Summary
Appian reported third quarter total revenue of $117.9 million, up 27.5% year-over-year. Gross profit was $84.1 million, up 27.6%. Gross margin was 71.4%, flat compared with the prior-year quarter. Year-to-date total revenue reached $342.2 million, up 29.5%. Year-to-date gross profit was $244.1 million, up 29.6%. Deferred revenue, current portion, was $161.15 million at September 30, 2022, up 31.2% year-over-year. Remaining performance obligations were $319.9 million, up 29.7%. The cloud subscription revenue retention rate was 115% as of September 30, 2022, down from 117% a year earlier.
Profitability weakened. GAAP operating loss was $(37.8) million, and the loss widened. Operating margin was -32.0%, down 7.3 percentage points. Year-to-date GAAP operating loss was $(104.4) million, and the loss widened. GAAP net loss was $(44.0) million, and the loss widened. GAAP net loss per diluted share was $(0.61), and the loss widened. Year-to-date GAAP net loss was $(116.5) million, and the loss widened. Year-to-date GAAP net loss per diluted share was $(1.61), and the loss widened. Non-GAAP operating loss was $(24.6) million, compared with $(13.5) million. Non-GAAP net loss was $(30.9) million, compared with $(15.9) million. Non-GAAP net loss per share was $(0.43), compared with $(0.22). Adjusted EBITDA loss was $(22.9) million, compared with $(12.0) million. The company said the higher adjusted EBITDA loss came from pull forward hiring and a sharp drop in attrition. Headcount grew from September 30, 2021 to September 30, 2022: sales and marketing personnel rose 24.5%, research and development personnel rose 25.6%, general and administrative personnel rose 38.2%, and professional services and product support personnel rose 15.9%.
Cash flow weakened. Net cash used in operating activities was $(43.7) million for the three months ended September 30, 2022, down 73.9% year-over-year. For the nine months ended September 30, 2022, net cash used in operating activities was $(94.0) million, down 172.4% year-over-year. Capital expenditures were $1.18 million in the quarter, down 18.7% year-over-year. Year-to-date capital expenditures were $5.86 million, up 137.0%. On November 3, 2022, Appian closed a new credit facility. The company received $98.7 million in net loan proceeds from a five-year term loan, with another $50 million available from a revolving credit facility. The MD&A discloses a $100.0 million term loan and a $50.0 million revolver, maturing November 3, 2027. Appian also has a non-cancellable cloud hosting arrangement with Amazon Web Services that includes $131.0 million in minimum purchase commitments over five years, with $24.8 million spent in the first nine months of 2022.
Guidance for the fourth quarter of 2022 calls for cloud subscription revenue of $63.5 million to $64.5 million, representing year-over-year growth of 24% to 26%. Total revenue is expected to be $121.5 million to $123.5 million, an increase of 16% to 18%. Adjusted EBITDA loss is expected to be between $(24.0) million and $(29.0) million, and non-GAAP net loss per share is expected to be between $(0.36) and $(0.42). For the full year 2022, cloud subscription revenue is expected to be $235.0 million to $236.0 million, growth of 31% to 32%. Total revenue is expected to be $461.0 million to $466.0 million, an increase of 25% to 26%. Adjusted EBITDA loss is expected to be between $(75.0) million and $(80.0) million, and non-GAAP net loss per share is expected to be between $(1.30) and $(1.36). CEO Matt Calkins said the company has a plan to reduce losses to 10% of revenue by the second half of 2023. Business highlights included Anglian Water reducing capital carbon by 63%, the Municipality of Milan automating citizen services, and a judge rejecting Pegasystems' motion to overturn a $2.036 billion jury verdict. Christopher Jones was named Chief Revenue Officer in August. Risks include foreign exchange headwinds from a stronger U.S. dollar, litigation costs, competition, variability in the sales cycle, and reliance on government customers.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2022 | Q2 FY2022 | QoQ | Q3 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $117.9M | $110.1M | +7.1% | $92.4M | +27.5% |
| Gross profit | $84.1M | $76.8M | +9.6% | $65.9M | +27.6% |
| Gross margin | 71.4% | 69.8% | +1.6 pp | 71.3% | +0.0 pp |
| Research & development | $37.6M | $33.8M | +11.2% | $26.5M | +41.9% |
| Sales & marketing | $54.9M | $56.2M | -2.2% | $42.1M | +30.5% |
| General & administrative | $29.4M | $29.5M | -0.5% | $20.2M | +45.1% |
| Total operating expenses | $121.9M | $119.5M | +2.0% | $88.8M | +37.3% |
| Operating income (loss) | -$37.8M | -$42.7M | +11.6% | -$22.9M | -65.0% |
| Operating margin | -32.0% | -38.8% | +6.8 pp | -24.8% | -7.3 pp |
| Net income (loss) | -$44.0M | -$49.4M | +10.9% | -$25.4M | -73.3% |
| Net margin | -37.3% | -44.8% | +7.5 pp | -27.5% | -9.9 pp |
| Diluted EPS | -$0.61 | -$0.68 | +$0.07 | -$0.36 | -$0.25 |
Risks
Operating loss widened to $37.8 million in the current quarter from $22.9 million in the prior-year quarter, and net loss widened to $44.0 million from $25.4 million. Operating cash flow used increased to $94.0 million for the current year to date from $34.5 million in the prior-year period.
Strengthening of the U.S. dollar against the British pound, Euro, and Swiss franc increased foreign exchange losses in the three and nine months ended September 30, 2022 compared to the prior-year periods, contributing to higher other expense, net.
Higher legal fees from two lawsuits, one to enforce intellectual property rights and one involving reciprocal false advertising and related claims with a competitor, increased general and administrative expense in the nine months ended September 30, 2022.
Cloud subscription revenue retention rate declined to 115% as of September 30, 2022 from 117% as of September 30, 2021, which may indicate lower expansion or higher non-renewals within the existing customer base.
Revenue from government agencies represented 21.2% of total revenue for the three months ended September 30, 2022 and 19.2% for the nine months ended September 30, 2022, compared to 19.2% and 20.0% in the prior-year periods, exposing results to government budget and procurement cycles.
A non-cancellable cloud hosting arrangement with Amazon Web Services includes $131.0 million in minimum purchase commitments over five years, with $24.8 million spent in the nine months ended September 30, 2022; if utilization falls short, margins and cash flows could be pressured.
Headcount increased across sales and marketing, research and development, and general and administrative teams from September 30, 2021 to September 30, 2022, and sales representatives can take six months to a year to become productive, increasing customer acquisition costs.
SaaS KPIs
All quarters →Cloud Subscription Revenue Retention Rate
Cloud Subscription Revenue
Summary, forecast, risks and KPIs are extracted from APPIAN CORP's SEC filings for Q3 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.