Appian (NASDAQ:APPN) Q4: Strong Sales, Stock Jumps 12.6%

Adam Hejl /
2022/02/17 4:09 pm EST
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Low code software development platform provider Appian (Nasdaq: APPN) beat analyst expectations in Q4 FY2021 quarter, with revenue up 28.6% year on year to $104.9 million. On top of that, guidance for next quarter's revenue was surprisingly good, being $107 million at the midpoint, 4.07% above what analysts were expecting. Appian made a GAAP loss of $25.8 million, down on its loss of $6.38 million, in the same quarter last year.

Is now the time to buy Appian? Access our full analysis of the earnings results here, it's free.

Appian (APPN) Q4 FY2021 Highlights:

  • Revenue: $104.9 million vs analyst estimates of $95.3 million (10.1% beat)
  • EPS (non-GAAP): -$0.16 vs analyst estimates of -$0.23
  • Revenue guidance for Q1 2022 is $107 million at the midpoint, above analyst estimates of $102.8 million
  • Management's revenue guidance for upcoming financial year 2022 is $445 million at the midpoint, beating analyst estimates by 4.76% and predicting 20.5% growth (vs 19.2% in FY2021)
  • Free cash flow was negative $23 million, compared to negative free cash flow of $26.5 million in previous quarter
  • Net Revenue Retention Rate: 116%, in line with previous quarter
  • Gross Margin (GAAP): 73.1%, in line with same quarter last year

"Appian cloud subscription revenue grew 39% for the full year. We enter 2022 with an accelerating business, a unified low-code platform, a growing ecosystem, and happy customers," said Matt Calkins, CEO & Founder.

Founded by Matt Calkins and his three friends out of an apartment in Northern Virginia, Appian (NASDAQ:APPN) sells a software platform that lets its users build applications without using much code, allowing them to create new software more quickly.

The whole purpose of software is to automate tasks to increase productivity. Today, innovative new software techniques, often involving AI and machine learning, are finally allowing automation that has graduated from simple one- or two-step workflows to more complex processes integral to enterprises. The result is surging demand for modern automation software.

Sales Growth

As you can see below, Appian's revenue growth has been strong over the last year, growing from quarterly revenue of $81.6 million, to $104.9 million.

Appian Total Revenue

This quarter, Appian's quarterly revenue was once again up a very solid 28.6% year on year. On top of that, revenue increased $12.5 million quarter on quarter, a very strong improvement on the $9.41 million increase in Q3 2021, which shows re-acceleration of growth, and is great to see.

Guidance for the next quarter indicates Appian is expecting revenue to grow 20.4% year on year to $107 million, improving on the 12.6% year-over-year increase in revenue the company had recorded in the same quarter last year. For the upcoming financial year management expects revenue to be $445 million at the midpoint, growing 20.5% compared to 19.2% increase in FY2021.

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Product Success

One of the best things about software as a service businesses (and a reason why they trade at such high multiples) is that customers tend to spend more with the company over time.

Appian Net Revenue Retention Rate

Appian's net revenue retention rate, an important measure of how much customers from a year ago were spending at the end of the quarter, was at 116% in Q4. That means even if they didn't win any new customers, Appian would have grown its revenue 16% year on year. Despite it going down over the last year this is still a good retention rate and a proof that Appian's customers are satisfied with their software and are getting more value from it over time. That is good to see.

Key Takeaways from Appian's Q4 Results

Since it has still been burning cash over the last twelve months it is worth keeping an eye on Appian’s balance sheet, but we note that with a market capitalization of $3.89 billion and more than $155.9 million in cash, the company has the capacity to continue to prioritise growth over profitability.

We were impressed by how strongly Appian outperformed analysts’ revenue expectations this quarter. And we were also glad that the revenue guidance for the rest of the year exceeded expectations. Zooming out, we think this impressive quarter should have shareholders feeling very positive. The company is up 12.6% on the results and currently trades at $55.51 per share.

Appian may have had a good quarter, so should you invest right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

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The author has no position in any of the stocks mentioned.