Appian(APPN) - 2024 Q1 - Quarterly Results

First Quarter 2024 Financial Highlights Appian achieved strong Q1 2024 results with cloud subscription revenue up 24% to $86.6 million and significant profitability improvements Q1 2024 Key Financial Metrics (in millions) | Metric | Q1 2024 | Q1 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Cloud Subscription Revenue | $86.6 | $69.9 (implied) | +24% | | Total Revenue | $149.8 | $135.2 | +11% | | GAAP Operating Loss | $(19.5) | $(35.3) | +44.7% Improvement | | Non-GAAP Operating Loss | $(3.7) | $(18.2) | +79.7% Improvement | | Adjusted EBITDA Loss | $(1.3) | $(15.8) | +91.8% Improvement | | GAAP Net Loss per Share | $(0.45) | $(0.51) | +11.8% Improvement | | Net Cash from Operations | $18.9 | $(25.3) | N/A | - The cloud subscription revenue retention rate was strong at 120% as of March 31, 2024, indicating robust customer expansion and retention[2] - GAAP and non-GAAP net loss for Q1 2024 included a significant foreign currency exchange loss of $11.5 million, or $0.16 per share, compared to a small gain in the prior year[2] Recent Business Highlights Appian advanced its market position through strategic partnerships with AWS and Symphony, and launched new platform capabilities - Key strategic initiatives and partnerships in Q1 2024 include: * A strategic collaboration agreement with AWS to deliver Private AI and end-to-end process automation * A partnership with Symphony to enable compliant financial communications and process automation * The launch of Appian ProcureSight, a new solution designed for better and faster government procurement[4] Financial Outlook Appian projects continued double-digit growth for Q2 and full year 2024, with cloud subscription revenue expected to grow 20% annually Second Quarter 2024 Guidance Appian forecasts Q2 2024 cloud subscription revenue growth of 16-18% and total revenue growth of 10-13% Q2 2024 Guidance (in millions) | Metric | Guidance Range | | :--- | :--- | | Cloud Subscription Revenue | $86.0 - $88.0 (+16% to +18% YoY) | | Total Revenue | $140.0 - $144.0 (+10% to +13% YoY) | | Adjusted EBITDA Loss | $(17.0) - $(13.0) | | Non-GAAP Net Loss per Share | $(0.34) - $(0.28) | Full Year 2024 Guidance For full year 2024, Appian anticipates cloud subscription revenue to grow 20% and total revenue to increase 13% Full Year 2024 Guidance (in millions) | Metric | Guidance Range | | :--- | :--- | | Cloud Subscription Revenue | $364.0 - $366.0 (+20% YoY) | | Total Revenue | $615.0 - $617.0 (+13% YoY) | | Adjusted EBITDA Loss | $(22.5) - $(17.5) | | Non-GAAP Net Loss per Share | $(0.85) - $(0.79) | Consolidated Financial Statements The consolidated financial statements detail Appian's financial health, showing increased cash, higher revenues, reduced operating loss, and positive cash flow from operations Consolidated Statements of Operations Q1 2024 total revenue increased to $149.8 million, driven by subscription growth, with gross profit rising and operating loss significantly narrowed Q1 2024 Statement of Operations Highlights (in thousands) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Subscriptions Revenue | $117,694 | $98,957 | | Total Revenue | $149,835 | $135,235 | | Gross Profit | $111,838 | $99,142 | | Total Operating Expenses | $131,373 | $134,408 | | Operating Loss | $(19,535) | $(35,266) | | Net Loss | $(32,923) | $(36,829) | Consolidated Balance Sheets As of March 31, 2024, Appian's balance sheet shows total assets of $595.4 million, increased cash, and $226.2 million in deferred revenue Balance Sheet Highlights (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $170,108 | $149,351 | | Total current assets | $389,880 | $414,355 | | Total assets | $595,358 | $627,503 | | Deferred revenue (current) | $220,943 | $235,992 | | Total liabilities | $605,023 | $575,162 | | Total stockholders' (deficit) equity | $(9,665) | $52,341 | Consolidated Statements of Cash Flows Q1 2024 saw significant cash flow improvement, with $18.9 million generated from operations, leading to a $20.8 million increase in cash and equivalents Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net cash from Operating Activities | $18,866 | $(25,265) | | Net cash from Investing Activities | $7,459 | $(12,316) | | Net cash from Financing Activities | $(4,249) | $88,144 | | Net increase in cash | $20,757 | $50,578 | | Cash at end of period | $170,108 | $200,959 | Reconciliation of GAAP to Non-GAAP Measures This section details adjustments from GAAP to non-GAAP metrics, primarily for stock-based compensation, JPI amortization, and litigation expenses, resulting in a non-GAAP operating loss of $(3.7) million Reconciliation of GAAP Net Loss to Adjusted EBITDA (in thousands) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | GAAP net loss | $(32,923) | $(36,829) | | Stock-based compensation expense | $10,606 | $11,056 | | Litigation Expense | $742 | $1,842 | | JPI Amortization | $4,504 | — | | Severance Costs | — | $4,204 | | Other adjustments | $16,049 | $3,905 | | Adjusted EBITDA | $(1,322) | $(15,822) | Reconciliation of GAAP Operating Loss to Non-GAAP Operating Loss (Q1 2024, in thousands) | Line Item | Amount | | :--- | :--- | | GAAP Operating loss | $(19,535) | | Stock-Based Compensation | $10,606 | | Litigation Expense | $742 | | JPI Amortization | $4,504 | | Non-GAAP Operating loss | $(3,683) | Notes and Disclosures This section provides context for financial results, including the rationale for non-GAAP measures and a safe harbor statement for forward-looking statements Non-GAAP Financial Measures Appian uses non-GAAP measures to provide supplemental information on core operating performance, excluding non-recurring expenses like stock-based compensation and litigation costs - Management uses non-GAAP measures for financial decision-making and to evaluate period-to-period comparisons, believing they offer greater transparency into the company's ongoing operational performance[9] - Key expenses excluded from non-GAAP calculations include stock-based compensation, litigation expenses related to the Pegasystems cases, JPI Amortization, and severance costs from a 2023 workforce reduction[10] Forward-Looking Statements The earnings release includes forward-looking statements subject to risks like competition, market acceptance, sales cycle variability, and AI's impact, where actual results may differ - The report's statements about future financial performance, demand for the Appian platform, and market opportunities are forward-looking and not guarantees of future results[14] - Key risks that could impact future results include competition, the length and variability of sales cycles, the unpredictable effects of AI technologies, and customer concentration[14]