Appian NASDAQ: APPN reported second-quarter 2025 results that exceeded its guidance for cloud subscription revenue, total revenue and adjusted EBITDA, citing momentum in larger enterprise transactions, AI-related demand and growth in its federal business.
Cloud subscription revenue rose 21% year over year to $106.9 million, while total subscription revenue increased 17% to $132.7 million. Total revenue also grew 17% to $170.6 million, or 14% on a constant-currency basis. Adjusted EBITDA was positive $8.1 million, compared with the company’s prior guidance range of a $5 million to $2 million loss and a $10.5 million loss a year earlier.
Net income was $0.3 million, or breakeven per diluted share, compared with a net loss of $18.2 million, or $0.25 per share, in the second quarter of 2024. Cash equivalents and investments totaled $184.8 million at quarter-end, up from $159.9 million at the end of 2024. Cash used in operations narrowed to $1.9 million from $17.6 million a year earlier.
AI Drives Higher Pricing and Pipeline
Chairman and CEO Matt Calkins said AI is contributing to Appian’s financial results, pipeline and customer value proposition. He said the company applies a 25% upcharge for AI and that most of its seven-figure software deals signed during the quarter included AI-inclusive license tiers.
“We’re getting higher prices because of AI,” Calkins said. “We’re in new deals because of AI and even new industries.”
The company highlighted an international grocery retailer that deployed Appian AI within an existing field-dispatch application. Calkins said drivers can now upload paperwork related to shipment problems, while Appian AI reconciles the information automatically rather than requiring back-office workers to manually record and correct discrepancies.
Appian also cited a global asset manager that signed a seven-figure deal to upgrade licenses and deploy AI features for client investment operations. The company said AI agents will help classify forms and extract data for account openings, closings and changes.
During the question-and-answer session, Calkins argued that Appian’s platform provides enterprise capabilities beyond what AI alone can create, including security, scalability, reliability, mobile functionality and high-availability features. CFO Serge Tanjga characterized AI as an “engine” that requires the surrounding application framework and controls supplied by the platform.
Modernization and Federal Opportunities
Calkins said Appian sees application modernization as an expanding opportunity as AI lowers the cost of extracting and translating legacy applications. He said the market includes both an extraction component that is likely more services-intensive and an application-instantiation component that is likely more software-intensive.
Appian cited several customer examples tied to modernization. A Spanish bank became a new customer in the quarter after purchasing thousands of software licenses to move back-office workflows from legacy systems to Appian. The company expects the bank to run core processes 30% faster and save millions of dollars annually.
A U.S. health insurer also signed a seven-figure expansion deal to deploy Appian more broadly, beginning with Medicare and Medicaid enrollment, as part of a company initiative to consolidate technology and save $1 billion.
In the public sector, Calkins said Appian’s federal business outgrew its global business in cloud revenue, new bookings and software pipeline during the first half of 2025. A U.S. agency supporting national healthcare selected Appian as the backbone for virtual care operations in a seven-figure software deal. According to Appian, the agency expects to save $38 million annually through the deployment.
Calkins continued to describe the federal outlook as “cautiously optimistic” amid volatility related to DOGE and other factors. He said government interest in buying software directly from providers rather than through intermediaries, along with increased emphasis on efficiency, could be favorable for Appian.
Margins, Retention and Go-to-Market Efforts
Appian’s non-GAAP gross margin was 75%, unchanged from a year earlier and down from 78% in the first quarter. Subscription gross margin was 87%, compared with 89% in both the prior-year period and preceding quarter. Professional services gross margin improved to 33% from 30% a year earlier.
Total operating expenses were $122.7 million, essentially flat from $123.2 million a year ago. Tanjga said the EBITDA outperformance reflected higher-than-expected revenue as well as the timing of certain expenses that are now expected in the second half. Those expenses were primarily marketing and consulting costs rather than headcount, he said.
Cloud subscription revenue retention was 111% as of June 30, down from 118% a year earlier and 112% in the prior quarter. Tanjga attributed the decline largely to the continuing effect of a small number of prior downsells in the backward-looking measure. He also said a greater portion of first-half new business came from new customers, which Appian views as evidence of its ability to win large, strategic deals with new clients.
The company’s go-to-market productivity ratio reached 3.3, its eighth consecutive sequential quarterly increase, according to Calkins. Tanjga said Appian has reduced investment in lower-productivity areas and is seeking further gains through better execution, larger deals, leadership changes and targeted investments.
Raised Full-Year Outlook
For the third quarter, Appian expects cloud subscription revenue of $109 million to $111 million, representing growth of 16% to 18%, and total revenue of $172 million to $176 million, representing growth of 12% to 14%. The company forecast adjusted EBITDA of $9 million to $12 million and non-GAAP earnings per share of $0.03 to $0.07.
Appian raised its full-year 2025 outlook. It now expects:
- Cloud subscription revenue of $429 million to $433 million, up 17% to 18% year over year.
- Total revenue of $695 million to $703 million, up 13% to 14% year over year.
- Adjusted EBITDA of $49 million to $55 million.
- Non-GAAP earnings per share of $0.28 to $0.36.
Tanjga said the higher outlook reflected fundamental business strength, with foreign exchange providing a marginal benefit. Appian also announced that David Crozier joined the company in July as chief marketing officer.
About Appian (NASDAQ:APPN)
Appian Corporation is a global technology company specializing in low-code automation platforms designed to streamline business processes. Founded in 1999 by Matt Calkins, the company provides an integrated suite of tools that enables organizations to build enterprise applications and workflows rapidly with minimal hand coding. The platform combines process management, robotic process automation (RPA), artificial intelligence (AI) capabilities and data integration into a single environment, allowing businesses to accelerate digital transformation initiatives.
The core offering, the Appian Low-Code Platform, empowers users—ranging from professional developers to business analysts—to visually model, design and deploy applications that can automate complex operations, orchestrate tasks across systems, and deliver real-time analytics.
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