Appian(US:APPN)2025-11-06 14:30Financial Data and Key Metrics Changes - In Q3 2025, Appian's total revenue grew 21% year-over-year to $187 million, with cloud subscriptions revenue increasing 21% to $113.6 million and total subscriptions revenue rising 20% to $147.2 million [4][18] - Adjusted EBITDA was $32.2 million, significantly higher than the guidance of $9-$12 million and up from $10.8 million in the same quarter last year [20][23] - Net income reached $24.4 million, or $0.32 per diluted share, compared to $1.8 million, or $0.02 per diluted share, in Q3 2024 [20] Business Line Data and Key Metrics Changes - Cloud subscription revenue retention rate was 111%, stable compared to the previous quarter but down from 117% a year ago [19] - Professional services revenue increased by 29% year-over-year to $39.8 million, with a gross margin of 34%, up from 30% in the previous year [18][19] Market Data and Key Metrics Changes - International operations contributed 40% of total revenue, up from 36% in the year-ago period, indicating strong growth in international markets [19] - Cloud net new ACV bookings accounted for approximately 90% of total net new software bookings in Q3, reflecting strong demand [19] Company Strategy and Development Direction - The company is focusing on integrating AI with business processes, emphasizing the importance of connecting AI to real work to enhance its value [5][8] - Appian's up-market strategy is driving growth, with over 50% more new seven-figure software deals booked compared to the previous year [15][17] - The launch of new features like Agent Studio is expected to enhance AI capabilities and drive further adoption among customers [13][32] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the government sector's purchasing patterns, noting a shift towards efficiency and openness to AI solutions despite the temporary impact of the government shutdown [31] - The company anticipates continued growth in cloud subscription revenue and total revenue for Q4 2025, with adjusted EBITDA expected to be between $10 million and $13 million [22][23] Other Important Information - The company is increasing its full-year guidance for cloud subscription revenue and total revenue, expecting cloud subscription revenue to be between $435 million and $437 million, representing year-over-year growth of 18% to 19% [23][24] - The upcoming release of Agent Studio is highly anticipated, with positive feedback from early customer programs indicating strong demand for the new capabilities [32] Q&A Session Summary Question: What drove the strength in cloud ACV bookings this quarter? - Management attributed the strength to a broad market improvement and the success of the up-market strategy, rather than specific sectors [27] Question: How does the company view its go-to-market transformation progress? - Management feels they are in the fourth or fifth inning of the transformation, with plans to return to growth in the sales organization while maintaining productivity [28] Question: What is the outlook for government business given the shutdown? - Management remains bullish about government business, noting that the shutdown is temporary and that long-term changes in purchasing patterns are positive [31] Question: What feedback has been received regarding the upcoming AI Studio release? - The beta program for AI Studio was oversubscribed, with positive feedback indicating strong anticipation for the release [32] Question: How does the company differentiate itself in the AI market? - Management emphasized the importance of connecting AI to data and processes, positioning Appian as a leader in providing complementary technologies to AI [35] Question: What is the expected path for profitability moving forward? - Management expects modest margin expansion in the future, focusing on sustainable revenue growth and continued efficiency improvements [38] Question: What is driving the strong performance in international markets? - The growth is attributed to AI adoption and higher-level conversations with decision-makers, along with favorable foreign exchange rates [39] Question: What is the outlook for professional services margins? - Management noted that while the current high margins may not be sustainable, they expect continued high profitability in professional services moving forward [41]