Appian Corporation

Good day and thank you for standing by. Welcome to the Appian Second Quarter 2025 Earnings Conference Call. At this time, all participants are in the 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 first speaker today, VP of Investor Relations, Jack Andrews. Please go ahead.

Good morning and thank you for joining us. Today we'll review Appian's second quarter 2025 financial results. With me are Matt Calkins, Chairman and Chief Executive Officer, and Srdjan Tanjga, Chief Financial Officer. After prepared remarks, we'll open the call for questions. During this call, we may make statements related to our business that are considered forward-looking. These include comments related to our financial results, trends and guidance for the third quarter and full year 2025, 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. These statements reflect our views only as of today and don't represent our views as of any subsequent date. We won't update these statements as a result of new information unless required by law. Actual results may differ materially from expectations due to the risks and uncertainties described in our SEC filings. Additionally, non-GAAP financial measures will be discussed on this conference call. Reconciliations of GAAP to non-GAAP financial measures are provided in our earnings release. With that, I'd like to turn the call over to our CEO, Matt Calkins. Matt?

Thanks, Jack, and thank you, everyone, for joining us today. In the second quarter of 2025, Appian's cloud subscriptions revenue grew 21% to $106.9 million. Subscriptions revenue grew 17% to $132.7 million. Total revenue grew 17% to $170.6 million. Adjusted EBITDA was $8.1 million. Last quarter, I shared two metrics that measure Appian's progress towards efficient growth. The first measure is the productivity of our sales and marketing expenditure. In Q2, Appian's go-to-market productivity ratio was 3.3. You can see on slide 4, that's our eighth sequential quarterly increase. And I believe there's more upside ahead. Our weighted rule of 40, which expresses our strategic priorities by weighting cloud subscriptions revenue growth twice as much as adjusted EBITDA margin, was also up slightly to 31. We're pleased. with our second quarter results. I'll briefly mention two reasons why they are good. First, the internal factor, our upmarket strategy is working. Powered by strong sales organization and execution, we are reaching the high value transactions where Appian belongs. Second, the external factor, artificial intelligence. Our platform gives AI the things it needs, like data access, structure, Guardrails and tracking so AI can solve complex business problems. AI is having a tangible effect on our financial results. We're getting higher prices because of AI. We add a 25% upcharge. We're in new deals because of AI and even new industries. I'll talk about that in a moment. But one more point about it. Whatever AI has done for our revenues, it's done more for our pipelines. and whatever it's done for our pipeline, it's done even more for our value proposition. So I see this being a strong growth factor in the future. Speaking of growth, most of our seven figure software deals signed this quarter were with our AI inclusive license tiers. I'll share two examples of AI impact in big applications for big customers. First, an international grocery retailer and seven figure ARR customer Manages supply chain logistics and insurance claims with Appian. In Q2, it deployed Appian AI into an existing field dispatching application built on our platform. Before AI, drivers filed paperwork when they encountered a shipment issue and back office workers manually recorded discrepancies before correcting the information and reissuing a new dispatch order in their Appian application. Managing these expectations was slow. and there were sometimes human errors. Now drivers upload their paperwork into Appian and our AI automatically reconciles the information. It's faster and more accurate. Second, a top global asset management firm and longtime Appian customer has deployed our platform across its enterprise. It runs dozens of Appian applications. This quarter it upgraded purchased a seven-figure software deal to upgrade its licenses to deploy features like Appian AI into areas like its client investment operations. Appian AI agents will accelerate the processing of customer requests. Agents will classify forms and extract data related to opening, closing, and changing accounts. Turning to the U.S. public sector, our performance in the first half of this year has been strong. Our federal business outgrew the global business in cloud revenue, in new bookings, and in software pipeline. We have a reputation for driving efficiency in a sector which now prioritizes efficiency higher than ever before. We're seeing some good opportunities. A U.S. agency supporting national healthcare is unifying its enterprise, and in Q2 it chose Appian as the backbone to all virtual care operations and signed a seven-figure software deal. Millions of patients will use our platform to engage with clinicians, coordinating virtual appointments and sharing health data in real time. The agency expects to save $38 million per year using Appian. We've been using the phrase cautiously optimistic in quotes all year to describe our expectations for the federal business in the face of Doge and other volatility. And I'll stick with that wording, but looking back, Our cautious optimism has been validated by results. We see a large opportunity emerging in the modernization of legacy applications. We've been modernizing applications for a decade already, but the industry is about to transform as AI lowers the cost of extracting old applications and translating them into a new format. Businesses modernize applications to reduce cost, eliminate technical debt, Improve functionality and unify silos. Let's start with an example. Aviva is a multinational insurer that consolidated 22 legacy call center systems into a single Appian application. They achieved 40% cost savings and the ability to service customers nine times faster. Now that AI makes it easy to achieve modernization, the industry is set to grow. Modernization was the hottest topic on my latest customer tour and generally customers brought it up themselves. This industry is going to be big because each major organization, every major organization around the world supports hundreds or even thousands of applications at great expense and they would rather have fewer and they wish they were better integrated and they regret the data incongruity. and they worry about the long security perimeter and they want to access them all in modern ways. And nobody likes silos. Silos are just the way applications are laid down as IT departments solve one problem at a time, but it's not a good way to structure an enterprise. Appian brings three powerful advantages to the revitalized field of app modernization. First, our platform is a great destination for translated applications. It's full of powerful pre-written functionality. It's secure, reliable, enterprise-grade. Second, recreating an application in Appian is a dialogue, not a delegation. We manage a multi-step dialogue between the designer and the AI. The AI presents the designer with proposals, like for the interface or the data structure, and the designer can modify them. When the designer is satisfied, the AI builds the new app. And even then, the app remains highly modifiable in Appian's process modeling interface. Third, Appian consolidates many applications into one. The modernization process is a unique opportunity to consolidate old applications into fewer new ones that offer the same functionality in a more coherent way. Last quarter, a customer asked me if we could translate 3,000 old applications. He didn't want us to give him 3,000 new ones. Appian is built to unify functionality and data into a combined application experience. I love this modernization market for its scale and universality and also because Appian's advantages won't be easy for rivals to duplicate. Another example. A leading Spanish bank is running a large-scale modernization campaign to decommission inflexible technology. In Q2, it purchased thousands of Appian software licenses and became a new customer. It'll migrate all back office workflows from legacy tools and consolidate them on our platform. We expect the bank will run core processes 30% faster and save millions of dollars annually with Appian. Last customer example, a prominent U.S. health insurer is undergoing a company-wide initiative to consolidate its tech stack and save $1 billion. It selected Appian two years ago to modernize its core applications and deployed a single application to unify its previously dispersed approval process for prescription fulfillments. In Q2, it signed a seven-figure software expansion deal to deploy Appian across its business, starting with Medicare and Medicaid enrollment. Finally, I have one personnel announcement. Last month, David Crozier joined Appian as our new Chief Marketing Officer. David holds a deep understanding of enterprise software and AI and brings decades of experience leading marketing teams and scaling operations globally. I'm excited for him to join our team. With that, I'll turn the floor over to Serge. Welcome, Serge.