Summary
Appian closed the first quarter of fiscal 2022 with total revenue of $114.3 million, up 28.6% from the prior-year quarter. Cloud subscription revenue did the heavy lifting, rising 37% to $53.4 million. Total subscriptions revenue, which also includes on-premises term licenses plus maintenance and support, climbed 31% to $83.7 million. Professional services revenue was $30.5 million against $25.1 million a year earlier. Subscriptions supplied 73.3% of revenue, up from 71.8%. The cloud subscription revenue retention rate was 117% as of March 31, 2022, down from 118% a year earlier, and it still points to expansion inside the installed base.
The profit picture is less comfortable. The GAAP operating loss widened to $23.87 million from $10.49 million, and the net loss widened to $23.15 million from $13.59 million. Diluted loss per share came in at $0.32, deeper than $0.19 a year ago. Gross margin slipped to 72.9% from 73.5%, and the operating margin fell to negative 20.9% from negative 11.8%. General and administrative expense told much of the story: it jumped 64.4% to $31.5 million, driven by legal costs. Litigation expenses tied to two lawsuits reached $11.8 million, up from $1.7 million a year earlier. Strip those and stock-based compensation out, and the non-GAAP operating loss was $5.1 million, compared with $0.9 million. Non-GAAP net loss was $4.4 million versus $4.0 million, and non-GAAP net loss per share was $0.06, matching the prior-year quarter. Adjusted EBITDA swung to a loss of $3.4 million from positive $0.4 million. Research and development expense rose 44.2% to $29.8 million, while sales and marketing rose 27.6% to $45.9 million, so the cost base is expanding faster than revenue.
Cash generation reversed hard. Operating cash flow was negative $20.6 million for the quarter, against negative $2.8 million a year earlier. Capital expenditures were $3.4 million versus $0.5 million, reflecting work on the headquarters. Appian ended March 31, 2022 with $168.4 million in cash, cash equivalents and investments. Deferred revenue, current portion, was $146.2 million, up 35.5% year over year, and remaining performance obligations were $290.8 million, up 43.6%. Management cautions that deferred revenue swings do not track revenue growth closely because billing terms vary. The company also carries a five-year AWS hosting commitment totaling $131.0 million, with $7.8 million spent under it during the quarter.
Guidance for the second quarter of 2022 calls for cloud subscription revenue of $55.8 million to $56.3 million, growth of 31% to 32%, with total revenue growth of 24% to 26%. The second-quarter adjusted EBITDA loss is guided at $22.0 million to $25.0 million, and non-GAAP net loss per share at $0.33 to $0.37 on 72.4 million weighted average shares. For the full fiscal year 2022, Appian guides cloud subscription revenue to $236.0 million to $238.0 million, growth of 32% to 33%, with total revenue growth of 23% to 24%. Full-year adjusted EBITDA loss is expected at $50.0 million to $53.0 million, with non-GAAP net loss per share of $0.77 to $0.82 on 72.5 million shares.
The revenue mix is shifting. Government agencies produced 18.1% of revenue in the quarter, down from 20.9%, while customers outside the United States contributed 33.5%, up from 32.2%. No single end customer accounted for more than 10% of revenue. Risks flagged in the filing include the length and variability of the sales cycle, competition in low-code, the composition and concentration of the customer base, the timing of subscription revenue recognition, and the ongoing effect of COVID-19 and new variants. Appian also named Mark Matheos chief financial officer, elevating him from chief accounting officer. The combination of 28.6% revenue growth, a wider GAAP loss, and heavier legal and infrastructure spending is the tension investors have to weigh.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2022 | Q4 FY2021 | QoQ | Q1 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $114.3M | $105.0M | +8.8% | $88.9M | +28.6% |
| Gross profit | $83.3M | $76.8M | +8.6% | $65.3M | +27.6% |
| Gross margin | 72.9% | 73.1% | -0.2 pp | 73.5% | -0.6 pp |
| Research & development | $29.8M | $26.5M | +12.8% | $20.7M | +44.2% |
| Sales & marketing | $45.9M | $49.3M | -6.8% | $36.0M | +27.6% |
| General & administrative | $31.5M | $27.0M | +16.6% | $19.1M | +64.4% |
| Total operating expenses | $107.2M | $102.7M | +4.4% | $75.8M | +41.4% |
| Operating income (loss) | -$23.9M | -$25.9M | +8.0% | -$10.5M | -127.5% |
| Operating margin | -20.9% | -24.7% | +3.8 pp | -11.8% | -9.1 pp |
| Net income (loss) | -$23.2M | -$25.8M | +10.4% | -$13.6M | -70.4% |
| Net margin | -20.3% | -24.6% | +4.4 pp | -15.3% | -5.0 pp |
| Diluted EPS | -$0.32 | -$0.36 | +$0.04 | -$0.19 | -$0.13 |
Risks
General and administrative expense rose 64.4% in the quarter ended March 31, 2022 versus the prior-year quarter, driven primarily by a $10.7 million increase in professional fees from higher legal fees tied to two separate lawsuits: reciprocal false advertising and related claims with a competitor, and an effort to enforce the company's intellectual property. These matters could continue to drive cost and management distraction.
The operating loss widened to $23.87 million and the net loss widened to $23.15 million in the quarter ended March 31, 2022 versus the prior-year quarter, with operating margin down 9.1 pp to -20.9% and operating cash flow down 633.2% to -$20.60 million. Total operating expenses grew faster than revenue, rising to 93.8% of revenue from 85.3%.
MD&A flags that there may be impacts to financial condition and results of operations in 2022 and beyond from reduced demand for products and services and longer sales cycles related to COVID-19 and new variant strains, and notes that the ultimate impact is not estimable and depends on factors outside the company's control.
Professional services gross margin decreased to 25.7% in the quarter ended March 31, 2022 from 29.6% in the prior-year quarter on higher personnel and human resources costs, and total gross margin fell to 72.9% from 73.5%. Management states 2021 and continuing 2022 margins have declined and remain subject to fluctuation.
The company executed a non-cancellable cloud hosting arrangement with Amazon Web Services in 2021 containing minimum purchase commitments totaling $131.0 million over five years, including $22.0 million in the first year. Spending under the agreement was $7.8 million in the quarter ended March 31, 2022, creating a fixed cost obligation independent of revenue growth.
Revenue from government agencies represented 18.1% of total revenue in the quarter ended March 31, 2022, down from 20.9% in the prior-year quarter, leaving the business exposed to changes in government budgets and procurement cycles even as the mix shifts.
SaaS KPIs
All quarters →Cloud Subscription Revenue Retention Rate
Summary, forecast, risks and KPIs are extracted from APPIAN CORP's SEC filings for Q1 FY2022 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.