Appian Announces Second Quarter 2022 Financial Results

Appian Announces Second Quarter 2022 Financial Results

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
[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
 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.