Appian Corporation

Greetings. Welcome to the Appian Corporation third quarter 2019 earnings conference call. At this time, all participants are in a listen-only mode. A 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. Please note, this conference is being recorded. I will now turn the conference over to your host, Will Mena. You may begin.

Thank you, Daryl. Good afternoon and thank you for joining us today to review Appian's third 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 for a Q&A 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 fourth quarter and full year of 2019, the 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. 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 of any other subsequent date. These statements are subject to a variety of risks and uncertainties that could cause actual results and differ materially from expectations. For discussion of the materials and other important factors that could affect our actual results, please refer to those contained in our 2018 10-K, followed with and other periodic filings with the SEC. These documents and the earnings call presentation are available in the investor relations section of our website at www.appian.com. Additionally, non-GAAP financial measures will be discussed on this conference call. Please refer to the tables in our earnings press release and the investor relations portion of our website for reconciliation of these measures to their most directly comparable GAAP financial measures. With that, I'd like to turn the call over to our CEO, Matt Calkins. Matt.

Thanks, Will, and thank you all for joining us today. In the third quarter of 2019, Appian's subscription revenue grew 38% year-over-year to $40.4 million, and our non-GAAP operating loss was $7.2 million. Our subscription revenue retention remained strong at 119% as of September 30th. These results exceeded our guidance. Key growth drivers this quarter were EMEA, our three strongest industries, and partners. Let's start with EMEA. EMEA, including Europe, the UK, the Middle East and Africa, increased subscription revenue about 60% in both Q1 and Q2 of this year. In Q3, it was once again our fastest growing territory with subscription revenue growth of 65% compared to the third quarter of 2018. We signed a notable UK expansion deal with a top 10 global bank and an Appian customer since 2016. In Q1, this leading bank made a multi-million dollar Appian purchase to manage regulatory changes and financial operations for its global services risk department. This quarter, the bank purchased another half a million dollars of software to expand our platform into its commercial bank. It will use the licenses to deploy a customer onboarding and Know Your Customer application. We will also deliver this division's first project in eight weeks under the Appian guarantee. Additionally, EMEA contributed a third of our new logos this quarter, including a top 10 European Superstore chain. This organization purchased Appian to replace portions of their legacy system and better coordinate its marketing, procurement, and sales teams to execute its food and non-food promotions. We won this deal over two competitors because we delivered a complex custom demo very quickly in just three days. Financial Services continues to be our largest and one of our fastest growing industries. In Q3, subscription revenue for this industry grew 48% compared to the same quarter last year. I'll mention a few notable expansions in financial services this quarter. Top Five Global Investment Bank has been an Appian customer for three years. In Q3, it purchased millions of dollars of new Appian software. With this expansion, the bank will add 50% more users to its existing consumer banking app bringing the bank closer to meeting its goal of standardizing customer case management in Appian. Additionally, they'll develop a new asset servicing application to notify institutional clients when market events affect their portfolios. This application will allow the bank to inform clients up to two times faster and will be delivered in eight weeks under the Appian guarantee. Additionally, a top five global asset management firm and existing Appian customer since 2018 purchased licenses in Q3 to build their 16th Appian application. They will use these licenses to replace the legacy system with Appian. Prior to this purchase, financial advisors would submit documents requesting changes to their clients' accounts and the firm's employees would manually enter the changes into multiple systems. With Appian, the information from the documents will be updated into those systems automatically. They did not evaluate any competitors for this project because of the proven impact of their existing Appian applications. Our U.S. federal sector grew subscription revenue 50% compared to Q3 last year, and we closed deals at a few notable agencies this quarter. A Department of Defense command bought an additional half a million dollars in new software licenses in Q3 They'll build two new applications, one to manage procurement and another for HR onboarding. The group purchased Appian because of our ease of use, which they've experienced firsthand with our cloud trials and existing Appian projects. A civilian federal agency and one of the largest researchers in the world became a new Appian customer this quarter. They'll build a recruitment management application with their purchase. Before Appian, it took days for research groups to understand the status of open jobs and their remaining staffing budget. With Appian, they'll be able to coordinate work across multiple teams to give instant visibility on the status of recruiting activities. Several vendors competed for this deal, but our reputation in the federal government set us apart. The customer selected Appian after receiving references from other agencies and viewing demos of their Appian applications. Half of the world's 10 largest life sciences companies are Appian customers, making it our third largest industry. This quarter, we saw a couple of notable expansions. in life sciences. A top five US biotechnology firm has been an Appian customer for two years. In Q3, it doubled its total software purchases with a multi-million dollar deal that expands our platform across its enterprise. The firm currently uses Appian in three of five business lines for customer onboarding, regulation management, and external engagement tracking. We won this enterprise wide deal because key decision makers across all business areas recognized our platform's flexibility. Additionally, a top five global pharmaceutical company purchased over a million dollars of Appian software this quarter. They'll use these licenses to expand their Foreign Corrupt Practices Act application into the Asia-Pacific region. This app has already reduced their process cycle time in Latin America by 90%. Ultimately, the customer plans to deploy it to about half of its operational countries, reusing existing Appian components to standardize global compliance. They chose us because our platform is simple to scale across their company. Partners also continued to play a strong role in capturing new logos. This quarter they doubled their new customer contribution compared to Q3 last year. This list of new customers includes one of the top 10 U.S. oil and gas service providers. Before Appian, field engineers recorded usage information about oil and gas equipment on paper and spreadsheets. making it difficult to evaluate the quality of equipment vendors. They chose Appian for our built-in mobile functionality. Now, hundreds of field engineers are using Appian on offline mobile devices to track equipment usage in remote locations. Also this quarter, a partner helped us win a deal at one of the world's largest entertainment companies, making them a new Appian customer. The company chose Appian to standardize their human resources request process which was managed using disjointed spreadsheets and hard-to-change applications. A single sales engineer met their requirements with a custom demo built in just one week, and our partner will deploy their first project in eight weeks under the Appian guarantee. Across industries and regions, our ease of use and speed continue to differentiate us in sales cycles, allowing us to sell into new organizations and expand within our existing customers. Now, let's turn the call over to Mark for a discussion of our financials.