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Low code software development platform provider Appian (Nasdaq: NASDAQ:APPN) beat analysts' expectations in Q2 CY2024, with revenue up 14.7% year on year to $146.5 million. On the other hand, next quarter's revenue guidance of $151 million was less impressive, coming in 2.8% below analysts' estimates. It made a GAAP loss of $0.60 per share, down from its loss of $0.58 per share in the same quarter last year.
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Appian (APPN) Q2 CY2024 Highlights:
- Revenue: $146.5 million vs analyst estimates of $142.9 million (2.5% beat)
- EPS: -$0.60 vs analyst expectations of -$0.47 (27.7% miss)
- Revenue Guidance for Q3 CY2024 is $151 million at the midpoint, below analyst estimates of $155.4 million
- The company dropped its revenue guidance for the full year from $616 million to $612.5 million at the midpoint, a 0.6% decrease
- Gross Margin (GAAP): 73.1%, up from 71.2% in the same quarter last year
- Free Cash Flow was -$18.35 million, down from $16.67 million in the previous quarter
- Net Revenue Retention Rate: 118%, down from 120% in the previous quarter
- Market Capitalization: $2.67 billion
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.
Automation SoftwareThe 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 GrowthAs you can see below, Appian's revenue growth has been decent over the last three years, growing from $83 million in Q2 2021 to $146.5 million this quarter.
This quarter, Appian's quarterly revenue was once again up 14.7% year on year. However, the company's revenue actually decreased by $3.39 million in Q2 compared to the $4.52 million increase in Q1 CY2024. Regardless, we aren't too concerned because Appian's sales seem to follow a seasonal pattern and management is guiding for revenue to rebound in the coming quarter.
Next quarter's guidance suggests that Appian is expecting revenue to grow 10.1% year on year to $151 million, slowing down from the 16.3% year-on-year increase it recorded in the same quarter last year. Looking ahead, analysts covering the company were expecting sales to grow 13.5% over the next 12 months before the earnings results announcement.
Product SuccessOne of the best parts about the software-as-a-service business model (and a reason why SaaS companies trade at such high valuation multiples) is that customers typically spend more on a company's products and services over time.
Appian's net revenue retention rate, a key performance metric measuring how much money existing customers from a year ago are spending today, was 118% in Q2. This means that even if Appian didn't win any new customers over the last 12 months, it would've grown its revenue by 18%.
Despite its recent drop, Appian still has a good net retention rate, proving that customers are satisfied with its software and getting more value from it over time, which is always great to see.
Key Takeaways from Appian's Q2 ResultsIt was good to see Appian beat analysts' revenue expectations this quarter. On the other hand, its revenue guidance for next quarter missed analysts' expectations and its full-year revenue guidance missed Wall Street's estimates. Overall, this was a bad quarter for Appian. The stock traded down 2.5% to $36.06 immediately following the results.
