Summary
Appian's fiscal 2021 third quarter showed a business still expanding at a solid clip while costs ran well ahead of revenue. Total revenue was $92.4 million for the quarter ended September 30, 2021, up 19.6% from $77.3 million a year earlier. Revenue for the first nine months of fiscal 2021 was $264.3 million, up 18.5% year over year. The mix keeps tilting toward subscriptions. Subscriptions revenue rose 32% to $67.2 million, and cloud subscription revenue climbed 36% to $46.7 million. Professional services revenue slipped to $25.2 million from $26.5 million, which management attributed to heavier use of partners to deliver implementations. Subscriptions supplied 72.8% of quarterly revenue, up from 65.7% a year earlier.
Profitability went the other way. Gross profit rose 18.2% to $65.9 million, but gross margin slipped to 71.3% from 72.1% as the professional services gross margin fell to 22.9% from 38.0%. The operating loss widened to $22.9 million from $7.5 million, and operating margin fell to -24.8% from -9.7%. Net loss was $25.4 million against $3.6 million a year earlier, and diluted EPS was -$0.36 versus -$0.05. On a non-GAAP basis, operating loss was $13.5 million, net loss was $15.9 million, and adjusted EBITDA loss was $12.0 million. Management flagged $2.3 million, or $0.03 per share, of foreign exchange losses inside both GAAP and non-GAAP net loss, driven by the Euro and Swiss franc against the dollar. Litigation expenses of $4.2 million tied to two lawsuits also weighed on the quarter, and general and administrative expense rose 50.0% to $20.2 million.
Cash generation weakened sharply. Net cash used in operating activities was $25.1 million for the quarter, compared with $6.5 million a year earlier, and $34.5 million for the first nine months, compared with $13.5 million. Capital expenditures were $1.45 million in the quarter, up from $0.35 million. The company ended September 30, 2021 with $188.5 million in cash, cash equivalents and investments. Longer-dated indicators held up better. Current deferred revenue was $122.8 million, up 26.8%, and remaining performance obligations were $246.7 million, up 32.8%. The cloud subscription revenue retention rate was 117%, against 115% a year earlier. In August 2021 Appian acquired Lana Labs, a process mining vendor, for roughly $30.7 million net of cash acquired and debt.
Guidance for the fourth quarter of fiscal 2021 puts cloud subscription revenue at $48.8 million to $49.3 million, growth of 32% to 33%, with total revenue growth of 16% to 17%. Adjusted EBITDA loss is expected between $13.0 million and $15.0 million, and non-GAAP net loss per share is guided to $0.21 to $0.24 on 71.2 million weighted average shares. For the full year 2021, management guides to cloud subscription revenue of $177.0 million to $177.5 million, up 37%, total revenue growth of 18%, an adjusted EBITDA loss of $41.0 million to $43.0 million, and non-GAAP net loss per share of $0.73 to $0.75.
The risk list is familiar but real. Sales cycles are long and variable, and the push toward partner-led delivery makes professional services revenue lumpy; that line declined in both the quarter and the first nine months. Hiring stayed aggressive, with sales and marketing headcount up 21.2% and research and development headcount up 33.3% from a year earlier. Appian also committed to $131.0 million of minimum cloud hosting purchases over five years, including $22.0 million in the first year. COVID-19 and new variant strains remain an open question, and management cites intense competition as a check on growth.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2021 | Q2 FY2021 | QoQ | Q3 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $92.4M | $83.0M | +11.3% | $77.3M | +19.6% |
| Gross profit | $65.9M | $57.2M | +15.3% | $55.8M | +18.2% |
| Gross margin | 71.3% | 68.9% | +2.4 pp | 72.1% | -0.8 pp |
| Research & development | $26.5M | $23.9M | +11.1% | $18.1M | +46.1% |
| Sales & marketing | $42.1M | $40.5M | +3.8% | $31.6M | +33.0% |
| General & administrative | $20.2M | $17.4M | +16.5% | $13.5M | +50.0% |
| Total operating expenses | $88.8M | $81.7M | +8.6% | $63.3M | +40.4% |
| Operating income (loss) | -$22.9M | -$24.6M | +6.8% | -$7.5M | -204.7% |
| Operating margin | -24.8% | -29.6% | +4.8 pp | -9.7% | -15.1 pp |
| Net income (loss) | -$25.4M | -$23.8M | -6.5% | -$3.6M | -602.8% |
| Net margin | -27.5% | -28.7% | +1.2 pp | -4.7% | -22.8 pp |
| Diluted EPS | -$0.36 | -$0.34 | -$0.02 | — | — |
Risks
Operating loss widened to $22.9 million in FY2021 Q3 from $7.5 million in FY2020 Q3, and net loss widened to $25.4 million from $3.6 million, as the company continues to invest in growth. The nine-month operating loss also widened to $58.0 million from $28.2 million, and net loss widened to $62.8 million from $27.1 million.
Total gross margin fell to 71.3% in FY2021 Q3 from 72.1% in FY2020 Q3. Professional services gross margin decreased to 22.9% for the three months ended September 30, 2021 from 38.0% in the prior-year period, driven by higher personnel and human resources costs and lower professional services revenue.
COVID-19, including new variant strains, remains a fluid situation that may reduce demand for products and services and cause longer sales cycles, even though the company has not seen a meaningful adverse impact to its financial position through September 30, 2021.
The company incurs significant customer acquisition costs, and new sales representatives can take up to one year to become productive given the length of its sales cycle, which may pressure growth if sales hiring or productivity slows.
General and administrative expenses increased due to higher legal fees from two lawsuits, one involving reciprocal false advertising and related claims with a competitor and one involving an effort to enforce intellectual property, which could continue to raise costs.
Other expense was $2.3 million in the three months ended September 30, 2021 compared to other income of $4.3 million in the prior-year period, driven by foreign exchange losses of $2.3 million versus gains of $3.3 million, due to Euro and Swiss franc fluctuations against the U.S. dollar.
Increased usage of strategic partners to perform professional services has contributed to a decrease in professional services revenue and may continue to reduce that revenue line, while partner agreements have indefinite terms and may be terminated for convenience by either party.
In 2021 the company executed a non-cancellable cloud hosting arrangement with Amazon Web Services with minimum purchase commitments totaling $131.0 million over five years, including $22.0 million in the first year, which may exceed the minimum depending on the volume of services utilized.
SaaS KPIs
All quarters →Cloud Subscription Revenue Retention Rate
Cloud Subscription Revenue
Non-GAAP Operating Loss
Summary, forecast, risks and KPIs are extracted from APPIAN CORP's SEC filings for Q3 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.