Appian Corporation

Greetings and welcome to the Appian First 2019 Earnings Conference Call. At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference please press star zero on your telephone keypad. As a reminder this conference is being recorded. It is now my pleasure to introduce Stacey Mortensen. Thank you, Stacey. You may begin.

Thank you. Good afternoon, and thank you for joining us today to review Appian's first quarter financial results. With me on the call today are Matt Calkins, Chairman and Chief Executive Officer, and Mark Lynch, Chief Financial Officer. After prepared remarks, we will open the call to a question and answer session. During this call, we may make statements related to our business that are forward-looking statements under federal securities laws and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements related to our financial results, trends, and guidance for the second quarter and full year 2019, the benefits of our platform, industry, and market trends, our go-to marketing 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. The words anticipate, continue, estimate, expect, intend, will, and similar expressions are intended to identify forward-looking statements or similar indications of future expectations. These statements reflect our views only as of today and should not be reflected upon as representing our views as of any subsequent date. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations. For a discussion of the material risks and other important factors that could affect your actual results, please refer to those contained in our 2018 10-K filing and our periodic filings with the SEC. These documents in the earning call presentation are available in the Investor Relations section of our website at www.appian.com. Additionally, non-GAAP financial measures will be discussed in this conference call. Please refer to the tables in our earnings release in the Investor Relations portion of our website for a reconciliation of these measures to the most directly comparable GAAP financials. With that, I'd like to turn the call over to our CEO, Matt Calkins. Matt.

Thanks, Stacey, and thank you all for joining us today. In the first quarter of 2019, Appian subscription revenue grew 32% year over year to $33.6 million. Our subscription revenue retention remain strong at 116% as of March 31st, 2019. These results matched our guidance. There were a few notable highlights in the quarter. We expanded with seven-figure deals in eight of our existing customers. Partners increased their contribution by bringing us 75% more new logos this quarter than they did in the first quarter of 2018. And the Appian Guarantee won us deals that we believe we would not have captured otherwise. Our large wins this quarter show that even the most mature Appian customers continue to buy more licenses for years after their first purchase. One of our seven-figure deals this quarter was with the top five US health insurer. Since becoming an Appian customer four years ago, they've saved more than $200 million, thanks to four mission-critical Appian applications built to manage care for at least 14 million plan participants. Following that success, they've increased their investment in each of the last three quarters. We also expanded with a multi-million dollar deal at one of the world's 10 largest banks. They first bought Appian in 2016 with a small purchase and now use our software to run 10 regulatory applications for 9,000 users. One of their applications, built to meet foreign accounting standard requirements, was created in just one month and improved processing times from weeks to hours. This quarter they licensed an additional 2,000 users in their risk department to deploy multiple applications The first will allow the bank's hundreds of thousands of global employees to call into a central help desk to obtain advice on upcoming regulatory changes. Another will use artificial intelligence to scan content from more than 350 regulatory agencies for upcoming changes so the bank can be prepared. We beat major competitors because of our speed and demonstrated impact. Another notable expansion was a deal with a top 10 global pharmaceutical company and Appian customer of seven years. together with our partners they've deployed more than 15 applications including a mission critical recovery application built in just two weeks during a crisis situation. This quarter they added more than 10,000 users to support their drug labeling and patent management processes. They selected Appian over our major competitors for this new application because we've proven to them that they can build powerful applications quickly. We're doing well with expansions because clients see we can deliver value quickly and reliably. This is the reason we launched the Appian Guarantee last year. As you may recall, the guarantee states that a customer's first application will be finished in eight weeks. In Q1, we had some notable Appian Guarantee wins. One of the top five insurance brokers selected Appian to modernize their global reinsurance claims management process, for example. They needed to quickly replace a decades-old homegrown legacy application that manages 30,000 policies per year. as part of the sales cycle our competitor estimated, our competitor now, that it would take 6,000 person hours and up to a year to deliver this solution. Our services offer was the Appian guarantee, eight weeks at 150K. We were selected for this million dollar software deal because of the guarantee and the efficiency it represents. A major Canadian insurance provider with roughly three million customers and $11 billion in assets under management became a new customer in Q1 they purchased almost a million dollars of software to modernize their system for onboarding and servicing their group insurance customers. The current system is heavily manual. Roughly 300,000 requests per year are made via email, mail, and phone and are managed across email spreadsheets and legacy systems. As a result of these information silos, it takes 20 days for a customer request to be processed. The company will first build an application to handle email requests intending to reduce processing times by half with us We won this new customer against five competitors because we were able to compete all their proof of concept requirements ahead of schedule in just a day and a half. And we used the Appian Guarantee to build their first application in just eight weeks. Our partners are increasingly bringing us more new logos and helping us expand in existing companies. In Q1, they sourced 61% more total contract value compared to the last quarter of 2018. Notably, 63% of new logos in the first quarter were partner deals. Partners who bring us deals deliver implementation services for them. Therefore, the recent acceleration of partner-related wins means partners are leading an increased share of Appian projects. Our long-term strategy is to engage partners to grow our software revenue, which will shift our revenue mix towards software even as we continue to have a robust professional services organization. a partner helped us win a top five law firm in the Asia Pacific region with a deal worth more than half a million dollars. This new Appian customer needed to replace a legacy application for managing their legal workload, things like lawsuits and estate planning. They'll use Appian to replace the functionality of their existing tool to manage 100,000 cases per year. We beat a major competitor for this win based on the ease of use demonstrated during our proof of concept and our ability to provide actionable information to the right decision maker at the right time. Another partner brought us a deal worth more than half a million dollars at a major U.S. commercial real estate developer. They became a new customer because they needed a platform to modernize more than 100 processes, from leasing case management to expense approvals for employees. Currently, their processes are managed across a series of emails, spreadsheets, and homegrown legacy applications. We won this deal based on speed because this client is committed to launching their first 10 applications in one year, and they believe Appian will enable them to do this. Partners also continue to help us expand in existing customers. For example, they brought us into a top five investment bank in 2016 to launch a new consumer line of business. They built that business from scratch on Appian in six months. Since then, our partner has driven expansion into five divisions inside the firm. And this quarter, the firm purchased licenses in a multi-million dollar deal to add 5,500 users to support their client servicing teams. This application will allow the bank to digitize the process by which their client coverage teams request executive support, escalate critical issues, and submit product enhancements for their top institutional clients. You may recall that last quarter, a partner brought us the UK Home Office, which leads immigration and passports, drug policy, crime, fire, counterterrorism, and police in the UK. They turned to us to replace a system to track housing for asylum seekers entering the country. Their first application improved housing inspections, This quarter they doubled their Appian investment to expand the application into new regions. 90% of their users will use Appian from their mobile devices to more easily inspect homes. With this application, they expect to improve their efficiency by the equivalent of 30 full-time workers, allowing their employees to better serve asylum seekers. Our customers build their applications once and can run them natively across different browsers and mobile devices. We had some notable wins this quarter for our mobile functionality. For example, a top five bank in the United States became an Appian customer by purchasing Appian to replace their legacy security management system. Their 300 person team uses the system to manage 25,000 security incidents a year, including earthquakes and bank robberies. When an emergency strikes, the team needs to deploy quickly. In Appian, they'll be able to immediately pull data from 10 systems to get a complete view of the assets and people affected. With this application, they'll also have checklists available on mobile devices so that local resources can ensure safety procedures are followed. A similar system in the bank was built by a major competitor using a team of 50 consultants over three years. This is a competitor now. With three Appian practitioners, we'll have the first project complete in eight weeks and expect to complete the entire system before the end of the year. We won this deal against four competitors due to our speed, which was proven when our sales consultant built a viable application on site in a half day session. Here's one more mobile use case. This quarter, we expanded at one of the world's largest oil field service providers. They purchased licenses for several thousand employees to manage field work within their wireline and perforation division. Our offline mobile capabilities were critical for their remote engineers and service coordinators. Before Appian, they had to rely on eight legacy systems and inefficient paper processes on worksites, but with Appian, they will collect information in one offline interface and then immediately synchronize field data when the field worker backs back online. Every business is unique and Appian allows our customers to quickly express their uniqueness in software. More companies are choosing Appian to launch new systems that realize great customer service and differentiate themselves from their competition. Now, I'll turn the call over to Mark for a deeper discussion of our financials. Mark.