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Appian Announces Fourth Quarter and Full Year 2022 Financial Results

Fourth quarter cloud subscription revenue increased 29% year-over-year to $65.8 million
Full year cloud subscription revenue increased 32% year-over year to $236.9 million

MCLEAN, Va., Feb. 16, 2023 (GLOBE NEWSWIRE) -- Appian (Nasdaq: APPN) today announced financial results for the fourth quarter and full year ended December 31, 2022.

“Appian grew cloud subscriptions revenue 32% for the full year. Our loyal customers and high gross margins provide a strong foundation as we enter 2023. Organizations are choosing Appian to increase productivity, time to value, and return on investment during uncertain times,” said Matt Calkins, CEO & Founder.

Fourth Quarter 2022 Financial Highlights:

  • Revenue: Cloud subscription revenue was $65.8 million, up 29% compared to the fourth quarter of 2021. Total subscriptions revenue, which includes sales of our cloud subscriptions, on-premises term license subscriptions, and maintenance and support, increased 23% year-over-year to $93.2 million. Professional services revenue was $32.5 million, an increase of 11% compared to the fourth quarter of 2021. Total revenue was $125.8 million, up 20% compared to the fourth quarter of 2021. Cloud subscription revenue retention rate was 115% as of December 31, 2022.
  • Operating loss and non-GAAP operating loss: GAAP operating loss was $(40.6) million, compared to $(25.9) million for the fourth quarter of 2021. Non-GAAP operating loss was $(26.8) million, compared to $(11.7) million for the fourth quarter of 2021.
  • Net loss and non-GAAP net loss: GAAP net loss was $(34.4) million, compared to $(25.8) million for the fourth quarter of 2021. GAAP net loss per share was $(0.47) for the fourth quarter of 2022, compared to $(0.36) for the fourth quarter of 2021. Non-GAAP net loss was $(20.6) million, compared to $(11.6) million for the fourth quarter of 2021. Non-GAAP net loss per share was $(0.28), compared to the $(0.16) net loss per share for the fourth quarter of 2021. GAAP and non-GAAP net loss for the fourth quarter of 2022 included $8.5 million, or $0.12 per share, of foreign currency exchange gains. GAAP and non-GAAP net loss for the fourth quarter of 2021 included $0.5 million, or $0.01 per share, of foreign currency exchange gains. We do not forecast foreign exchange rate movements.
  • Adjusted EBITDA: Adjusted EBITDA loss was $(24.8) million, compared to adjusted EBITDA loss of $(10.0) million for the fourth quarter of 2021.
  • Cash flows: Net cash used in operating activities was $(12.6) million for the three months ended December 31, 2022 compared to $(19.4) million of net cash used in operating activities for the same period in 2021.

Full Year 2022 Financial Highlights:

  • Revenue: Cloud subscription revenue was $236.9 million for the full year 2022, up 32% compared to the full year 2021. Total subscriptions revenue increased 29% year-over-year to $340.2 million for the full year 2022. Professional services revenue was $127.8 million for the full year 2022, compared to $105.5 million for the full year 2021. Total revenue was $468.0 million for the full year 2022, up 27% compared to the full year 2021.
  • Operating loss and non-GAAP operating loss: GAAP operating loss was $(145.0) million for the full year 2022, compared to $(83.9) million for the full year 2021. Non-GAAP operating loss was $(83.3) million for the full year 2022, compared to $(43.7) million for the full year 2021.
  • Net loss and non-GAAP net loss: GAAP net loss was $(150.9) million for the full year 2022, compared to $(88.6) million for the full year 2021. GAAP net loss per share was $(2.08) for the full year 2022, compared to $(1.25) for the full year 2021. Non-GAAP net loss was $(89.2) million for the full year 2022, compared to $(48.3) million for the full year 2021. Non-GAAP net loss per share was $(1.23) for the full year 2022, compared to the $(0.68) net loss per share for the full year 2021. GAAP and non-GAAP net loss for the full year 2022 included $6.1 million, or $(0.08) per share, of foreign currency exchange losses. GAAP and non-GAAP net loss for the full year 2021 included $3.7 million, or $(0.05) per share, of foreign currency exchange losses.
  • Adjusted EBITDA: Adjusted EBITDA loss was $(76.0) million for the full year 2022, compared to adjusted EBITDA loss of $(37.9) million for the full year 2021.
  • Balance sheet and cash flows: As of December 31, 2022, Appian had total cash, cash equivalents, and investments of $196.0 million. Net cash used in operating activities was $(106.6) million for the full year 2022 compared to $(53.9) million of net cash used in operating activities for the full year 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 February 16, 2023, guidance for 2023 is as follows:

  • First Quarter 2023 Guidance:
    • Cloud subscription revenue is expected to be between $67.0 million and $69.0 million, representing year-over-year growth of 26% to 29%.
    • Total revenue is expected to be between $130.0 million and $132.0 million, representing a year-over-year increase of 14% to 16%.
    • Adjusted EBITDA loss is expected to be between $(21.0) million and $(17.0) million.
    • Non-GAAP net loss per share is expected to be between $(0.33) and $(0.27), assuming weighted average common shares outstanding of 72.8 million.

  • Full Year 2023 Guidance:
    • Cloud subscription revenue is expected to be between $294.0 million and $296.0 million, representing year-over-year growth of 24% to 25%.
    • Total revenue is expected to be between $530.0 million and $535.0 million, representing a year-over-year increase of 13% to 14%.
    • Adjusted EBITDA loss is expected to be between $(75.0) million and $(70.0) million.
    • Non-GAAP net loss per share is expected to be between $(1.14) and $(1.07), assuming weighted average common shares outstanding of 73.2 million.

Conference Call Details:

Appian will host a conference call today, February 16, 2023, at 4:30 p.m. ET to discuss Appian's financial results for the fourth quarter ended December 31, 2022 and business outlook.

To access the call, navigate to the following link. 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 Appian’s website at http://investors.appian.com.

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 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 non-GAAP operating loss. 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 (income) expenses, net, (2) interest expense, (3) income tax expense, (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 first 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, 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 December 31,
  2022   2021 
Assets   
Current assets   
Cash and cash equivalents$148,132  $100,796 
Short-term investments and marketable securities 47,863   55,179 
Accounts receivable, net of allowance of $2,125 and $1,400, respectively 165,964   130,049 
Deferred commissions, current 30,196   24,668 
Prepaid expenses and other current assets 28,093   26,781 
Restricted cash, current 2,249   791 
Total current assets 422,497   338,264 
Property and equipment, net of accumulated depreciation of $18,864 and $14,106, respectively 41,855   36,913 
Long-term investments    12,044 
Goodwill 26,349   27,795 
Intangible assets, net of accumulated amortization of $2,715 and $1,260, respectively 5,251   7,144 
Operating right-of-use assets 37,248   27,897 
Deferred commissions, net of current portion 55,788   49,017 
Deferred tax assets 1,940   1,025 
Restricted cash, net of current portion    2,373 
Other assets 3,286   2,047 
Total assets$594,214  $504,519 
Liabilities and Stockholders’ Equity   
Current liabilities   
Accounts payable$7,997  $5,766 
Accrued expenses 12,227   15,483 
Accrued compensation and related benefits 40,718   35,126 
Deferred revenue, current 194,768   150,169 
Debt, current 2,740    
Operating lease liabilities, current 8,681   8,110 
Other current liabilities 3,121   1,067 
Total current liabilities 270,252   215,721 
Long-term debt 115,379    
Operating lease liabilities 57,225   48,784 
Deferred revenue 5,556   2,430 
Deferred tax liabilities 102   209 
Other non-current liabilities    3,458 
Total liabilities 448,514   270,602 
Stockholders’ equity   
Class A common stock—par value $0.0001; 500,000,000 shares authorized and 41,320,091 shares issued and outstanding as of December 31, 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 December 31, 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 561,390   497,128 
Accumulated other comprehensive loss (7,246)  (5,687)
Accumulated deficit (408,451)  (257,531)
Total stockholders’ equity 145,700   233,917 
Total liabilities and stockholders’ equity$594,214  $504,519 
        

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

 Three Months Ended December 31, Year Ended December 31,
  2022   2021   2022   2021 
 (unaudited)    
Revenue       
Subscriptions$93,244  $75,786  $340,152  $263,738 
Professional services 32,542   29,202   127,839   105,521 
Total revenue 125,786   104,988   467,991   369,259 
Cost of revenue       
Subscriptions 9,942   7,524   36,005   27,330 
Professional services 25,289   20,698   97,301   76,763 
Total cost of revenue 35,231   28,222   133,306   104,093 
Gross profit 90,555   76,766   334,685   265,166 
Operating expenses       
Sales and marketing 63,270   49,277   220,374   167,852 
Research and development 37,808   26,455   139,210   97,517 
General and administrative 30,097   26,978   120,111   83,704 
Total operating expenses 131,175   102,710   479,695   349,073 
Operating loss (40,620)  (25,944)  (145,010)  (83,907)
Other non-operating (income) expense, net       
Other (income) expense, net (9,271)  (557)  3,545   3,584 
Interest expense 1,451   139   1,673   372 
Total other non-operating (income) expense (7,820)  (418)  5,218   3,956 
Loss before income taxes (32,800)  (25,526)  (150,228)  (87,863)
Income tax expense 1,617   319   692   778 
Net loss$(34,417) $(25,845) $(150,920) $(88,641)
Net loss per share attributable to common stockholders:       
Basic and diluted$(0.47) $(0.36) $(2.08) $(1.25)
Weighted average common shares outstanding:       
Basic and diluted 72,703   71,334   72,455   71,036 
                

APPIAN CORPORATION
STOCK-BASED COMPENSATION EXPENSE
(in thousands)

 Three Months Ended December 31, Year Ended December 31,
  2022   2021   2022   2021 
 (unaudited)    
Cost of revenue       
Subscriptions$284  $226  $996  $1,199 
Professional services 1,521   848   5,309   3,131 
Operating expenses       
Sales and marketing 2,431   1,673   9,152   5,426 
Research and development 3,692   1,877   12,523   5,224 
General and administrative 3,475   1,528   10,850   8,864 
Total stock-based compensation expense$11,403  $6,152  $38,830  $23,844 
                

APPIAN CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

 Year Ended December 31,
  2022   2021 
Cash flows from operating activities:   
Net loss$(150,920) $(88,641)
Adjustments to reconcile net loss to net cash used by operating activities:   
Stock-based compensation 38,830   23,844 
Depreciation and amortization of intangible assets 7,297   5,743 
Bad debt expense 1,298   410 
Amortization of debt issuance costs 43    
Loss on disposal of property and equipment 3   79 
Deferred income taxes (1,089)  (498)
Changes in assets and liabilities:   
Accounts receivable (37,922)  (33,904)
Prepaid expenses and other assets (2,027)  2,094 
Deferred commissions (12,298)  (21,588)
Accounts payable and accrued expenses (3,289)  11,467 
Accrued compensation and related benefits 6,582   12,598 
Other current and non-current liabilities (264)  (444)
Deferred revenue 47,534   33,378 
Operating lease assets and liabilities (329)  1,544 
Net cash used by operating activities (106,551)  (53,918)
Cash flows from investing activities:   
Proceeds from investments 84,642   120,593 
Purchases of investments (65,283)  (41,870)
Purchases of property and equipment (9,095)  (6,058)
Payments for acquisitions, net of cash acquired    (30,729)
Net cash provided by investing activities 10,264   41,936 
Cash flows from financing activities:   
Proceeds from borrowings 120,000    
Payments for debt issuance costs (1,940)   
Debt repayments (625)   
Proceeds from exercise of common stock options 25,432   2,786 
Net cash provided by financing activities 142,867   2,786 
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash (159)  694 
Net increase (decrease) in cash, cash equivalents, and restricted cash 46,421   (8,502)
Cash, cash equivalents, and restricted cash at beginning of period 103,960   112,462 
Cash, cash equivalents, and restricted cash at end of period$150,381  $103,960 
    
Supplemental cash flow information:   
Cash paid for interest$1,671  $323 
Cash paid for income taxes$1,239  $1,505 
Supplemental non-cash investing and financing information:   
Accrued capital expenditures$1,774  $379 
        

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

 Three Months Ended December 31, Year Ended December 31,
  2022   2021   2022   2021 
Reconciliation of non-GAAP operating loss:       
GAAP operating loss$(40,620) $(25,944) $(145,010) $(83,907)
Add back:       
Stock-based compensation expense 11,403   6,152   38,830   23,844 
Litigation expenses(1) 2,453   8,130   22,886   16,400 
Non-GAAP operating loss$(26,764) $(11,662) $(83,294) $(43,663)
        
Reconciliation of non-GAAP net loss:       
GAAP net loss$(34,417) $(25,845) $(150,920) $(88,641)
Add back:       
Stock-based compensation expense 11,403   6,152   38,830   23,844 
Litigation expenses(1) 2,453   8,130   22,886   16,400 
Loss on disposal of property and equipment 3   1   3   79 
Non-GAAP net loss$(20,558) $(11,562) $(89,201) $(48,318)
        
Non-GAAP earnings per share:       
Non-GAAP net loss$(20,558) $(11,562) $(89,201) $(48,318)
Weighted average shares used to compute net loss per share, basic and diluted 72,703   71,334   72,455   71,036 
Non-GAAP net loss per share, basic and diluted$(0.28) $(0.16) $(1.23) $(0.68)
        
Reconciliation of non-GAAP net loss per share, basic and diluted:       
GAAP net loss per share, basic and diluted$(0.47) $(0.36) $(2.08) $(1.25)
Add back:       
Non-GAAP adjustments to net loss per share 0.19   0.20   0.85   0.57 
Non-GAAP net loss per share, basic and diluted$(0.28) $(0.16) $(1.23) $(0.68)
        
Reconciliation of adjusted EBITDA:       
GAAP net loss$(34,417) $(25,845) $(150,920) $(88,641)
Other (income) expense, net (9,271)  (557)  3,545   3,584 
Interest expense 1,451   139   1,673   372 
Income tax expense 1,617   319   692   778 
Depreciation and amortization of intangible assets 1,965   1,672   7,297   5,743 
Stock-based compensation expense 11,403   6,152   38,830   23,844 
Litigation expenses(1) 2,453   8,130   22,886   16,400 
Adjusted EBITDA$(24,799) $(9,990) $(75,997) $(37,920)
                

(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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