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Appian Announces Second Quarter 2019 Financial Results

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Subscription revenue increased 41% year-over-year to $38.0 million
Total revenue increased 12% year-over-year to $66.9 million

TYSONS, Va., Aug. 08, 2019 (GLOBE NEWSWIRE) -- Appian (NASDAQ:APPN) today announced financial results for the second quarter ended June 30, 2019.

"In the second quarter of 2019, Appian subscription revenue grew 41% year-over-year to $38.0 million. Also, once again we raised our revenue guidance, increasing both subscription and total revenue for the year. The growing interest from partners, prospects, and customers in our platform and the Appian Guarantee demonstrates that low-code has arrived," said Matt Calkins CEO & Founder.

 Second Quarter 2019 Financial Highlights:

  • Revenue: Subscription revenue was $38.0 million for the second quarter of 2019, up 41% compared to the second quarter of 2018. Total subscriptions, software and support revenue was $39.3 million for the second quarter of 2019, an increase of 19% year-over-year.  Professional services revenue was $27.7 million for the second quarter of 2019, an increase of 3% year-over-year. Total revenue was $66.9 million for the second quarter of 2019, up 12% compared to the second quarter of 2018. Subscription revenue retention rate was 117% as of June 30, 2019.
     
  • Operating loss and non-GAAP operating loss: GAAP operating loss was $(9.3) million for the second quarter of 2019, compared to $(8.3) million for the second quarter of 2018.  Non-GAAP operating loss was $(6.6) million for the second quarter of 2019, compared to $(6.1) million for the second quarter of 2018. 
     
  • Net loss and non-GAAP net loss: GAAP net loss was $(9.4) million for the second quarter of 2019, compared to $(11.0) million for the second quarter of 2018.  GAAP net loss per share attributable to common stockholders was $(0.15) for the second quarter of 2019 based on 64.8 million weighted-average shares outstanding, compared to $(0.18) for the second quarter of 2018 based on 61.4 million weighted-average shares outstanding.  Non-GAAP net loss was $(6.6) million for the second quarter of 2019, compared to $(8.8) million for the second quarter of 2018.  Non-GAAP net loss per share was $(0.10) for the second quarter of 2019, based on 64.8 million basic and diluted shares outstanding, compared to $(0.14) for the second quarter of 2018, based on 61.4 million basic and diluted shares outstanding. 
     
  • Balance sheet and cash flows: As of June 30, 2019, Appian had cash and cash equivalents of $81.1 million. Net cash provided by operating activities was $16.1 million for the three months ended June 30, 2019 compared to $(9.8) million of net cash used in operating activities for the same period in 2018.  In accordance with U.S. GAAP, the $12.5 million of tenant improvement allowance reimbursements received during the three months ended June 30, 2019 are a source of cash in operating activities, while the $11.1 million of capital expenditures, largely for the build-out of our new headquarters and the purchase of property and equipment, are recorded as cash used in investing activities.     

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."

Second Quarter 2019 Business Highlights:

Financial Outlook:

As of August 8, 2019, guidance for the third quarter 2019 and full year 2019 is as follows:

  • Third Quarter 2019 Guidance:
    ° Subscription revenue is expected to be in the range of $38.8 million and $39.0 million, representing year-over-year growth of between 32% and 33%.
    ° Total revenue is expected to be in the range of $65.0 million and $65.5 million, representing year-over-year growth of between 18% and 19%. 
    ° 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 $(0.16) and $(0.15). This assumes 65.0 million weighted average common shares outstanding.  
  • Full Year 2019 Guidance:
    ° Subscription revenue is now expected to be in the range of $153.0 million and $154.0 million, representing year-over-year growth of between 32% and 33%.
    ° Total revenue is now expected to be in the range of $260.5 million and $262.5 million, representing year-over-year growth of between 15% and 16%. 
    ° Non-GAAP operating loss is now 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 $(0.55) and $(0.51).  This assumes 65.0 million non-GAAP weighted average common shares outstanding.

Conference Call Details:

Appian will host a conference call today, August 8, 2019, at 5:00 p.m. ET to discuss the Company's financial results for the second quarter ended June 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 13692284.

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 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.

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 third 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 Contact
Will Maina
ICR for Appian
703-442-1091
investors@appian.com

Media Contact
Nicole Greggs
Director, Media Relations
703-260-7868
nicole.greggs@appian.com


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

  As of   As of
  June 30,   December 31,
    2019       2018  
  (unaudited)    
Assets      
Current assets      
Cash and cash equivalents $   81,101     $   94,930  
Accounts receivable, net of allowance of $600 as of June 30, 2019 and December 31, 2018     70,381         79,383  
Deferred commissions, current     17,492         14,020  
Prepaid expenses and other current assets     7,707         21,293  
Total current assets     176,681         209,626  
Property and equipment, net     36,823         7,539  
Deferred commissions, net of current portion     13,897         15,088  
Deferred tax assets     445         326  
Other assets     585         601  
Total assets $   228,431     $   233,180  
Liabilities and Stockholders' Equity      
Current liabilities      
Accounts payable $   10,173     $   9,249  
Accrued expenses     12,075         7,464  
Accrued compensation and related benefits     10,563         13,796  
Deferred revenue, current     97,556         95,523  
Capital leases, current     1,169         -   
Other current liabilities     1,852         2,369  
Total current liabilities     133,388         128,401  
Deferred tax liabilities     20         42  
Deferred revenue, net of current portion     14,597         16,145  
Deferred rent, net of current portion     20,150         15,400  
Capital leases, net of current portion     2,504       ―
Total liabilities     170,659         159,988  
Stockholders' equity      
Class A common stock—par value $0.0001; 500,000,000 shares authorized and 31,462,892 shares issued and outstanding as of June 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 33,374,676 shares issued and outstanding as of June 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     230,185         218,284  
Accumulated other comprehensive income     152         542  
Accumulated deficit     (172,571 )       (145,640 )
Total stockholders' equity     57,772         73,192  
Total liabilities and stockholders' equity $   228,431     $   233,180  
               


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

  Three Months Ended June 30,   Six Months Ended June 30,
    2019       2018       2019       2018  
Revenue:              
Subscriptions, software and support $   39,259     $   33,047     $   74,168     $   59,999  
Professional services     27,652         26,836         52,322         51,580  
Total revenue     66,911         59,883         126,490         111,579  
Cost of revenue:              
Subscriptions, software and support     4,036         2,824         7,621         5,452  
Professional services     19,015         18,750         39,496         37,171  
Total cost of revenue     23,051         21,574         47,117         42,623  
Gross profit     43,860         38,309         79,373         68,956  
Operating expenses:              
Sales and marketing     31,148         27,384         61,093         50,348  
Research and development     12,765         10,785         26,721         20,655  
General and administrative     9,261         8,425         18,277         16,485  
Total operating expenses     53,174         46,594         106,091         87,488  
Operating loss     (9,314 )       (8,285 )       (26,718 )       (18,532 )
Other (income) expense:              
Other (income) expense, net     (256 )       2,593         (316 )       1,675  
Interest expense     69         54         140         67  
Total other (income) expense     (187 )       2,647         (176 )       1,742  
Loss before income taxes     (9,127 )       (10,932 )       (26,542 )       (20,274 )
Income tax expense     267          35         389          246  
Net loss     (9,394 )       (10,967 )       (26,931 )       (20,520 )
Net loss per share attributable to common stockholders:              
Basic and diluted $    (0.15 )   $    (0.18 )   $   (0.42 )   $   (0.34 )
Weighted average common shares outstanding:              
Basic and diluted     64,753,044         61,401,466         64,531,089         61,127,516  
                               


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

  Three Months Ended June 30,   Six Months Ended June 30,
    2019     2018     2019     2018
Cost of revenue:              
Subscriptions, software and support $   161   $    107   $   315   $   217
Professional services     244       203       2,218       423
Operating expenses              
Sales and marketing     814       538       3,195       1,045
Research and development     435       342       2,550       733
General and administrative     1,035       1,016       1,636       2,028
     Total stock-based compensation expense $   2,689   $   2,206   $   9,914   $   4,446
                       



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

  Six Months Ended June 30,
    2019       2018  
Cash flows from operating activities:      
Net loss $   (26,931 )   $   (20,520 )
Adjustments to reconcile net loss to net cash provided by (used in)
  operating activities:
     
Depreciation and amortization     1,933         951  
Loss on disposal of equipment     145         -  
Bad debt expense     97         -  
Deferred income taxes     (47 )       77  
Stock-based compensation     9,914         4,446  
Changes in assets and liabilities:      
   Accounts receivable     8,861         (9,095 )
   Prepaid expenses and other assets     13,453         (311 )
   Deferred commissions     (2,281 )       (3,062 )
   Accounts payable and accrued expenses     5,458         3,480  
   Accrued compensation and related benefits     (3,181 )       1,995  
   Other current liabilities     (269 )       951  
   Deferred revenue     189         (1,368 )
   Deferred rent, non-current     4,584         (1,160 )
Net cash provided by (used in) operating activities     11,925         (23,616 )
Cash flows from investing activities:      
Purchases of property and equipment     (27,689 )       (1,593 )
Net cash used in investing activities     (27,689 )       (1,593 )
Cash flows from financing activities:      
Proceeds from exercise of common stock options     1,987         2,072  
Net cash provided by financing activities     1,987         2,072  
Effect of foreign exchange rate changes on cash and cash equivalents     (52 )       (258 )
Net decrease in cash and cash equivalents     (13,829 )       (23,395 )
Cash and cash equivalents, beginning of period     94,930         73,758  
Cash and cash equivalents, end of period $   81,101     $   50,363  
Supplemental disclosure of cash flow information:      
Cash paid for interest $   170     $   21  
Cash paid for income taxes $   116     $   175  
Supplemental disclosure of non-cash financing information:      
Capital lease obligations to acquire new office furniture and fixtures $   3,673      $   
               


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

  Three Months Ended June 30,   Six Months Ended June 30,
    2019       2018       2019       2018  
Reconciliation of non-GAAP operating loss:              
GAAP operating loss $   (9,314 )   $   (8,285 )   $   (26,718 )   $   (18,532 )
Add back:              
Stock-based compensation expense      2,689         2,206         9,914         4,446  
Non-GAAP operating loss $   (6,625 )   $   (6,079 )   $   (16,804 )   $   (14,086 )
               
Reconciliation of non-GAAP net loss:              
GAAP net loss $   (9,394 )   $   (10,967 )   $   (26,931 )   $   (20,520 )
Add back:              
Stock-based compensation expense      2,689         2,206         9,914         4,446  
Loss on disposal of asset     145       ―       145       ―
Non-GAAP net loss $   (6,560 )   $   (8,761 )   $   (16,872 )   $   (16,074 )
               
Non-GAAP earnings per share:              
Non-GAAP net loss $   (6,560 )   $   (8,761 )   $   (16,872 )   $   (16,074 )
Non-GAAP weighted average shares used to compute net loss per share attributable to common stockholders, basic and diluted     64,753,044         61,401,466         64,531,089         61,127,516  
Non-GAAP net loss per share, basic and diluted $   (0.10 )   $   (0.14 )   $   (0.26 )   $   (0.26 )
               
Reconciliation of non-GAAP net loss per share, basic and diluted:              
GAAP net loss per share attributable to common stockholders, basic and diluted $   (0.15 )   $   (0.18 )   $   (0.42 )   $   (0.34 )
Add back:              
Non-GAAP adjustments to net loss per share     0.05         0.04         0.16         0.08  
Non-GAAP net loss per share, basic and diluted $   (0.10 )   $   (0.14 )   $   (0.26 )   $   (0.26 )

 

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