NASDAQ:APPN Appian Q1 2025 Earnings Report $31.42 +0.30 (+0.96%) Closing price 05/22/2025 04:00 PM EasternExtended Trading$31.63 +0.21 (+0.68%) As of 04:22 AM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. ProfileEarnings HistoryForecast Appian EPS ResultsActual EPS$0.13Consensus EPS $0.03Beat/MissBeat by +$0.10One Year Ago EPS-$0.24Appian Revenue ResultsActual Revenue$166.43 millionExpected Revenue$163.27 millionBeat/MissBeat by +$3.16 millionYoY Revenue Growth+11.10%Appian Announcement DetailsQuarterQ1 2025Date5/8/2025TimeBefore Market OpensConference Call DateThursday, May 8, 2025Conference Call Time8:30AM ETUpcoming EarningsAppian's Q2 2025 earnings is scheduled for Wednesday, July 30, 2025, with a conference call scheduled on Thursday, July 31, 2025 at 8:30 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)SEC FilingEarnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Appian Q1 2025 Earnings Call TranscriptProvided by QuartrMay 8, 2025 ShareLink copied to clipboard.PresentationSkip to Participants Operator00:00:00note this event is being recorded. I would now like to turn the conference over to Jack Andrews, Vice President of Investor Relations. Operator00:00:09Please go ahead. Jack AndrewsVice President - Investor Relations at Appian00:00:11Good morning, and thank you for joining us. Today, we'll review Appian's first quarter twenty twenty five financial results. With me are Matt Calkins, Chairman and Chief Executive Officer and Mark Lynch, Interim Chief Financial Officer. After prepared remarks, we'll open the call for questions. During this call, we may make statements related to our business that are considered forward looking. Jack AndrewsVice President - Investor Relations at Appian00:00:32These include comments related to our financial results, trends and guidance for the second quarter and full year 2025, benefits of our platform, industry and market trends, our go to market and growth strategy, our market opportunity and ability to expand our leadership position, our ability to maintain and upsell existing customers and our ability to acquire new customers. These statements reflect our views only as of today and don't represent our views as of any subsequent date. We won't update these statements as a result of new information unless required by law. Actual results may differ materially from expectations due to the risks and uncertainties described in our SEC filings. Additionally, GAAP financial measures will be discussed on this conference call. Jack AndrewsVice President - Investor Relations at Appian00:01:16Reconciliations of GAAP to non GAAP financial measures are provided in our earnings release. With that, I'd like to turn the call over to our CEO, Matt Calkins. Matt? Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:01:26Thanks, Jack. Thanks everyone for joining us today. In the first quarter of twenty twenty five, Appian's cloud subscription revenue grew 15% year over year to $99,800,000 Subscriptions revenue grew 14% to 134,400,000.0 Total revenue grew 11% year over year to $166,400,000 Our cloud subscription revenue retention rate was 112 as of March 31. Adjusted EBITDA was $16,800,000 a strong follow-up to the prior quarter's adjusted EBITDA of $21,200,000 and a continued demonstration of our inherent earnings potential. We held our annual conference last week, Appian World. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:02:09Our focus was squarely on AI and AI agents and how AI can be deployed inside a process to deliver practical value. I appreciate the many customers who spoke about their experiences with Appian, the value they created using Appian AI, and the success they achieved. Speakers from Aon, NASA, and MagMutual shared stories of how their organizations optimized processes with Appian. Neuberger Berman revealed it onboards tens of billions of dollars in funds faster with Appian. Hitachi reported reducing operating expenses by 20% using Appian. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:02:42Acclaim autism uses Appian to ingest medical documents accelerating its patient intake process by 83%. My keynote was about bringing AI to work. By that, I mean finding the place in your enterprise where work is heaviest and most important and deploying AI there. We focus on AI the worker, not AI the helper. In order to make AI a worker, you must integrate AI into a business process because that's how the most critical work is done by teams taking coordinated action. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:03:19We don't believe in asking AI to make staggering leaps of creativity, not in 02/2025 anyway. Instead, AI is for doing regular work with superhuman efficiency. Things like document intake and response which AI can do faster and better than anyone else. My favorite conference session was called saving millions with boring AI because it pretty much sums up our approach to AI straightforward, even boring, and immensely productive. We focus on practical results over hype, but don't let our use of the word boring fool you. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:03:56We're getting incredible results. 70% of our cloud customers have adopted AI. We grew year over year production AI usage last quarter by 7.9 x, not 7.9%, seven point nine times. We had more AI usage in q one than in all twenty twenty four put together. It's natural that the focus of the AI revolution would shift to supporting technologies like processes. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:04:24The major AI models are convergent. The most important decision in AI applications may be not which AI you use, but how you deploy it. Our belief, as you know if you've heard me before, is that AI should be deployed in a process. In an Appian process, AI is easier to deploy, safer, and more powerful. Appian makes AI easy to adopt. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:04:50For example, a leading Australian insurer deployed an application to ingest documents and automate underwriting processes using Appian AI. Before Appian, hundreds of underwriting specialists spent days manually processing quotes with limited accuracy. Now in minutes, our AI classifies documents and extracts data with over 96% accuracy so the insurer can quickly open and progress cases. Customer expects to run these processes 50% faster and generate millions more dollars in revenue annually. Last year, Appian launched a multi tiered pricing model that allows us to monetize AI and other exclusive features. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:05:27Since then, nearly half of our new logos have purchased the AI inclusive upper tiers. Revenue from these AI inclusive tiers more than doubled in q one relative to q four rising to $9,000,000. This is not yet a large share of our quarterly subscriptions revenue but it demonstrates our early moves to monetize AI and our customers' willingness to pay for it. Our customers become more efficient when they use our platform. An association of US Financial Regulators is one example. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:06:00This group is an existing Appian customer. Its state regulators process thousands of product filings annually, 50% faster when using our platform. This was even without AI. In q one, it expanded its use with a 7 figure software deal to upgrade its existing licenses to our new pricing model and deploy Appian AI. Our AI classifies these documents and extracts pertinent data from each filing. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:06:25Now the group expects to eliminate manual verifications and save tens of thousands of additional labor hours annually. The central message of my keynote involved AI agents. I explained the three primary behaviors of an agent. It thinks, it acts, and it learns. And I explained why Appian agents have an edge in all three behaviors. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:06:49I'm gonna walk through them right now briefly. First of those three behaviors is thinking. Thinking refers to exploring data with repeated queries of disparate sources to decide on the best course of action. The more data an agent can explore, the better it will think. Appian's data fabric allows the agent to roam the entire enterprise of data, not limited to a single silo or data source. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:07:17Our data fabric is industry leading functionality adopted by 97% of our incoming cloud users. Our data fabric gives agents more than universal access. It also grants them speed because our queries are automatically performance tuned and security because we run those queries with the appropriate user's credentials. Due to a surge in AI related usage, data fabric queries are up 166% year over year to nearly 7,000,000,000 queries in q one. Second part of my behavior list is acting. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:07:57Acting is the second thing that these agents do and it refers to an agent implementing its decision. Appian's agents act exclusively through processes. That's all they can do is is launch processes. No surprise there as we are the process company. Processes are a great way to take action. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:08:18They are complex compound actions potentially triggering dozens of separate work items by dozens of different workers so they are powerful, but they are also safe. Processes are auditable and predictable. They provide guardrails. If processes are the best way for agents to take action, Appian has a distinct advantage. We run 16,000,000,000 transactions per day on our processes. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:08:50Finally, there's think, there's act, there's learn. So last one is learning. Learning means that an agent benefits from the knowledge of past results. If you want to learn from past results, must start by remembering them and Appian monitors everything that happens in our processes. How much time did it take? Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:09:08How much did it cost? Was it successful? We track all these things. Our process mining capability gives us an edge in collecting data for the benefit of our agents. The more you know, the more you can learn. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:09:22For example, a large US healthcare system will use Appian to simplify operations for hundreds of medical facilities. It'll start by analyzing a series of patient focused processes like medical procedure pre authorizations and denials to reduce overhead costs by 20%. Appian Data Fabric will consolidate data from a dozen systems so the group can use our process mining tools to identify key bottlenecks. The group will use these insights to prioritize an IT roadmap of workflows to automate with our platform. Appian does business in The United States public sector. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:10:00We have a large presence in the federal space and are thus exposed to whatever disruption Doge may create. But we are also tightly associated with Doge's primary virtues, efficiency and modernization. We remain cautiously optimistic about the evolving opportunity. In Q1, our federal government bookings including both the net new software and services grew 59 compared to the same period last year. Appian has a long history of delivering value within the government. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:10:38The Department of Labor, for example, saves tens of millions of dollars annually using Appian. Appian applications are mission critical. The government procures $464,000,000,000 in annual budget on the Appian platform. We offer a solution called government acquisition management or GAM. GAM helps agencies automate highly regulated processes for procuring goods and services. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:11:05Last year Appian launched ProcureSight to complement the suite. ProcureSight is an AI driven website. It applies AI to several major public datasets so government professionals can glean insights from past procurements to help generate new ones. Over 80 federal agencies and sub agencies use the service today to make their procurements more cost effective. We continue to sign new customers and win big expansions in our key verticals. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:11:37Here's some examples. First, a US civilian agency purchased a 7 figure software deal and became a new customer this quarter. It selected our platform to manage investigations for tens of thousands of mail related crimes annually. Before Appian, the group manually consolidated case files because its legacy system was disjointed and incomplete. Now Appian Data Fabric will seamlessly integrate data from dozens of systems so federal agents can focus on advancing investigations. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:12:07We won this competitive deal because we were the only vendor to meet all the customers' requirements during our custom demo. Next, a US agency supporting the Department of Defense catalogs and manages nuclear inventory using Appian. This quarter, it chose to modernize its procurement office and purchased our GAM solution. Before, contracting officers manually tracked requirements on spreadsheets and custom tools. Now they'll process hundreds of millions of dollars of annual procurement budget on Appian. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:12:37We won this deal because the customer's peer organizations recommended our solution. My final story is about a top Australian bank that became a new Appian customer this quarter. It'll use our platform to modernize customer service processes like credit card disputes and customer account updates. Appian AI will ingest nearly 75,000,000 document pages annually, and Appian Data Fabric will consolidate data from all related systems into a single workflow tool so service agents can reduce their SLAs from hours to minutes. It's important to me that Appian's investors know Appian's intentions. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:13:17So I'll share with you now two essential internal metrics which we'll report on quarterly going forward. The first is what we call weighted rule of 40. This is the most important number that we manage the company towards. It's a combination of growth and margin like a typical rule of 40, but we weight growth twice as much as margin. In the current quarter, our weighted rule of 40 score is 27, which is the sum of four thirds cloud subscription growth plus two thirds adjusted EBITDA margin. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:13:54I explained the math so you can see that the factors add up to two just like in a regular rule of 40 metric. Some Appian executives have weighted rule of 40 targets today and all of them will over the next few quarters. Appian's other top objective to increase sales and marketing efficiency. This became my primary objective in 02/2023 and after much work, we're seeing some results. This q one, our net new bookings per sales rep rose more than 30% compared to the same period last year. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:14:28We want to share our progress with you using a new metric. See slide four in the presentation called GTM productivity, that's go to market productivity. It measures the bang for our buck in sales and marketing. The numerator is the sum of total revenue and the quarterly changes in short term deferred revenue over trailing twelve months. The denominator is trailing twelve months non GAAP sales and marketing expenses. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:14:53As you'll see on the chart, we're showing steady progress. Appian hired Serge Tanga as our new chief financial officer starting later this month. Serge has over twenty years of financial experience, most recently as senior vice president of finance at MongoDB where he led financial planning, strategic finance, business operations, and analytics, and then as their interim CFO. I'm excited to welcome him to Appian's executive team. I thank Mark Lynch for serving as our interim CFO during this search. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:15:27He'll remain on Appian's board of directors. With that, I'll hand the call over to Mark for a deeper discussion of our financials. Mark? Mark LynchInterim CFO & Director at Appian00:15:37Thanks, Matt, and thank you everyone joining us today. I'll review the financial highlights for the quarter and then we'll provide guidance for Q2 and the full year 2025. Appian exceeded the guidance ranges we provided on our key metrics of cloud revenue, total revenue and adjusted EBITDA. Cloud subscriptions revenue was $99,800,000 an increase of 15% year over year. Total subscriptions revenue was $134,400,000 an increase of 14% year over year. Mark LynchInterim CFO & Director at Appian00:16:07On a constant currency basis, total subscriptions revenue grew 15% year over year. Professional services revenue was $32,100,000 flat growth compared to the first quarter of twenty twenty four. As a reminder, services revenue can be volatile quarter to quarter. We continue to expect professional services revenue to decline as a percentage of total revenue over the long term. Subscriptions revenue represented 81% of total revenue compared to 79% in the year ago period and 82% in the prior quarter. Mark LynchInterim CFO & Director at Appian00:16:40Total revenue was $166,400,000 an increase of 11% year over year. On a constant currency basis, total revenue grew 12% year over year. Our cloud subscriptions revenue retention rate was 112% as of 03/31/2025, compared to 120% a year ago and 116% in the prior quarter. We continue to target a cloud subscriptions revenue retention rate 110% to 120% on a quarterly basis. Our international operations contributed 36% of total revenue compared to 37% in the year ago period. Mark LynchInterim CFO & Director at Appian00:17:17Cloud net new ACV bookings were approximately 82% of total net new software bookings in Q1 consistent with the prior year. Let's turn to profitability metrics. Non GAAP gross margin was 78% compared to 76% in the year ago period and 80% in the prior quarter. Our subscriptions non GAAP gross profit margin was 89% compared to 90% in both the year ago period and prior quarter. This margin remains best in class in enterprise software. Mark LynchInterim CFO & Director at Appian00:17:48Professional services non GAAP gross margin was 30% compared to 25% a year ago period and 31% in the prior quarter. Total non GAAP operating expenses were $114,800,000 down 2% from $117,300,000 in the year ago period. Adjusted EBITDA was positive $16,800,000 versus our guidance of positive $8,000,000 to $10,000,000 and compared to an adjusted EBITDA loss of $1,300,000 in the year ago period. This outperformance relative to our guide was largely driven by taking a measured approach to hiring, prioritizing low cost regions for hiring and by greater than expected term license and services revenue. Non GAAP net income was $9,800,000 or $0.13 per diluted share compared to a non GAAP net loss of $4,900,000 or $07 per share for the first quarter of twenty twenty four. Mark LynchInterim CFO & Director at Appian00:18:43This is based on 74,100,000.0 diluted shares outstanding for the first quarter of twenty twenty five and 73,300,000.0 diluted shares outstanding for the first quarter of twenty twenty four. Turning to our balance sheet. As of 03/31/2025, cash and cash equivalents and investments were $199,700,000 compared with $159,900,000 at the end of last year. For the first quarter, cash provided by operations was $45,000,000 compared to $18,900,000 for the same period last year. Total deferred revenue was $262,500,000 as of 03/31/2025, an increase of 16% from the year ago period. Mark LynchInterim CFO & Director at Appian00:19:27As we stated on past calls, the majority of our customers are invoiced on an annual upfront basis. We also have large customers that are billed quarterly or monthly. Due to the variability of our billing terms, changes in our quarterly deferred revenue are generally not indicative of our business momentum. We continue to believe cloud subscriptions revenue is better indicator of our business momentum than billings or remaining performance obligations, RPO. The latter metrics can fluctuate based on the timing of invoicing, seasonality of self managed license revenue, and the duration of customer contracts. Mark LynchInterim CFO & Director at Appian00:20:02The true scale of the business is represented by subscriptions revenue, which includes support and all software subscriptions revenue regardless of whether the customer deploys to the Appian Cloud, their private cloud, or on prem. Before discussing guidance, I'll share a few observations about macroeconomic and business conditions. The US dollar has weakened since we last provided guidance, which now gives Appian a currency tailwind. Appian exceeded the high end of our q one guidance for cloud revenue and total revenue. And at this point in the year, we have not seen any material changes in our sales pipeline or the cadence of our business. Mark LynchInterim CFO & Director at Appian00:20:39Given the macro uncertain macroeconomic uncertainty, changes within the federal government, and thus a wider range of potential outcomes, we're taking a prudent approach to guidance for the remainder of 2025. For the second quarter of twenty twenty five, cloud subscriptions revenue is expected to be between 101 and $103,000,000, representing year over year growth between 1416%. Total revenue is expected to be between 158 and $162,000,000, representing year over year growth between 811%. Adjusted EBITDA for the second quarter of twenty twenty five is expected to be between negative 5,000,000 and negative $2,000,000 Non GAAP earnings per share is expected to be between negative 15 million and negative $11,000,000 This assumes 74,800,000.0 fully diluted weighted average shares outstanding. For the full year 2025, we are increasing the high end of our previously stated guidance range regarding cloud subscriptions revenue and total revenue while maintaining the original low end of those guidance ranges. Mark LynchInterim CFO & Director at Appian00:21:42We're also increasing our overall adjusted EBITDA range for the year. For the full year 2025, cloud subscriptions revenue is expected to be between 419 and $423,000,000, representing year over year growth of between 1415%. Total revenue is expected to be between 680 and $688,000,000, representing year over year growth of 10% to 12%. Adjusted EBITDA is now expected to range between positive 40,000,000 and $46,000,000 Non GAAP earnings per share is expected to be between $0.18 and $0.26 This assumes 75,100,000.0 fully diluted weighted average shares outstanding. Our guidance assumes the following: First, we expect Q2 professional services revenue will be flat compared to a year ago. Mark LynchInterim CFO & Director at Appian00:22:29For the full year, we expect professional services revenue to be approximately flat or increase by low single digit range compared to a year ago. Second, we anticipate term license revenue will decrease by low double digit percentage on a year over year basis as we anniversary a difficult comparison from a strong q two twenty twenty four. Third, we expect q two adjusted EBITDA to be a loss due to the combination of term license seasonality and the cost of running our annual user conference Appian World. Fourth, total in total total other income and interest expense will be approximately 3,500,000.0 in q two and 14,000,000 for the full year 2025. Fifth, capital expenditures will be between $1,000,000 and $1,500,000 in Q2 and between 3,000,000 and $4,000,000 for the full year 2025. Mark LynchInterim CFO & Director at Appian00:23:20Finally, our guidance assumes FX rates as of 05/02/2025. Now we'll turn the call over for questions. Operator? Operator00:23:30Certainly. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press then 2. Operator00:23:51At this time, we will pause momentarily to assemble our roster. The first question comes from Sanjit Singh with Morgan Stanley. Sanjit SinghExecutive Director at Morgan Stanley00:24:02Congrats Sanjit SinghExecutive Director at Morgan Stanley00:24:07on the continued progress on the profitability side. That's really nice to see. I wanted to ask about the good government performance this quarter. To what degree was there any sort of potential pull forward into Q1 ahead of some of the uncertainty around ordering patterns due to Doge? And then as we think out into Q3, the federal government end of fiscal year spend, what sort of the baseline assumptions that you guys are making with respect to the year end federal budget spending period? Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:24:45Alright. Thank you for the question. First of all, I don't believe pull forwards to have been a meaningful factor in q one. I I'm not aware of any pull forwards. So I hesitate to say I'm sure it was zero, but I don't believe it to be meaningful. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:25:02With regards to q three, we understand that there's a higher variance this year on on the federal business than there have been in previous years. But so far, we're on the good side of that variance. And, I I think that we're we're keeping possibilities open. We're cautiously optimistic about how q three will be. Sanjit SinghExecutive Director at Morgan Stanley00:25:22Awesome. That's great to hear. And then just as a follow-up, if I look at sort of the cloud net retention rates, certainly within the range that you guys have talked about historically, 01/10 to 01/20, it did dip down more meaningfully in q one and doesn't sound like that's coming from the government side of the house. Any sort of spending hesitation you're seeing on the on the enterprise commercial side of the business that drove that drove that net retention rate down four points quarter over quarter? Mark LynchInterim CFO & Director at Appian00:25:53Not really. First of all, it's it's a reminder that this is a a trailing metric. 12 you know, it's basically twelve months over twelve months, So it's backward looking. Basically, a couple of things happened. There were some down sells in q one of twenty twenty four that are working their way through the calculation now, and they were they're predominantly unrelated down sells. Mark LynchInterim CFO & Director at Appian00:26:15And also, we had some revenue growth rates and some of the customers level off during recent twelve month period. So those kind of conspired to lower the rate a little bit. Sanjit SinghExecutive Director at Morgan Stanley00:26:26I appreciate the color. Thanks, Mark. Operator00:26:30Our next question comes from Raimo Lenschow with Barclays. Please go ahead. Raimo LenschowManaging Director at Barclays00:26:35Perfect. Thanks for all the clarity on federal, and congrats on the quarter. Matt, Raimo LenschowManaging Director at Barclays00:26:41I wanted Raimo LenschowManaging Director at Barclays00:26:41to ask on AI and the new agentic world. How do you like and I appreciate you as a founder. You always think more bigger picture than a lot of other guys. How do you think this new world is going to play out? I mean, you clearly have a lot of success, but there's obviously a lot of noise, you know, marketing noise in the market of people. Raimo LenschowManaging Director at Barclays00:27:03Everyone is doing agents now and agentic, etcetera. Like, how do you think, like, what's ultimately the big thing for a customer and how you fit in there? And then I have a follow-up for Mark. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:27:14Yeah. This agent's topic, it's it's both the most important application of AI and as such an exceptionally worthy topic for conversation and and and development. And at the same time, it's it's overstated and it's the market is still dominated by more hype than than results. And so we're at pains to differentiate ourselves from that. And the fact that we rely mostly on customer stories to make our point and that we use words like boring, that this is all an intentional sort of disassociation that we're trying to make between our between our approach which is result centric and customer focused and and using AI to practical effect versus the the the the sky high hyperbole that we're hearing from from some vendors. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:28:05I I I keep figuring that now is the moment when the hyperbole is gonna melt away and people are gonna care about actual results. And and I I think that we stand to benefit when that change happens, when people start allocating well, I'm sorry. What's people start paying attention to agents for for their impact. Agents are actors. Yeah. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:28:27They they're the actors of the AI world. AI should be taking action. We believe in AI the worker. This is exactly what we're here for is to use AI to do work. But but that work has to be regulated and audited and guardrailed and and provide provisioned with information and tracked. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:28:46And and so you need all that structure. You need all the structure around AI. You can't just make an AI agent and let it loose in the enterprise. And and therefore, I view the process infrastructure that we provide as a requisite for productive application of AI agents. Simply a prerequisite. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:29:09And to the degree that anyone else is gonna make value with their agents, it's going to be because they approximate the the functionality even if they don't achieve the functionality that we're providing with our process infrastructure. Raimo LenschowManaging Director at Barclays00:29:23Okay. Perfect. And then one quick one for Mark. The was there anything on the if you know, like, I know billings is not, really a measure that you you focus on, but, some of investors are still kind of paying attention to here. Was there anything in Q1 that kind of impacted billings in terms of timing, etcetera? Raimo LenschowManaging Director at Barclays00:29:41Nothing Mark LynchInterim CFO & Director at Appian00:29:43really to call out. Operator00:29:50The next question comes from Steve Enders with Citi. Please go ahead. Steve EndersAnalyst at Citigroup00:29:56Okay. Great. Thanks for taking the questions this morning. I guess to start, I mean, to hear the on the AI side, good to hear the the solid usage expansion year over year, and I think it was pretty clear coming from the the the conference, what that was looking like. But I guess I just wanna ask on how you're feeling about incremental kind of monetization. Steve EndersAnalyst at Citigroup00:30:18I think you called out $9,000,000 or so in the quarter coming from the AI tiers that you have available. But just how do you feel about that usage that you're seeing driving incremental revenue opportunities and and adoption of of those plans moving forward? Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:30:35Yeah. I am pleased with the willingness of customers to spend on AI. I think there's a recognition that this is creating great value. And so that's moving along nicely. Partly, you could make a case for not even trying to monetize at this point in the life cycle of a feature as powerful as AI. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:30:57I I think we're moving toward monetization a little sooner than I might otherwise planned just to try to create a a demonstration of the tangibility of the results we're creating because I feel like we we need that contrast with the market. We wanna show that this is real and that our customers appreciate it. So while I could understand, right, not trying to monetize it, I also think that it's a good idea for us to demonstrate that in order to just make a statement. And, yeah. Think the value is there for sure. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:31:29It's wonderful value. I as I estimated last quarter, I feel like our our TAM has doubled, in the the wake of AI, which is the the best thing that's ever happened to the process automation industry. Steve EndersAnalyst at Citigroup00:31:43Right. No. That's, very clear. Great to, great great to hear. And then just on, you know, new, with with CIRS coming on on board and and and new CFO started later this month. Steve EndersAnalyst at Citigroup00:31:56I guess, what's kind of the the the mandate or the the key area focus for for him as as he starts to to to get ramped up in the role? And, I guess, it's kind of a piece of that. How are you kind of viewing the the the ability to drive margin or or kind of the the levers to drive margin moving forward here? Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:32:15Yeah. Let me say I'm really excited to have Serge coming on board. He's an exceptional addition to our team. I don't wanna preempt our strategy by talking about it right now. Think there's a lot of great opportunities where we're gonna make substantial progress, and I I I see him as a contributor across the board. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:32:37Yeah. Let me let me just stop at that. Steve EndersAnalyst at Citigroup00:32:41Okay. Perfect. Thanks for taking the, thanks for taking the questions here. Operator00:32:48Our next question comes from Jake Robersch with William Blair. Please go ahead. Jake RobergeEquity Research Analyst at William Blair & Company, L.L.C00:32:55Yeah. Thanks for taking my questions. And, yeah, great to hear that, those AI SKUs hit 9 million in the quarter. Can you talk about the the use cases or areas of the platform that are driving the most demand on that front? And then is there any sense of how large of a pricing uplift you can see for those solutions on just a per customer basis? Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:33:16Yeah. That's right. Well, we've got it priced at 25% uplift. And that may that may fluctuate. But right now, that's our easy we're just asking 25% to add AI. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:33:28As for the primary use cases, well, they're as I said in the comments, they're regular work. They're they're regular work that otherwise could be done in a rote manner, but but, AI is just so terrifically good at it. It's, it's processing documents and gathering information and making simple decisions that you might have otherwise tried to delegate to a person or a business rule set intake. It's just terrific at document intake. It it can read anything at this point. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:33:59It can read ripped receipts or handwritten notes or or emails or faxes or whatever you've got coming into your organization. It can respond. It can sort. It can extract data. These are the theme here is that these are rote jobs. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:34:14These are straightforward, simple jobs done at high volumes with exceptional efficiency. As opposed to a lot of the stories you hear about how AI is supposedly supposed to be used without thinking people. I I couldn't disagree more with that right now. AI is a fantastic worker to place in the middle of the heaviest work and the most important work that your organization does. That's where we wanna put it. Jake RobergeEquity Research Analyst at William Blair & Company, L.L.C00:34:43Okay. That's helpful. And then Data Fabric queries, I think we're up a 66%. I think you start monetizing that solution when customers connect it to multiple data sources. So can you talk about how that's progressing? Jake RobergeEquity Research Analyst at William Blair & Company, L.L.C00:34:56And then there's also some other players in the market that are obviously talking about other data fabric solutions. So can you help us understand how your data fabric compares and contrasts to those? Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:35:06You know, it is so important to emphasize how our data fabric is different. Because the need for a data fabric has become so important, now everyone is using the term. But what they have is not, in general, what I would have called a data fabric. But we're talking about a semantic layer similar to a virtual database that allows you to interact with data objects across the enterprise as if they were local objects. The semantic layer makes them local effectively. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:35:37They can be viewed and queried and manipulated and combined in a local manner. Right? It's not just a layer of integration. It it is far more than that. It it's a semantic layer that makes everything you integrate to into a local addressable object. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:35:53Secondly, it's read and write. Third, it's performance tuned. Fourth, there's a security layer. So you're running queries under variable credentials depending on who's answering the question. This is this is probably our best feature along with process itself and the integration of AI with process. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:36:13Let's put this in some kind of a, you know, hall of fame top three features. It's an extraordinary piece functionality, and it is strictly differentiated from anything on the market today that goes by the name of Data Fabric that I'm aware of. Jake RobergeEquity Research Analyst at William Blair & Company, L.L.C00:36:27That's helpful. Thanks for taking the questions. Operator00:36:32Our next question comes from Nick Altman with Scotiabank. I Nick AltmannDirector - U.S. Software Equity Research at Scotiabank00:36:40wanted to circle back to the 9,000,000 of AI revenue. How are you guys thinking about contribution from AI in 2025? And can you just maybe talk about the net new ACV that's being driven by AI just to kind of help us think about where that can shake out in 2025? Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:36:59Yes, that's right. Well, we're going to continue our push to bring customers to the higher tiers, the AI laden tiers. We've we've done that mostly focusing on new customers over the past year. We're broadening that into a campaign to bring existing customers to higher tiers as well. Though as you saw from my notes, a few have already made that jump. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:37:23We are also going to transition and our whole industry is going to transition away from per seat pricing. That's my prediction. Because per seat pricing is gonna move in the opposite direction with AI success. So we're gonna need to to price by something else. It could be it could be nodes. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:37:41It could be cases. It it could be consumption of some sort and within a solution or a highly understood context, it could be value or value correlates. So we're all going to be adopting different pricing mechanisms in order to capture AI as an upside instead of effectively having it as a downside as it removes necessary seats. So there's gonna be a little bit of a pricing transition across this industry this year And we're thinking a lot and carefully. And we're on the way to making that careful transition. Nick AltmannDirector - U.S. Software Equity Research at Scotiabank00:38:15Okay. Great. That's helpful. And then the net new bookings per sales rep up more than 30%, that's encouraging, and we're starting to see some of those efficiencies show up in the margins. I guess my question is like how durable do you think some of those productivity gains are through the rest of the year? Nick AltmannDirector - U.S. Software Equity Research at Scotiabank00:38:36Because on one side, they're very encouraging and can help out that weighted Rule of 40 target you outlined. On the flip side, you guys are relatively early in kind of running a leaner go to market motion. Maybe some of that pipeline was generated when you had a larger sales force. So any color you can provide on kind of how durable, those sales productivity gains are as you get through the rest of the year, think that'd be really interesting. Thanks. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:39:02Great. Well, I don't wish to quote any targets on the metrics that we've recently revealed, including the ones that we will be reporting on next quarter as designated. I would sooner classify them as durable than nondurable according to your terms. I don't believe that they are dependent upon a larger pipeline gathering force. I believe that they are they instead stem from recent innovations, superior efficiency, better account targeting, larger accounts, selling higher, conveying value first. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:39:37I think that they're the new habits and the new seriousness and tension that we have brought to the sales organization, the the the terrific professionalism that we are bringing, the, these are the real factors, and these are enduring factors. Nick AltmannDirector - U.S. Software Equity Research at Scotiabank00:39:54Great. Thank you. Operator00:39:58We have our next question from Derrick Wood with TD Cowen. Please go ahead. Derrick WoodManaging Director at TD Cowen00:40:04Great. Thanks, guys. This is Cole on for Derrick. I just want to start off on the go to market. I mean, you know, it Derrick WoodManaging Director at TD Cowen00:40:11it it Derrick WoodManaging Director at TD Cowen00:40:13sounds like you've you've made some good, good progress in inefficiencies. I'm I'm just wondering how much of that is coming from this renewed channel focus and narrowing the the scope of of channel partners, versus direct reps? Thanks. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:40:31The narrowing of partners is an example of something that's very successful, demonstrably, measurably successful last year. We motivated a small group of our most trusted partners to seek business with us, and it dramatically expanded the partner generated pipeline in 02/2024. We continue that because it has worked so well. I saw more evidence of how well it was working last week at Appian World. Our partners are enthusiastic. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:41:00Those that are focused partners are are working hard to maintain that designation. Those that are not are working hard to gain it. We also have another category called champion partners that lead us into a new market. And I see a boom of interest for for partners, especially if they're not focused partners on becoming champion partners so that they can receive our our attention in at least one market. This has been a great motivational tool, a great alignment tool with our partners. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:41:31We will certainly keep it up. Derrick WoodManaging Director at TD Cowen00:41:33Great. Thanks. And then just a follow-up on the on the GAM Suite. I could you just remind us, is there any sort of an ACV uplift that that comes with that? And if so, what what would that be? Derrick WoodManaging Director at TD Cowen00:41:44Thanks. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:41:46Yeah. Well, the the GAM suite has a price. It isn't so much an uplift. It's a separate product. And the GAM suite has has a price. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:41:56I don't know if it's published. It might be on GSA. But, you know, it is substantial. If you want the GAM suite, it's gonna be a a 7 figure, for sure. A 7 figure a year proposition no matter how small your organization. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:42:10So it's a it's a meaningful sale when we place it. Derrick WoodManaging Director at TD Cowen00:42:14Appreciate it. Thanks. Operator00:42:18The next question comes from Devin Oh with KeyBanc Capital Markets. Please go ahead. Devin AuAVP - Associate Analyst at KeyBanc Capital Markets00:42:24Great. Good morning, Matt. Good morning, Mark. Thanks for taking my questions here. I wanna first off maybe just start with some of the exciting product announcements that came out of Appian World this year. Devin AuAVP - Associate Analyst at KeyBanc Capital Markets00:42:35When I talked to your customers at the conference, seems like intelligent document processing and extraction. That has been a really widely adopted product among your customers. Could could you maybe share more on what's been driving success and adoption there? Any learnings you can kinda port over to some of the new AI agent offerings that you can maybe replicate the success you've seen today at IDP? Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:42:59I'm glad to hear you enjoyed the product announcements at Appian World. I was incredibly excited. I felt like all four of the major features that I announced could have been the headline feature at a typical annual conference. Of course, they were all AI related. Most of them were agent related. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:43:19But there was also the the one composer that allows you to create a new application through the use of AI, having AI be the author of the application, and that was exceptionally well received. And I can tell you that early users absolutely love that. That's been receiving some of the best feedback I've ever seen. With regards to IDP or intelligent document processing, this has long been our number one AI use case. Like, literally for years, this has been number one. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:43:49And we made it sharply better in in this latest round of advancements. IDP used to be a feature that you trained per document. So if you had a certain format of document coming in, you would train the AI to recognize it and know where to extract different pieces of information. The new version, you don't have to train on any format of document. It just figures it out. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:44:13So you can give it something in, you know, in in handwriting or in a in a novel format or an email or or whatever it is. It be in the wrong language, and and AI is just going to gonna figure it out. And the the level of accuracy with which it does that is astonishing. It's both more adaptive and more accurate than anything we've been able to offer in the past, and customers really love it. I I build it in the the conferences, read anything. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:44:42I said you call it IDP, but you could just you could also just call it read anything. Devin AuAVP - Associate Analyst at KeyBanc Capital Markets00:44:48I I appreciate the context there. Really helpful. And then just a quick follow-up. I do you want to dive a little bit deeper into your comments around public sector? I mean, it seems like things are still going well, and you were cautiously optimistic, and you mentioned bookings growth of 59% in the quarter. Devin AuAVP - Associate Analyst at KeyBanc Capital Markets00:45:05I mean, how did kind of that bookings performance compare to your internal expectations in the quarter? Any color on how that figure kind of compared last quarter or maybe last year's? Anything you can share would be helpful. Thank you. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:45:20Yeah. Well, it is a year over year comparison, of course. And I would say that that that exceeded my expectations. But I'm I'm sticking with cautious optimism. That's what we said word for word last quarter, and I think it's the right position to take right now. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:45:39And, I'm I'm glad that the numbers are bearing us out, but I don't wanna get out ahead of them. I wanna just let this story tell itself. Mark LynchInterim CFO & Director at Appian00:45:49Another, another factoid out there is that, the federal revenue federal government revenue grew year over year, 21% versus the total revenue for Appian during the quarter was 11%. So that strong strong revenue growth as well. Devin AuAVP - Associate Analyst at KeyBanc Capital Markets00:46:08Got it. Really appreciate the color. Thank you. Operator00:46:12Thank you. We have no further questions at this time. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.Read moreParticipantsExecutivesJack AndrewsVice President - Investor RelationsMatt CalkinsFounder, Chairman and Chief Executive OfficerMark LynchInterim CFO & DirectorAnalystsSanjit SinghExecutive Director at Morgan StanleyRaimo LenschowManaging Director at BarclaysSteve EndersAnalyst at CitigroupJake RobergeEquity Research Analyst at William Blair & Company, L.L.CNick AltmannDirector - U.S. Software Equity Research at ScotiabankDerrick WoodManaging Director at TD CowenDevin AuAVP - Associate Analyst at KeyBanc Capital MarketsPowered by Key Takeaways In Q1 ’25 Appian reported 15% year-over-year growth in cloud subscription revenue to $99.8 million, 11% total revenue growth to $166.4 million, a 112% cloud retention rate, and $16.8 million adjusted EBITDA. AI adoption accelerated sharply, with 70% of cloud customers using Appian AI, production AI usage up 7.9× year-over-year, and $9 million in AI-inclusive tier revenue in Q1. Appian differentiates by embedding AI as an “AI worker” via its process automation platform and Data Fabric—which saw a 166% increase in queries to 7 billion in Q1—enabling safe, auditable, and performance-tuned AI agents. The public sector remains a strong growth driver, with 59% year-over-year federal bookings growth in Q1 and over 80 federal agencies using AI-driven solutions like ProcureSight and Government Acquisition Management. New internal KPIs include a weighted Rule of 40 score of 27 (emphasizing growth twice as much as margin) and a go-to-market productivity metric showing a 30%+ increase in net new bookings per rep year-over-year. AI Generated. May Contain Errors.Conference Call Audio Live Call not available Earnings Conference CallAppian Q1 202500:00 / 00:00Speed:1x1.25x1.5x2xTranscript SectionsPresentationParticipants Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) Appian Earnings HeadlinesAbdiel Capital Advisors, Lp Sells 100,665 Shares of Appian Co. (NASDAQ:APPN) StockMay 21 at 4:37 AM | americanbankingnews.comStock Traders Purchase Large Volume of Put Options on Appian (NASDAQ:APPN)May 21 at 2:01 AM | americanbankingnews.comEveryone’s watching Nvidia right now. Here’s why I’m excited.So, unless you’ve been living under a rock, you probably saw the news… Nvidia just signed a $7 BILLION deal with Saudi Arabia to power its new AI empire 🤯 We’re talking about hundreds of thousands of chips, including their latest Grace Blackwell supercomputer.May 23, 2025 | Timothy Sykes (Ad)Citigroup Issues Positive Forecast for Appian (NASDAQ:APPN) Stock PriceMay 14, 2025 | americanbankingnews.comBrokerages Set Appian Co. (NASDAQ:APPN) PT at $36.14May 13, 2025 | americanbankingnews.comAppian Corp (APPN) Q1 2025 Earnings Call Highlights: Strong Cloud Growth and Federal Sector ...May 9, 2025 | finance.yahoo.comSee More Appian Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Appian? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Appian and other key companies, straight to your email. Email Address About AppianAppian (NASDAQ:APPN), a software company that provides low-code design platform in the United States, Mexico, Portugal, and internationally. The company's platform offers artificial intelligence, process automation, data fabric, and process mining. It provides The Appian Platform, an integrated automation platform that enables organizations to design, automate, and optimize mission-critical business processes. The company also offers professional and customer support services. It serves to financial services, government, life sciences, insurance, manufacturing, energy, healthcare, telecommunications, and transportation industries. Appian Corporation was incorporated in 1999 and is headquartered in McLean, Virginia.View Appian ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Alibaba's Earnings Just Changed Everything for the StockCisco Stock Eyes New Highs in 2025 on AI, Earnings, UpgradesSymbotic Gets Big Earnings Lift: Is the Stock Investable Again?D-Wave Pushes Back on Short Seller Case With Strong EarningsAppLovin Surges on Earnings: What's Next for This Tech Standout?Can Shopify Stock Make a Comeback After an Earnings Sell-Off?Rocket Lab: Earnings Miss But Neutron Momentum Holds Upcoming Earnings PDD (5/27/2025)AutoZone (5/27/2025)Bank of Nova Scotia (5/27/2025)NVIDIA (5/28/2025)Synopsys (5/28/2025)Bank of Montreal (5/28/2025)Salesforce (5/28/2025)Costco Wholesale (5/29/2025)Marvell Technology (5/29/2025)Canadian Imperial Bank of Commerce (5/29/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. Start Your 30-Day Trial MarketBeat All Access Features Best-in-Class Portfolio Monitoring Get personalized stock ideas. Compare portfolio to indices. Check stock news, ratings, SEC filings, and more. Stock Ideas and Recommendations See daily stock ideas from top analysts. Receive short-term trading ideas from MarketBeat. Identify trending stocks on social media. Advanced Stock Screeners and Research Tools Use our seven stock screeners to find suitable stocks. Stay informed with MarketBeat's real-time news. Export data to Excel for personal analysis. Sign in to your free account to enjoy these benefits In-depth profiles and analysis for 20,000 public companies. Real-time analyst ratings, insider transactions, earnings data, and more. Our daily ratings and market update email newsletter. Sign in to your free account to enjoy all that MarketBeat has to offer. Sign In Create Account Your Email Address: Email Address Required Your Password: Password Required Log In or Sign in with Facebook Sign in with Google Forgot your password? Your Email Address: Please enter your email address. Please enter a valid email address Choose a Password: Please enter your password. Your password must be at least 8 characters long and contain at least 1 number, 1 letter, and 1 special character. Create My Account (Free) or Sign in with Facebook Sign in with Google By creating a free account, you agree to our terms of service. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
PresentationSkip to Participants Operator00:00:00note this event is being recorded. I would now like to turn the conference over to Jack Andrews, Vice President of Investor Relations. Operator00:00:09Please go ahead. Jack AndrewsVice President - Investor Relations at Appian00:00:11Good morning, and thank you for joining us. Today, we'll review Appian's first quarter twenty twenty five financial results. With me are Matt Calkins, Chairman and Chief Executive Officer and Mark Lynch, Interim Chief Financial Officer. After prepared remarks, we'll open the call for questions. During this call, we may make statements related to our business that are considered forward looking. Jack AndrewsVice President - Investor Relations at Appian00:00:32These include comments related to our financial results, trends and guidance for the second quarter and full year 2025, benefits of our platform, industry and market trends, our go to market and growth strategy, our market opportunity and ability to expand our leadership position, our ability to maintain and upsell existing customers and our ability to acquire new customers. These statements reflect our views only as of today and don't represent our views as of any subsequent date. We won't update these statements as a result of new information unless required by law. Actual results may differ materially from expectations due to the risks and uncertainties described in our SEC filings. Additionally, GAAP financial measures will be discussed on this conference call. Jack AndrewsVice President - Investor Relations at Appian00:01:16Reconciliations of GAAP to non GAAP financial measures are provided in our earnings release. With that, I'd like to turn the call over to our CEO, Matt Calkins. Matt? Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:01:26Thanks, Jack. Thanks everyone for joining us today. In the first quarter of twenty twenty five, Appian's cloud subscription revenue grew 15% year over year to $99,800,000 Subscriptions revenue grew 14% to 134,400,000.0 Total revenue grew 11% year over year to $166,400,000 Our cloud subscription revenue retention rate was 112 as of March 31. Adjusted EBITDA was $16,800,000 a strong follow-up to the prior quarter's adjusted EBITDA of $21,200,000 and a continued demonstration of our inherent earnings potential. We held our annual conference last week, Appian World. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:02:09Our focus was squarely on AI and AI agents and how AI can be deployed inside a process to deliver practical value. I appreciate the many customers who spoke about their experiences with Appian, the value they created using Appian AI, and the success they achieved. Speakers from Aon, NASA, and MagMutual shared stories of how their organizations optimized processes with Appian. Neuberger Berman revealed it onboards tens of billions of dollars in funds faster with Appian. Hitachi reported reducing operating expenses by 20% using Appian. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:02:42Acclaim autism uses Appian to ingest medical documents accelerating its patient intake process by 83%. My keynote was about bringing AI to work. By that, I mean finding the place in your enterprise where work is heaviest and most important and deploying AI there. We focus on AI the worker, not AI the helper. In order to make AI a worker, you must integrate AI into a business process because that's how the most critical work is done by teams taking coordinated action. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:03:19We don't believe in asking AI to make staggering leaps of creativity, not in 02/2025 anyway. Instead, AI is for doing regular work with superhuman efficiency. Things like document intake and response which AI can do faster and better than anyone else. My favorite conference session was called saving millions with boring AI because it pretty much sums up our approach to AI straightforward, even boring, and immensely productive. We focus on practical results over hype, but don't let our use of the word boring fool you. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:03:56We're getting incredible results. 70% of our cloud customers have adopted AI. We grew year over year production AI usage last quarter by 7.9 x, not 7.9%, seven point nine times. We had more AI usage in q one than in all twenty twenty four put together. It's natural that the focus of the AI revolution would shift to supporting technologies like processes. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:04:24The major AI models are convergent. The most important decision in AI applications may be not which AI you use, but how you deploy it. Our belief, as you know if you've heard me before, is that AI should be deployed in a process. In an Appian process, AI is easier to deploy, safer, and more powerful. Appian makes AI easy to adopt. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:04:50For example, a leading Australian insurer deployed an application to ingest documents and automate underwriting processes using Appian AI. Before Appian, hundreds of underwriting specialists spent days manually processing quotes with limited accuracy. Now in minutes, our AI classifies documents and extracts data with over 96% accuracy so the insurer can quickly open and progress cases. Customer expects to run these processes 50% faster and generate millions more dollars in revenue annually. Last year, Appian launched a multi tiered pricing model that allows us to monetize AI and other exclusive features. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:05:27Since then, nearly half of our new logos have purchased the AI inclusive upper tiers. Revenue from these AI inclusive tiers more than doubled in q one relative to q four rising to $9,000,000. This is not yet a large share of our quarterly subscriptions revenue but it demonstrates our early moves to monetize AI and our customers' willingness to pay for it. Our customers become more efficient when they use our platform. An association of US Financial Regulators is one example. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:06:00This group is an existing Appian customer. Its state regulators process thousands of product filings annually, 50% faster when using our platform. This was even without AI. In q one, it expanded its use with a 7 figure software deal to upgrade its existing licenses to our new pricing model and deploy Appian AI. Our AI classifies these documents and extracts pertinent data from each filing. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:06:25Now the group expects to eliminate manual verifications and save tens of thousands of additional labor hours annually. The central message of my keynote involved AI agents. I explained the three primary behaviors of an agent. It thinks, it acts, and it learns. And I explained why Appian agents have an edge in all three behaviors. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:06:49I'm gonna walk through them right now briefly. First of those three behaviors is thinking. Thinking refers to exploring data with repeated queries of disparate sources to decide on the best course of action. The more data an agent can explore, the better it will think. Appian's data fabric allows the agent to roam the entire enterprise of data, not limited to a single silo or data source. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:07:17Our data fabric is industry leading functionality adopted by 97% of our incoming cloud users. Our data fabric gives agents more than universal access. It also grants them speed because our queries are automatically performance tuned and security because we run those queries with the appropriate user's credentials. Due to a surge in AI related usage, data fabric queries are up 166% year over year to nearly 7,000,000,000 queries in q one. Second part of my behavior list is acting. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:07:57Acting is the second thing that these agents do and it refers to an agent implementing its decision. Appian's agents act exclusively through processes. That's all they can do is is launch processes. No surprise there as we are the process company. Processes are a great way to take action. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:08:18They are complex compound actions potentially triggering dozens of separate work items by dozens of different workers so they are powerful, but they are also safe. Processes are auditable and predictable. They provide guardrails. If processes are the best way for agents to take action, Appian has a distinct advantage. We run 16,000,000,000 transactions per day on our processes. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:08:50Finally, there's think, there's act, there's learn. So last one is learning. Learning means that an agent benefits from the knowledge of past results. If you want to learn from past results, must start by remembering them and Appian monitors everything that happens in our processes. How much time did it take? Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:09:08How much did it cost? Was it successful? We track all these things. Our process mining capability gives us an edge in collecting data for the benefit of our agents. The more you know, the more you can learn. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:09:22For example, a large US healthcare system will use Appian to simplify operations for hundreds of medical facilities. It'll start by analyzing a series of patient focused processes like medical procedure pre authorizations and denials to reduce overhead costs by 20%. Appian Data Fabric will consolidate data from a dozen systems so the group can use our process mining tools to identify key bottlenecks. The group will use these insights to prioritize an IT roadmap of workflows to automate with our platform. Appian does business in The United States public sector. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:10:00We have a large presence in the federal space and are thus exposed to whatever disruption Doge may create. But we are also tightly associated with Doge's primary virtues, efficiency and modernization. We remain cautiously optimistic about the evolving opportunity. In Q1, our federal government bookings including both the net new software and services grew 59 compared to the same period last year. Appian has a long history of delivering value within the government. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:10:38The Department of Labor, for example, saves tens of millions of dollars annually using Appian. Appian applications are mission critical. The government procures $464,000,000,000 in annual budget on the Appian platform. We offer a solution called government acquisition management or GAM. GAM helps agencies automate highly regulated processes for procuring goods and services. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:11:05Last year Appian launched ProcureSight to complement the suite. ProcureSight is an AI driven website. It applies AI to several major public datasets so government professionals can glean insights from past procurements to help generate new ones. Over 80 federal agencies and sub agencies use the service today to make their procurements more cost effective. We continue to sign new customers and win big expansions in our key verticals. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:11:37Here's some examples. First, a US civilian agency purchased a 7 figure software deal and became a new customer this quarter. It selected our platform to manage investigations for tens of thousands of mail related crimes annually. Before Appian, the group manually consolidated case files because its legacy system was disjointed and incomplete. Now Appian Data Fabric will seamlessly integrate data from dozens of systems so federal agents can focus on advancing investigations. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:12:07We won this competitive deal because we were the only vendor to meet all the customers' requirements during our custom demo. Next, a US agency supporting the Department of Defense catalogs and manages nuclear inventory using Appian. This quarter, it chose to modernize its procurement office and purchased our GAM solution. Before, contracting officers manually tracked requirements on spreadsheets and custom tools. Now they'll process hundreds of millions of dollars of annual procurement budget on Appian. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:12:37We won this deal because the customer's peer organizations recommended our solution. My final story is about a top Australian bank that became a new Appian customer this quarter. It'll use our platform to modernize customer service processes like credit card disputes and customer account updates. Appian AI will ingest nearly 75,000,000 document pages annually, and Appian Data Fabric will consolidate data from all related systems into a single workflow tool so service agents can reduce their SLAs from hours to minutes. It's important to me that Appian's investors know Appian's intentions. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:13:17So I'll share with you now two essential internal metrics which we'll report on quarterly going forward. The first is what we call weighted rule of 40. This is the most important number that we manage the company towards. It's a combination of growth and margin like a typical rule of 40, but we weight growth twice as much as margin. In the current quarter, our weighted rule of 40 score is 27, which is the sum of four thirds cloud subscription growth plus two thirds adjusted EBITDA margin. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:13:54I explained the math so you can see that the factors add up to two just like in a regular rule of 40 metric. Some Appian executives have weighted rule of 40 targets today and all of them will over the next few quarters. Appian's other top objective to increase sales and marketing efficiency. This became my primary objective in 02/2023 and after much work, we're seeing some results. This q one, our net new bookings per sales rep rose more than 30% compared to the same period last year. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:14:28We want to share our progress with you using a new metric. See slide four in the presentation called GTM productivity, that's go to market productivity. It measures the bang for our buck in sales and marketing. The numerator is the sum of total revenue and the quarterly changes in short term deferred revenue over trailing twelve months. The denominator is trailing twelve months non GAAP sales and marketing expenses. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:14:53As you'll see on the chart, we're showing steady progress. Appian hired Serge Tanga as our new chief financial officer starting later this month. Serge has over twenty years of financial experience, most recently as senior vice president of finance at MongoDB where he led financial planning, strategic finance, business operations, and analytics, and then as their interim CFO. I'm excited to welcome him to Appian's executive team. I thank Mark Lynch for serving as our interim CFO during this search. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:15:27He'll remain on Appian's board of directors. With that, I'll hand the call over to Mark for a deeper discussion of our financials. Mark? Mark LynchInterim CFO & Director at Appian00:15:37Thanks, Matt, and thank you everyone joining us today. I'll review the financial highlights for the quarter and then we'll provide guidance for Q2 and the full year 2025. Appian exceeded the guidance ranges we provided on our key metrics of cloud revenue, total revenue and adjusted EBITDA. Cloud subscriptions revenue was $99,800,000 an increase of 15% year over year. Total subscriptions revenue was $134,400,000 an increase of 14% year over year. Mark LynchInterim CFO & Director at Appian00:16:07On a constant currency basis, total subscriptions revenue grew 15% year over year. Professional services revenue was $32,100,000 flat growth compared to the first quarter of twenty twenty four. As a reminder, services revenue can be volatile quarter to quarter. We continue to expect professional services revenue to decline as a percentage of total revenue over the long term. Subscriptions revenue represented 81% of total revenue compared to 79% in the year ago period and 82% in the prior quarter. Mark LynchInterim CFO & Director at Appian00:16:40Total revenue was $166,400,000 an increase of 11% year over year. On a constant currency basis, total revenue grew 12% year over year. Our cloud subscriptions revenue retention rate was 112% as of 03/31/2025, compared to 120% a year ago and 116% in the prior quarter. We continue to target a cloud subscriptions revenue retention rate 110% to 120% on a quarterly basis. Our international operations contributed 36% of total revenue compared to 37% in the year ago period. Mark LynchInterim CFO & Director at Appian00:17:17Cloud net new ACV bookings were approximately 82% of total net new software bookings in Q1 consistent with the prior year. Let's turn to profitability metrics. Non GAAP gross margin was 78% compared to 76% in the year ago period and 80% in the prior quarter. Our subscriptions non GAAP gross profit margin was 89% compared to 90% in both the year ago period and prior quarter. This margin remains best in class in enterprise software. Mark LynchInterim CFO & Director at Appian00:17:48Professional services non GAAP gross margin was 30% compared to 25% a year ago period and 31% in the prior quarter. Total non GAAP operating expenses were $114,800,000 down 2% from $117,300,000 in the year ago period. Adjusted EBITDA was positive $16,800,000 versus our guidance of positive $8,000,000 to $10,000,000 and compared to an adjusted EBITDA loss of $1,300,000 in the year ago period. This outperformance relative to our guide was largely driven by taking a measured approach to hiring, prioritizing low cost regions for hiring and by greater than expected term license and services revenue. Non GAAP net income was $9,800,000 or $0.13 per diluted share compared to a non GAAP net loss of $4,900,000 or $07 per share for the first quarter of twenty twenty four. Mark LynchInterim CFO & Director at Appian00:18:43This is based on 74,100,000.0 diluted shares outstanding for the first quarter of twenty twenty five and 73,300,000.0 diluted shares outstanding for the first quarter of twenty twenty four. Turning to our balance sheet. As of 03/31/2025, cash and cash equivalents and investments were $199,700,000 compared with $159,900,000 at the end of last year. For the first quarter, cash provided by operations was $45,000,000 compared to $18,900,000 for the same period last year. Total deferred revenue was $262,500,000 as of 03/31/2025, an increase of 16% from the year ago period. Mark LynchInterim CFO & Director at Appian00:19:27As we stated on past calls, the majority of our customers are invoiced on an annual upfront basis. We also have large customers that are billed quarterly or monthly. Due to the variability of our billing terms, changes in our quarterly deferred revenue are generally not indicative of our business momentum. We continue to believe cloud subscriptions revenue is better indicator of our business momentum than billings or remaining performance obligations, RPO. The latter metrics can fluctuate based on the timing of invoicing, seasonality of self managed license revenue, and the duration of customer contracts. Mark LynchInterim CFO & Director at Appian00:20:02The true scale of the business is represented by subscriptions revenue, which includes support and all software subscriptions revenue regardless of whether the customer deploys to the Appian Cloud, their private cloud, or on prem. Before discussing guidance, I'll share a few observations about macroeconomic and business conditions. The US dollar has weakened since we last provided guidance, which now gives Appian a currency tailwind. Appian exceeded the high end of our q one guidance for cloud revenue and total revenue. And at this point in the year, we have not seen any material changes in our sales pipeline or the cadence of our business. Mark LynchInterim CFO & Director at Appian00:20:39Given the macro uncertain macroeconomic uncertainty, changes within the federal government, and thus a wider range of potential outcomes, we're taking a prudent approach to guidance for the remainder of 2025. For the second quarter of twenty twenty five, cloud subscriptions revenue is expected to be between 101 and $103,000,000, representing year over year growth between 1416%. Total revenue is expected to be between 158 and $162,000,000, representing year over year growth between 811%. Adjusted EBITDA for the second quarter of twenty twenty five is expected to be between negative 5,000,000 and negative $2,000,000 Non GAAP earnings per share is expected to be between negative 15 million and negative $11,000,000 This assumes 74,800,000.0 fully diluted weighted average shares outstanding. For the full year 2025, we are increasing the high end of our previously stated guidance range regarding cloud subscriptions revenue and total revenue while maintaining the original low end of those guidance ranges. Mark LynchInterim CFO & Director at Appian00:21:42We're also increasing our overall adjusted EBITDA range for the year. For the full year 2025, cloud subscriptions revenue is expected to be between 419 and $423,000,000, representing year over year growth of between 1415%. Total revenue is expected to be between 680 and $688,000,000, representing year over year growth of 10% to 12%. Adjusted EBITDA is now expected to range between positive 40,000,000 and $46,000,000 Non GAAP earnings per share is expected to be between $0.18 and $0.26 This assumes 75,100,000.0 fully diluted weighted average shares outstanding. Our guidance assumes the following: First, we expect Q2 professional services revenue will be flat compared to a year ago. Mark LynchInterim CFO & Director at Appian00:22:29For the full year, we expect professional services revenue to be approximately flat or increase by low single digit range compared to a year ago. Second, we anticipate term license revenue will decrease by low double digit percentage on a year over year basis as we anniversary a difficult comparison from a strong q two twenty twenty four. Third, we expect q two adjusted EBITDA to be a loss due to the combination of term license seasonality and the cost of running our annual user conference Appian World. Fourth, total in total total other income and interest expense will be approximately 3,500,000.0 in q two and 14,000,000 for the full year 2025. Fifth, capital expenditures will be between $1,000,000 and $1,500,000 in Q2 and between 3,000,000 and $4,000,000 for the full year 2025. Mark LynchInterim CFO & Director at Appian00:23:20Finally, our guidance assumes FX rates as of 05/02/2025. Now we'll turn the call over for questions. Operator? Operator00:23:30Certainly. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press then 2. Operator00:23:51At this time, we will pause momentarily to assemble our roster. The first question comes from Sanjit Singh with Morgan Stanley. Sanjit SinghExecutive Director at Morgan Stanley00:24:02Congrats Sanjit SinghExecutive Director at Morgan Stanley00:24:07on the continued progress on the profitability side. That's really nice to see. I wanted to ask about the good government performance this quarter. To what degree was there any sort of potential pull forward into Q1 ahead of some of the uncertainty around ordering patterns due to Doge? And then as we think out into Q3, the federal government end of fiscal year spend, what sort of the baseline assumptions that you guys are making with respect to the year end federal budget spending period? Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:24:45Alright. Thank you for the question. First of all, I don't believe pull forwards to have been a meaningful factor in q one. I I'm not aware of any pull forwards. So I hesitate to say I'm sure it was zero, but I don't believe it to be meaningful. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:25:02With regards to q three, we understand that there's a higher variance this year on on the federal business than there have been in previous years. But so far, we're on the good side of that variance. And, I I think that we're we're keeping possibilities open. We're cautiously optimistic about how q three will be. Sanjit SinghExecutive Director at Morgan Stanley00:25:22Awesome. That's great to hear. And then just as a follow-up, if I look at sort of the cloud net retention rates, certainly within the range that you guys have talked about historically, 01/10 to 01/20, it did dip down more meaningfully in q one and doesn't sound like that's coming from the government side of the house. Any sort of spending hesitation you're seeing on the on the enterprise commercial side of the business that drove that drove that net retention rate down four points quarter over quarter? Mark LynchInterim CFO & Director at Appian00:25:53Not really. First of all, it's it's a reminder that this is a a trailing metric. 12 you know, it's basically twelve months over twelve months, So it's backward looking. Basically, a couple of things happened. There were some down sells in q one of twenty twenty four that are working their way through the calculation now, and they were they're predominantly unrelated down sells. Mark LynchInterim CFO & Director at Appian00:26:15And also, we had some revenue growth rates and some of the customers level off during recent twelve month period. So those kind of conspired to lower the rate a little bit. Sanjit SinghExecutive Director at Morgan Stanley00:26:26I appreciate the color. Thanks, Mark. Operator00:26:30Our next question comes from Raimo Lenschow with Barclays. Please go ahead. Raimo LenschowManaging Director at Barclays00:26:35Perfect. Thanks for all the clarity on federal, and congrats on the quarter. Matt, Raimo LenschowManaging Director at Barclays00:26:41I wanted Raimo LenschowManaging Director at Barclays00:26:41to ask on AI and the new agentic world. How do you like and I appreciate you as a founder. You always think more bigger picture than a lot of other guys. How do you think this new world is going to play out? I mean, you clearly have a lot of success, but there's obviously a lot of noise, you know, marketing noise in the market of people. Raimo LenschowManaging Director at Barclays00:27:03Everyone is doing agents now and agentic, etcetera. Like, how do you think, like, what's ultimately the big thing for a customer and how you fit in there? And then I have a follow-up for Mark. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:27:14Yeah. This agent's topic, it's it's both the most important application of AI and as such an exceptionally worthy topic for conversation and and and development. And at the same time, it's it's overstated and it's the market is still dominated by more hype than than results. And so we're at pains to differentiate ourselves from that. And the fact that we rely mostly on customer stories to make our point and that we use words like boring, that this is all an intentional sort of disassociation that we're trying to make between our between our approach which is result centric and customer focused and and using AI to practical effect versus the the the the sky high hyperbole that we're hearing from from some vendors. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:28:05I I I keep figuring that now is the moment when the hyperbole is gonna melt away and people are gonna care about actual results. And and I I think that we stand to benefit when that change happens, when people start allocating well, I'm sorry. What's people start paying attention to agents for for their impact. Agents are actors. Yeah. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:28:27They they're the actors of the AI world. AI should be taking action. We believe in AI the worker. This is exactly what we're here for is to use AI to do work. But but that work has to be regulated and audited and guardrailed and and provide provisioned with information and tracked. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:28:46And and so you need all that structure. You need all the structure around AI. You can't just make an AI agent and let it loose in the enterprise. And and therefore, I view the process infrastructure that we provide as a requisite for productive application of AI agents. Simply a prerequisite. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:29:09And to the degree that anyone else is gonna make value with their agents, it's going to be because they approximate the the functionality even if they don't achieve the functionality that we're providing with our process infrastructure. Raimo LenschowManaging Director at Barclays00:29:23Okay. Perfect. And then one quick one for Mark. The was there anything on the if you know, like, I know billings is not, really a measure that you you focus on, but, some of investors are still kind of paying attention to here. Was there anything in Q1 that kind of impacted billings in terms of timing, etcetera? Raimo LenschowManaging Director at Barclays00:29:41Nothing Mark LynchInterim CFO & Director at Appian00:29:43really to call out. Operator00:29:50The next question comes from Steve Enders with Citi. Please go ahead. Steve EndersAnalyst at Citigroup00:29:56Okay. Great. Thanks for taking the questions this morning. I guess to start, I mean, to hear the on the AI side, good to hear the the solid usage expansion year over year, and I think it was pretty clear coming from the the the conference, what that was looking like. But I guess I just wanna ask on how you're feeling about incremental kind of monetization. Steve EndersAnalyst at Citigroup00:30:18I think you called out $9,000,000 or so in the quarter coming from the AI tiers that you have available. But just how do you feel about that usage that you're seeing driving incremental revenue opportunities and and adoption of of those plans moving forward? Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:30:35Yeah. I am pleased with the willingness of customers to spend on AI. I think there's a recognition that this is creating great value. And so that's moving along nicely. Partly, you could make a case for not even trying to monetize at this point in the life cycle of a feature as powerful as AI. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:30:57I I think we're moving toward monetization a little sooner than I might otherwise planned just to try to create a a demonstration of the tangibility of the results we're creating because I feel like we we need that contrast with the market. We wanna show that this is real and that our customers appreciate it. So while I could understand, right, not trying to monetize it, I also think that it's a good idea for us to demonstrate that in order to just make a statement. And, yeah. Think the value is there for sure. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:31:29It's wonderful value. I as I estimated last quarter, I feel like our our TAM has doubled, in the the wake of AI, which is the the best thing that's ever happened to the process automation industry. Steve EndersAnalyst at Citigroup00:31:43Right. No. That's, very clear. Great to, great great to hear. And then just on, you know, new, with with CIRS coming on on board and and and new CFO started later this month. Steve EndersAnalyst at Citigroup00:31:56I guess, what's kind of the the the mandate or the the key area focus for for him as as he starts to to to get ramped up in the role? And, I guess, it's kind of a piece of that. How are you kind of viewing the the the ability to drive margin or or kind of the the levers to drive margin moving forward here? Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:32:15Yeah. Let me say I'm really excited to have Serge coming on board. He's an exceptional addition to our team. I don't wanna preempt our strategy by talking about it right now. Think there's a lot of great opportunities where we're gonna make substantial progress, and I I I see him as a contributor across the board. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:32:37Yeah. Let me let me just stop at that. Steve EndersAnalyst at Citigroup00:32:41Okay. Perfect. Thanks for taking the, thanks for taking the questions here. Operator00:32:48Our next question comes from Jake Robersch with William Blair. Please go ahead. Jake RobergeEquity Research Analyst at William Blair & Company, L.L.C00:32:55Yeah. Thanks for taking my questions. And, yeah, great to hear that, those AI SKUs hit 9 million in the quarter. Can you talk about the the use cases or areas of the platform that are driving the most demand on that front? And then is there any sense of how large of a pricing uplift you can see for those solutions on just a per customer basis? Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:33:16Yeah. That's right. Well, we've got it priced at 25% uplift. And that may that may fluctuate. But right now, that's our easy we're just asking 25% to add AI. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:33:28As for the primary use cases, well, they're as I said in the comments, they're regular work. They're they're regular work that otherwise could be done in a rote manner, but but, AI is just so terrifically good at it. It's, it's processing documents and gathering information and making simple decisions that you might have otherwise tried to delegate to a person or a business rule set intake. It's just terrific at document intake. It it can read anything at this point. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:33:59It can read ripped receipts or handwritten notes or or emails or faxes or whatever you've got coming into your organization. It can respond. It can sort. It can extract data. These are the theme here is that these are rote jobs. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:34:14These are straightforward, simple jobs done at high volumes with exceptional efficiency. As opposed to a lot of the stories you hear about how AI is supposedly supposed to be used without thinking people. I I couldn't disagree more with that right now. AI is a fantastic worker to place in the middle of the heaviest work and the most important work that your organization does. That's where we wanna put it. Jake RobergeEquity Research Analyst at William Blair & Company, L.L.C00:34:43Okay. That's helpful. And then Data Fabric queries, I think we're up a 66%. I think you start monetizing that solution when customers connect it to multiple data sources. So can you talk about how that's progressing? Jake RobergeEquity Research Analyst at William Blair & Company, L.L.C00:34:56And then there's also some other players in the market that are obviously talking about other data fabric solutions. So can you help us understand how your data fabric compares and contrasts to those? Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:35:06You know, it is so important to emphasize how our data fabric is different. Because the need for a data fabric has become so important, now everyone is using the term. But what they have is not, in general, what I would have called a data fabric. But we're talking about a semantic layer similar to a virtual database that allows you to interact with data objects across the enterprise as if they were local objects. The semantic layer makes them local effectively. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:35:37They can be viewed and queried and manipulated and combined in a local manner. Right? It's not just a layer of integration. It it is far more than that. It it's a semantic layer that makes everything you integrate to into a local addressable object. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:35:53Secondly, it's read and write. Third, it's performance tuned. Fourth, there's a security layer. So you're running queries under variable credentials depending on who's answering the question. This is this is probably our best feature along with process itself and the integration of AI with process. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:36:13Let's put this in some kind of a, you know, hall of fame top three features. It's an extraordinary piece functionality, and it is strictly differentiated from anything on the market today that goes by the name of Data Fabric that I'm aware of. Jake RobergeEquity Research Analyst at William Blair & Company, L.L.C00:36:27That's helpful. Thanks for taking the questions. Operator00:36:32Our next question comes from Nick Altman with Scotiabank. I Nick AltmannDirector - U.S. Software Equity Research at Scotiabank00:36:40wanted to circle back to the 9,000,000 of AI revenue. How are you guys thinking about contribution from AI in 2025? And can you just maybe talk about the net new ACV that's being driven by AI just to kind of help us think about where that can shake out in 2025? Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:36:59Yes, that's right. Well, we're going to continue our push to bring customers to the higher tiers, the AI laden tiers. We've we've done that mostly focusing on new customers over the past year. We're broadening that into a campaign to bring existing customers to higher tiers as well. Though as you saw from my notes, a few have already made that jump. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:37:23We are also going to transition and our whole industry is going to transition away from per seat pricing. That's my prediction. Because per seat pricing is gonna move in the opposite direction with AI success. So we're gonna need to to price by something else. It could be it could be nodes. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:37:41It could be cases. It it could be consumption of some sort and within a solution or a highly understood context, it could be value or value correlates. So we're all going to be adopting different pricing mechanisms in order to capture AI as an upside instead of effectively having it as a downside as it removes necessary seats. So there's gonna be a little bit of a pricing transition across this industry this year And we're thinking a lot and carefully. And we're on the way to making that careful transition. Nick AltmannDirector - U.S. Software Equity Research at Scotiabank00:38:15Okay. Great. That's helpful. And then the net new bookings per sales rep up more than 30%, that's encouraging, and we're starting to see some of those efficiencies show up in the margins. I guess my question is like how durable do you think some of those productivity gains are through the rest of the year? Nick AltmannDirector - U.S. Software Equity Research at Scotiabank00:38:36Because on one side, they're very encouraging and can help out that weighted Rule of 40 target you outlined. On the flip side, you guys are relatively early in kind of running a leaner go to market motion. Maybe some of that pipeline was generated when you had a larger sales force. So any color you can provide on kind of how durable, those sales productivity gains are as you get through the rest of the year, think that'd be really interesting. Thanks. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:39:02Great. Well, I don't wish to quote any targets on the metrics that we've recently revealed, including the ones that we will be reporting on next quarter as designated. I would sooner classify them as durable than nondurable according to your terms. I don't believe that they are dependent upon a larger pipeline gathering force. I believe that they are they instead stem from recent innovations, superior efficiency, better account targeting, larger accounts, selling higher, conveying value first. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:39:37I think that they're the new habits and the new seriousness and tension that we have brought to the sales organization, the the the terrific professionalism that we are bringing, the, these are the real factors, and these are enduring factors. Nick AltmannDirector - U.S. Software Equity Research at Scotiabank00:39:54Great. Thank you. Operator00:39:58We have our next question from Derrick Wood with TD Cowen. Please go ahead. Derrick WoodManaging Director at TD Cowen00:40:04Great. Thanks, guys. This is Cole on for Derrick. I just want to start off on the go to market. I mean, you know, it Derrick WoodManaging Director at TD Cowen00:40:11it it Derrick WoodManaging Director at TD Cowen00:40:13sounds like you've you've made some good, good progress in inefficiencies. I'm I'm just wondering how much of that is coming from this renewed channel focus and narrowing the the scope of of channel partners, versus direct reps? Thanks. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:40:31The narrowing of partners is an example of something that's very successful, demonstrably, measurably successful last year. We motivated a small group of our most trusted partners to seek business with us, and it dramatically expanded the partner generated pipeline in 02/2024. We continue that because it has worked so well. I saw more evidence of how well it was working last week at Appian World. Our partners are enthusiastic. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:41:00Those that are focused partners are are working hard to maintain that designation. Those that are not are working hard to gain it. We also have another category called champion partners that lead us into a new market. And I see a boom of interest for for partners, especially if they're not focused partners on becoming champion partners so that they can receive our our attention in at least one market. This has been a great motivational tool, a great alignment tool with our partners. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:41:31We will certainly keep it up. Derrick WoodManaging Director at TD Cowen00:41:33Great. Thanks. And then just a follow-up on the on the GAM Suite. I could you just remind us, is there any sort of an ACV uplift that that comes with that? And if so, what what would that be? Derrick WoodManaging Director at TD Cowen00:41:44Thanks. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:41:46Yeah. Well, the the GAM suite has a price. It isn't so much an uplift. It's a separate product. And the GAM suite has has a price. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:41:56I don't know if it's published. It might be on GSA. But, you know, it is substantial. If you want the GAM suite, it's gonna be a a 7 figure, for sure. A 7 figure a year proposition no matter how small your organization. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:42:10So it's a it's a meaningful sale when we place it. Derrick WoodManaging Director at TD Cowen00:42:14Appreciate it. Thanks. Operator00:42:18The next question comes from Devin Oh with KeyBanc Capital Markets. Please go ahead. Devin AuAVP - Associate Analyst at KeyBanc Capital Markets00:42:24Great. Good morning, Matt. Good morning, Mark. Thanks for taking my questions here. I wanna first off maybe just start with some of the exciting product announcements that came out of Appian World this year. Devin AuAVP - Associate Analyst at KeyBanc Capital Markets00:42:35When I talked to your customers at the conference, seems like intelligent document processing and extraction. That has been a really widely adopted product among your customers. Could could you maybe share more on what's been driving success and adoption there? Any learnings you can kinda port over to some of the new AI agent offerings that you can maybe replicate the success you've seen today at IDP? Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:42:59I'm glad to hear you enjoyed the product announcements at Appian World. I was incredibly excited. I felt like all four of the major features that I announced could have been the headline feature at a typical annual conference. Of course, they were all AI related. Most of them were agent related. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:43:19But there was also the the one composer that allows you to create a new application through the use of AI, having AI be the author of the application, and that was exceptionally well received. And I can tell you that early users absolutely love that. That's been receiving some of the best feedback I've ever seen. With regards to IDP or intelligent document processing, this has long been our number one AI use case. Like, literally for years, this has been number one. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:43:49And we made it sharply better in in this latest round of advancements. IDP used to be a feature that you trained per document. So if you had a certain format of document coming in, you would train the AI to recognize it and know where to extract different pieces of information. The new version, you don't have to train on any format of document. It just figures it out. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:44:13So you can give it something in, you know, in in handwriting or in a in a novel format or an email or or whatever it is. It be in the wrong language, and and AI is just going to gonna figure it out. And the the level of accuracy with which it does that is astonishing. It's both more adaptive and more accurate than anything we've been able to offer in the past, and customers really love it. I I build it in the the conferences, read anything. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:44:42I said you call it IDP, but you could just you could also just call it read anything. Devin AuAVP - Associate Analyst at KeyBanc Capital Markets00:44:48I I appreciate the context there. Really helpful. And then just a quick follow-up. I do you want to dive a little bit deeper into your comments around public sector? I mean, it seems like things are still going well, and you were cautiously optimistic, and you mentioned bookings growth of 59% in the quarter. Devin AuAVP - Associate Analyst at KeyBanc Capital Markets00:45:05I mean, how did kind of that bookings performance compare to your internal expectations in the quarter? Any color on how that figure kind of compared last quarter or maybe last year's? Anything you can share would be helpful. Thank you. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:45:20Yeah. Well, it is a year over year comparison, of course. And I would say that that that exceeded my expectations. But I'm I'm sticking with cautious optimism. That's what we said word for word last quarter, and I think it's the right position to take right now. Matt CalkinsFounder, Chairman and Chief Executive Officer at Appian00:45:39And, I'm I'm glad that the numbers are bearing us out, but I don't wanna get out ahead of them. I wanna just let this story tell itself. Mark LynchInterim CFO & Director at Appian00:45:49Another, another factoid out there is that, the federal revenue federal government revenue grew year over year, 21% versus the total revenue for Appian during the quarter was 11%. So that strong strong revenue growth as well. Devin AuAVP - Associate Analyst at KeyBanc Capital Markets00:46:08Got it. Really appreciate the color. Thank you. Operator00:46:12Thank you. We have no further questions at this time. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.Read moreParticipantsExecutivesJack AndrewsVice President - Investor RelationsMatt CalkinsFounder, Chairman and Chief Executive OfficerMark LynchInterim CFO & DirectorAnalystsSanjit SinghExecutive Director at Morgan StanleyRaimo LenschowManaging Director at BarclaysSteve EndersAnalyst at CitigroupJake RobergeEquity Research Analyst at William Blair & Company, L.L.CNick AltmannDirector - U.S. Software Equity Research at ScotiabankDerrick WoodManaging Director at TD CowenDevin AuAVP - Associate Analyst at KeyBanc Capital MarketsPowered by