Appian Corporation

Greetings and welcome to Appian Corporation's first quarter 2021 earnings conference call. At this time, all participants are on a listen-only mode. Later, we will have a question and answer session, and if you need to go into queue, the command is star one. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference call is being recorded. It is now my pleasure to turn the conference over to your host, Lang Lee, Investor Relations. Thank you. You may begin.

Thank you, operator. Good afternoon, and thank you for joining us to review Appian's first quarter 2021 financial results. With me are Matt Calkins, chairman and CEO, and Mark Lynch, CFO. After prepared remarks, we'll open the call for questions. During this call, we may make statements related to our business that are forward-looking under federal securities laws and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These include comments related to our financial results, trends and guidance for the second 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 discussion on the material risks and other important factors that could affect our actual results, Refer to our 2020 10K and other periodic filings with the SEC. These documents and the earnings call presentation are available in the investor section of our website, www.appian.com. Additionally, non-GAAP financial measures will be discussed on this conference call. Refer to the tables in our earnings release and the investor section of our website for a reconciliation of these measures to the most directly comparable GAAP financial measures. With that, I'd like to turn the call to our CEO, Matt Hawkins. Matt?

Thanks Lang and thanks everyone for joining us today. In the first quarter of 2021 Appian's cloud subscription revenue grew 38% year over year to $39.1 million. Subscriptions revenue grew 26% to $63.8 million. Total revenue grew 13% year over year to $88.9 million. Our cloud subscription revenue retention rate was 118% at quarter end. Also of note, we set a new high mark for gross profit margin, and our adjusted EBITDA was positive. These results exceeded our guidance. The business community recently faced its biggest disruption in decades. Organizations responded by adapting faster than they previously thought possible. Low-code was an essential technology, enabling change and will remain essential as businesses maintain a quick metabolism into the future. Everyone sees that business became more agile last year and changed more quickly than before. McKinsey & Company put numbers around this and found that firms augmented their data security 19 times faster than usual, migrated to the cloud 24 times faster than usual, adopted new technologies 25 times faster than usual, etc., Companies are digitizing their operations, customer service, and supply chain three to four years sooner than planned. The ways low-code can help an organization change can be summarized in three points, which I've taken to calling the low-code promise. You can build an application in one-tenth the time, have it cost one-half as much, and get better functionality. Appian is pioneering the low-code industry. We were the first company to go public as a low-code firm. We're ranked as a leader in over 10 analyst quadrants, including Gartner's enterprise low-code platforms and Forrester's digital process automation. More importantly, buyers rank us as their number one vendor in our industry, according to Gartner Peer Insights. Appian is the leader and the only leader for North American clients. The only leader. for the finance industry, the only leader in the entire analysis for big companies, those whose annual revenue exceeds a billion dollars. Appian is popular with buyers because we deliver on the fundamental value proposition of the low-code industry, summarized in that low-code promise I mentioned. Remember that's speed, savings, and superior apps. For example, a government agency overseeing federal employment regulations became a new Appian customer in 2015 and uses our platform across half its enterprise. It originally selected our platform to replace 39 disparate case management solutions. It's built over a dozen Appian applications and saves over $18 million annually. In Q1, it purchased more licenses to expand our platform into additional business areas. Another satisfied customer is a leading global insurance company. It has increased its software spend nearly every quarter since first buying Appian in 2018. Our platform automates a variety of processes across the company's reinsurance claims management, compliance, and employee commissions tracking systems. In Q1, it signed a new deal to license tens of thousands of users globally. We won this deal because our low code builds apps quickly. For example, We delivered the customer's global reinsurance app in just eight weeks under the Appian guarantee, while the competition estimated 6,000 person hours and up to a year to deliver the solution. Here's a third example. A top global bank and existing customer uses Appian to mitigate financial reporting risks across its business. In 2020, the bank expanded our low-code automation platform into its global consumer banking group, to systematize hundreds of error-prone manual processes to comply with the regulatory mandate. Appian enabled the bank to meet regulations within a year, saving millions of dollars. Now in Q1, it purchased a seven-figure deal to remediate another 1,000 high-risk processes before the end of 2021. Low-code is here to stay. Businesses are now expected to be able to implement change by their management, by their investors, by their customers. So agility is a central reason for the sustained usage of low-code. It is not the only reason, though. Mobility is now a necessary part of every application, and that will drive more development to low-code platforms. Also, technical debt rises in times of change, and that too will boost low-code. Let's dig into these other factors. Last year saw a surge in remote work, and corporate mobile app usage grew 220% globally. Mobile usage on Appian apps, however, grew 1,870% in the trailing four quarters. That's because every Appian app is natively mobile, while most others are not. In today's era of remote work, it will be an expectation that applications be mobile accessible. Low code, and Appians especially, is an ideal platform for building an application once and publishing it to every device. For example, a top 10 entertainment conglomerate purchased Appian in Q1 to manage its international labor standards program across 40,000 global facilities. Before Appian, the company struggled to adapt to evolving regulations because it lacked global governance over its regional systems. Now, thousands of field workers will use Appian on any device to audit facilities in coordination with corporate offices. We won this deal because of our mobile support and our performance in a complex proof of concept. In this new era of rapid change, agility has become the most important business virtue. Organizations need to be able to pivot their apps quickly. They don't have time to manage cumbersome technical debt. As you know, technical debt is the cost of keeping old applications up to date. In times of change, apps go out of date faster and the already high cost of technical debt becomes almost paralyzing. Appian is the antidote to technical debt. We keep applications up to date automatically. Every quarter, we strengthen our cloud security, just to mention one example, to ensure that every application written on our platform upholds modern security standards. Appian Cloud maintains compliance with over a dozen security certification and audit frameworks. In 2021, We've expanded our ISO 27001 certification, validating our cloud security controls and personal data protection for global customers. Appian recently achieved the high-level national security framework certification for the Spanish government. Also, Appian RPA achieved FedRAMP certification for US government organizations. Appian Cloud proved to be a winning differentiator in Q1. 89% of our new logos chose to deploy in our cloud, For example, a top global private equity firm purchased a seven-figure deal to become a new customer in the first quarter. The firm has a company-wide mandate to modernize its systems by the end of 2021. It selected our low-code platform to replace its legacy on-prem investment management system. The customer will migrate over 30 workflows to Appian Cloud before the end of this year. They suggest they selected Appian because our cloud met their security requirements and Our team built a custom demo in just two hours while the competition took over a month. An Australian government group that supplies electricity to hundreds of thousands of customers became a new Appian client this quarter. It selected our low-code automation platform to modernize its siloed supply chain business. Before Appian, it lacked digital tools to unify its procurement and legal teams, resulting in bottlenecks and multi-week delays in supply chain onboarding and reporting. We won this deal because of our superior cloud ratings and strong track record with large government groups. We're making low code better by joining it with automation. Low code is about creating applications by drawing a workflow. Automation is about using a workflow to coordinate work across different types of workers, RPA, AI, and people. These industries belong together, and it's time to unify them. Workflow makes this convergence inevitable. Great low code and great automation come down to the same thing, a great process model. Appian has been a leader in process modeling for more than a decade, and now we apply that strength to a broader market. Appian ships out of the box today with native AI, RPA, and workflow. We also accommodate other AI and RPA under our philosophy of openness. We choose that philosophy because it's right for the customer. It's what the customer would prefer that we do. Some customers want to use existing RPA or AI tools in an Appian workflow, while other customers prefer to use Appian's built-in functionality. There's good reason for them to use our functionality since Appian RPA has no additional cost for new bots, and Appian AI doesn't require sending data to a third party. We give them a choice. Appian is a champion for companies that want the freedom to choose their products instead of adopting a tech vendor's full stack. A leading British automotive manufacturer provides a good example of low-code automation. It became a new customer in Q1 and will use Appian to orchestrate work between its supply chain employees and its RPA bots. Before Appian, the company struggled to organize its workers and technologies to address evolving Brexit regulations related to moving automotive parts across European borders. Now, Appian will automate end-to-end delivery processes. Together, shipping agents will submit required documentation, Automation Anywhere bots will populate customs data into the company's systems, and internal staff will track deliveries, all of it in a single workflow. We won this deal because our open platform automates complex processes and provides governance over the manufacturer's existing data and technologies. As the world enters this new era of change, Appian is attracting more interest, as demonstrated by the thousands of registrations for next week's Appian World and our 61% new logo growth in Q1 compared to the same period last year. For example, A top 10 media company selected our low-code platform as a primary tool for its newly formed consumer products division. The group will use Appian to manage its end-to-end process to launch new products globally, from initial market research to final licensing with studios and retailers. The customer faces tight competition and wants to grow its thriving consumer products business line. We won this deal because our low-code is fast. The customer's first project will be delivered in eight weeks under the Appian guarantee. A year ago, I spoke to you about why Appian will emerge from this pandemic stronger than we entered it. While the full extent of 2020 was unpredictable to the business community, its impact on the way organizations will work tomorrow is clear. Agility is the most important business virtue. Appian's open, low-code automation platform facilitates mobile usage, eliminates technical debt, and enables customers to adapt quickly, modernize their enterprise, and scale. Now I'll turn the call over to Mark for a deeper discussion of our financials. Mark.