Appian NASDAQ: APPN Chief Financial Officer Serge Tanjga said the company is seeing growing customer adoption of artificial intelligence features, while emphasizing that enterprises are taking a cautious approach to deploying AI in mission-critical workflows.
Speaking at a TD Cowen software conference in a discussion moderated by Senior Analyst Derrick Wood, Tanjga described Appian as a process automation company focused on complex, highly regulated environments. He said the company has been automating mission-critical processes for more than 25 years and expects to generate more than $800 million in revenue this year.
Tanjga said Appian primarily serves four verticals: financial services, insurance, life sciences and government. Those industries account for roughly 80% of the company’s annual recurring revenue, he said. He added that Appian’s customer base includes eight of the top 10 global banks, seven of the top 10 insurance and pharmaceutical companies, and all 15 branches of the U.S. government.
Appian Highlights Mission-Critical Use Cases
Tanjga pointed to several customer examples to illustrate how Appian’s platform is used. One large global financial institution uses Appian to monitor fraud in money transfers, he said. Before Appian, the process involved six disparate systems, spreadsheets and significant manual labor. After implementing an Appian layer and using AI to automate investigations, the institution reduced the time to investigate a case to 38 seconds, cut the overall process by 98% and reduced risk by three-quarters, according to Tanjga.
He also cited a branch of the U.S. military using Appian to manage the ammunition lifecycle. Tanjga said the organization replaced a legacy system handling about 1 million transactions a month and now has near real-time visibility into global ammunition status in a high-security IL5 environment.
“It really comes down to we replace homegrown systems, other automation tools that have failed, or a tremendous amount of spreadsheets and manual labor,” Tanjga said.
AI Adoption Is Rising, But Many Projects Remain Early
Tanjga framed Appian’s AI strategy in two categories: “AI as a worker” inside a process and “AI as an author” used to create applications. He said Appian’s approach is to deploy AI selectively, with guardrails, rather than allowing AI to operate broadly across an enterprise without oversight.
For AI used inside workflows, Tanjga said Appian surrounds AI with checks, routes uncertain outcomes to humans, uses multiple large language models in some cases and maintains auditability. He said this approach is resonating with customers because Appian is using AI “deliberately and surgically” when it is the best tool for a specific task.
On AI-generated applications, Tanjga said so-called vibe coding can be powerful at the start but can create reliability and maintenance challenges, particularly for banks, insurers and government agencies. He said customers must be able to understand, troubleshoot and maintain applications over time.
“AI is an exceptionally powerful tool,” Tanjga said. “But as you think about it, employing it repeatedly at a core of a real enterprise, it needs the support, it needs the harness, it needs the guardrails, and that’s what Appian provides.”
Advanced Tier Drives AI Monetization
Tanjga said 70% to 80% of Appian customers are using AI in some form, though much of that activity remains in proof-of-concept stages. To use AI in production with Appian, customers must upgrade to the company’s Advanced tier, which carries a 25% to 35% license premium, he said.
On Appian’s most recent earnings call, the company said 40% of its customers are paying for AI tiers, Tanjga noted. At its investor day, Appian disclosed it had reached $100 million in annual recurring revenue on the Advanced tier, compared with a base of just over $600 million of ARR last year.
Tanjga said customers often begin with a first production use case, frequently with help from Appian’s professional services team. As those use cases grow, customers may need to purchase additional AI consumption. He said Appian expects some customers to buy committed AI usage in advance, while others may pay in arrears at a higher price.
He also said Appian has a Premium tier that could eventually include additional AI functionality, representing another potential 25% to 35% uplift, though he characterized that as a future opportunity.
DocCenter Seen as a Key AI Opportunity
Tanjga said one area of incremental investment is Appian’s DocCenter, an AI-enabled document processing solution. He described document processing as a horizontal use case across enterprises, particularly for difficult documents such as handwritten prescriptions, stained forms or older copied records.
According to Tanjga, Appian is able to help customers achieve accuracy above 95%, compared with legacy solutions in the 60% to 70% range. He said the product’s advantage is that document processing is integrated into business processes rather than operating as a standalone cleanup tool.
He said Appian is seeing success with DocCenter across insurance, government and life sciences customers and is improving how it productizes, sells and implements the solution.
Sales Execution, Margins and Competition
Tanjga said Appian has made changes to its go-to-market organization over the past 12 to 18 months, including leadership changes, improved forecasting, stronger deal qualification and more discipline around pricing, packaging and discounting. He said the company has focused more on large strategic deals and selling based on value rather than volume.
He said Appian delivered its best year of new business growth in four years while making those changes, and the company has “earned the right” to grow its sales organization again after pausing expansion for two years.
On internal efficiency, Tanjga said Appian is using AI across its own operations, especially in research and development. He said the company is rethinking the software development lifecycle with AI and aims to accelerate innovation without accelerating investment. He also said Appian expects more than 100 basis points of margin expansion this year, following nearly 20 percentage points of combined improvement in 2023 and 2024.
Tanjga said the competitive landscape has not changed materially. He identified Pega as a competitor in higher-complexity workloads and also named ServiceNow, Salesforce and Microsoft as competitors. He said Appian’s win rates have been stable and strong, and added that when AI is a specific requirement, Appian’s win rates are “significantly higher.”
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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