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Appian Announces First Quarter 2023 Financial Results

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.

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)


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