Appian (APPN) 7 Nov 24 2024 Q3 Earnings call transcript

In Appian's latest earnings call for the third quarter of 2024, the company reported a strong financial performance, with cloud subscription revenue growing by 22% year-over-year to $94.1 million. The company's cloud subscriptions revenue retention rate was 117%, indicating a high level of customer satisfaction and loyalty. Appian's cloud revenue represented 80% of its total revenue, highlighting the company's growing emphasis on cloud-based solutions.

During the call, CEO Matt Calkins emphasized the company's focus on process and its role in enabling agentic AI. Calkins argued that process is a more effective framework for AI, as it provides the necessary structure, data access, and collaboration features that AI needs to be effective. This perspective aligns with Appian's positioning as a process company, offering a software platform for processes alongside expertise, solutions, and organizational commitment to deliver great process outcomes.

One of the significant highlights of the call was the company's progress in the public sector, where it has now secured contracts with all 15 U.S. cabinet-level agencies. This achievement underscores Appian's reputation and momentum in the government sector, with a focus on its government acquisition management solutions. The company also shared its intention to continue expanding in this sector, aiming to improve operational efficiency and digital transformation for government organizations.

Mark Matheos, CFO, provided an in-depth analysis of Appian's financial performance, highlighting the company's improved profitability, with adjusted EBITDA now projected to be positive for the full year 2024. Matheos attributed this success to a more efficient cost structure and a focus on high-value implementations in core verticals and use cases.

The call also addressed the ongoing trend of AI and its integration with Appian's platform. The company highlighted its use of AI in processes, emphasizing its advantages over standalone AI solutions. Appian's approach to AI is centered around its Data Fabric, which provides enterprise-wide data access and facilitates the integration of AI with various data sources. This approach is key to Appian's differentiation in the market, as it enables a more private and auditable AI solution.

Investors and analysts posed several questions during the call, touching on topics such as pricing strategies, market trends, and the role of AI in Appian's growth. The company provided insights into its pricing model, particularly its consumption-based pricing for AI, and shared its vision of outcome-based pricing in the future. Appian also discussed its focus on larger opportunities and existing customers, aiming to sell more to its already satisfied customer base.

Overall, Appian's third-quarter earnings call underscores the company's strong financial performance and strategic focus on process and AI. The company's success in the public sector and its innovative approach to AI integration are noteworthy, positioning Appian as a leader in process automation and orchestration. The call also highlighted the company's commitment to efficiency and cost management, setting a positive outlook for its future financial health and growth prospects.