Key Points
- Cloud subscription revenue increased 19% year over year to $88.4 million, beating the upper end of management's guidance.
- Total revenue exceeded expectations, reaching $146.5 million, up 15% year over year.
- The company posted a GAAP net loss of $43.6 million, slightly higher than last year's $42.4 million loss.
Appian (APPN 3.71%), a leading low-code automation platform provider, released its second-quarter results on Aug. 1. Its cloud subscription revenue grew by 19% year over year to $88.4 million, aligning with the higher end of management's guidance. Total revenue reached $146.5 million, beating the company's expectations. However, its GAAP net loss of $43.6 million was slightly worse than its $42.4 million loss in the same period last year.
| Metric | Q2 2024 Result | Q2 2024 Guidance | Q2 2023 Result | % Change (YoY) |
|---|---|---|---|---|
| Cloud subscription revenue | $88.4 million | $86 million to $88 million | $74.4 million | 19% |
| Total revenue | $146.5 million | $140 million to $144 million | $127.7 million | 15% |
| Non-GAAP net EPS | ($0.26) | ($0.34) to ($0.28) | ($0.39) | N/A |
| GAAP net earnings | ($43.6 million) | - | ($42.4 million) | N/A |
| Adjusted EBITDA | ($10.5 million) | ($17 million) to ($13 million) | ($24.7 million) | N/A |
| Source: Guidance figures provided in the Q1 earnings report on May 2. |
Company Overview and Operational Highlights
Appian provides a low-code automation platform that enables organizations to build custom to suit their needs applications quickly. The platform addresses complex business problems by integrating AI, data, and process automation, making it a preferred choice for digital transformation initiatives.
In recent quarters, Appian has focused on increasing its cloud subscription revenue and market adoption.
Appian's strong performance in the quarter reflected the increasing adoption and retention of the platform, as did its cloud subscription revenue retention rate of 118%.
Total revenue reached $146.5 million, a 15% increase year over year, surpassing the top end of management’s expectations of $140 million to $144 million. However, professional services revenue declined by 1% to $33.5 million, reflecting timing fluctuations of large projects and possibly a shift in focus towards cloud subscriptions.
Non-GAAP net loss per share contracted to $0.26 from $0.39 in the same period last year, outperforming the guidance range. Adjusted EBITDA loss improved to $10.5 million from its loss of $24.7 million in Q2 2023. However, the company's GAAP net loss slightly worsened to $43.6 million from $42.4 million in Q2 2023.
The company announced partnerships with ReleasePoint for automating life insurance underwriting and PwC UK to drive innovation in the insurance sector. Appian AI usage nearly doubled, reflecting increased integration of AI across its platform.
Overall, the quarter saw significant strides in revenue growth and platform adoption, but some areas remain challenging, among them, achieving consistent profitability and managing professional services revenue.
Focus Areas
Appian had approximately 1,000 customers as of the end of 2023, with 36% of its revenue generated internationally.
Continuous innovation and platform improvement will be crucial for Appian to maintain its competitive edge. The company invests heavily in research and development and offers multiple upgrades annually. Appian was named a leader in Gartner's 2024 Magic Quadrant for Process Mining Platforms, reflecting its commitment to advancement. The company has expanded its presence in regulated industries like life sciences and insurance, emphasizing security and compliance to build customer trust.
Looking Ahead
Appian’s management provided updated guidance for the third quarter and full year. For Q3, cloud subscription revenue is expected to land in the $89 million to $91 million range, which would amount to year-over-year growth of 15% to 18%. Guidance on total revenue is for $149 million to $153 million, which would be an increase of 9% to 12%. Adjusted EBITDA is anticipated to be between breakeven and $3.0 million, while non-GAAP net loss per share is expected to range from $0.10 to $0.06.
For the year, Appian expects cloud subscription revenue to rise by approximately 18% to between $358 million and $360 million. Total revenue is forecast to be in the range of $610 million to $615 million, an increase of 12% to 13%. On adjusted EBITDA, the guidance range is from a $3 million loss to a $3 million profit, with non-GAAP net loss per share ranging from $0.61 to $0.52.
Investors should focus on the company’s ability to sustain its cloud subscription growth and improve operational efficiencies. The success of Appian’s partnerships and its continuous innovation will be critical in driving future adoption and market penetration. Additionally, achieving consistent profitability remains a key challenge and priority for the company.
