Summary
Appian reported total revenue of $110.06 million for its fiscal 2022 second quarter, up 32.6% from $83.00 million in the prior-year quarter. Year-to-date revenue reached $224.33 million, up 30.5% from $171.85 million. Gross profit rose 34.3% to $76.77 million, and gross margin improved to 69.8% from 68.9%. Year-to-date gross margin was 71.3%, flat with the prior-year period. Cloud subscription revenue retention rate was 116% as of June 30, 2022, compared with 121% a year earlier. Government agencies made up 18.2% of total revenue in both the quarter and the six-month period, and no single end-customer accounted for more than 10% of total revenue.
Profitability weakened. Operating loss widened to $42.75 million from $24.58 million in the prior-year quarter, and operating margin fell to -38.8% from -29.6%. Net loss widened to $49.35 million, or -$0.68 per diluted share, from the second quarter of 2021. The quarter included $6.5 million of foreign currency exchange losses. Non-GAAP operating loss was $(26.8) million, compared with $(17.6) million a year earlier. Non-GAAP net loss was $(33.4) million, or $(0.46) per share, compared with $(16.9) million, or $(0.24) per share. Adjusted EBITDA loss was $(25.0) million, compared with $(16.3) million. Litigation expenses added $6.8 million in the quarter and $18.6 million year to date. Headcount growth, more in-person marketing events, and legal fees from two lawsuits drove the higher costs.
Cash generation turned sharply negative. Operating cash flow was -$29.66 million for the quarter, compared with -$6.56 million in the prior-year quarter, a decline of $23.09 million. Year-to-date operating cash flow was -$50.26 million, compared with -$9.37 million. Capital expenditures were $1.30 million for the quarter, up from $0.56 million, and $4.68 million year to date, up from $1.03 million. Appian ended the quarter with $138.0 million in total cash and investments. Deferred revenue was $151.27 million, up 32.9% from $113.80 million. Remaining performance obligations were $298.00 million, up 33.2% from $223.80 million.
Guidance for the third quarter of 2022 calls for cloud subscription revenue of $60.8 million to $61.3 million, year-over-year growth of 30% to 31%. Total revenue is expected to be $115.0 million to $117.0 million, up 24% to 27%. Adjusted EBITDA loss is expected to be $(15.0) million to $(13.0) million, and non-GAAP net loss per share is expected to be $(0.23) to $(0.20) on 72.5 million weighted average shares. For the full year 2022, cloud subscription revenue is expected to be $236.0 million to $238.0 million, up 32% to 33%. Total revenue is expected to be $466.0 million to $470.0 million, up 26% to 27%. Adjusted EBITDA loss is expected to be $(53.0) million to $(50.0) million, and non-GAAP net loss per share is expected to be $(0.91) to $(0.86) on 72.5 million shares.
Risks include foreign exchange rate movements, which the company does not forecast. Litigation remains a cost driver, and Appian reported $2.036 billion in damages awarded against Pegasystems. Competition in low-code software, a long and variable sales cycle, and uncertainty in the global economy all weigh on the outlook. Management pointed to the platform's efficiency focus as an advantage in uncertain times, but the quarter showed widening losses and negative operating cash flow.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2022 | Q1 FY2022 | QoQ | Q2 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $110.1M | $114.3M | -3.7% | $83.0M | +32.6% |
| Gross profit | $76.8M | $83.3M | -7.9% | $57.2M | +34.3% |
| Gross margin | 69.8% | 72.9% | -3.2 pp | 68.9% | +0.9 pp |
| Research & development | $33.8M | $29.8M | +13.4% | $23.9M | +41.8% |
| Sales & marketing | $56.2M | $45.9M | +22.3% | $40.5M | +38.6% |
| General & administrative | $29.5M | $31.5M | -6.2% | $17.4M | +70.0% |
| Total operating expenses | $119.5M | $107.2M | +11.5% | $81.7M | +46.2% |
| Operating income (loss) | -$42.7M | -$23.9M | -79.1% | -$24.6M | -73.9% |
| Operating margin | -38.8% | -20.9% | -18.0 pp | -29.6% | -9.2 pp |
| Net income (loss) | -$49.4M | -$23.2M | -113.2% | -$23.8M | -107.2% |
| Net margin | -44.8% | -20.3% | -24.6 pp | -28.7% | -16.1 pp |
| Diluted EPS | -$0.68 | -$0.32 | -$0.36 | -$0.34 | -$0.34 |
Risks
The company is defending two separate lawsuits, one to enforce its intellectual property and one involving reciprocal false advertising and related claims with a competitor. Legal fees tied to these matters drove general and administrative professional fees up $6.2 million in the three months ended June 30, 2022 and up $16.9 million in the six months ended June 30, 2022, contributing to a 70.0% and 66.2% increase in G&A expense for those periods respectively.
Operating loss widened to $42.75 million in FY2022 Q2 from $24.58 million in FY2021 Q2, and operating margin fell 9.2 percentage points to -38.8% as total operating expenses reached 108.6% of revenue. Net loss widened to $49.35 million in the quarter and $72.51 million for the six months ended June 30, 2022, while operating cash flow turned to -$50.26 million year to date.
Cloud subscription revenue retention rate declined to 116% as of June 30, 2022 from 121% as of June 30, 2021, which the company attributes to customer non-renewals, pricing changes, and user growth within its installed cohort. A lower retention rate would slow the subscription growth that drives most of the business.
Strengthening of the U.S. dollar against the British pound, Euro, and Swiss franc produced $6.5 million in foreign exchange losses in the three months ended June 30, 2022 versus $1.0 million in foreign exchange gains in the prior year quarter, driving other expense, net to $6.2 million. International revenue was 35.0% of total revenue in the quarter, exposing results to further currency swings.
Headcount rose sharply across functions from June 30, 2021 to June 30, 2022, including 32.2% in research and development, 27.4% in general and administrative, 19.2% in sales and marketing, and 17.0% in professional services and product support. Personnel costs were the largest driver of expense growth, and stock-based compensation rose to $9.1 million in the quarter from $4.6 million a year earlier, indicating reliance on equity to attract and keep staff.
Professional services gross margin declined to 25.8% in the three months ended June 30, 2022 from 27.2% a year earlier and to 25.6% for the six months ended June 30, 2022 from 28.3%, due to higher personnel and allocated costs. The prior year benefited from fewer in-person engagements and deployments during the pandemic, so current margins reflect a less favorable cost structure.
The company has a non-cancellable cloud hosting arrangement with Amazon Web Services carrying minimum purchase commitments of $131.0 million over five years, including $22.0 million in the first year, with no outstanding borrowings under its $20.0 million revolver as of June 30, 2022. Prepayments under this arrangement contributed to a $5.6 million increase in prepaid expenses and other assets and to lower operating cash flow.
SaaS KPIs
All quarters →Cloud Subscription Revenue Retention Rate
Summary, forecast, risks and KPIs are extracted from APPIAN CORP's SEC filings for Q2 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.