Please ensure Javascript is enabled for purposes of website accessibility

Appian Boosts Guidance After Its Revenue Growth Accelerates

By Brian Feroldi - Aug 6, 2018 at 8:16AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Sales jumped 39% as new customers flocked to the platform and existing ones increased their spending.

Appian (APPN 8.60%) reported its second-quarter results on Thursday, Aug. 2. The low-code software maker reported revenue growth of 39% thanks to the combination of new customer acquisition, a 119% subscription revenue retention rate among existing customers, and a one-off perpetual software deal. This figure grew much faster than management had previously predicted.

Man sitting at computer with two monitors

Image source: Getty Images.

Appian Q2 results: The raw numbers


Q2 2018

Q2 2017

Year-Over-Year Change


$59.9 million 

$43.2 million


Non-GAAP operating loss

($6.1 million)

($5.5 million)


Non-GAAP net loss

($8.8 million)

($4.4 million)






Dada source: Appian. GAAP = generally accepted accounting principles. NM = not meaningful. EPS = earnings per share. 

What happened with Appian this quarter?

  • Subscription revenue grew 36% to $27 million. This figure came in above the top end of management's guidance range.
  • Professional services revenue jumped 27% to $26.8 million. 
  • Sales were boosted by a $4.4 million perpetual deal with the U.S. Air Force. Management stated that this was a rare event since it no longer offers its customers perpetual license agreements.
  • Subscription revenue retention rate held firm at 119% for the period.
  • International sales comprised 28% of total revenue during the period.
  • Nine deals were closed during the quarter that exceeded $1 million.  
  • Non-GAAP operating loss expanded to $6.1 million. This figure came in several million dollars below guidance.
  • Non-GAAP net loss of $8.8 million, or $0.14 per share, was above guidance.
  • Cash balance at quarter's end was $50.4 million.

What management had to say

As usual, CEO Matt Calkins remained modest with his quarterly commentary, stating that "Appian is winning on flexibility and deployment speed." He also noted that many new customers are ramping up their spending on the platform in a matter of quarters after they experience early success with it. 

CEO Calkins also noted that the company's decision to create strategic alliances with partners such as consulting firms is paying off:

Partners are increasingly helping us add new customers. So far this year they've influenced 68% of our new logos compared to 50% in the year-ago period. This quarter a longtime partner referred $1 million deal to us with an employment services contractor for the British government. They've purchased Appian to replace a home-run system that administers occupational health assessments. We won this deal thanks to the strength of our partnership.

Looking forward

Appian's CFO Mark Lynch projects that subscription growth will remain very strong in the upcoming quarter. However, his guidance predicts that total revenue growth is expected to lag its subscription revenue growth considerably. That indicates that professional services revenue won't grow much in the period ahead:

Metric Guidance Range Implied Change
Subscription revenue $27.7 million to $27.9 million 34% to 35%
Total revenue $49.6 million to $49.8 million 11% to 12%
Non-GAAP operating loss ($11.2 million) to ($10.2 million) N/A
Non-GAAP EPS ($0.19) to ($0.17) N/A

Data source: Appian. 

On the plus side, the better-than-expected second-quarter results allowed management to boost its guidance across the board for the full year:

Metric New Guidance Range
Old Guidance Range
Subscription revenue $110.5 million to $110.9 million $107.6 million to $108.6 million
Total revenue $213.8 million to $215.3 million $202 million to $205 million
Non-GAAP operating loss ($36.4 million) to ($34.4 million) ($38.9 million) to ($36.9 million)
Non-GAAP EPS ($0.63) to ($0.60) ($0.64) to ($0.61)

Data source: Appian.

Appian's stock declined by high single digits on the morning following this earnings release. The fall is likely attributable to the slowing revenue growth projection for the third quarter. However, shareholders shouldn't be too worried about the guidance, because service revenue is low margin and can be lumpy from quarter to quarter. 

Looking further out, Appian's strong quarterly results and the boost to full-year guidance clearly indicate that the platform is a hit with users. With room left for growth, shareholders should be cheering on management's decision to spend aggressively on sales and marketing. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Appian Stock Quote
$50.01 (8.60%) $3.96

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.