Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Appian Corp (APPN, Financial) reported a 22% year-over-year growth in cloud subscription revenue, reaching $94.1 million.
- The company achieved a positive adjusted EBITDA of $10.8 million, surpassing previous guidance.
- Appian Corp (APPN) maintained a high cloud subscription revenue retention rate of 117% as of September 30, 2024.
- The company has successfully expanded its presence in the public sector, now serving all 15 US cabinet-level agencies.
- Appian Corp (APPN) has introduced a more efficient cost structure, leading to higher advisory service attachment rates and increased customer renewal uplifts.
Negative Points
- Professional services revenue declined by 7% year over year, highlighting potential volatility in this segment.
- The company anticipates a sequential decline in adjusted EBITDA for Q4 2024 due to increased sales commissions and marketing event expenses.
- Appian Corp (APPN) experienced a slight decline in total non-GAAP expenses, indicating potential challenges in cost management.
- The departure of CFO Mark Matheos introduces uncertainty in financial leadership, with an interim CFO stepping in.
- Despite positive growth, the macroeconomic environment remains a variable, with no clear insight into potential Q4 budget flushes.
Q & A Highlights
Q: Is the discussion about process versus agents, or is it about agents as a user interface and execution layer on top of process?
A: Matthew Calkins, CEO: Agents are not just a means to an end but an end themselves. The focus is on AI taking actions, and process empowers agents to be stronger by providing information, structured collaborators, and pre-coded output levers. Process is proposed as a better way to achieve a superior version of action-taking agents.
Q: Was the federal sector a strong performer for Appian this quarter compared to previous periods?
A: Matthew Calkins, CEO: The federal sector has been the best-performing area for Appian this year, driven by the success of the GAM suite and strong reputation. Appian is now in all 15 cabinet-level agencies, and the government sector is showing significant growth.
Q: What enabled the impressive EBITDA results this quarter, and where are the efficiency savings coming from?
A: Mark Matheos, CFO: The positive EBITDA was due to ongoing efforts to improve efficiency by focusing on high-value activities and reducing investments in less productive areas. The revenue beat also contributed to the adjusted EBITDA, and the company is committed to maintaining efficient growth.
Q: What are Appian's key differentiators in the Agentic AI market compared to competitors?
A: Matthew Calkins, CEO: Appian's data fabric allows for better data sourcing and interaction without needing to gather data into proprietary centers. This provides an informativeness advantage, and the structured approach to agents is more appealing to industries like government that require predictability and auditability.
Q: How is the adoption of the new pricing tiers going, and what impact has it had on revenue growth?
A: Matthew Calkins, CEO: The advanced tier, which offers higher functionality and pricing, has seen substantial interest, especially from new customers. The company is also working on upgrading existing customers to this tier, and the response has been positive, aligning with Appian's pricing strategy.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
