Appian Announces Second Quarter 2020 Financial Results

Thursday, 06. August 2020 22:05

MCLEAN, Va., Aug. 06, 2020 (GLOBE NEWSWIRE) -- Appian (Nasdaq: APPN) today announced financial results for the second quarter ended June 30, 2020.

“Recent circumstances have demonstrated the importance of quick adaptability. Organizations are turning to rapid-development technologies like Appian's low-code automation platform to build their applications and processes," said Matt Calkins, CEO & Founder.

Second Quarter 2020 Financial Highlights:

  • Revenue: Cloud subscription revenue was $29.6 million for the second quarter of 2020, up 30% compared to the second quarter of 2019. Total subscriptions revenue, which includes sales of SaaS subscriptions, on-premises term license subscriptions and maintenance and support, increased 12% year-over-year to $41.4 million for the second quarter of 2020. Professional services revenue was $25.4 million for the second quarter of 2020, compared to $28.4 million for the second quarter of 2019. Total revenue was $66.8 million for the second quarter of 2020, up 2% compared to the second quarter of 2019. Cloud subscription revenue retention rate was 113% as of June 30, 2020. Gross renewal rate was 98% as of June 30, 2020.
     
  • Operating loss and non-GAAP operating loss: GAAP operating loss was $(12.1) million for the second quarter of 2020, compared to $(9.8) million for the second quarter of 2019.  Non-GAAP operating loss was $(8.5) million for the second quarter of 2020, compared to $(7.1) million for the second quarter of 2019.
     
  • Net loss and non-GAAP net loss: GAAP net loss was $(11.8) million for the second quarter of 2020, compared to $(10.1) million for the second quarter of 2019.  GAAP net loss per share was $(0.17) for the second quarter of 2020, based on 68.4 million weighted-average shares outstanding, compared to $(0.16) for the second quarter of 2019, based on 64.8 million weighted-average shares outstanding.  Non-GAAP net loss was $(8.2) million for the second quarter of 2020, compared to $(7.2) million for the second quarter of 2019.  Non-GAAP net loss per share was $(0.12) for the second quarter of 2020, based on 68.4 million basic and diluted shares outstanding, consistent with $(0.11) for the second quarter of 2019, based on 64.8 million basic and diluted shares outstanding.
     
  • Adjusted EBITDA: Adjusted EBITDA loss was $(7.0) million for the second quarter of 2020, compared to $(6.0) million for the second quarter of 2019.
     
  • Balance sheet and cash flows: As of June 30, 2020, Appian had cash and cash equivalents of $256.1 million, compared to $149.2 million at March 31, 2020, primarily reflecting the completion of Appian’s underwritten public offering of 1,931,206 shares of Appian Class A common stock in June 2020. Net cash used in operating activities was $(3.1) million for the three months ended June 30, 2020 compared to $16.1 million of net cash provided by operating activities for the same period in 2019. The $16.1 million of net cash provided by operating activities for the three months ended June 30, 2019, includes $12.5 million of tenant improvement allowance reimbursements received associated with the build-out of Appian’s new headquarters.

A reconciliation of GAAP to non-GAAP financial measures has been provided in the tables following the financial statements in this press release.  An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures.”

Second Quarter 2020 Business Highlights:

  • Appian launched the Workforce Safety solution to safely return employees to facilities during the COVID pandemic.
  • Appian launched the CampusPass™ solution for colleges and universities to safely reopen campuses during the COVID pandemic.
  • The United States Marine Corps has included Appian’s low-code automation platform on its list of approved Platform as a Service (PaaS) tools.
  • Appian and KPMG announced an Intelligent Data Privacy offering, helping businesses manage compliance with the California Consumer Privacy Act (CCPA).
  • DocuSign and Appian announced a no-code integration, adding market-leading electronic signature capabilities to Appian’s low-code automation platform.
  • Box and Appian announced the availability of a no-code integration, uniting Box's best-of-breed content management with Appian's low-code automation platform.
  • Appian released the latest version of its low-code automation platform.

Financial Outlook:

As of August 6, 2020, guidance for 2020 is as follows:

  • Third Quarter 2020 Guidance:
    • Cloud subscription revenue is expected to be in the range of $31.4 million and $31.9 million, representing year-over-year growth of between 28% and 30%.
    • Total revenue is expected to be in the range of $70.5 million and $71.5 million, representing a year-over-year increase of between 7% and 8%. 
    • Adjusted EBITDA loss is expected to be in the range of $(11.0) million and $(10.0) million.
    • Non-GAAP net loss per share is expected to be in the range of $(0.18) and $(0.16). This assumes 70.0 million weighted average common shares outstanding.
  • Full Year 2020 Guidance:
    • Given the continued uncertainty regarding the duration of COVID-19 and its impact on the global economy, there is a broad range of possible results for this year. Therefore, Appian is not providing a financial outlook for full year 2020.

Conference Call Details:

Appian will host a conference call today, August 6, 2020, at 5:00 p.m. ET to discuss Appian's financial results for the second quarter ended June 30, 2020 and business outlook. 

The live webcast of the conference call can be accessed on the Investor Relations page of Appian’s website at http://investors.appian.com. To access the call, please dial (800) 437-2398 in the U.S. or (323) 289-6576 internationally.  Following the call, an archived webcast will be available at the same location on the Investor Relations page.  A telephone replay will be available for one week at (844) 512-2921 in the U.S. or (412) 317-6671 internationally with recording access code 3672818.

About Appian

Appian (NASDAQ: APPN) provides a low-code automation platform that accelerates the creation of high-impact business applications. Many of the world’s largest organizations use Appian applications to improve customer experience, achieve operational excellence, and simplify global risk management and compliance. For more information, visit www.appian.com.

Non-GAAP Financial Measures

To supplement its consolidated financial statements, which are prepared and presented in accordance with GAAP, Appian provides investors with certain non-GAAP financial measures, including non-GAAP operating loss, non-GAAP net loss, non-GAAP net loss per share, non-GAAP weighted average shares outstanding and adjusted EBITDA. These non-GAAP financial measures exclude the effect of stock-based compensation expense and gains or losses on disposal of an asset. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP, and Appian’s non-GAAP measures may be different from non-GAAP measures used by other companies. For more information on these non-GAAP financial measures, please see the reconciliation of these non-GAAP financial measures to their nearest comparable GAAP measures at the end of this press release.  A reconciliation of non-GAAP guidance measures to the most comparable GAAP measures is not available on a forward-looking basis without unreasonable efforts due to the high variability, complexity and low visibility with respect to the charges excluded from these non-GAAP measures.

Appian uses these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. Appian’s management believes that these non-GAAP financial measures provide meaningful supplemental information regarding Appian’s performance by excluding certain expenses that may not be indicative of its recurring core business operating results. Appian believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing Appian’s performance and when planning, forecasting, and analyzing future periods. These non-GAAP financial measures also facilitate management’s internal comparisons to historical performance as well as comparisons to competitors’ operating results. Appian believes these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to measures used by management in its financial and operational decision-making and (2) they are used by Appian’s institutional investors and the analyst community to help them analyze the health of Appian’s business.

Forward-Looking Statements

This press release includes forward-looking statements. All statements contained in this press release other than statements of historical facts, including statements regarding Appian’s future financial and business performance for the third quarter, the impact of COVID-19 on Appian’s business and on the global economy, future investment by Appian in its go-to-market initiatives, increased demand for the Appian platform, market opportunity and plans and objectives for future operations, including Appian’s ability to drive continued subscription revenue and total revenue growth, are forward-looking statements. The words "anticipate," believe," "continue," "estimate," "expect," "intend," "may," "will" and similar expressions are intended to identify forward-looking statements. Appian has based these forward-looking statements on its current expectations and projections about future events and financial trends that Appian believes may affect its financial condition, results of operations, business strategy, short-term and long-term business operations and objectives and financial needs. These forward-looking statements are subject to a number of risks and uncertainties, including the risks and uncertainties associated with Appian’s ability to grow its business and manage its growth, Appian’s ability to sustain its revenue growth rate, continued market acceptance of Appian’s platform and adoption of low-code solutions to drive digital transformation, the fluctuation of Appian’s operating results due to the length and variability of its sales cycle, competition in the markets in which Appian operates, risks and uncertainties associated with the composition and concentration of Appian’s customer base and their demand for its platform and satisfaction with the services provided by Appian, the potential fluctuation of Appian’s future quarterly results of operations, Appian’s ability to shift its revenue towards subscriptions and away from professional services, Appian’s ability to operate in compliance with applicable laws and regulations, Appian’s strategic relationships with third parties and use of third-party licensed software and its platform’s compatibility with third-party applications, and the timing of Appian’s recognition of subscription revenue which may delay the effect of near term changes in sales on its operating results, and the additional risks and uncertainties set forth in the "Risk Factors" section of Appian’s Annual Report on Form 10-K for the year ended December 31, 2019 filed with the Securities and Exchange Commission on February 20, 2020 and other reports that Appian has filed with the Securities and Exchange Commission.  Moreover, Appian operates in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for Appian’s management to predict all risks, nor can Appian assess the impact of all factors on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements Appian may make. In light of these risks, uncertainties and assumptions, Appian cannot guarantee future results, levels of activity, performance, achievements or events and circumstances reflected in the forward-looking statements will occur. Appian is under no duty to update any of these forward-looking statements after the date of this press release to conform these statements to actual results or revised expectations, except as required by law.

Investor Contact
Scott Walker
Director, Investor Relations
703-496-4573
scott.walker@appian.com

Media Contact
Nicole Greggs
Director, Media Relations
703-260-7868
nicole.greggs@appian.com


APPIAN CORPORATION AND SUBSIDIARIES 
CONDENSED CONSOLIDATED BALANCE SHEETS 
(in thousands, except share and per share data) 
     
     
 As of  As of  
 June 30, December 31, 
  2020   2019  
 (unaudited)   
Assets    
Current assets    
Cash and cash equivalents$256,146  $159,755  
Accounts receivable, net of allowance of $800 and $600 as of June 30, 2020 and December 31, 2019, respectively 71,853   70,408  
Deferred commissions, current 15,122   14,543  
Prepaid expenses and other current assets 26,289   32,955  
Total current assets  369,410   277,661  
Property and equipment, net 37,437   39,554  
Goodwill 4,443   -  
Intangible assets, net of accumulated amortization of $196 as of June 30, 2020 1,790   -  
Operating right-of-use assets 23,156   24,205  
Deferred commissions, net of current portion 28,694   28,979  
Deferred tax assets 583   494  
Other assets 5,847   592  
Total assets$471,360  $371,485  
Liabilities and Stockholders’ Equity    
Current liabilities    
Accounts payable$4,128  $5,222  
Accrued expenses 7,307   7,488  
Accrued compensation and related benefits 13,183   10,691  
Deferred revenue, current 87,550   82,201  
Operating lease liabilities, current 5,427   3,836  
Finance lease liabilities, current 1,549   1,447  
Other current liabilities 592   1,395  
Total current liabilities  119,736   112,280  
Operating lease liabilities, net of current portion 44,142   44,416  
Finance lease liabilities, net of current portion 1,556   2,375  
Deferred revenue, net of current portion 4,595   7,139  
Deferred tax liabilities 437   38  
Other non-current liabilities 2,092   -  
Total liabilities 172,558   166,248  
Stockholders’ equity    
Class A common stock - par value $0.0001; 500,000,000 shares authorized and 37,558,379 shares issued and outstanding as of June 30, 2020; 500,000,000 shares authorized and 34,525,386 shares issued and outstanding as of December 31, 2019 4   3  
Class B common stock - par value $0.0001; 100,000,000 shares authorized and 32,281,936 shares issued and outstanding as of June 30, 2020; 100,000,000 shares authorized and 32,942,636 shares issued and outstanding as of December 31, 2019 3   3  
Additional paid-in capital 458,174   340,929  
Accumulated other comprehensive loss (482)  (285) 
Accumulated deficit (158,897)  (135,413) 
Total stockholders’ equity 298,802   205,237  
Total liabilities and stockholders’ equity$471,360  $371,485  
     


APPIAN CORPORATION AND SUBSIDIARIES  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS 
(unaudited, in thousands, except share and per share data) 
         
         
 Three Months Ended June 30, Six Months Ended June 30, 
  2020   2019   2020   2019  
Revenue        
Subscriptions$41,418  $36,860  $91,854  $71,417  
Professional services 25,357   28,415   53,785   54,162  
Total revenue 66,775   65,275   145,639   125,579  
Cost of revenue        
Subscriptions 4,701   4,036   10,084   7,621  
Professional services 16,455   19,015   35,191   39,496  
Total cost of revenue 21,156   23,051   45,275   47,117  
Gross profit 45,619   42,224   100,364   78,462  
Operating expenses        
Sales and marketing 29,086   29,992   63,258   58,583  
Research and development 17,178   12,765   33,216   26,721  
General and administrative 11,450   9,261   24,591   18,277  
Total operating expenses  57,714   52,018   121,065   103,581  
Operating loss (12,095)  (9,794)  (20,701)  (25,119) 
Other (income) expense:        
Other (income) expense, net (682)  (79)  2,432   (381) 
Interest expense 128   69   271   140  
Total other (income) expense (554)  (10)  2,703   (241) 
Loss before income taxes (11,541)  (9,784)  (23,404)  (24,878) 
Income tax expense 274   267   80   389  
Net loss$(11,815) $(10,051) $(23,484) $(25,267) 
Net loss per share:        
Basic and diluted$(0.17) $(0.16) $(0.35) $(0.39) 
Weighted average common shares outstanding:        
Basic and diluted 68,369,823   64,753,044   67,949,270   64,531,089  
         


APPIAN CORPORATION AND SUBSIDIARIES 
STOCK-BASED COMPENSATION EXPENSE 
(unaudited, in thousands) 
         
         
 Three Months Ended June 30, Six Months Ended June 30, 
 2020  2019  2020  2019 
Cost of revenue:        
Subscriptions$229 $161 $442 $315 
Professional services 317  244  529  2,218 
Operating expenses        
Sales and marketing 657  814  1,410  3,195 
Research and development 619  435  1,172  2,550 
General and administrative 1,792  1,035  3,537  1,636 
Total stock-based compensation expense$3,614 $2,689 $7,090 $9,914 
         


APPIAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
    
    
 Six Months Ended June 30,
  2020   2019 
Cash flows from operating activities:   
Net loss$(23,484) $(25,267)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:   
Depreciation and amortization 2,980   1,933 
Bad debt expense 200   97 
Loss on disposal of property and equipment 22   145 
Deferred income taxes (168)  (47)
Stock-based compensation 7,090   9,914 
Changes in assets and liabilities:    
Accounts receivable (2,084)  9,337 
Prepaid expenses and other assets 1,922   13,453 
Deferred commissions (295)  (4,790)
Accounts payable and accrued expenses (1,674)  5,458 
Accrued compensation and related benefits 2,575   (3,181)
Other liabilities 1,271   (269)
Deferred revenue 2,310   640 
Operating lease liabilities 2,378   - 
Deferred rent, non-current -   4,584 
Net cash (used in) provided by operating activities  (6,957)  12,007 
Cash flows from investing activities:   
Payments for acquisitions, net of cash acquired (6,138)  - 
Purchases of property and equipment (686)  (27,689)
Net cash used in investing activities  (6,824)  (27,689)
Cash flows from financing activities:   
Principal payments on finance leases (716)  - 
Proceeds from public offering, net of underwriting discounts 108,260   - 
Payments of costs related to public offerings (18)  - 
Proceeds from exercise of common stock options 2,242   1,987 
Net cash provided by financing activities  109,768   1,987 
Effect of foreign exchange rate changes on cash and cash equivalents 404   (134)
Net increase (decrease) in cash and cash equivalents 96,391   (13,829)
Cash and cash equivalents, beginning of period 159,755   94,930 
Cash and cash equivalents, end of period$256,146  $81,101 
Supplemental disclosure of cash flow information:   
Cash paid for interest$88  $170 
Cash paid for income taxes$139  $116 
Supplemental disclosure of non-cash financing information:   
Capital lease obligations to acquire new office furniture and fixtures$ ― $3,673 


APPIAN CORPORATION AND SUBSIDIARIES 
RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES 
(unaudited, in thousands, except share and per share data) 
         
         
 Three Months Ended June 30, Six Months Ended June 30, 
  2020   2019   2020   2019  
Reconciliation of non-GAAP operating loss:        
GAAP operating loss$(12,095) $(9,794) $(20,701) $(25,119) 
Add back:        
Stock-based compensation expense 3,614   2,689   7,090   9,914  
Non-GAAP operating loss$(8,481) $(7,105) $(13,611) $(15,205) 
         
Reconciliation of non-GAAP net loss:        
GAAP net loss$(11,815) $(10,051) $(23,484) $(25,267) 
Add back:        
Stock-based compensation expense 3,614   2,689   7,090   9,914  
Loss on disposal of property and equipment 15   145   22   145  
Non-GAAP net loss$(8,186) $(7,217) $(16,372) $(15,208) 
         
Non-GAAP earnings per share:        
Non-GAAP net loss$(8,186) $(7,217) $(16,372) $(15,208) 
Non-GAAP weighted average shares used to compute net loss per share, basic and diluted 68,369,823   64,753,044   67,949,270   64,531,089  
Non-GAAP net loss per share, basic and diluted$(0.12) $(0.11) $(0.24) $(0.24) 
         
Reconciliation of non-GAAP net loss per share, basic and diluted:        
GAAP net loss per share, basic and diluted$(0.17) $(0.16) $(0.35) $(0.39) 
Add back:        
Non-GAAP adjustments to net loss per share 0.05   0.05   0.11   0.15  
Non-GAAP net loss per share, basic and diluted$(0.12) $(0.11) $(0.24) $(0.24) 
         
Reconciliation of adjusted EBITDA:        
GAAP net loss$(11,815) $(10,051) $(23,484) $(25,267) 
Other (income) expense, net (682)  (79)  2,432   (381) 
Interest expense 128   69   271   140  
Income tax expense 274   267   80   389  
Depreciation and amortization expense 1,469   1,135   2,980   1,933  
Stock-based compensation expense 3,614   2,689   7,090   9,914  
Adjusted EBITDA$(7,012) $(5,970) $(10,631) $(13,272) 
         

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