Summary
Appian's second quarter of fiscal 2021 showed solid top-line growth. Total revenue was $83.0 million, up 24.3% from the prior-year quarter. The cloud subscription revenue retention rate was 121% as of June 30, 2021, up from 113% a year earlier. The company also announced the acquisition of Lana Labs, a process mining firm, which closed on August 4, 2021 for approximately $31.0 million net of cash acquired and debt. Appian ended the quarter with $249.7 million in total cash, cash equivalents, and investments.
Operational highlights were broad. Appian named KPMG, Accenture, PwC, Wipro, Infosys, Vuram, Appcino, GxP Partners, and Needzaio as 2021 Partner award recipients. Bankhaus von der Heydt, one of Europe's oldest banks, reported delivering new products 10 times faster with the Appian platform. CNA Financial won the Celent 2021 Model Insurer Award for CNA ComPass, a solution built on Appian. Entelgy accelerated the time between invoicing and payment by 35% and processes 98% of invoices without human intervention using Appian Robotic Process Automation. Appian also unveiled a new version of its low-code automation platform with enhanced AI-driven Intelligent Document Processing, design guidance, developer collaboration, and DevSecOps capabilities.
Profitability was a different story. Gross profit rose 25.3% to $57.16 million, and gross margin was 68.9%, up 0.6 percentage points from the prior-year quarter. For the first six months of 2021, total revenue was $171.85 million, up 18.0%, and gross margin was 71.3%, up 2.4 percentage points from the prior-year period. Operating loss widened to $24.58 million, and operating margin fell to negative 29.6%, down 11.5 percentage points. Net loss widened to $23.82 million. Diluted EPS was negative $0.34, a wider loss than the prior-year quarter. Non-GAAP operating loss was $17.6 million, and adjusted EBITDA loss was $16.3 million. The company continued to spend on growth, with sales and marketing headcount up 17.4%, research and development headcount up 18.5%, and general and administrative headcount up 14.6% from June 30, 2020 to June 30, 2021. Legal fees also increased.
Cash flow and backlog metrics deserve attention. Operating cash flow was negative $6.56 million for the quarter, a larger outflow than the prior-year quarter. For the first six months of 2021, operating cash flow was negative $9.37 million, down 34.7% from the prior-year period. Capital expenditures were $0.56 million in the quarter, up 15.5%, and $1.03 million year to date, up 49.7%. Deferred revenue was $113.80 million, up 30.0% from the prior-year quarter. Remaining performance obligations were $223.8 million, up 27.2%. The company also committed to $131.0 million of minimum purchases from Amazon Web Services over five years.
Guidance points to continued growth at the subscription line but also wider losses. For the third quarter of 2021, Appian expects cloud subscription revenue of $45.0 million to $45.5 million, adjusted EBITDA loss of $13.0 million to $11.0 million, and non-GAAP net loss per share of $0.20 to $0.17. For the full year 2021, guidance calls for cloud subscription revenue of $174.0 million to $175.0 million, adjusted EBITDA loss of $40.0 million to $38.0 million, and non-GAAP net loss per share of $0.68 to $0.65. Risks include COVID-19 uncertainty, long and variable sales cycles, competition, reliance on strategic partners, and the timing of subscription revenue recognition. The company also faces two lawsuits, one over reciprocal false advertising and related claims with a competitor and one to enforce intellectual property. Government customers made up 19.8% of second quarter revenue, and international customers made up 35.3%. No single end-customer accounted for more than 10% of total revenue.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2021 | Q1 FY2021 | QoQ | Q2 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $83.0M | $88.9M | -6.6% | $66.8M | +24.3% |
| Gross profit | $57.2M | $65.3M | -12.5% | $45.6M | +25.3% |
| Gross margin | 68.9% | 73.5% | -4.6 pp | 68.3% | +0.6 pp |
| Research & development | $23.9M | $20.7M | +15.3% | $17.2M | +38.9% |
| Sales & marketing | $40.5M | $36.0M | +12.6% | $29.1M | +39.3% |
| General & administrative | $17.4M | $19.1M | -9.3% | $11.4M | +51.6% |
| Total operating expenses | $81.7M | $75.8M | +7.8% | $57.7M | +41.6% |
| Operating income (loss) | -$24.6M | -$10.5M | -134.3% | -$12.1M | -103.2% |
| Operating margin | -29.6% | -11.8% | -17.8 pp | -18.1% | -11.5 pp |
| Net income (loss) | -$23.8M | -$13.6M | -75.4% | -$11.8M | -101.7% |
| Net margin | -28.7% | -15.3% | -13.4 pp | -17.7% | -11.0 pp |
| Diluted EPS | -$0.34 | -$0.19 | -$0.15 | — | — |
Risks
COVID-19 may reduce demand for Appian's products and services and lengthen sales cycles in 2021 and beyond. Management states the ultimate impact is not estimable and depends on factors outside its control, though through June 30, 2021 Appian had not seen a meaningful adverse impact on its financial position, results of operations, and cash flows.
Appian's sales cycle can be long, and newly hired sales representatives can take up to one year to become productive. Sales and marketing expense increased 39.3% in the quarter ended June 30, 2021 and 20.9% year to date, reflecting continued investment in sales capacity before those representatives may contribute revenue.
Appian increasingly relies on strategic partners such as KPMG, PwC, Accenture, and Deloitte to perform professional services, and it expects professional services revenue as a percentage of total revenue to decline over time. Partner agreements have indefinite terms and may be terminated for convenience, which could reduce professional services revenue without a corresponding increase in subscriptions revenue.
Gross margin may fluctuate based on the mix of SaaS and on-premises subscriptions and the mix of subscriptions and professional services revenue. Subscriptions gross margin declined to 88.0% in the quarter ended June 30, 2021 from 88.6% in the prior-year quarter, and professional services gross margin declined to 27.2% from 35.1%, with prior-year professional services margins temporarily improved by fewer in-person engagements during the pandemic.
Appian entered a non-cancellable cloud hosting arrangement with AWS in 2021 that includes minimum purchase commitments totaling $131.0 million over five years, including $22.0 million in the first year. The total amount paid may exceed the minimum depending on volume, creating fixed obligations that could strain liquidity if demand or utilization declines.
Appian completed the acquisition of Lana Labs GMBH in August 2021 for approximately $31.0 million, net of cash acquired and debt, financed with cash on hand. Future investments or acquisitions may require additional equity financing, incur indebtedness, or use cash resources, and integration risks could adversely affect business, operating results, and financial condition.
SaaS KPIs
All quarters →Cloud Subscription Revenue Retention Rate
Summary, forecast, risks and KPIs are extracted from APPIAN CORP's SEC filings for Q2 FY2021 (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.