Appian (APPN 4.19%), a leading provider of low-code software solutions, reported its fourth-quarter and full-year results on Thursday, Feb. 22. Last quarter, management told investors that the company's strong momentum would continue through the end of the year. Despite setting a high bar, the company's actual results came in far better than management had predicted.

Appian Q4 results: The raw numbers


Q4 2017

Q4 2016

Year-Over-Year Change


$50.6 million 

$33.7 million


Non-GAAP operating loss

($4.9 million)

($1.8 million)


Non-GAAP net loss

($4.8 million)

($4.2 million)






Dada source: Appian. GAAP = generally accepted accounting principles. EPS = earnings per share.

What happened with Appian this quarter?

  • Subscription revenue increased 42% to $23.5 million. This result exceeded management's guidance range. 
  • Professional services revenue, which is earned by helping its customers create their apps and can be lumpy from quarter to quarter, increased 75% to $25.2 million. 
  • The subscription revenue retention rate, which measures renewals and revenue from the company's existing users, was 122% during the period.
  • Non-GAAP operating loss of $4.9 million was much lower than management had predicted.
  • Non-GAAP per-share loss of $0.08 was far lower than the guidance range of a loss of $0.15-$0.16 per share.
  • Cash flow from operations was $1 million during the period.
  • Backlog at the end of the year was $214 million. 

Zooming out to the full year, here's a look at the highlights from 2017:

  • Revenue jumped 33% to $177 million.
  • The company added 85 net new subscription customers during the year, bringing the total at year-end to 291. This was a big jump when compared to the 28 net new customers that were added in all of 2016.
  • Non-GAAP operating loss was $19 million. That was up from the $11.4 million operating loss that was recorded in 2016.
  • Non-GAAP net loss was $17.3 million, or $0.30 per share. That was higher than the $12.3 million loss, of $0.23 per share, that was recorded in 2016.
Man in suit touching a tablet screen with chart coming off of it

Image source: Getty Images.

What management had to say

CEO Matt Calkins' quarterly commentary in the press release was very modest: "Companies everywhere want a better way to make unique software. Appian is emerging as a good platform for doing that, as you can see in our recent results." 

On the investor call, CFO Mark Lynch also provided some additional context related to the company's big jump in professional services revenue: "We have said many times that customers often spend more on services in their first years compared to later years, and the surge in new customers was met by a surge in professional services work. As we continue to work with our partners, we do not expect services to grow in this manner in the future."

Calkins noted on the investor call that Appian's strong customer additions and high revenue retention rate serve as proof that the company is executing well against its market opportunity. In addition, he boasted that Appian's lifetime value of a customer (LTV) to customer acquisition cost (CAC) ratio is consistently above 7, which demonstrates that the company has a strong economic model in place. In response, he plans on accelerating the company's spending in the upcoming year ahead in an effort to capitalize on the demand.

Looking forward

Here's what management expects to happen in the upcoming quarter:

Metric Guidance Range Implied Change
Subscription revenue $24.4 million to $24.6 million 30% to 31%
Total revenue $46.0 million to $46.2 million 20% to 21%
Non-GAAP operating loss ($10.9 million) to ($10.5 million) N/A
Non-GAAP EPS ($0.18) to ($0.17) N/A

Data source: Appian. 

And here's the guidance that management is sharing for full-year 2018:

Metric Guidance Range Implied Change
Subscription revenue $106.5 million to $107.5 million 29% to 30%
Total revenue $198.1 million to $201.1 million 12% to 14%
Non-GAAP operating loss ($39.9 million) to ($37.9 million) N/A
Non-GAAP EPS ($0.65) to ($0.62) N/A

Data source: Appian. Appian initially provided a non-GAAP EPS guidance range between ($0.54) and ($0.53), but released a correction with the figures included in this table.

Since this full-year guidance suggests that the company's operating loss is going to grow substantially year over year, Lynch ended his prepared remarks on the investor call with the following statement: "Our guidance reflects our stated strategy to invest for growth to capture the long-term opportunity and build on our momentum. Given our high gross margins and subscription revenue along with our powerful LTV-to-CAC metrics, we think it makes sense to continue to invest in the business to capture new customers and capitalize on the big upsell opportunity."