Executive Summary

Q3 2025 materially beat Street and company guidance: total revenue $187.0M vs S&P Global consensus $174.2M and non-GAAP diluted EPS $0.32 vs $0.05; adjusted EBITDA $32.2M, far above the $9–$12M guide . Estimates marked with * retrieved from S&P Global.
Profitability and efficiency improved: gross margin 77% (up from 75% in Q2), subscription GM 88%, pro services GM 34%; go-to-market productivity rose to 3.5, the ninth consecutive quarterly increase .
FY25 guidance raised: cloud subscriptions revenue to $435–$437M (18–19% YoY), total revenue to $711–$715M (15–16% YoY), adjusted EBITDA to $67–$70M; Q4 revenue guided to $187–$191M and EPS $0.04–$0.08 .
Narrative/catalysts: strong AI traction (Agent Studio GA), up-market wins and federal momentum; management flagged a temporary U.S. government shutdown risk that could impact Q4 by up to ~$10M, mostly term licenses, if it persisted through year-end .

What Went Well and What Went Wrong

What Went Well

Broad-based demand and AI monetization lifted results: cloud subscriptions revenue +21% YoY to $113.6M; total revenue +21% YoY to $187.0M; adjusted EBITDA $32.2M vs $10.8M a year ago .
Efficiency gains: go-to-market productivity ratio reached 3.5 with nine quarters of improvement; weighted Rule of 40 rose to 39 (double-weights cloud growth), underscoring balanced growth and margin .
Strategic AI progress: oversubscribed beta and strong early feedback for Agent Studio; “roughly a quarter” of customers now pay for AI, with IDP accuracy 95–99%, and multiple seven-figure AI deals across pharma, insurance, and public sector .

What Went Wrong

Government shutdown uncertainty: management included a scenario showing up to ~$10M impact to Q4 revenue/EBITDA if shutdown persisted through year-end, primarily term license renewals; cloud and services impact expected to be small .
NRR normalizing: cloud subscription revenue retention rate at 111% (down from 117% a year ago), consistent with mid–high teens cloud growth; management noted NRR is backward-looking and new logos also drive growth .
Pro services utilization likely above sustainable levels: 34% margin driven by very high utilization (weekends, limited vacations); management guided margin remains high but Q3 level may not be sustainable .

Financial Results

Revenue, EPS, Margins vs Prior Periods and Estimates

Metric	Q1 2025	Q2 2025	Q3 2025
Total Revenue ($USD)	$166.4M	$170.6M	$187.0M
Revenue Consensus ($USD)	$163.3M*	$160.1M*	$174.2M*
Cloud Subscriptions Revenue ($USD)	$99.8M	$106.9M	$113.6M
Subscriptions (Total) Revenue ($USD)	$134.4M	$132.7M	$147.2M
Professional Services Revenue ($USD)	$32.1M	$38.0M	$39.8M
Non-GAAP Diluted EPS ($)	$0.13	$0.00	$0.32
EPS Consensus ($)	$0.031*	-$0.128*	$0.054*
Adjusted EBITDA ($USD)	$16.8M	$8.1M	$32.2M
Total Gross Margin % (non-GAAP)	78%	75%	77%
Subscription GM % (non-GAAP)	89%	87%	88%
Pro Services GM % (non-GAAP)	30%	33%	34%

Notes: Estimates marked with * retrieved from S&P Global.

Selected sequential dynamics:

Total revenue rose $16.4M sequentially from $170.6M to $187.0M , driven by AI traction and up-market wins; adjusted EBITDA expanded from $8.1M to $32.2M .

Segment Breakdown

Revenue Segment	Q1 2025	Q2 2025	Q3 2025
Subscriptions ($USD)	$134.352M	$132.657M	$147.188M
Professional Services ($USD)	$32.074M	$37.983M	$39.816M
Total ($USD)	$166.426M	$170.640M	$187.004M

KPIs

KPI	Q1 2025	Q2 2025	Q3 2025
Cloud Subscription Revenue Retention Rate	112%	111%	111%
International Revenue Mix	36% of total	—	40% of total
Cloud Net New ACV as % of Net New Software Bookings	82%	—	~90%
Weighted Rule of 40	27	—	39
GTM Productivity Ratio	—	—	3.5

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Cloud Subscriptions Revenue	FY 2025	$429–$433M	$435–$437M	Raised
Total Revenue	FY 2025	$695–$703M	$711–$715M	Raised
Adjusted EBITDA	FY 2025	$49–$55M	$67–$70M	Raised
Non-GAAP EPS	FY 2025	$0.28–$0.36	$0.50–$0.54	Raised
Cloud Subscriptions Revenue	Q4 2025	—	$115–$117M	New
Total Revenue	Q4 2025	—	$187–$191M	New
Adjusted EBITDA	Q4 2025	—	$10–$13M	New
Non-GAAP EPS	Q4 2025	—	$0.04–$0.08 (74.5M shares)	New
Total OI&E	Q4 2025	—	~$3.2M	New
Total OI&E	FY 2025	—	~$13.8M	New

Shutdown scenario: If U.S. government shutdown continues through year-end, potential up to ~$10M impact vs current Q4/FY guidance, mostly term licenses; small potential impact to cloud and services margin; timing effect, not demand .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q3 2025)	Trend
AI/Technology Initiatives	Q2 PR: “Appian AI drove strong financial results” and higher prices/pipeline ; Q1 call: 70% of cloud customers adopted AI; AI tiers revenue $9M; Data Fabric queries +166% YoY; focus on “boring AI” for practical value .	Agent Studio GA; oversubscribed beta; ~25% of customers pay for AI; IDP accuracy 95–99%; multiple seven-figure AI expansions across pharma, insurers, and U.S. agencies .	Accelerating monetization and enterprise-scale adoption.
Go-to-Market Efficiency	Q1: net new bookings per rep +30% YoY; weighted Rule of 40 27 .	GTM productivity 3.5 (9th consecutive increase); weighted Rule of 40 39 .	Sustained efficiency gains.
Federal/Public Sector	Q1: federal bookings +59% YoY; revenue growth in federal +21% YoY .	Faster-than-company growth YTD; positive purchasing pattern shift; temporary shutdown risk noted .	Structural tailwinds, near-term timing risk.
International Mix	Q1: 36% of revenue .	40% of revenue; FX helpful; AI-driven up-market engagements .	Rising mix and demand breadth.
Pricing/Monetization	Q1: AI tier uplift ~25%; moving beyond per-seat to consumption/value-based pricing .	Agent Studio in AI Advanced tier; elements of consumption to drive long-term growth .	Continued evolution of pricing model.
Data Fabric	Q1: adopted by 97% of incoming cloud users; “semantic layer” differentiation .	Embedded agents leverage data fabric; scaled security/performance .	Core differentiator for “serious AI.”

Management Commentary

CEO on AI embedded in process: “When you combine AI, data, and process, you can address bigger work and create bigger value. We call this serious AI.” .
CEO on differentiation: “We give [AI] connection… coordination… [and] governance… those are essential components… as a complement to AI.” .
CFO on profitability trajectory: “We’re guiding to EBITDA margin at 10% at the midpoint… going forward… expect more modest margin expansion ahead.” .
Product momentum: “Agent Studio… most oversubscribed beta… most positive feedback… puts us in the vanguard of innovation.” .
Federal outlook: “Efficiency has become the priority… the government’s willing to see software as the answer… open-minded about using AI… overall, I’m really bullish.” .

Q&A Highlights

Demand breadth: Strongest cloud ACV bookings of 2025 were “broad strengthening” tied to up-market strategy and AI traction .
Sales org and margins: Productivity improvements place Appian in “fourth or fifth inning”; plan to return to moderate headcount growth while maintaining margin expansion .
Agent Studio monetization: Available in AI Advanced tier; consumption elements will provide an incremental long-term growth lever .
Professional services margin: 34% driven by very high utilization; expected to remain high but Q3 level likely above sustainable .
NRR vs growth: 111% NRR is backward-looking and new logos contribute meaningfully to growth; minimal on-prem to cloud migrations .
Modernization opportunity: AI enables collaborative recreation (not mere translation) of legacy apps onto Appian; expected to be a substantial market .

Estimates Context

Q3 2025 beat: Revenue $187.0M vs $174.2M*; EPS $0.32 vs $0.054*; Q2 and Q1 also exceeded consensus revenue and EPS . Estimates marked with * retrieved from S&P Global.
Forward quarter: Q4 2025 consensus revenue $189.3M* and EPS $0.078* within company guidance ranges . Estimates marked with * retrieved from S&P Global.
Implication: Street models likely need higher FY25 revenue and EBITDA post beat and guidance raise; watch for term license sensitivity if shutdown persists .

Key Takeaways for Investors

Significant beat and full-year guidance raise suggest upside to consensus and validate AI-driven, up-market strategy; adjusted EBITDA inflection supports improving cash-generation profile .
Efficiency metrics (GTM productivity 3.5; Rule of 40 39) indicate durable improvements in sales productivity and margin expansion potential into 2026, albeit at a more modest pace near term .
Agent Studio GA and IDP differentiation (95–99% accuracy) are catalysts for incremental AI penetration, tier uplift, and consumption-based monetization over time .
Federal momentum and international mix expansion (40%) broaden demand drivers; near-term U.S. government shutdown risk is timing-centric and concentrated in term licenses .
Watch pro services margin normalization from elevated utilization; sustained high-margin services can accelerate AI adoption and ARR growth .
Near-term trading: Expect positive estimate revisions; monitor Q4 execution vs shutdown scenario; term license renewals and FX are swing factors .
Medium-term thesis: Platform advantages in process + data fabric + governed agents create defensible moat; pricing shifts to consumption/value can expand TAM and unit economics .

Estimates marked with * retrieved from S&P Global.

APPIAN CORP (APPN)·Q3 2025 Earnings Summary