What happened

Shares of Appian (NASDAQ:APPN) lost 13.5% last month, according to data provided by S&P Global Market Intelligence.

The low-code platform provider reported fourth-quarter earnings on Feb. 20 that didn't sit well with investors. The company beat earnings estimates but fell shy on sales expectations. 

Two workers sitting at a desk looking at computer code displayed on three computers.

Image source: Getty Images.

So what

Sometimes investors get caught up in comparing actual performance to analysts' estimates and send the stock price down even though the company continues to report healthy growth rates.

Appian's sales growth looked satisfactory overall. Revenue for the quarter came in at $70.5 million, representing an increase of 17% year over year. This was driven by an increase in subscription revenue of 28%.

It was also encouraging to see existing clients continue to spend on more services with Appian, as noted by the dollar retention rate of 116%. 

During the fourth quarter, Appian also saw its net loss narrow to $10 million from $13.9 million compared with the year-ago quarter.

Now what

In January, Appian expanded its capabilities by acquiring Novayre Solutions, the maker of the Jidoka platform, which is the highest rated robotic process automation (RPA) product, according to Gartner Peer Insights. During the call, Appian CEO Matt Calkins said, "Adding RPA to our platform makes Appian a one-stop shop for automation capable of natively orchestrating humans, bots, and artificial intelligence within a workflow." 

Appian is continuing to win customers and enhance its offerings, which promises more growth. Management is calling for total revenue to increase between 18% and 19% in the first quarter, with subscription revenue up between 31% and 32%. For the full year, revenue is expected to be up 14%, with a net loss between $0.55 and $0.58. 

Growth stocks that are not reporting a profit are going to be volatile at times, but Appian stock should bounce back. Calkins sees a large and expanding market for Appian to grow into. "Our strong customer outcomes and newly augmented automation platform capabilities will allow us to address a larger market and expand within our base in the new year," he said during the call.