Summary
Appian's fiscal 2024 first quarter, ended March 31, 2024, showed top-line growth and a smaller loss. Revenue was $149.8 million, up 10.8% from the prior-year quarter. Gross profit was $111.8 million, up 12.8%. Gross margin reached 74.6%, up 1.3 percentage points. The operating loss narrowed 44.6% to $19.5 million. The net loss narrowed 10.6% to $32.9 million. Diluted EPS improved 11.8% to -$0.45. Operating cash flow was $18.9 million, up 174.7% from the prior-year quarter. Capital expenditures were $2.2 million, down 50.3%. Deferred revenue was $226.2 million, up 13.8%. Remaining performance obligations were $468.3 million, up 27.9%. Operating margin improved by 13.0 percentage points to -13.0%.
The revenue mix continued to shift toward subscriptions. Subscriptions represented 78.5% of total revenue, up from 73.2% in the prior-year quarter, while professional services fell to 21.5% from 26.8%. Cloud subscriptions revenue retention rate was 120%, compared with 115% a year earlier. Government agencies accounted for 21.7% of revenue, up from 20.5%, and 37.2% of revenue came from customers outside the United States, up from 33.4%. Appian works with partners such as Accenture, Capgemini, Deloitte, EY, KPMG, PwC, and TCS to refer customers and deliver professional services. No single end-customer accounted for more than 10% of total revenue in either period. The company targets organizations with over 2,000 employees and $2 billion in annual revenue, and it operated in 16 countries as of March 31, 2024.
For full-year 2024, management expects professional services gross margin to be slightly lower than in 2023. For full-year 2024, it also expects general and administrative expense to increase in absolute dollars. That increase is largely tied to amortization of the judgment preservation insurance policy and investments in the information technology team. On a non-GAAP basis, the operating loss was $3.7 million, compared with $18.2 million a year earlier. Non-GAAP net loss was $17.7 million, compared with $19.7 million. Adjusted EBITDA was negative $1.3 million, compared with negative $15.8 million.
Risks and cash uses are notable. Foreign exchange losses and higher interest expense weighed on non-operating results. The company has a credit agreement with covenants and used borrowing capacity under its revolving credit facility. It also has a non-cancellable cloud hosting arrangement with Amazon Web Services that includes $131.0 million in purchase commitments over five years. The agreement has minimum spending requirements of $28.0 million in each of the third, fourth, and fifth years. Spending under that agreement was $10.3 million in the quarter, compared with $9.4 million a year earlier. Appian faces competition, economic uncertainty, and customer spending risk. Its growth depends on market adoption, new customer additions, and further penetration of existing accounts.
The company repurchased approximately $50.0 million of common stock during the quarter. It also incurred $57.3 million for a judgment preservation insurance policy connected to its Pegasystems litigation. Management's strategy is to rely more on strategic partners for professional services. The company continues to invest in new geographies and its platform. The quarter showed better operating cash flow and a narrower loss, but the business still depends on large enterprises and government agencies for growth. Foreign exchange swings and debt costs can move results, and the company must manage its cloud hosting commitments and litigation.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2024 | Q4 FY2023 | QoQ | Q1 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $149.8M | $145.3M | +3.1% | $135.2M | +10.8% |
| Gross profit | $111.8M | $111.0M | +0.8% | $99.1M | +12.8% |
| Gross margin | 74.6% | 76.4% | -1.8 pp | 73.3% | +1.3 pp |
| Research & development | $39.8M | $34.6M | +15.0% | $41.6M | -4.5% |
| Sales & marketing | $58.2M | $61.0M | -4.7% | $63.1M | -7.8% |
| General & administrative | $33.4M | $32.2M | +3.9% | $29.7M | +12.6% |
| Total operating expenses | $131.4M | $127.8M | +2.8% | $134.4M | -2.3% |
| Operating income (loss) | -$19.5M | -$16.8M | -16.1% | -$35.3M | +44.6% |
| Operating margin | -13.0% | -11.6% | -1.5 pp | -26.1% | +13.0 pp |
| Net income (loss) | -$32.9M | -$10.0M | -229.0% | -$36.8M | +10.6% |
| Net margin | -22.0% | -6.9% | -15.1 pp | -27.2% | +5.3 pp |
| Diluted EPS | -$0.45 | -$0.14 | -$0.31 | -$0.51 | +$0.06 |
Risks
Other expense, net was $8.2 million in the three months ended March 31, 2024 compared with other income, net of $2.7 million in the prior-year period, driven primarily by $11.5 million of foreign exchange losses versus $0.6 million of foreign exchange gains. This swing materially offset operating loss improvement.
Professional services gross margin decreased to 20.0% for the three months ended March 31, 2024 from 29.3% in the prior-year period, and management expects 2024 professional services gross margin to be slightly lower than in 2023. Professional services revenue decreased $4.1 million, or 11.4%, in the quarter.
Interest expense increased 81.1% to $5.6 million for the three months ended March 31, 2024 from $3.1 million in the prior-year period due to additional credit facility borrowings. As of March 31, 2024, $62.0 million was drawn under the $100.0 million revolving credit facility, and compliance with Credit Agreement covenants remains required.
Revenue from government agencies represented 21.7% of total revenue for the three months ended March 31, 2024 compared with 20.5% in the prior-year period, creating exposure to government budget and procurement cycles.
A non-cancellable cloud hosting arrangement with Amazon Web Services includes minimum purchase commitments totaling $131.0 million over five years, with minimum spending requirements of $28.0 million in each of the third, fourth, and fifth years. Spending under the agreement was $10.3 million in the three months ended March 31, 2024.
General and administrative expense increased $3.8 million, or 12.6%, in the three months ended March 31, 2024 versus the prior-year period primarily due to a $4.5 million increase in amortization of the judgment preservation insurance policy tied to the Pegasystems litigation. Litigation-related costs can fluctuate.
We incur significant customer acquisition costs, and new sales representatives can take six months to a year to become productive given the length of our sales cycle, which may delay revenue growth if hiring or productivity lags.
We intend to increasingly rely on strategic partners such as Accenture, Capgemini, Deloitte, EY, KPMG, PwC, and TCS to refer customers and provide professional services, creating dependence on partner performance as professional services revenue as a percentage of total revenue is expected to decline.
Summary, forecast, risks and KPIs are extracted from APPIAN CORP's SEC filings for Q1 FY2024 (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.