APPIAN CORP Q2 FY2018 earnings

Appian Corporation, a leader in providing a low-code software development platform, ended the second quarter of 2018 without any significant changes to its risk factors, as outlined in previous filings. With its core offering aimed at enabling organizations to quickly build and deploy custom applications, Appian has continued to build its revenue predominantly from subscription sales. These subscriptions include both SaaS and term license models, reinforced by bundled maintenance and support agreements. The company serves a broad and diversified base, targeting entities with extensive resources, specifically organizations exceeding 2,000 employees and $2 billion in annual revenue. Notably, government agencies constitute a substantial portion of Appian’s revenue, contributing over 20% for recent quarters.

Appian’s business model revolves around maximizing the lifetime value of its customer relationships, encouraging incremental revenue expansions through strategies that deepen existing relationships. The ‘land and expand’ strategy has been fruitful, as many customers initially start with a single application and grow to deploy multiple applications on the Appian platform. This snowballing effect significantly contributes to successful revenue streams.

International markets remain a critical focus as Appian looks to expand its footprint across 12 countries. The current climate sees nearly 30% of Appian’s revenue stemming from international operations, a figure that has seen consistent year-on-year growth. This area holds promising potential as the company intensifies investments in direct and indirect sales channels and fosters strategic partnerships across global markets for more robust service capabilities.

In terms of cash flow, Appian observed a $3.2 million cash outflow primarily due to its operational activities, as influenced by net losses and sales cycle characteristics. Financing activities offered some relief with $2.1 million gains attributable to stock option exercises. Comparatively, in the first half of 2017, the company’s financing was buoyed by the proceeds from its IPO.

Moreover, Appian unveiled plans for a new Tysons, Virginia headquarters with complex leasing terms that would initially incur higher costs but are structured to accommodate future growth. Interestingly, Appian is not heavily leveraged into off-balance sheet arrangements, mitigating risk exposure to financing, market, or credit risks that could arise from such activities.

From a growth standpoint, continuous investment in its sales force and fostering relationships with giant consultancies like Deloitte, KPMG, and PricewaterhouseCoopers positions the company well to harness the digital transformation wave.

With no single customer (barring governmental bodies) representing more than 10% of revenues and a strong push towards enhancing global reach, Appian appears to stabilize its footing for gradual, sustained growth despite missing specific guidance and KPI disclosures for the quarter.