What happened
Shares of Appian (APPN 0.19%) fell 25.2% in November, according to data from S&P Global Market Intelligence. The stock lost ground after the low-code software specialist published its third-quarter results, and it continued to move lower as bearish pressures seized the market.
Appian published its Q3 results on Nov. 4, posting a non-GAAP (adjusted) loss of $0.22 on revenue of $92.42 million. Meanwhile, the average analyst estimate had called for an adjusted loss of $0.19 per share on revenue of $91.06 million. The company's GAAP loss for the period came in at $0.36, which was significantly worse than the average analyst estimate's target for a loss of $0.21 per share.
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So what
Appian's revenue climbed 19.6% year over year in Q3, and its cloud subscription revenue rose 36% compared to the prior-year period to reach $46.7 million. However, losses on both a GAAP and non-GAAP basis came in significantly worse than the market anticipated, and the company widened its full-year EBITDA loss target in conjunction with the earnings release. With rising Treasury bond yields and the spread of the coronavirus omicron variant creating additional uncertainty as the month progressed, investors moved out of Appian stock.
Now what
Appian stock has continued to fall early in December's trading. The company's share price is down roughly 6.6% in the month so far.
For the fourth quarter, Appian expects that cloud subscription revenue will come in between $48.8 million and $49.3 million, representing growth of roughly 32.5% year over year at the midpoint. Overall sales for the quarter are projected to come in between $95 million and $95.5 million, good for growth of roughly 16.5% year over year at the midpoint of the target. Management is guiding for an adjusted per share loss between $0.21 and $0.24 in the period.
For the full year, Appian is targeting sales between $177 million and $177.5 million, suggesting growth of 37% year over year. The company is targeting an EBITDA loss between $41 million and $43 million, and its adjusted loss is expected to be between $0.73 and $0.75 per share. The company had previously targeted an EBITDA loss between $38 million and $40 million for the year.
Appian now has a market capitalization of roughly $4.9 billion and trades at approximately 14 times this year's expected earnings. Even after recent sell-offs, the company has a growth-dependent valuation and remains a high-risk investment. However, I own the stock in my portfolio and continue to like the company's low-code software solutions playing a winning role in the overall digital transformation trend.
