Appian Announces Fourth Quarter and Full Year 2022 Financial Results

Rhea-AI Summary

Appian (Nasdaq: APPN) reported a 29% increase in fourth quarter cloud subscription revenue, reaching $65.8 million, while full-year cloud subscription revenue grew 32% to $236.9 million. Total revenue for Q4 2022 was $125.8 million, a 20% year-over-year rise. Despite revenue growth, the company faced a GAAP net loss of $(34.4) million in Q4, up from $(25.8) million the prior year. For 2023, Appian expects cloud subscription revenue to range from $294.0 million to $296.0 million, indicating a 24% to 25% annual increase. Adjusted EBITDA loss is projected at $(75.0) million to $(70.0) million.

Positive

• Cloud subscription revenue increased 29% year-over-year in Q4 to $65.8 million.
• Full-year cloud subscription revenue rose 32% to $236.9 million.
• Total revenue for Q4 2022 was $125.8 million, a 20% year-over-year increase.
• Cloud subscription revenue retention rate was 115% as of December 31, 2022.

Negative

• GAAP net loss in Q4 2022 was $(34.4) million, compared to $(25.8) million in Q4 2021.
• Full-year GAAP net loss was $(150.9) million, up from $(88.6) million in 2021.
• Adjusted EBITDA loss for Q4 was $(24.8) million, worsening from $(10.0) million in Q4 2021.
• Net cash used in operating activities for 2022 totaled $(106.6) million, compared to $(53.9) million the previous year.

Fourth quarter cloud subscription revenue increased 29% year-over-year to $65.8 million
Full year cloud subscription revenue increased 32% year-over year to $236.9 million

MCLEAN, Va., Feb. 16, 2023 (GLOBE NEWSWIRE) -- Appian (Nasdaq: APPN) today announced financial results for the fourth quarter and full year ended December 31, 2022.

“Appian grew cloud subscriptions revenue 32% for the full year. Our loyal customers and high gross margins provide a strong foundation as we enter 2023. Organizations are choosing Appian to increase productivity, time to value, and return on investment during uncertain times,” said Matt Calkins, CEO & Founder.

Fourth Quarter 2022 Financial Highlights:

• Revenue: Cloud subscription revenue was $65.8 million, up 29% compared to the fourth quarter of 2021. Total subscriptions revenue, which includes sales of our cloud subscriptions, on-premises term license subscriptions, and maintenance and support, increased 23% year-over-year to $93.2 million. Professional services revenue was $32.5 million, an increase of 11% compared to the fourth quarter of 2021. Total revenue was $125.8 million, up 20% compared to the fourth quarter of 2021. Cloud subscription revenue retention rate was 115% as of December 31, 2022.
• Operating loss and non-GAAP operating loss: GAAP operating loss was $(40.6) million, compared to $(25.9) million for the fourth quarter of 2021. Non-GAAP operating loss was $(26.8) million, compared to $(11.7) million for the fourth quarter of 2021.
• Net loss and non-GAAP net loss: GAAP net loss was $(34.4) million, compared to $(25.8) million for the fourth quarter of 2021. GAAP net loss per share was $(0.47) for the fourth quarter of 2022, compared to $(0.36) for the fourth quarter of 2021. Non-GAAP net loss was $(20.6) million, compared to $(11.6) million for the fourth quarter of 2021. Non-GAAP net loss per share was $(0.28), compared to the $(0.16) net loss per share for the fourth quarter of 2021. GAAP and non-GAAP net loss for the fourth quarter of 2022 included $8.5 million, or $0.12 per share, of foreign currency exchange gains. GAAP and non-GAAP net loss for the fourth quarter of 2021 included $0.5 million, or $0.01 per share, of foreign currency exchange gains. We do not forecast foreign exchange rate movements.
• Adjusted EBITDA: Adjusted EBITDA loss was $(24.8) million, compared to adjusted EBITDA loss of $(10.0) million for the fourth quarter of 2021.
• Cash flows: Net cash used in operating activities was $(12.6) million for the three months ended December 31, 2022 compared to $(19.4) million of net cash used in operating activities for the same period in 2021.

Full Year 2022 Financial Highlights:

• Revenue: Cloud subscription revenue was $236.9 million for the full year 2022, up 32% compared to the full year 2021. Total subscriptions revenue increased 29% year-over-year to $340.2 million for the full year 2022. Professional services revenue was $127.8 million for the full year 2022, compared to $105.5 million for the full year 2021. Total revenue was $468.0 million for the full year 2022, up 27% compared to the full year 2021.
• Operating loss and non-GAAP operating loss: GAAP operating loss was $(145.0) million for the full year 2022, compared to $(83.9) million for the full year 2021. Non-GAAP operating loss was $(83.3) million for the full year 2022, compared to $(43.7) million for the full year 2021.
• Net loss and non-GAAP net loss: GAAP net loss was $(150.9) million for the full year 2022, compared to $(88.6) million for the full year 2021. GAAP net loss per share was $(2.08) for the full year 2022, compared to $(1.25) for the full year 2021. Non-GAAP net loss was $(89.2) million for the full year 2022, compared to $(48.3) million for the full year 2021. Non-GAAP net loss per share was $(1.23) for the full year 2022, compared to the $(0.68) net loss per share for the full year 2021. GAAP and non-GAAP net loss for the full year 2022 included $6.1 million, or $(0.08) per share, of foreign currency exchange losses. GAAP and non-GAAP net loss for the full year 2021 included $3.7 million, or $(0.05) per share, of foreign currency exchange losses.
• Adjusted EBITDA: Adjusted EBITDA loss was $(76.0) million for the full year 2022, compared to adjusted EBITDA loss of $(37.9) million for the full year 2021.
• Balance sheet and cash flows: As of December 31, 2022, Appian had total cash, cash equivalents, and investments of $196.0 million. Net cash used in operating activities was $(106.6) million for the full year 2022 compared to $(53.9) million of net cash used in operating activities for the full year 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:

• Appian received an additional $20.0 million from its term loan facility and also increased the borrowing capacity of its revolving credit facility by $10.0 million.
• Appian elects Shirley Edwards to Board of Directors.
• Appian releases Connected Underwriting to equip insurers with speed and precision.
• Appian named a leader in Everest Group’s Process Orchestration Products PEAK Matrix^® 2023.
• Appian names 2022 Public Partner and Sector Solutions Cup winners.
• Tracxe joins Appian Education Partner Program in the United Kingdom.

Financial Outlook:

As of February 16, 2023, guidance for 2023 is as follows:

• First Quarter 2023 Guidance:
  • Cloud subscription revenue is expected to be between $67.0 million and $69.0 million, representing year-over-year growth of 26% to 29%.
    
  • Total revenue is expected to be between $130.0 million and $132.0 million, representing a year-over-year increase of 14% to 16%.
  • Adjusted EBITDA loss is expected to be between $(21.0) million and $(17.0) million.
  • Non-GAAP net loss per share is expected to be between $(0.33) and $(0.27), assuming weighted average common shares outstanding of 72.8 million.
    
    
• Full Year 2023 Guidance:
  
  • Cloud subscription revenue is expected to be between $294.0 million and $296.0 million, representing year-over-year growth of 24% to 25%.
    
  • Total revenue is expected to be between $530.0 million and $535.0 million, representing a year-over-year increase of 13% to 14%.
  • Adjusted EBITDA loss is expected to be between $(75.0) million and $(70.0) million.
  • Non-GAAP net loss per share is expected to be between $(1.14) and $(1.07), assuming weighted average common shares outstanding of 73.2 million.

Conference Call Details:

Appian will host a conference call today, February 16, 2023, at 4:30 p.m. ET to discuss Appian's financial results for the fourth quarter ended December 31, 2022 and business outlook.

To access the call, navigate to the following link. Once registered, participants can dial in using their phone with a dial in and PIN, or they can choose the Call Me option for instant dial to their phone. The live webcast of the conference call can also be accessed on the Investor Relations page of Appian’s website at http://investors.appian.com.

About Appian

Appian is a software company that automates business processes. The Appian Platform includes everything you need to design, automate, and optimize even the most complex processes, from start to finish. The world's most innovative organizations trust Appian to improve their workflows, unify data, and optimize operations—resulting in better growth and superior customer experiences. For more information, visit www.appian.com. [Nasdaq: APPN]

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 non-GAAP operating loss. 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 (income) expenses, net, (2) interest expense, (3) income tax expense, (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 first quarter and full year 2023, 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,” “plan,” 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, 2022 filed with the Securities and Exchange Commission on February 16, 2023 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
investors@appian.com

Media Contact
Ben Farrell
703-442-1067
ben.farrell@appian.com

APPIAN CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except par value and share data) 

	As of December 31,
		2022				2021
Assets
Current assets
Cash and cash equivalents	$	148,132			$	100,796
Short-term investments and marketable securities		47,863				55,179
Accounts receivable, net of allowance of $2,125 and $1,400, respectively		165,964				130,049
Deferred commissions, current		30,196				24,668
Prepaid expenses and other current assets		28,093				26,781
Restricted cash, current		2,249				791
Total current assets		422,497				338,264
Property and equipment, net of accumulated depreciation of $18,864 and $14,106, respectively		41,855				36,913
Long-term investments		—				12,044
Goodwill		26,349				27,795
Intangible assets, net of accumulated amortization of $2,715 and $1,260, respectively		5,251				7,144
Operating right-of-use assets		37,248				27,897
Deferred commissions, net of current portion		55,788				49,017
Deferred tax assets		1,940				1,025
Restricted cash, net of current portion		—				2,373
Other assets		3,286				2,047
Total assets	$	594,214			$	504,519
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	7,997			$	5,766
Accrued expenses		12,227				15,483
Accrued compensation and related benefits		40,718				35,126
Deferred revenue, current		194,768				150,169
Debt, current		2,740				—
Operating lease liabilities, current		8,681				8,110
Other current liabilities		3,121				1,067
Total current liabilities		270,252				215,721
Long-term debt		115,379				—
Operating lease liabilities		57,225				48,784
Deferred revenue		5,556				2,430
Deferred tax liabilities		102				209
Other non-current liabilities		—				3,458
Total liabilities		448,514				270,602
Stockholders’ equity
Class A common stock—par value $0.0001; 500,000,000 shares authorized and 41,320,091 shares issued and outstanding as of December 31, 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 December 31, 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		561,390				497,128
Accumulated other comprehensive loss		(7,246	)			(5,687	)
Accumulated deficit		(408,451	)			(257,531	)
Total stockholders’ equity		145,700				233,917
Total liabilities and stockholders’ equity	$	594,214			$	504,519

APPIAN CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)

	Three Months Ended December 31,								Year Ended December 31,
		2022				2021				2022				2021
	(unaudited)
Revenue
Subscriptions	$	93,244			$	75,786			$	340,152			$	263,738
Professional services		32,542				29,202				127,839				105,521
Total revenue		125,786				104,988				467,991				369,259
Cost of revenue
Subscriptions		9,942				7,524				36,005				27,330
Professional services		25,289				20,698				97,301				76,763
Total cost of revenue		35,231				28,222				133,306				104,093
Gross profit		90,555				76,766				334,685				265,166
Operating expenses
Sales and marketing		63,270				49,277				220,374				167,852
Research and development		37,808				26,455				139,210				97,517
General and administrative		30,097				26,978				120,111				83,704
Total operating expenses		131,175				102,710				479,695				349,073
Operating loss		(40,620	)			(25,944	)			(145,010	)			(83,907	)
Other non-operating (income) expense, net
Other (income) expense, net		(9,271	)			(557	)			3,545				3,584
Interest expense		1,451				139				1,673				372
Total other non-operating (income) expense		(7,820	)			(418	)			5,218				3,956
Loss before income taxes		(32,800	)			(25,526	)			(150,228	)			(87,863	)
Income tax expense		1,617				319				692				778
Net loss	$	(34,417	)		$	(25,845	)		$	(150,920	)		$	(88,641	)
Net loss per share attributable to common stockholders:
Basic and diluted	$	(0.47	)		$	(0.36	)		$	(2.08	)		$	(1.25	)
Weighted average common shares outstanding:
Basic and diluted		72,703				71,334				72,455				71,036

APPIAN CORPORATION
STOCK-BASED COMPENSATION EXPENSE
(in thousands)

	Three Months Ended December 31,								Year Ended December 31,
		2022				2021				2022				2021
	(unaudited)
Cost of revenue
Subscriptions	$	284			$	226			$	996			$	1,199
Professional services		1,521				848				5,309				3,131
Operating expenses
Sales and marketing		2,431				1,673				9,152				5,426
Research and development		3,692				1,877				12,523				5,224
General and administrative		3,475				1,528				10,850				8,864
Total stock-based compensation expense	$	11,403			$	6,152			$	38,830			$	23,844

APPIAN CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

	Year Ended December 31,
		2022				2021
Cash flows from operating activities:
Net loss	$	(150,920	)		$	(88,641	)
Adjustments to reconcile net loss to net cash used by operating activities:
Stock-based compensation		38,830				23,844
Depreciation and amortization of intangible assets		7,297				5,743
Bad debt expense		1,298				410
Amortization of debt issuance costs		43				—
Loss on disposal of property and equipment		3				79
Deferred income taxes		(1,089	)			(498	)
Changes in assets and liabilities:
Accounts receivable		(37,922	)			(33,904	)
Prepaid expenses and other assets		(2,027	)			2,094
Deferred commissions		(12,298	)			(21,588	)
Accounts payable and accrued expenses		(3,289	)			11,467
Accrued compensation and related benefits		6,582				12,598
Other current and non-current liabilities		(264	)			(444	)
Deferred revenue		47,534				33,378
Operating lease assets and liabilities		(329	)			1,544
Net cash used by operating activities		(106,551	)			(53,918	)
Cash flows from investing activities:
Proceeds from investments		84,642				120,593
Purchases of investments		(65,283	)			(41,870	)
Purchases of property and equipment		(9,095	)			(6,058	)
Payments for acquisitions, net of cash acquired		—				(30,729	)
Net cash provided by investing activities		10,264				41,936
Cash flows from financing activities:
Proceeds from borrowings		120,000				—
Payments for debt issuance costs		(1,940	)			—
Debt repayments		(625	)			—
Proceeds from exercise of common stock options		25,432				2,786
Net cash provided by financing activities		142,867				2,786
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash		(159	)			694
Net increase (decrease) in cash, cash equivalents, and restricted cash		46,421				(8,502	)
Cash, cash equivalents, and restricted cash at beginning of period		103,960				112,462
Cash, cash equivalents, and restricted cash at end of period	$	150,381			$	103,960
Supplemental cash flow information:
Cash paid for interest	$	1,671			$	323
Cash paid for income taxes	$	1,239			$	1,505
Supplemental non-cash investing and financing information:
Accrued capital expenditures	$	1,774			$	379

APPIAN CORPORATION
RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES
(unaudited, in thousands, except per share data)

	Three Months Ended December 31,								Year Ended December 31,
		2022				2021				2022				2021
Reconciliation of non-GAAP operating loss:
GAAP operating loss	$	(40,620	)		$	(25,944	)		$	(145,010	)		$	(83,907	)
Add back:
Stock-based compensation expense		11,403				6,152				38,830				23,844
Litigation expenses(1)		2,453				8,130				22,886				16,400
Non-GAAP operating loss	$	(26,764	)		$	(11,662	)		$	(83,294	)		$	(43,663	)
Reconciliation of non-GAAP net loss:
GAAP net loss	$	(34,417	)		$	(25,845	)		$	(150,920	)		$	(88,641	)
Add back:
Stock-based compensation expense		11,403				6,152				38,830				23,844
Litigation expenses(1)		2,453				8,130				22,886				16,400
Loss on disposal of property and equipment		3				1				3				79
Non-GAAP net loss	$	(20,558	)		$	(11,562	)		$	(89,201	)		$	(48,318	)
Non-GAAP earnings per share:
Non-GAAP net loss	$	(20,558	)		$	(11,562	)		$	(89,201	)		$	(48,318	)
Weighted average shares used to compute net loss per share, basic and diluted		72,703				71,334				72,455				71,036
Non-GAAP net loss per share, basic and diluted	$	(0.28	)		$	(0.16	)		$	(1.23	)		$	(0.68	)
Reconciliation of non-GAAP net loss per share, basic and diluted:
GAAP net loss per share, basic and diluted	$	(0.47	)		$	(0.36	)		$	(2.08	)		$	(1.25	)
Add back:
Non-GAAP adjustments to net loss per share		0.19				0.20				0.85				0.57
Non-GAAP net loss per share, basic and diluted	$	(0.28	)		$	(0.16	)		$	(1.23	)		$	(0.68	)
Reconciliation of adjusted EBITDA:
GAAP net loss	$	(34,417	)		$	(25,845	)		$	(150,920	)		$	(88,641	)
Other (income) expense, net		(9,271	)			(557	)			3,545				3,584
Interest expense		1,451				139				1,673				372
Income tax expense		1,617				319				692				778
Depreciation and amortization of intangible assets		1,965				1,672				7,297				5,743
Stock-based compensation expense		11,403				6,152				38,830				23,844
Litigation expenses(1)		2,453				8,130				22,886				16,400
Adjusted EBITDA	$	(24,799	)		$	(9,990	)		$	(75,997	)		$	(37,920	)

⁽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.

FAQ

What were Appian's Q4 2022 financial results?

Appian reported Q4 2022 revenue of $125.8 million, with cloud subscription revenue of $65.8 million, up 29% year-over-year.

What is Appian's full-year revenue for 2022?

In 2022, Appian's total revenue was $468.0 million, a 27% increase compared to 2021.

What is the guidance for Appian's 2023 cloud subscription revenue?

Appian expects cloud subscription revenue in 2023 to be between $294.0 million and $296.0 million.

What was Appian's GAAP net loss for 2022?

Appian's GAAP net loss for 2022 was $(150.9) million, compared to $(88.6) million in 2021.

When will Appian discuss its financial results?

Appian will host a conference call on February 16, 2023, at 4:30 p.m. ET to discuss its financial results and outlook.