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Appian Announces Third Quarter 2022 Financial Results

November 3, 2022 4:02 PM

Third quarter cloud subscription revenue increased 30% year-over-year to $60.6 million

MCLEAN, Va., Nov. 03, 2022 (GLOBE NEWSWIRE) -- Appian (Nasdaq: APPN) today announced financial results for the third quarter ended September 30, 2022.

“In Q3, total revenue exceeded guidance. On a constant currency basis, both cloud subscription revenue and total revenue grew more than 30% year-over-year. Adjusted EBITDA loss was higher due to pull forward hiring and a sharp drop in attrition. We have a plan to reduce losses to 10% of revenue by the second half of 2023,” said Matt Calkins, CEO & Founder.

Third Quarter 2022 Financial Highlights:

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 November 3, 2022, guidance for 2022 is as follows:

Conference Call Details:

Appian will host a conference call today, November 3, 2022, at 4:30 p.m. ET to discuss Appian's financial results for the third quarter ended September 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: 7718213). 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 7718213.

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 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 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 fourth quarter and full year 2022 and 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, 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
[email protected]

Media Contact
Ben Farrell
703-442-1067
[email protected]

APPIAN CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except par value and share data)

As of
September 30, 2022 December 31, 2021
(unaudited)
Assets
Current assets
Cash and cash equivalents$51,802 $100,796
Short-term investments and marketable securities 40,885 55,179
Accounts receivable, net of allowance of $1,901 and $1,400, respectively 143,385 130,049
Deferred commissions, current 27,874 24,668
Prepaid expenses and other current assets 31,976 26,781
Restricted cash, current 2,053 791
Total current assets 297,975 338,264
Property and equipment, net of accumulated depreciation of $18,189 and $14,106, respectively 38,692 36,913
Long-term investments — 12,044
Goodwill 24,045 27,795
Intangible assets, net of accumulated amortization of $2,131 and $1,260, respectively 5,139 7,144
Right-of-use assets for operating leases 31,841 27,897
Deferred commissions, net of current portion 51,526 49,017
Deferred tax assets 2,518 1,025
Restricted cash, net of current portion — 2,373
Other assets 2,824 2,047
Total assets$454,560 $504,519
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable$5,082 $5,766
Accrued expenses 12,710 15,483
Accrued compensation and related benefits 35,408 35,126
Deferred revenue, current 161,154 150,169
Operating lease liabilities, current 7,434 8,110
Other current liabilities 2,603 1,067
Total current liabilities 224,391 215,721
Operating lease liabilities, net of current portion 52,710 48,784
Deferred revenue, net of current portion 3,408 2,430
Deferred tax liabilities 153 209
Other non-current liabilities 956 3,458
Total liabilities 281,618 270,602
Stockholders’ equity
Class A common stock—par value $0.0001; 500,000,000 shares authorized and 41,043,099 shares issued and outstanding as of September 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 September 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 549,760 497,128
Accumulated other comprehensive loss (2,790) (5,687)
Accumulated deficit (374,035) (257,531)
Total stockholders’ equity 172,942 233,917
Total liabilities and stockholders’ equity$454,560 $504,519

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

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Revenue
Subscriptions$86,520 $67,240 $246,908 $187,952
Professional services 31,356 25,177 95,297 76,319
Total revenue 117,876 92,417 342,205 264,271
Cost of revenue
Subscriptions 9,313 7,092 26,065 19,806
Professional services 24,447 19,415 72,011 56,065
Total cost of revenue 33,760 26,507 98,076 75,871
Gross profit 84,116 65,910 244,129 188,400
Operating expenses
Sales and marketing 54,912 42,071 157,104 118,575
Research and development 37,623 26,510 101,401 71,062
General and administrative 29,357 20,226 90,014 56,726
Total operating expenses 121,892 88,807 348,519 246,363
Operating loss (37,776) (22,897) (104,390) (57,963)
Other non-operating expense
Other expense, net 5,876 2,329 12,815 4,141
Interest expense 89 72 222 233
Total other non-operating expense 5,965 2,401 13,037 4,374
Loss before income taxes (43,741) (25,298) (117,427) (62,337)
Income tax expense (benefit) 255 86 (924) 459
Net loss$(43,996) $(25,384) $(116,503) $(62,796)
Net loss per share:
Basic and diluted$(0.61) $(0.36) $(1.61) $(0.89)
Weighted average common shares outstanding:
Basic and diluted 72,503 71,119 72,372 70,936

APPIAN CORPORATION
STOCK-BASED COMPENSATION EXPENSE
(unaudited, in thousands)

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Cost of revenue
Subscriptions$284 $381 $712 $973
Professional services 1,401 777 3,788 2,283
Operating expenses
Sales and marketing 2,667 1,448 6,721 3,753
Research and development 3,454 1,263 8,831 3,347
General and administrative 3,530 1,331 7,375 7,336
Total stock-based compensation expense$11,336 $5,200 $27,427 $17,692

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

Nine Months Ended September 30,
2022 2021
Cash flows from operating activities
Net loss$(116,503) $(62,796)
Adjustments to reconcile net loss to net cash used by operating activities
Stock-based compensation 27,427 17,692
Depreciation and amortization 5,332 4,071
Bad debt expense 561 61
Loss on disposal of property and equipment — 78
Change in fair value of available-for-sale securities — (31)
Deferred income taxes (1,549) (522)
Changes in assets and liabilities
Accounts receivable (9,114) (10,005)
Prepaid expenses and other assets (6,723) 2,734
Deferred commissions (5,715) (11,570)
Accounts payable and accrued expenses (3,654) 10,797
Accrued compensation and related benefits 1,634 5,782
Other current and non-current liabilities (383) 2,858
Deferred revenue 15,414 6,829
Operating lease liabilities (685) (476)
Net cash used by operating activities (93,958) (34,498)
Cash flows from investing activities
Purchases of investments (31,214) —
Proceeds from investments 57,417 84,592
Payments for acquisitions, net of cash acquired — (30,729)
Purchases of property and equipment (5,861) (2,473)
Net cash provided by investing activities 20,342 51,390
Cash flows from financing activities
Proceeds from exercise of common stock options 25,205 2,375
Net cash provided by financing activities 25,205 2,375
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash (1,694) (1,367)
Net (decrease) increase in cash, cash equivalents, and restricted cash (50,105) 17,900
Cash, cash equivalents, and restricted cash at beginning of period 103,960 112,462
Cash, cash equivalents, and restricted cash at end of period$53,855 $130,362
Supplemental disclosure of cash flow information:
Cash paid for interest$243 $240
Cash paid for income taxes$749 $1,196
Supplemental disclosure of non-cash financing information:
Accrued capital expenditures$317 $—

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

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Reconciliation of non-GAAP operating loss:
GAAP operating loss$(37,776) $(22,897) $(104,390) $(57,963)
Add back:
Stock-based compensation expense 11,336 5,200 27,427 17,692
Litigation expenses(1) 1,810 4,230 20,432 8,270
Non-GAAP operating loss$(24,630) $(13,467) $(56,531) $(32,001)
Reconciliation of non-GAAP net loss:
GAAP net loss$(43,996) $(25,384) $(116,503) $(62,796)
Add back:
Stock-based compensation expense 11,336 5,200 27,427 17,692
Litigation expenses(1) 1,810 4,230 20,432 8,270
Loss on disposal of property and equipment — 78 — 78
Non-GAAP net loss$(30,850) $(15,876) $(68,644) $(36,756)
Non-GAAP earnings per share:
Non-GAAP net loss$(30,850) $(15,876) $(68,644) $(36,756)
Weighted average shares used to compute net loss per share, basic and diluted 72,503 71,119 72,372 70,936
Non-GAAP net loss per share, basic and diluted$(0.43) $(0.22) $(0.95) $(0.52)
Reconciliation of non-GAAP net loss per share, basic and diluted:
GAAP net loss per share, basic and diluted$(0.61) $(0.36) $(1.61) $(0.89)
Add back:
Non-GAAP adjustments to net loss per share 0.18 0.14 0.66 0.37
Non-GAAP net loss per share, basic and diluted$(0.43) $(0.22) $(0.95) $(0.52)
Reconciliation of adjusted EBITDA:
GAAP net loss$(43,996) $(25,384) $(116,503) $(62,796)
Other expense, net 5,876 2,329 12,815 4,141
Interest expense 89 72 222 233
Income tax expense (benefit) 255 86 (924) 459
Depreciation and amortization 1,759 1,510 5,332 4,071
Stock-based compensation expense 11,336 5,200 27,427 17,692
Litigation expenses(1) 1,810 4,230 20,432 8,270
Adjusted EBITDA$(22,871) $(11,957) $(51,199) $(27,930)

(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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