Appian Corporation

Good day, and thank you for standing by. Welcome to the Appian First Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Sri Anatha, Senior Director of Finance and Investor Relations. Please go ahead.

Thank you, Operator. Good afternoon, and thank you for joining us to review Appian's first quarter 2023 financial results. With me today are Matt Calkins, Chairman and Chief Executive Officer, and Mark Mateos, Chief Financial Officer. After prepared remarks, we'll open the call for questions. Today, you will want to follow along with our earnings presentation. You can download it from the main page of our investor site at investors.appian.com. 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 2023, 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 2022 10-K, our 10-Q filing for Q1 2023, and other periodic filings with the SEC. These documents are also available on our investor section of our website. 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 results. With that, I would like to turn the call to our CEO, Matt Calkins. Matt.

Thanks Sri, and thank you everyone for joining us today. In the first quarter of 2023, Appian's cloud subscriptions revenue grew 31% year over year to $69.7 million. Overall subscriptions revenue almost broke the $100 million line, but finished at $99.0 million. Total revenue grew 18% year-over-year to $135.2 million. Our cloud subscription revenue retention rate was 115% as of March 31st. Our adjusted EBITDA was a loss of $15.8 million. Our non-GAAP gross margins set a post-IPO record at 75%. that these results exceeded our guidance. We hosted our annual conference Appian World in San Diego last week. I'm pleased with the attendance and the enthusiasm. More than twice as many prospects came to Appian World this year as last. Our conference theme was process automation. Customers talked about the benefits of running the whole process lifecycle on Appian's platform. On stage, I explained the emerging split between what I call public AI and private AI. Public AI involves sharing data with a cloud AI provider. And that's unacceptable to many of our clients. Companies want to keep control of their data. They may have legal restrictions as well. And they don't want to help train an algorithm that could then be used by their competitors. Private AI, by contrast, means every company cultivates their own AI algorithms, starting with a public model but training it privately and using it privately. I predict that in the long run, private AI wins, which is to say that it becomes the more popular model for our customers. I think customized AI algorithms will someday be as normal as custom applications inside big firms. Private AI will feature strong accuracy despite having smaller training data sets because the data is more pertinent and the scope of each AI will be narrower. These AIs won't write limericks or make images. They'll just do the one thing that they were made for. Appian will facilitate both kinds of AI, but we prefer the private model. We announced some new features, which I call low-code AI, that make it easy for customers to cultivate their own AI on Appian-connected data sets. This public-private split separates Appian from its largest competition. By being a champion of private AI, we appeal to buyers who prefer not to share their data assets. Our ability to assemble large data sets to train the private AI algorithms comes from a feature called data fabric. Data fabric is a fancy term for a virtual database, and it means that we can address data from across the enterprise like it was together, even though it remains apart. This strategy is preferable for our clients who dislike having to relocate data Data is the hardest part of building and running processes, so this feature constitutes a substantial advantage. Our data fabric in turn gives us a critical edge at inventing the next generation of process mining. We call our new vision Process HQ, and we're starting a beta program for it next quarter. It uses Appian's capabilities to overcome the limitations of process mining as it exists today. Process mining projects are notorious for taking a lot of time to gather a data set and not being immediately actionable. In Process HQ, data collectors' data collection can be quick using Appian's data fabric. Recommendations for delegating work to new types of workers like AI or RPA can be instantly applied using Appian's full suite of automation tools. Process HQ will quantify the efficiency gains made by Appian-run processes at the same time as helping owners make further improvements. All three of these critical advances are data-related. We see lasting advantage over competitors and capability for clients in our data abilities. For example, a leading European automotive manufacturer uses Appian to better leverage its data and boost productivity. The company currently automates supply chain processes with Appian, saving tens of millions of dollars annually. In Q1, it purchased a seven-figure software deal to build more apps and further optimize operations. One app will manage warranty claims. Appian will integrate the company's systems to run the end-to-end claims assessment and review process. Our platform will feed the customer's data into a machine learning model to predict which claims need intervention. The customer expects to improve operational efficiency of this process by 20% and save millions of dollars per year. The U.S. public sector contributed half of our Q1 new logo ACV, becoming one of our strongest growth areas. We recently announced some new advances for this market. First, Appian Cloud is now StateRamp certified. This is the state-level cybersecurity equivalent of FedRAMP. It'll enhance our likelihood of winning deals with sensitive workloads. We also launched two new solutions for government customers, contract writing for federal and constituent case management for state and local. Contract writing completes our government acquisition management suite, our GAM suite, so customers can now run the entire acquisition lifecycle on Appian. Constituent case management is Appian's first solution for state and local customers. It's a flexible case management solution that governments can use to serve residents. I'll share this evening two public sector customer stories. First, a large US state government is under executive mandate to simplify its process for registering new businesses. In Q1, the government purchased a seven-figure Appian software deal and became a new customer. Appian will replace a decades-old business registration and ancillary filings system. Our platform will run the end-to-end process for establishing LLCs and renewing licenses for millions of entrepreneurs and growing businesses. We won this deal after a proof of concept that integrated the customer's systems and leveraged our native AI and RPA capabilities. A U.S. international affairs agency also became a new Appian customer. Our platform will replace a series of old logistics management applications that are too costly to maintain. They'll begin with a vehicle fleet management process and plan to follow with others. These apps are core to the organization's mission and represent one of the largest IT spends on logistics management in the federal government. Partners continue to drive growth this quarter. For example, a partner helped us land a leading financial services and credit card provider as a new logo in Q1. One of the company's largest business segments manages expenses for corporate clients and must monitor client interactions in accordance with federal regulations. Appian will create a single tracking application. that monitors relationships across the company's various interaction channels, including voice chat and email. Before Appian, agents manually audited interactions because their systems were siloed. We won this competitive deal after our partner built a proof of concept in just three days. Forrester, the analyst firm, is currently completing a commissioned total economic impact study on Appian's customers. I shared the preliminary results last week at Appian World. This study finds that a composite organization comprised of Appian customers experienced a 90% reduction in development time, realized a positive return on investment in just six months, and a full ROI of 257% over three years, and accelerated their process execution by a factor of 20 times. Good stuff. These results explain. why Appian prospects and customers purchase our software. Our quick return on investment appeals to the cautious buyer. We doubled our new seven-figure software deals in Q1 compared to the same period last year. This growth was split about evenly between new logos and existing customers. Here's a new logo example. A US federal law enforcement agency purchased a seven-figure software deal to unify its operations. The agency will manage its entire criminal investigation lifecycle on Appian. 16,000 agents and contractors will open cases and run investigations using a single tool. The customer expects to deploy this mission-critical app in just a few months. Atop Global Bank uses our platform to onboard new clients and manage ongoing relationships. The organization became a new Appian customer in 2019 and we delivered its first project in just eight weeks with the Appian guarantee at that time. It's purchased more software every year since. In Q1, it selected our platform to automate credit payment and trade related processes for more than a thousand users globally. Finally, a global packaging and logistics company is an existing Appian customer and uses our platform to onboard clients and manage global supply chain logistics. In Q1, it expanded with a seven-figure software purchase to license new users that oversee consumer recycling programs. They will manage the lifecycle of containers like bottles and milk cartons using Appian. They will also deploy an externally facing Appian portal to engage over 100,000 constituents in the recycling process. Our plan this year is growth with scrutiny. That means we'll examine all of our investments, reducing those we find unproductive and keep growing at the same time. We are hiring in all offices and all departments. The bar is higher than in other years, but we're still willing to make major new investments when the upside justifies it. Our expanded development of new solutions is a good example. This year's scrutiny drive has helped us become more efficient, which will ease our path to profitability in a way that does not diminish our growth rate. Now, I'll hand the call to Mark for a deeper look at our financials. Mark?