Appian Announces Third Quarter 2018 Financial Results
November 1, 2018
Subscription revenue increased 42% year-over-year to $29.4 million
Total revenue increased 23% year-over-year to $54.9 million
Reston, VA – Appian (NASDAQ: APPN) today announced financial results for the third quarter ended September 30, 2018.
“In the third quarter, our subscription revenue grew 42% year-over-year and our subscription revenue retention rate remained high at 117%. We continue to demonstrate that our platform is the most accessible in the market. More companies are finding us to be the fastest way to build and deploy unique software to run their business,” said Matt Calkins, CEO & Founder.
Third Quarter 2018 Financial Highlights:
- Revenue: Subscription revenue was $29.4 million for the third quarter of 2018, up 42% compared to the third quarter of 2017. Total subscriptions, software and support revenue increased 36% year-over-year to $30.9 million for the third quarter of 2018. Professional services revenue was $24.0 million for the third quarter of 2018, an increase of 9% year-over-year. Total revenue was $54.9 million for the third quarter of 2018, up 23% compared to the third quarter of 2017. Subscription revenue retention rate was 117% as of September 30, 2018.
- Operating loss and non-GAAP operating loss: GAAP operating loss was $(14.9) million for the third quarter of 2018, compared to $(6.5) million for the third quarter of 2017. Non-GAAP operating loss was $(8.1) million for the third quarter of 2018, compared to $(4.9) million for the third quarter of 2017.
- Net loss and non-GAAP net loss: GAAP net loss was $(15.0) million for the third quarter of 2018, compared to $(6.3) million for the third quarter of 2017. GAAP net loss per share attributable to common stockholders was $(0.24) for the third quarter of 2018 based on 62.5 million weighted-average shares outstanding, compared to $(0.10) for the third quarter of 2017 based on 60.2 million weighted-average shares outstanding. Non-GAAP net loss was $(8.2) million for the third quarter of 2018, compared to $(4.7) million for the third quarter of 2017. Non-GAAP net loss per share was $(0.13) for the third quarter of 2018, based on 62.5 million basic and diluted shares outstanding, compared to $(0.08) for the third quarter of 2017, based on 60.2 million basic and diluted shares outstanding.
- Balance sheet and cash flows: As of September 30, 2018, Appian had cash and cash equivalents of $107.3 million, inclusive of $57.8 million net cash raised in the company’s underwritten public offering of Class A Common Stock on August 23, 2018. Cash used in operating activities was $(0.3) million for the three months ended September 30, 2018, compared with cash used in operating activities of $(4.4) million for the three months ended September 30, 2017.
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.”
Third Quarter 2018 Business Highlights:
- Announced integration with Google Cloud’s new Contact Center AI, a solution that combines multiple AI products to improve customer service experience and the productivity of contact centers. This continues the integrated customer experience across channels and customer touchpoint with Appian.
- Announced it will work with Queensland University of Technology (QUT), a major Australian university, to rollout new enterprise applications on the Appian Cloud Platform. QUT is redesigning business processes to provide an improved student and staff experience, starting with Finance, Payroll and HR processes.
- Pirelli is one of the world’s leading tire manufacturers and related services providers. They awarded Appian with the 2018 Pirelli Supplier Award in the Information and Communications Technology (ICT) category. This annual award recognizes companies for their outstanding partnership with the Pirelli organization.
As of November 1, 2018, guidance for the fourth quarter 2018 and full year 2018 is as follows:
- Fourth Quarter 2018 Guidance:
- Subscription revenue is expected to be in the range of $31.4. million and $31.6 million, representing year-over-year growth of between 34% and 35%.
- Total revenue is expected to be in the range of $55.1 million and $56.1 million, representing year-over-year growth of between 9% and 11%.
- Non-GAAP operating loss is expected to be in the range of $(10.4) million and $(9.4) million.
- Non-GAAP net loss per share is expected to be in the range of $(0.17) and $(0.15). This assumes 63.9 million weighted average common shares outstanding.
- Full Year 2018 Guidance:
- Subscription revenue is now expected to be in the range of $113.3 million and $113.5 million, representing year-over-year growth of 37%.
- Total revenue is now expected to be in the range of $221.6 million and $222.6 million, representing year-over-year growth of between 25% and 26%.
- Non-GAAP operating loss is now expected to be in the range of $(32.5) million and $(31.5) million.
- Non-GAAP net loss per share is now expected to be in the range of $(0.56) and $(0.54). This assumes 62.2 million non-GAAP weighted average common shares outstanding.
Conference Call Details:
Appian will host a conference call today, November 1, 2018, at 5:00 p.m. ET to discuss the Company’s financial results for the third quarter ended September 30, 2018 and business outlook.
The live webcast of the conference call can be accessed on the Investor Relations page of the Company’s website at http://investors.appian.com. To access the call, please dial (877) 407-0792 in the U.S. or (201) 689-8263 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 13683715.
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 and non-GAAP weighted average shares outstanding. 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.
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 fourth quarter and full-year 2018, 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, 2017 filed with the Securities and Exchange Commission on February 23, 2018 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 software development platform that combines intelligent automation and enterprise low-code development to rapidly deliver powerful business applications. Many of the world’s largest organizations use Appian applications to improve customer experience, achieve operational excellence, and simplify global risk and compliance.