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AC

APPIAN CORP (APPN)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered steady top-line growth and stronger profitability: total revenue $166.4M (+11% YoY) with third straight positive adjusted EBITDA ($16.8M; 10.1% margin) and $45.0M operating cash flow . Cloud subscriptions revenue rose 15% YoY to $99.8M; total subscriptions revenue grew 14% YoY to $134.4M .
  • Results beat S&P Global consensus: revenue $166.4M vs $163.3M estimate (+1.9%); Primary EPS $0.13 vs $0.03 estimate; professional services was flat YoY; non-GAAP operating income swung to $14.3M from $(3.7)M YoY . Estimates marked with * are from S&P Global.
  • Guidance raised at the high end for FY25 cloud subscriptions and total revenue; FY25 adjusted EBITDA range increased to $40–46M (from $38–42M). Q2 guide implies a seasonal adjusted EBITDA loss on Appian World timing and term license seasonality .
  • Key catalysts: accelerating AI monetization (AI-inclusive tiers revenue ~$9M in Q1; ~25% price uplift), robust federal momentum (bookings +59% YoY; federal revenue +21% YoY) offset by softer cloud net retention (112% vs 116% prior quarter; 120% a year ago) .

What Went Well and What Went Wrong

What Went Well

  • Profitability inflection continues: third straight quarter of positive adjusted EBITDA ($16.8M) and non-GAAP net income ($9.8M), plus $45.0M operating cash flow; GAAP operating loss narrowed to $(0.8)M from $(19.5)M YoY .
  • AI traction and monetization: “70% of our cloud customers have adopted AI,” with production AI usage up 7.9x YoY; AI-inclusive tiers revenue doubled vs Q4 to $9M and price uplift is ~25% .
  • Federal strength: “federal government bookings… grew 59% compared to the same period last year,” and “federal government revenue grew year-over-year 21% versus… total revenue… 11%” .

What Went Wrong

  • Cloud net retention softened to 112% (from 116% prior quarter; 120% a year ago) due to a few unrelated downsells and slower customer-level growth; management still targets 110–120% range .
  • Q2 profitability guide implies seasonal step down (adjusted EBITDA loss $(5)M to $(2)M) given event timing and term license seasonality, despite FY raises at the high end .
  • FX and non-operating items remain volatile; Q1 included sizable FX gains in non-operating line that swing period-to-period (Q1 “Other (income) expense, net” $(5.7)M vs +$8.2M a year ago) .

Financial Results

Summary vs Prior Periods and Estimates

MetricQ3 2024Q4 2024Q1 2025Q1 2025 Consensus*YoY (Q1)QoQ (Q1)
Total Revenue ($M)154.1 166.7 166.4 163.3*+11% (0.2%) (calc from )
Subscriptions Revenue ($M)123.1 136.8 134.4 —+14% (1.7%) (calc from )
Professional Services Revenue ($M)30.9 29.9 32.1 —Flat YoY +7.2% (calc from )
GAAP Gross Profit ($M)117.0 131.0 127.5 —+14.0% (calc vs $111.8M PY )(2.7%) (calc)
GAAP Gross Margin %75.9% (calc from )78.6% (calc from )76.6% (calc from )—+200 bps YoY to 76.6%? (calc; non-GAAP GM discussed below)(200) bps QoQ (calc)
GAAP Operating Income (Loss) ($M)(7.2) 5.0 (0.8) —+$18.7M YoY (5.8) (vs Q4)
Adjusted EBITDA ($M)10.8 21.2 16.8 —+$18.1M YoY (4.4) vs Q4
Adjusted EBITDA Margin %7.0% (calc)12.7% (calc)10.1% (calc)—+10.2 pp YoY (calc)(2.6) pp QoQ (calc)
GAAP EPS(0.03) (0.18) (0.02) —+$0.43 YoY +$0.16 QoQ
Non-GAAP EPS (Primary)0.15 0.00 0.13 0.03*+$0.22 YoY +$0.13 QoQ
  • Non-GAAP gross margin was 78% in Q1 (vs 76% a year ago; 80% prior quarter). Subscriptions non-GAAP gross margin was 89% (vs 90% YoY and prior quarter). Professional services non-GAAP gross margin was 30% (vs 25% YoY; 31% prior quarter) .

Segment Revenue Breakdown

Revenue ($M)Q3 2024Q4 2024Q1 2025
Cloud Subscriptions94.1 98.9 99.8
Total Subscriptions123.1 136.8 134.4
Professional Services30.9 29.9 32.1
Total Revenue154.1 166.7 166.4

KPIs and Cash Flow

KPIQ3 2024Q4 2024Q1 2025
Cloud Subscriptions Revenue Retention Rate117% 116% 112%
Subscriptions Mix of Revenue79.9% (calc from )82.0% (calc from )81%
Operating Cash Flow ($M)(8.2) 13.9 45.0
Total Deferred Revenue ($M, end of period)~227.6 (224.2 current + 3.4 non-current) ~287.2 (281.8 + 5.5) 262.5
International Revenue %——36%
Cloud Net New ACV as % of Net New Software——~82%

Q1 2025 vs Consensus (S&P Global)

MetricActualConsensus*Surprise
Revenue ($M)166.4 163.3*+1.9%
Primary EPS0.13 0.03*+$0.10

Values marked with * are from S&P Global.

Guidance Changes

MetricPeriodPrevious Guidance (Feb 19, 2025)Current Guidance (May 8, 2025)Change
Cloud Subscriptions RevenueFY 2025$419–421M $419–423M Raised high end
Total RevenueFY 2025$680–684M $680–688M Raised high end
Adjusted EBITDAFY 2025$38–42M $40–46M Raised both ends
Non-GAAP EPSFY 2025$0.17–$0.22 $0.18–$0.26 Raised
Cloud Subscriptions RevenueQ2 2025—$101–103M (+14–16% YoY) New
Total RevenueQ2 2025—$158–162M (+8–11% YoY) New
Adjusted EBITDAQ2 2025—$(5)–$(2)M New
Non-GAAP EPSQ2 2025—$(0.15)–$(0.11) (74.8M shares) New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3’24, Q4’24)Current Period (Q1’25)Trend
AI adoption and monetizationQ3: positive trajectory; Q4: highlighted AI-driven process focus; cloud retention 116% 70% of cloud customers using AI; 7.9x YoY production AI usage; AI tiers ~$9M; ~25% price uplift Accelerating adoption and monetization
Data Fabric usageNot quantified previouslyData Fabric queries up 166% YoY to ~7B in Q1; 97% of new cloud users adopt Data Fabric Rapid growth in usage
Public sector momentumQ3: launched ProcureSight; govt positioning Federal bookings +59% YoY; federal revenue +21% YoY; optimistic but cautious on variability Strength with watchful stance
GTM productivity & pricing modelQ4: improving efficiency; positive EBITDA Net new bookings per rep +30% YoY; unveiling “weighted Rule of 40” and GTM productivity metrics; moving away from per-seat pricing over time Efficiency rising; pricing evolution
FX/non-operating volatilityQ3 FX gains $9.2M; Q4 FX losses $14.3M Q1 “Other (income) expense, net” $(5.7)M; interest expense ~$5.3M Volatile but less impactful to non-GAAP
Services mixQ3 services down YoY; mix ~20% Services flat YoY; expected to decline as % of revenue long-term Mix shifting to subscriptions

Management Commentary

  • “In Q1, Appian continued to demonstrate our earnings potential, with narrowing net losses, our third straight quarter of positive adjusted EBITDA, and $45 million in operating cash flow” — Matt Calkins, CEO .
  • “70% of our cloud customers have adopted AI… We had more AI usage in Q1 than in all 2024 put together” .
  • “Revenue from these AI inclusive tiers more than doubled in Q1 relative to Q4. Rising to $9 million” .
  • “Our cloud subscription revenue retention rate was 112% as of March 31, 2025” .
  • “Federal government bookings… grew 59% compared to the same period last year” . “Federal government revenue grew year-over-year 21% versus… total revenue… 11%” — Mark Lynch .
  • Product momentum: agentic AI enhancements (Agent Studio), AI Document Center, Smart Search, and autoscale for generative agents; FedRAMP High authorization highlighted in Q1 press cycle .

Q&A Highlights

  • Federal demand durability: No meaningful pull-forward in Q1; “cautiously optimistic” into Q3 despite higher variance from government dynamics .
  • Cloud net retention drivers: Dip to 112% reflects a few unrelated downsells and leveling of revenue growth at some customers; metric is trailing and within 110–120% target .
  • AI monetization and pricing: AI-inclusive tiers carry ~25% uplift; management expects industry to shift away from per-seat pricing toward usage/value-based models to capture AI benefits .
  • Billings: No noteworthy timing effects in Q1; management de-emphasizes billings in favor of subscriptions revenue as a momentum indicator .
  • GAM suite pricing and demand: Government Acquisition Management is a standalone solution typically “7-figure a year” even for small orgs .

Estimates Context

  • Beat on both revenue and EPS in Q1: $166.4M vs $163.3M revenue estimate; $0.13 vs $0.03 Primary EPS estimate. Professional services was flat YoY, and non-GAAP profitability exceeded company’s Q1 guidance ranges (Adj. EBITDA $16.8M vs guide $8–10M) . Consensus values marked with * are from S&P Global.
  • Guidance raises (FY25 revenue and adjusted EBITDA) suggest upward estimate revisions for FY25. Q2 guide implies seasonal softness in profitability (Appian World) and term license seasonality, which may temper near-term margin estimates while sustaining subscription growth .

Key Takeaways for Investors

  • Subscriptions-led model is compounding with improving efficiency: third straight quarter of positive adjusted EBITDA and strong operating cash flow position the company to invest while expanding margins over time .
  • AI is a tangible growth lever: broad adoption, rapidly rising usage, and early monetization ($9M in AI tiers; ~25% uplift) should support sustained subscriptions growth and upsell motion .
  • Federal momentum is a differentiator: +59% bookings YoY and +21% revenue YoY from federal provide counter-cyclical exposure, though management remains prudently cautious on variability .
  • Watch retention and pricing evolution: cloud net retention at 112% is within the targeted 110–120% but down sequentially; management plans to shift pricing away from per-seat to usage/value-based models to better monetize AI .
  • FY25 guidance raised (high end) across cloud and total revenue, and adjusted EBITDA — a positive signal for consensus trajectory; Q2 seasonality expected in profitability .
  • Product velocity underpins AI/process advantage: Agent Studio, AI Document Center, and Smart Search strengthen the platform’s ability to deploy governable, high-impact AI inside processes; FedRAMP High underscores credibility in regulated environments .
  • Near-term trading setup: Positive FY25 guidance revisions and AI monetization disclosures are supportive; investors will monitor Q2’s seasonal margin dip, retention trajectory, and continued federal execution .

Values marked with * in tables are retrieved from S&P Global.