• Appian Announces Third Quarter 2022 Financial Results

    Source: Nasdaq GlobeNewswire / 03 Nov 2022 15:02:00   America/Chicago

    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:

    • Revenue: Cloud subscription revenue was $60.6 million, up 30% compared to the third quarter of 2021. Total subscriptions revenue increased 29% year-over-year to $86.5 million. Professional services revenue was $31.4 million, an increase of 25% compared to the third quarter of 2021. Total revenue was $117.9 million, up 28% compared to the third quarter of 2021. Cloud subscription revenue retention rate was 115% as of September 30, 2022.
    • Operating loss and non-GAAP operating loss: GAAP operating loss was $(37.8) million, compared to $(22.9) million for the third quarter of 2021. Non-GAAP operating loss was $(24.6) million, compared to $(13.5) million for the third quarter of 2021.
    • Net loss and non-GAAP net loss: GAAP net loss was $(44.0) million, compared to $(25.4) million for the third quarter of 2021. GAAP net loss per share was $(0.61) for the third quarter of 2022, compared to $(0.36) for the third quarter of 2021. Non-GAAP net loss was $(30.9) million, compared to $(15.9) million for the third quarter of 2021. Non-GAAP net loss per share was $(0.43), compared to the $(0.22) net loss per share for the third quarter of 2021. GAAP and non-GAAP net loss for the third quarter of 2022 included $6.1 million, or $(0.08) per share, of foreign currency exchange losses. GAAP and non-GAAP net loss for the third quarter of 2021 included $2.3 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 $(22.9) million, compared to adjusted EBITDA loss of $(12.0) million for the third quarter of 2021.
    • Balance sheet and cash flows: As of September 30, 2022, Appian had total unencumbered cash and investments of $92.7 million. Net cash used in operating activities was $(43.7) million for the three months ended September 30, 2022 compared to $(25.1) 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 November 3, 2022, guidance for 2022 is as follows:

    • Fourth Quarter 2022 Guidance:
      • Cloud subscription revenue is expected to be between $63.5 million and $64.5 million, representing year-over-year growth of 24% to 26%.
      • Total revenue is expected to be between $121.5 million and $123.5 million, representing a year-over-year increase of 16% to 18%.
      • Adjusted EBITDA loss is expected to be between $(24.0) million and $(29.0) million.
      • Non-GAAP net loss per share is expected to be between $(0.36) and $(0.42), assuming weighted average common shares outstanding of 72.7 million.
    • Full Year 2022 Guidance:
      • Cloud subscription revenue is expected to be between $235.0 million and $236.0 million, representing year-over-year growth of 31% to 32%.
      • Total revenue is expected to be between $461.0 million and $466.0 million, representing a year-over-year increase of 25% to 26%.
      • Adjusted EBITDA loss is expected to be between $(75.0) million and $(80.0) million.
      • Non-GAAP net loss per share is expected to be between $(1.30) and $(1.36), assuming weighted average common shares outstanding of 72.5 million.

    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
    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
     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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