Appian(APPN) - 2019 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Appian's subscription revenue grew 41% year-over-year to $38.0 million, exceeding guidance [7][22] - Non-GAAP operating loss was $6.6 million, compared to a loss of $6.1 million in the prior year [25][26] - Subscription revenue retention rate remained strong at 117% as of June 30, 2019 [7][23] - Total revenue for Q2 was $66.9 million, up 12% year-over-year [22][23] Business Line Data and Key Metrics Changes - Professional services revenue was $27.7 million, slightly up from $26.8 million in the prior year [23] - Total subscription, software, and support revenue was $39.3 million, an increase of 19% year-over-year [22] - Non-GAAP gross profit margin for subscriptions, software, and support was 90% [25] Market Data and Key Metrics Changes - International operations contributed 31% of total revenue for Q2, up from 28% in the prior year [23] - Cloud subscription revenue accounted for approximately 67% of total subscription revenue, up from 61% in the same period last year [24] Company Strategy and Development Direction - The company emphasizes the importance of the Appian Guarantee, which assures customers that their first application can be completed in eight weeks [8] - Appian is focusing on expanding its platform capabilities and pre-built solutions to enhance application development speed [16][17] - Partnerships are crucial, with partners contributing to 67% of new logo deals, which closed more than a third faster than direct sales [14][66] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth of the low-code market and the company's position as a leader [7] - The company is optimistic about the impact of new security features on government contracts, although these were not yet reflected in Q2 results [58] - Management raised full-year revenue guidance, expecting subscription revenue to be between $153 million and $154 million, representing year-over-year growth of 32% to 33% [29] Other Important Information - The company relocated to new headquarters in Tysons, Virginia, which is expected to enhance its presence in the Washington DC region [21] - The company is adopting ASC 606 on a modified retrospective basis, which will not materially change revenue recognition for cloud subscriptions [24] Q&A Session Summary Question: Insights on customer application usage - Management indicated that top customers run dozens of applications on the Appian platform, leveraging synergies for cost-effective adoption [32][36] Question: Pre-built app strategy and market targeting - The company is focusing on proven solutions based on customer demand and successful implementations [37][39] Question: Professional services revenue expectations - Management suggested that professional services margins improved due to prior quarter work being recognized in Q2 [43][44] Question: Direct sales organization efficiency - Management noted improvements in sales efficiency and output per representative, although specific comparisons between commercial and federal sectors were not provided [46][47] Question: Partnership impacts on new logos - Management expressed satisfaction with the increasing partner-sourced new logos, indicating a successful strategy [66] Question: RFP process and low-code adoption - Management confirmed that RFPs specifying low-code solutions are becoming more common, indicating a shift in customer preferences [80][81]