Appian Announces First Quarter 2020 Financial Results
May 7, 2020
McLean, VA – Appian (Nasdaq: APPN) today announced financial results for the first quarter ended March 31, 2020.
“Appian is a platform for change. We’ve helped businesses around the world adapt to COVID-19. When the crisis is over, we expect strengthened demand for digital transformation, low-code, and automation,” said Matt Calkins, CEO & Founder.
First Quarter 2020 Financial Highlights:
- Revenue: Cloud subscription revenue was $28.4 million for the first quarter of 2020, up 33% compared to the first quarter of 2019. Total subscriptions revenue, which includes sales of our SaaS subscriptions, on-premises term license subscriptions and maintenance and support, increased 46% year-over-year to $50.4 million for the first quarter of 2020. Professional services revenue was $28.4 million for the first quarter of 2020, compared to $25.7 million for the first quarter of 2019. Total revenue was $78.9 million for the first quarter of 2020, up 31% compared to the first quarter of 2019. Cloud subscription revenue retention rate was 115% as of March 31, 2020.
- Operating loss and non-GAAP operating loss: GAAP operating loss was $(8.6) million for the first quarter of 2020, compared to $(15.3) million for the first quarter of 2019. Non-GAAP operating loss was $(5.1) million for the first quarter of 2020, compared to $(8.1) million for the first quarter of 2019.
- Net loss and non-GAAP net loss: GAAP net loss was $(11.7) million for the first quarter of 2020, compared to $(15.2) million for the first quarter of 2019. GAAP net loss per share was $(0.17) for the first quarter of 2020, based on 67.5 million weighted-average shares outstanding, compared to $(0.24) for the first quarter of 2019, based on 64.3 million weighted-average shares outstanding. Non-GAAP net loss was $(8.2) million for the first quarter of 2020, compared to $(8.0) million for the first quarter of 2019. Non-GAAP net loss per share was $(0.12) for the first quarter of 2020, based on 67.5 million basic and diluted shares outstanding, consistent with $(0.12) for the first quarter of 2019, based on 64.3 million basic and diluted shares outstanding.
- Adjusted EBITDA: Adjusted EBITDA loss was $(3.6) million for the first quarter of 2020, compared to $(7.3) million for the first quarter of 2019.
- Balance sheet and cash flows: As of March 31, 2020, Appian had cash and cash equivalents of $149.2 million. Net cash used in operating activities was $(3.9) million for the three months ended March 31, 2020 compared to $(4.1) million of net cash used in operating activities for the same period in 2019.
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.”
First Quarter 2020 Business Highlights:
- Deloitte and Appian formed a strategic alliance to modernize mission systems for government and commercial clients.
- Appian offered a free application for enterprises and government agencies to manage their COVID-19 response.
- Google and Appian expanded their partnership, enhancing the Appian AI offering to include out-of-the-box AI capabilities pre-configured for Intelligent Document Processing.
- Celonis, the market leader in AI-enhanced Process Mining and Process Excellence software, and Appian announced a technology partnership.
- Appian acquired a Robotic Process Automation (RPA) company making the platform a one-stop shop for automation.
- Appian announced Appian RPA, providing full-stack automation combining AI, RPA, workflow, decision rules and case management at the speed of low-code.
- Appian released the latest version of its low-code automation platform.
- Appian also announced the appointment of Eric Cross as Chief Revenue Officer and Pavel Zamudio as Senior Vice President, Customer Success.
As of May 7, 2020, guidance for 2020 is as follows:
- Second Quarter 2020 Guidance:
- Cloud subscription revenue is expected to be in the range of $28.4 million and $28.7 million, representing year-over-year growth of between 25% and 26%.
- Total revenue is expected to be in the range of $60.0 million and $61.0 million, representing year-over-year decrease of between 8% and 7%.1
- Adjusted EBITDA loss is expected to be in the range of $(16.0) million and $(14.0) million.
- Non-GAAP net loss per share is expected to be in the range of $(0.26) and $(0.23). This assumes 67.7 million weighted average common shares outstanding.
- Full Year 2020 Guidance:
- Given the uncertainty regarding the duration of COVID-19 and its impact on the global economy, there is a broad range of possible results for this year. Therefore, Appian is withdrawing the full year 2020 guidance it provided on February 20, 2020 for cloud subscription revenue, total revenue, adjusted EBITDA, and non-GAAP net loss per share.
1In the first quarter of 2020, Appian recognized approximately $4 million of on-premises term license subscriptions revenue associated with deals that closed during the first quarter of 2020 that Appian had expected to close in the second quarter of 2020 when Appian provided its first quarter 2020 guidance in February 2020.
Conference Call Details:
Appian will host a conference call today, May 7, 2020, at 5:00 p.m. ET to discuss Appian’s financial results for the first quarter ended March 31, 2020 and business outlook.
The live webcast of the conference call can be accessed on the Investor Relations page of Appian’s website at http://investors.appian.com. To access the call, please dial (866) 575-6539 in the U.S. or (323) 994-2093 internationally. Following the call, an archived webcast will be available at the same location on the Investor Relations page. A telephone replay will be available for one week at (844) 512-2921 in the U.S. or (412) 317-6671 internationally with recording access code 5243081.
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 measures, including non-GAAP operating loss, non-GAAP net loss, non-GAAP net loss per share, non-GAAP weighted average shares outstanding and adjusted EBITDA. These non-GAAP financial measures exclude the effect of stock-based compensation expense and gain or loss on disposal of an asset. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or 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, please see the reconciliation of these non-GAAP financial measures to their nearest comparable GAAP measures at the end of this press release. A reconciliation of non-GAAP guidance measures to the most comparable GAAP measures is not available on a forward-looking basis without unreasonable efforts due to the high variability, complexity and low visibility with respect to the charges excluded from these non-GAAP measures.
Appian uses these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. Appian’s management believes that 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 that 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.
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 second quarter, the impact of COVID-19 on our business and on the global economy, 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 subscription revenue and total revenue growth, are forward-looking statements. The words “anticipate,” believe,” “continue,” “estimate,” “expect,” “intend,” “may,” “will” 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, and the timing of Appian’s recognition of subscription 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, 2019 filed with the Securities and Exchange Commission on February 20, 2020 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.
Appian provides a low-code automation platform that accelerates the creation of high-impact business applications. Many of the world’s largest organizations use Appian applications to improve customer experience, achieve operational excellence, and simplify global risk management and compliance.