Appian(US:APPN)2024-08-01 17:17Revenue Growth - Cloud subscriptions revenue for Q2 2024 reached $88.4 million, an 18.8% increase from $74.4 million in Q2 2023, while for the first half of 2024, it was $175.0 million, up 21.4% from $144.1 million in the same period last year [132]. - Total revenue increased by $18.7 million, or 14.7%, to $146.5 million for the three months ended June 30, 2024, compared to $127.7 million in the same period in 2023, driven primarily by a $19.2 million increase in subscriptions revenue [152]. - Total revenue increased by $33.3 million, or 12.7%, to $296,285 thousand for the six months ended June 30, 2024, primarily due to a $37.9 million increase in subscriptions revenue [163]. - Subscriptions revenue grew by $37,917 thousand, or 19.7%, to $230,668 thousand for the six months ended June 30, 2024, while professional services revenue decreased by $4,582 thousand, or 6.5% [163]. Subscription Metrics - The cloud subscriptions revenue retention rate improved to 118% as of June 30, 2024, compared to 115% in 2023, indicating strong renewal and expansion of subscription agreements [133]. - For the three months ended June 30, 2024, 77.1% of total revenue was derived from subscriptions, compared to 73.4% in the same period of 2023, highlighting a shift towards subscription-based revenue [129]. - Subscriptions revenue reached $113.0 million for the three months ended June 30, 2024, up 20.4% from $93.8 million in the same period in 2023, with a notable $14.0 million increase in cloud subscription revenue [152]. Cost and Expenses - Total cost of revenue increased by $2.6 million, or 7.0%, to $39.4 million for the three months ended June 30, 2024, primarily due to a $2.2 million increase in hosting costs [154]. - Operating expenses increased to $146.2 million for the three months ended June 30, 2024, compared to $131.5 million in 2023, reflecting continued investment in growth [148]. - General and administrative expense rose by $11.0 million, or 37.6%, to $40,193 thousand for the three months ended June 30, 2024, driven by lease impairment charges and increased amortization expenses [158]. - Total cost of revenue increased by $4.5 million, or 6.1%, to $77,410 thousand for the six months ended June 30, 2024, mainly due to higher hosting costs [164]. Profitability and Loss - The operating loss for the three months ended June 30, 2024, was $39.2 million, an improvement from a loss of $40.7 million in the same period in 2023 [148]. - Net loss for the three months ended June 30, 2024, was $43.6 million, compared to a net loss of $42.4 million in the same period in 2023 [148]. - The net loss for the six months ended June 30, 2024, was $(76.5 million), an increase of $19.4 million compared to the prior year [178]. - The net loss per share, basic and diluted, was $(1.05) for the six months ended June 30, 2024, a decrease of $0.51 from the previous year [178]. Financial Position - Cash and cash equivalents as of June 30, 2024, were $120.8 million, down from $149.4 million as of December 31, 2023 [184]. - The company had a working capital of $70.3 million as of June 30, 2024, an increase from $43.2 million at the end of 2023 [184]. - Outstanding principal debt as of June 30, 2024, was $254.0 million, with a hypothetical one percentage point increase in interest rates potentially raising annual interest expense by approximately $2.5 million [200]. Strategic Focus - The business model focuses on maximizing customer lifetime value, with significant investments in customer acquisition and sales team expansion, which can take up to a year to yield productivity [125]. - The company targets organizations with over 2,000 employees and $2 billion in annual revenue, indicating a focus on large enterprises for customer acquisition [123]. - The company plans to continue investing in its platform and infrastructure to meet evolving customer needs and may pursue strategic acquisitions to enhance product offerings [130]. Risks and Challenges - Inflation risks are present in personnel costs and general overhead expenses, with potential adverse effects on gross profit margins if inflation pressures increase [201]. - The company faces foreign currency exchange risks, primarily with the British pound, Euro, Australian dollar, and Swiss franc, impacting revenue and operating results [202]. - A 10% change in foreign currency exchange rates could affect total revenue by approximately 4% and operating loss by about 3% for the six months ended June 30, 2024 [202]. Non-GAAP Measures - The company emphasizes the importance of non-GAAP financial measures for evaluating performance and making operational decisions [173]. - Adjusted EBITDA, a non-GAAP measure, is defined as net loss before certain expenses, providing a clearer view of operational performance [176]. - The company reported an adjusted EBITDA of $(10.5) million for the three months ended June 30, 2024, compared to $(24.7) million for the same period in 2023 [181].