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Appian Announces Third Quarter 2019 Financial Results

Published: 2019-10-31 20:05:00 ET

Subscription revenue increased 38% year-over-year to $40.4 millionTotal revenue increased 26% year-over-year to $69.4 million

TYSONS, Va., Oct. 31, 2019 (GLOBE NEWSWIRE) -- Appian (NASDAQ: APPN) today announced financial results for the third quarter ended September 30, 2019.

"We exceeded our guidance once again this quarter. Our ease-of-use and speed continue to differentiate us in sales cycles, allowing us to sell into new organizations and expand within our existing customers,” said Matt Calkins, CEO & Founder.

Third Quarter 2019 Financial Highlights:

Revenue: Subscription revenue was $40.4 million for the third quarter of 2019, up 38% compared to the third quarter of 2018. Total subscriptions, software and support revenue was $41.6 million for the third quarter of 2019, an increase of 35% year-over-year. Professional services revenue was $27.8 million for the third quarter of 2019, an increase of 16% year-over-year. Total revenue was $69.4 million for the third quarter of 2019, up 26% compared to the third quarter of 2018. Subscription revenue retention rate was 119% as of September 30, 2019.
Operating loss and non-GAAP operating loss: GAAP operating loss was $(10.3) million for the third quarter of 2019, compared to $(14.9) million for the third quarter of 2018. Non-GAAP operating loss was $(7.2) million for the third quarter of 2019, compared to $(8.1) million for the third quarter of 2018.
Net loss and non-GAAP net loss: GAAP net loss was $(12.4) million for the third quarter of 2019, compared to $(15.0) million for the third quarter of 2018. GAAP net loss per share attributable to common stockholders was $(0.19) for the third quarter of 2019 based on 65.5 million weighted average shares outstanding, compared to $(0.24) for the third quarter of 2018 based on 62.5 million weighted average shares outstanding. Non-GAAP net loss was $(9.3) million for the third quarter of 2019, compared to $(8.2) million for the third quarter of 2018. Non-GAAP net loss per share was $(0.14) for the third quarter of 2019, based on 65.5 million basic and diluted weighted average shares outstanding, compared to $(0.13) for the third quarter of 2018, based on 62.5 million basic and diluted weighted average shares outstanding.
Balance sheet and cash flows: As of September 30, 2019, Appian had cash and cash equivalents of $165.6 million, compared with $81.1 million at June 30, 2019, primarily reflecting the completion of the Company’s underwritten public offering of 1,825,000 shares of Appian Class A common stock in September 2019. Net cash used in operating activities was $(14.9) million for the three months ended September 30, 2019 compared with $(0.3) million of net cash used in operating activities for the same period in 2018.

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 2019 Business Highlights:

Appian named leader in “Gartner’s 2019 Magic Quadrant for Enterprise Low-Code Application Platforms” report.
Anglian Water selects Appian Low-Code Platform to digitize and automate new capital projects.
Charities Trust selects Appian for new Charity Portal to distribute over £100 million in donations per annum.
Public offering of 2,329,000 shares of Class A common stock priced. 1,825,000 shares were offered by Appian and 504,000 shares were offered by existing stockholders of Appian.

Financial Outlook:

As of October 31, 2019, guidance for the fourth quarter 2019 and full year 2019 is as follows:

Fourth Quarter 2019 Guidance:
- Subscription revenue is expected to be in the range of $42.0 million and $42.5 million, representing year-over-year growth of between 24% and 26%.
- Total revenue is expected to be in the range of $69.1 million and $70.1 million, representing year-over-year growth of between 15% and 16%.
- Non-GAAP operating loss is expected to be in the range of $(10.0) million and $(9.5) million.
- Non-GAAP net loss per share is expected to be in the range of $(0.15) and $(0.14). This assumes 67.3 million basic and diluted weighted average common shares outstanding

Full Year 2019 Guidance:
- Subscription revenue is now expected to be in the range of $154.0 million and $154.5 million, representing year-over-year growth of between 33% and 34%.
- Total revenue is now expected to be in the range of $265.0 million and $266.0 million, representing year-over-year growth of 17%.
- Non-GAAP operating loss is expected to be in the range of $(35.0) million and $(33.0) million.
- Non-GAAP net loss per share is now expected to be in the range of $(0.57) and $(0.54). This assumes 65.5 million basic and diluted weighted average common shares outstanding.

Conference Call Details:

Appian will host a conference call today, October 31, 2019, at 5:00 p.m. ET to discuss the Company’s financial results for the third quarter ended September 30, 2019 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 13695306.

About Appian

Appian (NASDAQ: APPN) provides a low-code development 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. For more information, visit www.appian.com.

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 basic and diluted weighted average common 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.

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 fourth quarter and full-year 2019, 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, 2018 filed with the Securities and Exchange Commission on February 21, 2019 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 ContactWill MainaICR for Appian703-442-1091investors@appian.com

Media ContactNicole GreggsDirector, Media Relations703-260-7868nicole.greggs@appian.com

APPIAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
(unaudited)

	As of			As of
	September			December 31,
		2019			2018
	(unaudited)
Assets
Current assets
Cash and cash equivalents	$	165,554		$	94,930
Accounts receivable, net of allowance of $600 as of September 30, 2019 and December 31, 2018		70,792			79,383
Deferred commissions, current		18,468			14,020
Prepaid expenses and other current assets		10,200			21,293
Total current assets		265,014			209,626
Property and equipment, net		40,023			7,539
Deferred commissions, net of current portion		13,069			15,088
Deferred tax assets		560			326
Other assets		561			601
Total assets	$	319,227		$	233,180
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	5,316		$	9,249
Accrued expenses		7,916			7,464
Accrued compensation and related benefits		11,458			13,796
Deferred revenue, current		100,497			95,523
Capital leases, current		1,429			-
Other current liabilities		2,067			2,369
Total current liabilities		128,683			128,401
Deferred tax liabilities		136			42
Deferred revenue, net of current portion		13,557			16,145
Deferred rent, net of current portion		21,280			15,400
Capital leases, net of current portion		2,763		―
Total liabilities		166,419			159,988
Stockholders’ equity
Class A common stock—par value $0.0001; 500,000,000 shares authorized and 34,204,362 shares issued and outstanding as of September 30, 2019; 500,000,000 shares authorized and 29,626,054 shares issued and outstanding as of December 31, 2018		3			3
Class B common stock—par value $0.0001; 100,000,000 shares authorized and 32,942,636 shares issued and outstanding as of September 30, 2019; 100,000,000 shares authorized and 34,290,383 shares issued and outstanding as of December 31, 2018		3			3
Additional paid-in capital		336,694			218,284
Accumulated other comprehensive income		1,106			542
Accumulated deficit		(184,998	)		(145,640	)
Total stockholders’ equity		152,808			73,192
Total liabilities and stockholders’ equity	$	319,227		$	233,180

APPIAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
(unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
		2019			2018			2019			2018
Revenue:
Subscriptions, software and support	$	41,599		$	30,905		$	115,767		$	90,904
Professional services		27,788			24,043			80,110			75,623
Total revenue		69,387			54,948			195,877			166,527
Cost of revenue:
Subscriptions, software and support		4,484			3,261			12,105			8,713
Professional services		19,467			16,831			58,963			54,002
Total cost of revenue		23,951			20,092			71,068			62,715
Gross profit		45,436			34,856			124,809			103,812
Operating expenses:
Sales and marketing		28,858			25,467			89,951			75,815
Research and development		15,697			11,737			42,418			32,392
General and administrative		11,191			12,537			29,468			29,022
Total operating expenses		55,746			49,741			161,837			137,229
Operating loss		(10,310	)		(14,885	)		(37,028	)		(33,417	)
Other expense:
Other expense, net		2,016			110			1,700			1,785
Interest expense		96			67			236			134
Total other expense		2,112			177			1,936			1,919
Loss before income taxes		(12,422	)		(15,062	)		(38,964	)		(35,336	)
Income tax expense (benefit)		5			(34	)		394			212
Net loss		(12,427	)		(15,028	)		(39,358	)		(35,548	)
Net loss per share attributable to common stockholders:
Basic and diluted	$	(0.19	)	$	(0.24	)	$	(0.61	)	$	(0.58	)
Weighted average common shares outstanding:
Basic and diluted		65,508,113			62,480,927			64,860,342			61,583,610

APPIAN CORPORATION AND SUBSIDIARIES
STOCK BASED COMPENSATION EXPENSE
(in thousands)
(unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
		2019		2018		2019		2018
Cost of revenue:
Subscriptions, software and support	$	147	$	138	$	462	$	355
Professional services		243		222		2,461		645
Operating expenses
Sales and marketing		776		736		3,971		1,781
Research and development		433		373		2,983		1,106
General and administrative		1,542		5,332		3,178		7,360
Total stock-based compensation expense	$	3,141	$	6,801	$	13,055	$	11,247

APPIAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)

	Nine Months Ended September 30,
		2019			2018
Cash flows from operating activities:
Net loss	$	(39,358	)	$	(35,548	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		3,273			1,452
Loss (gain) on disposal of equipment		146			(4	)
Bad debt expense		97			2
Deferred income taxes		(191	)		69
Stock-based compensation		13,055			11,247
Changes in assets and liabilities:
Accounts receivable		9,051			(6,226	)
Prepaid expenses and other assets		11,351			76
Deferred commissions		(2,428	)		(5,531	)
Accounts payable and accrued expenses		(3,910	)		1,255
Accrued compensation and related benefits		(2,159	)		1,814
Other current liabilities		(251	)		376
Deferred revenue		2,646			7,862
Deferred rent, non-current		5,718			(797	)
Net cash used in operating activities		(2,960	)		(23,953	)
Cash flows from investing activities:
Purchases of property and equipment		(31,430	)		(2,187	)
Proceeds from sale of equipment		-			4
Net cash used in investing activities		(31,430	)		(2,183	)
Cash flows from financing activities:
Proceeds from public offering, net of any underwriting discounts		101,653			58,258
Payment of costs related to public offerings		(12	)		(353	)
Proceeds from exercise of common stock options		4,052			2,627
Principal payments on capital lease obligations		(299	)		-
Net cash provided by financing activities		105,394			60,532
Effect of foreign exchange rate changes on cash and cash equivalents		(380	)		(888	)
Net decrease in cash and cash equivalents		70,624			33,508
Cash and cash equivalents, beginning of period		94,930			73,758
Cash and cash equivalents, end of period	$	165,554		$	107,266
Supplemental disclosure of cash flow information:
Cash paid for interest	$	250		$	34
Cash paid for income taxes	$	236		$	178
Supplemental disclosure of non-cash financing information:
Capital lease obligations to acquire new office furniture and fixtures and computer hardware	$	4,491		$	―
Offering costs included in accounts payable and accrued expenses	$	338		$	76

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


	Three Months Ended September 30,						Nine Months Ended September 30,
		2019			2018			2019			2018
Reconciliation of non-GAAP operating loss:
GAAP operating loss	$	(10,310	)	$	(14,885	)	$	(37,028	)	$	(33,417	)
Add back:
Stock-based compensation expense		3,141			6,801			13,055			11,247
Non-GAAP operating loss	$	(7,169	)	$	(8,084	)	$	(23,973	)	$	(22,170	)

Reconciliation of non-GAAP net loss:
GAAP net loss	$	(12,427	)	$	(15,028	)	$	(39,358	)	$	(35,548	)
Add back:
Stock-based compensation expense		3,141			6,801			13,055			11,247
Loss (gain) on disposal of asset		1			(4	)		146			(4	)
Non-GAAP net loss	$	(9,285	)	$	(8,231	)	$	(26,157	)	$	(24,305	)

Non-GAAP earnings per share:
Non-GAAP net loss	$	(9,285	)	$	(8,231	)	$	(26,157	)	$	(24,305	)
Non-GAAP weighted average shares used to compute net loss per share attributable to common stockholders, basic and diluted		65,508,113			62,480,927			64,860,342			61,583,610
Non-GAAP net loss per share, basic and diluted	$	(0.14	)	$	(0.13	)	$	(0.40	)	$	(0.39	)

Reconciliation of non-GAAP net loss per share, basic and diluted:
GAAP net loss per share attributable to common stockholders, basic and diluted	$	(0.19	)	$	(0.24	)	$	(0.61	)	$	(0.58	)
Add back:
Non-GAAP adjustments to net loss per share		0.05			0.11			0.21			0.19
Non-GAAP net loss per share, basic and diluted	$	(0.14	)	$	(0.13	)	$	(0.40	)	$	(0.39	)

Source: Appian Corporation

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