Summary
Appian's fiscal 2023 first quarter, ended March 31, 2023, delivered solid top-line growth but wider losses. Total revenue rose 18.4% to $135.2 million from $114.3 million in the prior-year quarter. Gross profit increased 18.9% to $99.1 million, and gross margin edged up to 73.3% from 72.9%. The operating picture was less favorable. Operating loss widened to $35.3 million from $23.9 million, and operating margin fell to -26.1% from -20.9%. Net loss widened to $36.8 million from $23.2 million. Diluted loss per share was $(0.51), compared with $(0.32) in the prior-year quarter. The cloud subscription revenue retention rate was 115% as of March 31, 2023, down from 117% a year earlier.
Cash generation remained negative. Operating cash flow was -$25.3 million for the quarter, compared with -$20.6 million in the prior-year quarter, a 22.6% decline. Capital expenditures were $4.4 million, up 30.4% from $3.4 million. Deferred revenue stood at $198.7 million at March 31, 2023. Remaining performance obligations were $366.1 million, up 25.9% from $290.8 million a year earlier. In March 2023, the company drew $62.0 million from its revolving line of credit after Silicon Valley Bank's failures. It had used $62.0 million of its $75.0 million revolving facility and had $12.0 million in outstanding letters of credit. Appian said it was in compliance with all credit agreement covenants as of March 31, 2023.
Non-GAAP results also weakened. Non-GAAP operating loss was $18.2 million, compared with $5.1 million in the prior-year quarter. Non-GAAP net loss was $19.7 million, compared with $4.4 million. Non-GAAP net loss per share was $(0.27), compared with $(0.06). Adjusted EBITDA loss was $15.8 million, compared with $3.4 million. The gap between GAAP and non-GAAP results reflects add-backs for stock-based compensation, litigation expenses tied to the Pegasystems cases, and severance costs. Operating expenses rose, driven by sales and marketing and research and development, while general and administrative expense declined because of lower legal fees. Government agencies represented 20.5% of total revenue in the quarter, up from 18.1% a year earlier. International customers generated 33.4% of total revenue, compared with 33.5% in the prior-year quarter.
Guidance points to slower growth and continued losses. For the second quarter of 2023, Appian expects cloud subscription revenue of $72.0 million to $74.0 million, representing year-over-year growth of 26% to 30%. Total revenue is expected to be $123.0 million to $125.0 million, up 12% to 14%. Adjusted EBITDA loss is expected to be $30.0 million to $26.0 million. Non-GAAP net loss per share is expected to be $0.46 to $0.40, assuming 73.0 million weighted average shares. For the full year 2023, cloud subscription revenue is expected to be $296.0 million to $298.0 million, growth of 25% to 26%. Total revenue is expected to be $533.0 million to $538.0 million, up 14% to 15%. Adjusted EBITDA loss is expected to be $70.0 million to $65.0 million. Non-GAAP net loss per share is expected to be $1.16 to $1.09, assuming 73.2 million weighted average shares. The company said it expects sales and marketing and research and development expenses to increase in absolute dollars in 2023, while general and administrative expense should decline largely because of lower legal costs. It also expects professional services gross margin to be consistent with 2022. Risks include long and variable sales cycles, competition, customer concentration, the timing of subscription revenue recognition, the ability to keep shifting revenue toward subscriptions, compliance with credit agreement covenants, and litigation with Pegasystems. Appian also has an AWS cloud hosting commitment with minimum purchases of $131.0 million over five years, including $25.0 million in the second year and $28.0 million in each of the third, fourth, and fifth years.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2023 | Q4 FY2022 | QoQ | Q1 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $135.2M | $125.8M | +7.5% | $114.3M | +18.4% |
| Gross profit | $99.1M | $90.6M | +9.5% | $83.3M | +18.9% |
| Gross margin | 73.3% | 72.0% | +1.3 pp | 72.9% | +0.4 pp |
| Research & development | $41.6M | $37.8M | +10.1% | $29.8M | +39.5% |
| Sales & marketing | $63.1M | $63.3M | -0.3% | $45.9M | +37.4% |
| General & administrative | $29.7M | $30.1M | -1.3% | $31.5M | -5.6% |
| Total operating expenses | $134.4M | $131.2M | +2.5% | $107.2M | +25.4% |
| Operating income (loss) | -$35.3M | -$40.6M | +13.2% | -$23.9M | -47.8% |
| Operating margin | -26.1% | -32.3% | +6.2 pp | -20.9% | -5.2 pp |
| Net income (loss) | -$36.8M | -$34.4M | -7.0% | -$23.2M | -59.1% |
| Net margin | -27.2% | -27.4% | +0.1 pp | -20.3% | -7.0 pp |
| Diluted EPS | -$0.51 | -$0.48 | -$0.03 | -$0.32 | -$0.19 |
Risks
A new risk factor states that a government shutdown or failure to raise the U.S. debt ceiling could cause near-term revenue decline because U.S. federal government customers may be unable to renew existing contracts or enter new agreements. Government agencies represented 20.5% and 18.1% of total revenue for the three months ended March 31, 2023 and 2022, respectively.
MD&A highlights that operating expenses grew faster than revenue, with sales and marketing expense up 37.4% and research and development expense up 39.5% in the three months ended March 31, 2023 versus the same period in 2022. Reported figures show operating loss widened to $35.27 million and net loss widened to $36.83 million in the quarter.
The filing adds a new risk that Appian maintains domestic cash deposits above FDIC insurance limits and cites the March 10, 2023 closure of Silicon Valley Bank. In March 2023 the company drew $62.0 million on its revolving line of credit to protect against credit-market disruptions, though it states it has access to all cash previously held at SVB.
The company expanded its credit facilities in February 2023 and drew $62.0 million on its revolving line of credit in March 2023, and interest expense increased $3.0 million in the three months ended March 31, 2023 compared to the prior-year period. MD&A notes compliance with covenants as of March 31, 2023 but identifies meeting financial covenants as a forward-looking risk.
SaaS KPIs
All quarters →Cloud Subscription Revenue Retention Rate
Summary, forecast, risks and KPIs are extracted from APPIAN CORP's SEC filings for Q1 FY2023 (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.