   $ 428   $ 592
Professional services   1,330     865     2,387     1,506
Operating expenses              
Sales and marketing   2,266     1,197     4,054     2,305
Research and development   3,063     1,069     5,377     2,084
General and administrative   2,240     1,172     3,845     6,005
Total stock-based compensation expense $ 9,148   $ 4,598   $ 16,091   $ 12,492


APPIAN CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
 
  Six Months Ended June 30,
    2022       2021  
Cash flows from operating activities      
Net loss $ (72,508 )   $ (37,412 )
Adjustments to reconcile net loss to net cash used by operating activities      
Stock-based compensation   16,091       12,492  
Depreciation and amortization   3,573       2,561  
Bad debt expense   (1 )     32  
Change in fair value of available-for-sale securities         (31 )
Deferred income taxes   (1,302 )     (144 )
Changes in assets and liabilities      
Accounts receivable   12,132       16,720  
Prepaid expenses and other assets   (5,334 )     243  
Deferred commissions   (1,777 )     (7,340 )
Accounts payable and accrued expenses   2,098       3,000  
Accrued compensation and related benefits   (4,923 )     2,808  
Other current and non-current liabilities   (395 )     (563 )
Deferred revenue   2,990       (1,791 )
Operating lease liabilities   (905 )     52  
Net cash used by operating activities   (50,261 )     (9,373 )
Cash flows from investing activities      
Purchases of investments   (31,214 )      
Proceeds from investments   36,473       27,604  
Purchases of property and equipment   (4,685 )     (1,027 )
Net cash provided by investing activities   574       26,577  
Cash flows from financing activities      
Proceeds from exercise of common stock options   25,030       2,089  
Net cash provided by financing activities   25,030       2,089  
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash   (205 )     (476 )
Net (decrease) increase in cash, cash equivalents, and restricted cash   (24,862 )     18,817  
Cash, cash equivalents, and restricted cash at beginning of period   103,960       112,462  
Cash, cash equivalents, and restricted cash at end of period $ 79,098     $ 131,279  
Supplemental disclosure of cash flow information      
Cash paid for interest $ 145     $ 173  
Cash paid for income taxes $ 524     $ 806  
Supplemental disclosure of non-cash investing and financing activities      
Accrued capital expenditures $ 96     $  


APPIAN CORPORATION
RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES
(unaudited, in thousands, except per share data)
 
  Three Months Ended June 30,   Six Months Ended June 30,
    2022       2021       2022       2021  
Reconciliation of non-GAAP operating loss:              
GAAP operating loss $ (42,747 )   $ (24,576 )   $ (66,613 )   $ (35,066 )
Add back:              
Stock-based compensation expense   9,148       4,598       16,091       12,492  
Litigation expenses(1)   6,831       2,353       18,623       4,040  
Non-GAAP operating loss $ (26,768 )   $ (17,625 )   $ (31,899 )   $ (18,534 )
               
Reconciliation of non-GAAP net loss:              
GAAP net loss $ (49,354 )   $ (23,825 )   $ (72,508 )   $ (37,412 )
Add back:              
Stock-based compensation expense   9,148       4,598       16,091       12,492  
Litigation expenses(1)   6,831       2,353       18,623       4,040  
Non-GAAP net loss $ (33,375 )   $ (16,874 )   $ (37,794 )   $ (20,880 )
               
Non-GAAP earnings per share:              
Non-GAAP net loss $ (33,375 )   $ (16,874 )   $ (37,794 )   $ (20,880 )
Weighted average shares used to compute net loss per share, basic and diluted   72,390       70,953       72,272       70,842  
Non-GAAP net loss per share, basic and diluted $ (0.46 )   $ (0.24 )   $ (0.52 )   $ (0.29 )
               
Reconciliation of non-GAAP net loss per share, basic and diluted:              
GAAP net loss per share, basic and diluted $ (0.68 )   $ (0.34 )   $ (1.00 )   $ (0.53 )
Add back:              
Non-GAAP adjustments to net loss per share   0.22       0.10       0.48       0.24  
Non-GAAP net loss per share, basic and diluted $ (0.46 )   $ (0.24 )   $ (0.52 )   $ (0.29 )
               
Reconciliation of adjusted EBITDA:              
GAAP net loss $ (49,354 )   $ (23,825 )   $ (72,508 )   $ (37,412 )
Other expense (income), net   6,153       (1,081 )     6,940       1,812  
Interest expense   60       80       134       161  
Income tax expense (benefit)   394       250       (1,179 )     373  
Depreciation and amortization   1,800       1,283       3,573       2,561  
Stock-based compensation expense   9,148       4,598       16,091       12,492  
Litigation expenses(1)   6,831       2,353       18,623       4,040  
Adjusted EBITDA $ (24,968 )   $ (16,342 )   $ (28,326 )   $ (15,973 )

(1) Consists of professional fees and other costs incurred in connection with two separate lawsuits, one involving an effort to enforce our intellectual property and the second related to reciprocal false advertising and related claims with a competitor.


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Source: Appian Corporation