Appian Corporation

Good day, and welcome to the Appian Corporation's second quarter 2021 earnings conference call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Sriyananta, Director of Investor Relations. Please go ahead, sir.

Thank you, operator. Good afternoon, and thank you for joining us to review Appian's second quarter 2021 financial results. With me today are Matt Calkins, Chairman and Chief Executive Officer, and Mark Lynch, Chief Financial Officer. After prepared remarks, we will 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 third 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. They do not represent our views as of any subsequent date. They 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, 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 their most directly comparable GAAP financial measures. With that, I would like to turn the call to our CEO, Matt Calkins. Matt.

Thanks, Sri, and thank you all for joining us today. In the second quarter of 2021, Appian's cloud subscription revenue grew 44% year over year to $42.5 million. Subscriptions revenue grew 37% to $56.9 million. Total revenue grew 24% year-over-year to $83.0 million. Our cloud subscription revenue retention rate was 121% at quarter end, and our adjusted EBITDA was a loss of $16.3 million. That's pretty good numbers for us. In addition to some good results, though, we're also announcing an acquisition of Lana Labs, a leading process mining firm. We expect the transaction to close next week. Process mining is the technology that examines usage logs to discover what work people are actually doing and see the patterns in that work and find processes that have not yet been automated. Those processes can then be automated in Appian using workflow technology. So process mining is a great complement to workflow. Process mining discovers processes, workflow automates them. Combining them in one product may create new business opportunities. help substantiate the return of investment in Appian and accelerate our expansion within our existing customer base. This acquisition also signals where Appian believes the low-code automation market is going. We believe the heart of this evolving and consolidating industry is workflow. Workflow is about doing, as are automation technologies like RPA. Process mining, by contrast, is about knowing. Knowing and doing are natural complements When used together, they create greater value than either component could have conveyed alone. Here's an example of the synergy between process mining and low-code automation. This is from a leading insurer who is also an Appian customer. They bought Appian late last year and built a few processes. They saw how quickly Appian could automate the processes they knew they had to improve. At the same time, they were using process mining to discover and map thousands of their existing processes. This quarter, they brought it all together. They multiplied their Appian investment to automate the many processes they discovered with process mining. Lana Labs is a strong firm in its own right. In the most recent analyst report on process mining, they're listed as a major contender. Like Appian, they focus on complex enterprise processes. They run natively in the cloud. They're recognized for ease of use, and they have many happy customers. Some of Appian's top partners already have LANA practices, including KPMG and PWC. They've got a great staff, very smart, good people. They're based in Berlin, and we're going to keep the operation there and grow it. Culture is a very important factor in Appian acquisitions, and we think we are fortunate with this one. We hope to keep every member of the LANA team. When Appian makes a technological acquisition, we follow a three-point playbook. There are three things that we prioritize when we combine technologies, and these are things our customers can count on as we expand our platform. The first is synergy. We're not just creating a portfolio of technologies. We're integrating them deeply. We think process mining and low-code automation are better together, so we're combining them. We think both are improved by intimate access to the other. Appian offers one product. And after this acquisition is processed, we will still offer one unified product. The second thing is reliability. We automate important processes for prominent organizations. Everything Appian offers has to be enterprise grade. The third is low code. Appian makes powerful technology that is still easy to use. For us, low code is an adjective. and it represents a new standard in usability. We are pioneers in the concept of low-code, allowing our users to program machines in simple terms. Whatever functionality Appian sells will feature an intuitive low-code interface. So that's it. That's our game plan. Synergy, reliability, and low-code. We have done it before. Last year, we acquired an RPA vendor Within a year of that acquisition, we fused our functionality to invent low code automation. We made RPA secure, certifying it with all our existing credentials. We made it low code, easy to use and integrate. We bundled it into our product. RPA is now a native feature in the Appian platform. An example will help show what I mean. A top international grocery retailer has been an Appian customer for two years. The company uses our low code automation platform to investigate issues with its supply chain, to file claims, and to manage the logistics of its fleet drivers who deliver supplies to stores. In Q2, the retailer purchased additional licenses and will deploy Appian RPA to help automate its distribution centers. For example, Appian bots will carry data across systems and assign truckloads to drivers. The company appreciates having RPA and low code in the same platform. and expects to save seven figures annually using Appian. For a while now, I've been explaining our industry to newcomers with what I call the low-code promise. It's a statement of what you can expect from our industry, an introduction for those who aren't familiar with it. It goes like this, and you've probably heard it before. With low-code automation, you can build apps 10 times faster, cut development costs by half, and still enjoy better functionality. So I've been saying this for a while based on internal data. But this quarter, an independent study was released by Forrester Research, and it validates the benefits I've been talking about. They found Appian's low-code automation platform accelerated app development by 17 times, better than 10, and reduces customer costs, including operating and maintenance costs, by 50%. Additionally, Appian improves the time-to-value of our customers' apps by half, reduces thousands of hours of manual work annually, and produces a 389% ROI on average with a payback period under six months. Here are a few examples of customers choosing Appian because we can deliver the low-code promise. A Fortune 500 insurance company became a new Appian customer early last year and has expanded its use of Appian with additional license purchases almost every quarter since. Our platform orchestrates the work between third-party RPA bots and employees as it onboards insurance policy resellers. In Q2, it purchased more licenses to deploy Appian RPA and build additional workflows, automating the end-to-end process of creating, processing, and shipping documents to customers. We won this deal because the company can cut its operational costs in half using Appian. A domiciliary care provider in the UK purchased over a million dollars in Appian software licenses in Q2 and became a new customer. The company will use our platform to orchestrate patient care and replace two legacy systems. Call center agents will use Appian to respond to care inquiries and request site visits, while back office workers will assess staffing resources, schedule visits, and dispatch a health care provider. Then, dispatched providers will record the services rendered on an Appian app so invoicing teams know how much to bill clients. We won this deal after proving our platform's speed and flexibility during a competitive proof of concept. Partners have increased their involvement in our software business, bringing roughly twice the software bookings in the first half of this year compared to the same period last year. This has raised our commission payments above expectations and reduced our services revenue, both of which effects we feel are generally positive. Speaking of partners, a partner helped us win a global humanitarian agency responsible for supporting international public health as a new customer. This agency purchased a seven-figure software deal in Q2, making Appian its new enterprise low-code standard. To start, we'll automate core financial and global fund resource planning processes. We won this deal after proving our speed and flexibility with multiple demos built in just days. We saw strong performance this quarter in our key industries. Here's several examples. Our top global medical devices company became a new Appian customer in Q2. It selected our low-code automation platform to oversee its manufacturing installation process for a specialized medical device. Before Appian, the company lacked unified tools to coordinate its manufacturing timelines, customer deliveries, and enablement training of these devices. These inefficiencies caused delays in their revenue recognition. We won this deal because our platform will unify these processes and improve overall efficiency by over 30%. The customer's first project will be delivered in eight weeks with the Appian guarantee. Also, a U.S. government group that administers federal funding is another existing Appian customer that purchased a seven-figure deal for software licenses in Q2. The group selected our platform to manage the end-to-end processing of constituents' funding requests. We won this deal because our platform allows the organization to quickly build and deploy a new application. Within weeks, they'll be able to distribute billions of dollars in accordance with a federal relief mandate. Our mission is to build the world's best low-code automation platform. We're doing this by bringing together complementary technologies that provide the greatest benefits to our customers. This quarter, we unified process mining and low-code automation. Process mining will allow companies to understand their processes so they can automate them on our platform. Now I'll turn the call over to Mark for a deeper discussion of our financials.