Appian Corporation

Greetings and welcome to Appian's fourth quarter and full year 2020 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 would now like to turn the conference over to your host, Mr. Scott Walker, Director of Investor Relations. Thank you. You may begin.

Thank you, Operator. Good afternoon, and thank you for joining us today to review Appian's fourth quarter and full year 2020 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 first quarter and full year 2021, the impact of COVID-19 on our business and on the global economy, 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 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 our actual results, please refer to those contained in our 2020 10-K filing and our other periodic filings with the SEC. These documents and the earnings call presentation are available in the Investors 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 release in the investor relations portion of our website for a 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, Scott, and thank you all for joining us today. In the fourth quarter of 2020, Appian's cloud subscription revenue grew 40% year-over-year to $36.9 million, and our dusted EBITDA was a loss of $3.7 million. Subscriptions revenue grew by 33% to $56.1 million. Total revenue grew 19% year over year to $81.6 million. Our cloud subscription revenue retention rate was 119% as of December 31st, 2020. For the full year, Appian's cloud subscription revenue grew 36% year over year to $129.2 million, and our adjusted EBITDA was a loss of $16.8 million. Subscriptions revenue grew 31% year-over-year to $198.7 million. Total revenue grew 17% year-over-year to $304.6 million. Both our fourth quarter and full year 2020 results exceeded our guidance. Our gross renewal rate was 99% as of the end of December, higher than 96% at the end of the previous year. We also set our best mark for gross profit margin at 74%. in q4 for the full year 2020 our gross profit margin was 72 percent exceeding the previous year's margin by 639 basis points the profile of low code has risen substantially over the past year for reasons we've discussed on previous calls anecdotally i hear many more people talking about low code when i say the term i find people are more likely to recognize it popular publications and media including the wall street journal forbes inc and cnbc have written recently about low code. Some smaller news outlets are calling 2021 the year of low code. Forrester predicts that 75% of development shops will use low code platforms by the end of 2021. Appian was the first company to go public as a low code firm. Our first annual report from 2017, I've got it right here, has a full page picture of an ascending rocket ship on the inside cover. It's not subtle at all. The headline says Appian launches the era of low-code. Now, four years later, low-code really has taken off. In addition to being first chronologically, we're a leader in over 10 analyst quadrants, including Gartner's enterprise low-code platforms and Forrester's digital process automation. Buyers rank us as the number one choice for enterprise low-code, according to Gartner Peer Insights. Notably, we're also the clear top selection for companies that generate more than $10 billion in revenue. Appian is a preferred choice for both analysts and buyers for a few reasons. First, our platform is fast. Appian customers build applications by drawing a workflow which is faster and more intuitive than coding. We also accelerate a customer's deployment by allowing them to keep their data anywhere in the enterprise and connect to that data through low-code techniques reducing sharply the difficulty of creating new applications. Employing Appian accelerates a company's ability to ship new products, meet regulatory deadlines, and respond to their customers. Speed is a common reason for us to win new logos and expand within our customer base. For example, with a multimillion-dollar expansion in Q4 with a top 10 global pharmaceutical company, it became a new Appian customer in early 2020 and manages the design of clinical trial protocols with our platform. In Q4, the company purchased additional Appian licenses to deploy multiple applications, including a clinical trials portal to improve communication with participating healthcare professionals and provide more time visibility about the studies. We won this follow-on deal because of the speed we demonstrated when we deployed the customer's original application in just eight weeks with our eight-week Appian guarantee. Our speed also won us a deal with a Fortune 500 insurance company, making them a new Appian customer in Q4. the insurer will use our low-code automation platform to manage its highly regulated online content and document creation processes. Before Appian, it lacked a digital tool to coordinate work across hundreds of users before publishing content publicly. We won this deal because Appian's low-code enabled the insurer to quickly build two applications within a strict compliance deadline. Each app would be launched within eight weeks. Our second advantage is complete automation. In 2020, we acquired a leading robotic process automation company to make us a one-stop shop for automation. Our platform gives organizations everything they need to orchestrate their people, existing systems, data, bots, and AI in a single workflow. Complete automation allows organizations to make the most of their resources. For example, a Fortune 500 consumer products company has been an Appian customer since 2016, and uses our low-code automation platform to manage its end-to-end product lifecycle. In Q4, it purchased more licenses to automate approvals and launch products to market faster. Before, the company lacked a centralized view of its product information because its data was siloed across many systems. Now, Appian will orchestrate the approval process as Appian RPA bots fetch and aggregate data so employees can realistically review and approve products within a single tool. We won this deal because our platform was the fastest way to unify the company's people, data, and technologies into a single workflow. But the third and final advantage is that our platform is enterprise-ready. The largest organizations trust Appian to run their core business applications with world-class performance, governance, DevOps, and security. Our platform is open, allowing organizations to integrate their preferred best-of-breed technologies. In fact, we provide a simple no-code integration designer Our designer allows customers to connect with almost any modern external system. Our commitment to openness and our enterprise-grade cloud allows customers to scale their companies with our platform as they add new products, grow their customer base, and hire more employees. For example, a Fortune 500 electronics manufacturer became a new Appian customer in Q4. It selected our low-code automation platform to unify over a dozen disparate systems across its enterprise. All employees use Appian to manage tens of thousands of approvals annually, ranging from IT service requests to travel reimbursements. We won this deal because the customer will be able to deploy its mobile-enabled application in just eight weeks under the Appian guarantee. And this customer, by the way, is not alone in their demand for mobile. Appian customers increased their mobile usage six-fold in 2020 compared to 2019. Appian gained 167 net new subscription customers in 2020, adding 50% more than we did in 2019. These customers are high-quality global organizations in a variety of industries, including a top jewelry maker, a top telecommunications company, and a top publisher. Existing customers also expanded their use of our platform in 2020. For example, 81% of our seven-figure ARR customers from 2019 purchased more software in 2020, 81%. These customers include a US federal health agency that selected Appian to automate its contract writing process in early 2020. This quarter, it purchased our acquisition requirements management solution to completely replace its acquisition system and modernize its end-to-end procurement process with Appian. A top five global automotive supplier also expanded in Q4. The German company has been an Appian customer since 2018 and uses our low-code automation platform to manage its global product design process. This quarter, the company purchased over a million dollars of new licenses to automate more than a dozen new manufacturing processes. Now, factory workers will use Appian to oversee the design and building of prototypes, reducing its design-to-order time from weeks to days. I'd like to spotlight two areas that are performing particularly well. 1st, our region had a strong here, doubling its new logo contribution in Q4, 2020, compared to the prior year period. It also won twice as many 7 figure deals in 2020 as it did in 2019. 1, noteworthy new logo example in Q4 is a top 5 bank in the UK. It purchased over a 1M dollars of Appian licenses to replace its inflexible and overly manual internal audit solution. Our low-code automation platform will fully digitize the audit lifecycle and provide a comprehensive view of the bank's risk profile. The bank selected Appian after an existing banking customer reported that it saves over $6 million annually in audit costs with their Appian application. Another highlight in 2020 was our partner ecosystem, which was, again, a leading growth driver. Partners delivered more than 70% of our new logos for the year. It's worth mentioning that partners alone contributed more new logos in 2020 than our entire company in 2019. For example, a partner helped us win a million dollar new logo deal with a leading European insurance company in Q4. The insurer will use our platform to fully manage its life insurance policies across including writing, servicing, policy termination. Appian will replace three legacy applications and integrate with the insurer's existing customer management and risk profiling systems. We won this deal because our partner demonstrated the speed and power of our platform with a complex custom demo built in just days. Partners also win new customers with solutions they pre-build on the Appian platform. For example, a Fortune 500 global medical devices manufacturer became a new Appian customer in Q4 by purchasing PwC's Interactions Hub solution. This partner solution manages the highly regulated end-to-end process of engaging healthcare professionals as speakers and spokespeople for medical device and pharmaceutical events. Appian will manage tens of thousands of interactions annually. PwC's unique Appian solution won this deal over competitors. Low-code is not a complicated idea. Unlike other terms, like digital transformation, its meaning is not ambiguous. It means exactly what it says. It's a new way to build applications with less code, resulting in productivity gains of 10x or more. Some people think it's just for citizen developers, but that's incorrect. IT developers need 10x productivity gains just as much as citizen developers do. In fact, because their applications are the most important in the enterprise. Low code is frequently and increasingly used for mission-critical applications. Four years ago, Appian's IPO launched the era of low code. For three years, we advanced in what I would call a slow revolution. Low code grew steadily and felt inevitable, driven by developer shortages and the booming demand for new applications, driven by frustration over enterprise fragmentation and the rising cost of technical debt. But then our slow revolution was preempted by a fast revolution. The disruptions of 2020 focused every organization in the world on the necessity of agile change. The events of last year will shape the low-code market profoundly. Appian now has an opportunity to be a leader in a leading market. Now, I'll turn the call over to Mark for a deeper discussion of our finances. Mark?