Greetings, and welcome to Appian Corporation Fourth Quarter and Full Year 2020 Earnings Conference Call. As a reminder, this conference is being recorded. I would now like to turn this 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 up 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 trends, our go-to-market 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 and 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?

Thank you, 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 adjusted 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 31, 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%, 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 and when I mention the term, I find people are more likely to recognize it. Popular publications and media have recently written 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 has a full-page picture of an ascending rocket ship on the inside cover; 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 leaders 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 workflows, which is faster and more intuitive than coding. We also accelerate customers' deployment by allowing them to keep their data anywhere in the enterprise and connect to that data through low-code techniques, significantly reducing the difficulty of creating new applications. Appian accelerates an organization’s ability to ship new products, meet regulatory deadlines, and respond to customers. Speed is a common reason for us to win new logos and expand within our customer base. For example, we had a multi-million 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 communications with participating healthcare professionals and provide real-time visibility about the studies. We won this follow-on deal because of the speed we demonstrated by deploying the customer’s original application in just eight weeks, with our eight-week Appian guarantee. Our speed also secured 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 will be launched within eight weeks. Our second advantage is complete automation. In 2020, we acquired a leading robotic process automation company to establish ourselves as a one-stop shop for automation. Our platform provides organizations with everything they need to orchestrate their people, existing systems, data, bots, and AI in a single workflow. Complete automation allows organizations to maximize 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 holistically 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. 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, dev ops, 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 that allows customers to connect with almost any modern external system. Our commitment to openness and our enterprise-grade cloud enables our customers to scale their companies with our platform, if they had 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; the customer will be able to deploy its mobile-enabled application in just eight weeks under the Appian guarantee. 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. This includes a U.S. 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 $1 million in 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 months. I’d like to spotlight two areas that are performing particularly well. First, our EMEA region had a strong year, doubling its new logo contribution in Q4 2020 compared to the prior year period. It also won twice as many seven-figure deals in 2020 as it did in 2019. One noteworthy new logo example in Q4 is a top five bank in the UK. It purchased over $1 million of Appian licenses to replace its inflexible and overly manual internal audit solution. Our low-code automation platform fully digitizes the audit lifecycle and provides 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 did in 2019. For example, our partner helped us win a $1 million new logo deal with a leading European insurance company in Q4. The insurer will use our platform to fully manage its life insurance policies, including writing, servicing, and 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 application built in just days. Partners also win new customers with solutions they pre-built 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 the leading market. Now I’ll turn the call over to Mark for a deeper discussion of our finances. Mark?

Thanks Matt. I’ll review the financial highlights of the quarter and full year, and then we’ll provide details on our Q1 and full year 2021 guidance. Cloud subscription revenue for the fourth quarter was $36.9 million, an increase of 40% year-over-year and above the top end of our guidance. Our total subscriptions revenue was $56.1 million, an increase of 33% year-over-year. Subscription revenue was 69% of total revenue in the fourth quarter, an increase from 61% in the prior year period. Professional services revenue was $25.5 million, down 4% from $26.5 million in the prior year period and down from $26.5 million in the prior quarter. Partners continue to play a larger part in our ecosystem and are increasingly helping us sell more software. All our services engagements, both cloud and on-prem, continue to be performed remotely. Total revenue in the fourth quarter was $81.6 million, an increase of 19% year-over-year and also above our guidance range. Our cloud subscription revenue retention rate as of December 31 was 119%, within the 110% to 120% range that we target on a quarterly basis. We remain pleased with our customers' expanded use of our platform. Our international operations contributed 33% of total revenue for Q4 compared with 34% in the prior year period, demonstrating the balance of our businesses both domestically and internationally. Now, I’ll turn to our profitability. For the fourth quarter, our non-GAAP gross profit margin was 74%, an increase of 7% compared to the same period in 2019. Subscriptions non-GAAP gross profit margin was 90% in the fourth quarter compared to 89% in the same quarter of 2019. Our non-GAAP professional services gross profit margin was 38% in the fourth quarter compared to 34% in the same period of 2019. The services gross profit margin was positively impacted by a reduction in services performed by subcontractors and decreased travel and entertainment costs. I continue to expect our non-GAAP professional services margins to be closer to 30%. Total non-GAAP operating expenses were $65.6 million, an increase of 17% from $56 million in the year-ago period. Impacts from COVID-19 have naturally decreased certain expenditures like travel, entertainment, and office-related expenses. Adjusted EBITDA loss was $3.7 million in the fourth quarter, ahead of our guidance and compared to an adjusted EBITDA loss of $8.2 million in the year-ago period. In the fourth quarter, we had approximately $3.9 million of foreign exchange gains compared to $2.3 million in Q4, 2019. We don’t estimate movements in FX rates, therefore they aren’t considered in our guidance. Non-GAAP net loss was $1.8 million for the fourth quarter of 2020 or a loss of $0.03 per basic and diluted share compared to a non-GAAP net loss of $7.4 million or a loss of $0.11 per basic and diluted share for the fourth quarter of 2019. This is based on 70.4 million basic and diluted shares outstanding for the fourth quarter of 2020 and 67.3 million basic and diluted shares outstanding for the fourth quarter of 2019. Turning to our balance sheet. As of December 31, 2020, our cash and cash equivalents and investments were $258.4 million compared with $251.1 million as of September 30, 2020. For the fourth quarter, cash provided by operations was $5.8 million. Total deferred revenue was $120.1 million as of December 31, 2020. With respect to our billing terms, the majority of customers are invoiced on an annual upfront basis, but we also have large customers that are billed quarterly or monthly. Due to the variability of referring terms, changes in our deferred revenue are generally not indicative of the momentum in our business. Now, I’ll recap our full year 2020 results. Cloud subscription revenue was $129.2 million, representing growth of 36% year-over-year. Our total subscriptions revenue for the year was $198.7 million, an increase of 31%. Professional services revenue for 2020 was $105.9 million, down 3% compared to 2019. Total revenue for 2020 was $304.6 million, up 17% compared to 2019. Adjusted EBITDA loss was $16.8 million in 2020 compared to $29.3 million in 2019. Non-GAAP net loss was $18.2 million in 2020 or a loss of $0.26 per basic and diluted share compared to a non-GAAP net loss of $34.1 million or a loss of $0.52 per basic and diluted share for 2019. This is based on $69.1 million and $65.5 million basic and diluted shares outstanding for 2020 and 2019 respectively. For the year ended December 31, 2020, cash used in operations was $7.6 million; for the year ended December 31, 2019, cash used in operations was $8.9 million, which also included the reimbursement of $17 million in tenant and improvement allowances. Excluding that, our cash used in operations was $25.9 million. Now, I’ll turn to guidance. For the first quarter of 2021, cloud subscription revenue is expected to be in the range of $37.7 million and $38.2 million, representing year-over-year growth between 33% and 35%. Total revenue is expected to be in the range of $81.7 million to $82.7 million. I want to remind everyone that Q1 2020 is a difficult comparison. For example, we closed a three-year on-prem contract during the quarter where the customer did not want the contract to auto-renew on an annual basis. As a result, we recognized $2.8 million in revenue upfront versus recognizing approximately $1 million each year upon auto-renewal. Adjusted EBITDA loss is expected to be in the range of $9 million to $8 million. Non-GAAP net loss per share is expected to be between $0.15 and $0.13. This assumes 70.8 million basic and diluted common shares outstanding. For the full year of 2021, cloud subscription revenue is expected to be in the range of $167.5 million and $169.5 million, representing year-over-year growth of between 30% and 31%. Total revenue is expected to be in the range of $353 million to $355 million. Adjusted EBITDA loss is expected to be in the range of $38 million to $36 million. Non-GAAP net loss per share is expected to be between $0.64 and $0.60. This assumes 71.0 million basic and diluted common shares outstanding. Our revenue guidance reflects expected ongoing headwinds to our professional services revenue from the impacts of COVID and from the continued growth of our partner ecosystem, which is increasingly implementing our software. In addition, our adjusted EBITDA guidance reflects increased investments in sales and marketing in R&D throughout the year, along with expected travel and entertainment expenditures normalizing in the back half of the year. For years, we’ve been saying that Appian is a 30% grower, meaning we expect our software revenue to grow at least 30% each year. We met that goal in 2020 and I’d like to reiterate that expectation for 2021. With that, let’s turn it over to questions.

Our first question comes from Sanjit Singh with Morgan Stanley. Please go ahead with your question.

Congratulations on another year of 30% subscription growth, and it's great to see the cloud performing well for several quarters. Kudos to the team. Matt, I have two questions that focus on the long term. What does the growth equation for Appian look like over the next two to five years? I understand you have over 650 customers now, so should we view the growth equation as Appian aiming for 1,000 or 1,500 customers spending $1.5 million or $1 million over time? Or do you envision it being more of a longer tail? In your remarks, you mentioned a larger number of customers, possibly around 5,000 to 10,000. I’d like to know your current thoughts on the growth dynamics.

That’s a great thing to ask about. I think we’re capable of capturing more of a tail than we have so far and I want to emphasize that is not our primary target even though it’s available to us and we’re going after it. I do not want to trade the largest organizations, the highest spending organization for the tail. We won’t do that. We’re going to emphasize big deals. We’re going to continue to emphasize important, high-end, mission-critical deployments and not lose sight of that. We know that’s our edge in this market and being the best at that gives us a carryover advantage in competing for less essential, less mission-critical applications and perhaps for less feature-conscious consumers. By becoming the standard that’s adopted by the high-end cases and customers, we establish our capability to handle all the other cases. So we’re absolutely not moving away from the high-end and the customer who’s willing to spend $500,000 or $1 million per year on this technology. But I believe that being strong with those customers will allow us to also capture a portion of the tail. So I think we’re going to expand in both directions, but we won’t lose track of the fact that our priority is the large, mission-critical applications.

That’s great to hear. And then sort of second question I wanted to mention is, to take us back to the IPO in 2017, the services mix was roughly half of the business, and today I think in Q4 it’s in the low 30s, I think it was 31% by my math. My suspicion is, that it probably is sustainable because you’ve added so many new customers this year. So it didn’t seem like services was a headwind necessarily impacted by COVID. But just wanted to double check on that line of thinking.

Yes, well I think your suspicion is correct. That services will continue to shrink as a percentage of Appian’s revenue and yes, it’s going down into the 20s and I think that every year, it’s going to be smaller than the year it was before. I’m not saying it’s going to be in the 20s this year. I’m saying that’s the direction that it’s going in. The trend was probably exacerbated a little bit by COVID and by the fact that it was more difficult to deliver a service than it was to deliver a product in 2020. But the trend holds; the trend will continue. It’s what we expect and it’s what we’re managing the business toward because we want to elevate partners and leverage their influence in major customers.

Got it and maybe if I can just sneak one in for Mark. Mark, as it relates to the guidance. I know we’ve been talking about a couple of different things. Moving to one-year auto-renewals and the 606 headwind that potentially turns into a tailwind and into 2021. To what extent does this guidance sort of reflect those impacts and like a higher renewal base on one-year auto-renewals and then the impact from the headwind in 2020 that turns into a tailwind because of the 606 accounting? Was that sort of contemplated or embedded in your 2021 guidance framework?

So I think there’s not really the tailwind that you guys are talking about because those multi-year deals that haven’t gone into the auto-renewal, some of them are coming up for renewal in 2021, some are coming in 2022; it’s not a material amount. But we’ve done a good job of migrating everybody over. So it’s not really that, a tailwind I would say that's implicit in guide. I think what’s implicit in guide which is important is that we expect right now that services will actually decline year-over-year and that’s what we implied in guide. I think personally and Matt personally believes that the services will actually grow. But what we’ve got implied right now in the guide is a reduction in services to be. Candidly we don’t know how long COVID is going to last. If partners continue to bring 30%, the logos are going to get most of the services. So we’re just trying to be as we’ve been – we’ve been public for four years now. When we give guidance, we generally try to be conservative. In particular, we generally try to be conservative on that line item because we now have the visibility that we have in the software.

Understood. Thank you, Mark. Appreciate your response.

Our next question comes from the line of Mohit Gogia with Barclays. Please proceed with your question.

So my question was around the expansion, right. So I think Matt, you mentioned that some of your even larger customers in the seven figure ARR continue to expand. And I was just wondering if you can give us some more color there as to, I mean you guys have pricing model around either the number of apps or number of users. Right. So wondering if there’s sort of like a trend that you can see based on the expansions or maybe it’s the number of apps that popped primarily by these expansions or you're also seeing customers going from wall-to-wall within lines of businesses with the number of users. So any color on those two dimensions in driving the expansion would be very helpful and then I have a question for you, Mark.

All right. We’re pleased with the expansion. I’m particularly pleased with the expansion as it pertains to customers who are already spending a lot with us. They’re seeing the value and they want to buy more. The fact that 81% of the seven-figure ARR customers from last year wanted to buy more in 2020 represents not only great uptick but a great turnaround time. They saw the value so quickly and they wanted to expand. I’m particularly pleased with that. The expansion happens along multiple dimensions. You mentioned that we price according to application and also according to user. Both of those are primary roots for expansion. Generally a customer decides which of the two pricing vectors they prefer to be on and then they stay with that vector. I would not say that one of the vectors is more conducive to growth than the other. Instead, I would say the growth occurs no matter which vector the customer choose and accordingly they pay more for either more applications or more users depending on whichever way they chose. We’re going to emphasize even more in 2020 and I believe that there’s a lot of potential there, not just at larger accounts but at all of them.

Great, my follow-up question is for Matt. Just on the dimensions, right. So we saw this tick up in the cloud subscription retention rate this quarter. For the higher end of the range you’ve been communicating. I mean this is another quarter of 40% sub growth and I think last time around you were alluding to some linearity helping it. But obviously given the performance this quarter I’m assuming this is becoming a more fundamental trend rather than something one-off. So can you help me unpack what the drivers there are? Obviously the land and expand motion is working. But just trying to figure out as to what is driving this 40% growth and how sustainable that is. Thanks guys for taking my questions.

Yes, so I’ll take that. As we said in the prepared remarks, we’re at 30% plus growth; that’s how we viewed ourselves from the time of the IPO and we continue to see ourselves going forward. Having said that, there was no linearity phenomenon in this quarter. It was a pretty typical back-end loaded quarter, so a lot of the momentum of the business was expansion. We had 50% more new logos this year. Right? So that’s a big piece of it. The other big piece of it is re-expansion and Matt mentioned that 81% of our seven-figure ARR customers bought more software in 2020. Obviously that goes right to that in our calculation. So we see both expansion and net new logos working to our benefit and I think going forward to 2021, Matt was saying low-code is a thing now and we’re getting more and more inbound interest in low-code platform. So we’re hoping to take advantage of that momentum.

Great, thanks for taking my questions guys.

Our next question comes from the line of Bhavan Suri with William Blair. Please proceed with your question.

I guess I wanted to touch a little bit on the customers that adopted Appian over the past year. If you think about this cohort relative to past pre-COVID cohorts and maybe add partners to the second vector. I guess has there been any change in who’s buying, are use cases different, are landing ACV different, are deployment sizes different? I guess how do you see a pattern with some of the new use cases you’ve sourced, partially because low-code has become more common, maybe because of partners, or has it been pretty consistent from say a year and a half, two years ago, pre-COVID?

All right, let me talk about that. First of all, I’m going to say they’re largely the same. They haven’t changed all that much. A few dozen of them bought into Appian because they wanted our workforce safety solution, but that’s a small portion of our sales. The dollars per customer is steady if you’re talking about licenses, and it decreases only on the services side. So if you’re looking for any changes, I would say it’s that our services component per customer has decreased. But our license has stayed equal, almost exactly equal, and the depth of their usage and the fact that they prefer the platform; they come to us as platform buyers, that has remained constant.

I understand. I want to tie that into your earlier comment about how over 80% of large customers who expanded last year came back in 2020. You mentioned being excited about realizing that mindset. If we consider the core thesis here, which is that it’s a platform where users can see the value of the low-code environment and how quickly applications can be built with fewer resources, shouldn't that momentum continue to grow? While it may eventually slow down as we penetrate organizations deeper, we still have a long way to go with many customer interactions. Shouldn't that trend continue, or possibly even increase, as we highlight that this is an effective way to develop new applications given the speed and project support from various businesses? So, logically speaking, shouldn’t that develop further?

Okay, let me address that on both a micro end and macro dimension. On a micro dimension, I think, yes, it should. We should see acceleration as we prove the concept and we sell more. We’re not saturating our customers. There’s more room to sell nearly everywhere and the more we prove our concept, the more benefit they get from each incremental purchase, then I believe the conclusion will be, yes, this is a flywheel; we should expect to see further acceleration. That’s the micro answer. The macro answer is, we’re a 30% grower and I don’t want to indicate that I expect anything other than that.

Fair enough, and I’m going to squeeze one more quick one in. I noticed you launched a 14-day free trial version, which is not something typically associated with Appian. Could you just walk us through that, the strategic rationale behind this, and what are the objectives for that free trial?

Okay. There are good reasons why we would have a 14-day trial. First of all, even for enterprise software, most of the sale is done before the customer contacts the vendor. Putting a good foot forward in that hidden part of the sale is essential. Secondly, Appian shows well. I would prefer the experience of Appian’s first 14 days to the experience of our competitors’ first 14 days. So I think it benefits us to allow the customer to explore and understand the difference, and furthermore, with our product, you can actually do something in 14 days, which would give them a sense of accomplishment and that’s possible. I think for all of these reasons it’s good for us to be out there selling in this manner, and by the way, it may appeal to a different kind of buyer. I think it was a really good step and we’ve been working on this for a while and we’ve experienced some good pipeline development as a result of our free trial. So yes, I think it suits our situation pretty well even though you might not have expected it from an enterprise software vendor.

Great, appreciate the color and candor, gents. Thank you.

Our next question comes from the line of Chris Merwin with Goldman Sachs. Please proceed with your question.

I wanted to ask about some of your fruition-based apps. I think I saw that connected claims solution for an insurance company. I imagine that may or may not actually compete with some of the vertical software vendors. Can you talk about whether you’re trying to come in with net new solutions for companies as opposed to competing with any of these dedicated vendors in the space and just overall talking about the traction of the solutions?

Sure. As Appian is a platform company, when we sell, we generally sell the platform. I believe that there are a number of advantages that we could accrue from being more focused on solutions, from cutting cycle times of sales to differentiating our competition and raising our price point partly due to that differentiation. I think that mostly, however, we’re still a Platform Company, and the benefits there are to be had from solutions are largely benefits that we might experience in the future. Right now our solutions are not the primary things we’re selling and most customers do not interact with an Appian solution. But we understand this to be an advantageous route for the future, which is why we keep working on it and some customers, of course, are seeing terrific benefits. But I think mostly when they approach Appian they approach us for what we’re known for, and that is the platform. Down the road, I look forward to us being known also for solutions and I think there’s good potential for us.

Okay, great. Thank you. And maybe just to follow up on investments this year. I think Mark, you talked about investing more in R&D and sales & marketing. Can you maybe just go into a little more detail about how and why you’re ramping that spend? Obviously there’s a very long-term opportunity here, but curious if there's anything else you can comment on regarding these investments you make in 2021.

Yes, I mean as we’ve made some investments during 2020, we’ve brought in Senior Vice President in charge of customer success, a new CRO, a new CMO. Thus far the new CRO has been here for nine months or so and we’re starting to see good traction. Our sales cycles—one of the things—the length of our sales cycles has historically been long and painful, and they’re actually shortening about 30% this year. We’ve gotten better and more efficient, so we’re seeing a lot of opportunities out there and we basically want to hire sales reps pretty aggressively. At the same time that we’re still not really well known; we’re not top of mind when you think of things. And so from a marketing perspective, with our new CMO, we’ve given her additional budget. Matt has given her a lot more budget than I wanted to, but we’ve given it to her seriously and we want to invest both in the marketing side as well as the sales. The TAM, as you guys know, no matter how you slice it, is massive. So we just want to take advantage of it, and we’re starting to see traction right now and momentum. So we’re pretty excited about where we’re headed and obviously we’re always looking to bring on smart software engineers to help out and build the platform.

Yes, and let me just add to that. This is a really exciting moment in the history of this organization and we’re, of course, a careful, conservative organization; we don’t like to spend too much. But I’ll take the fall for wanting to spend more on marketing right now. I think we should be expanding on all fronts. I think we should be hiring more account reps. We should be spending more in engineering. I’m more upset these days when we under-spend than when we over-spend our budget. I want to be sure that all the money we allocate is actually converted and we learn from it. We grow from it. I think that we’ve reached a unique point in low-code and we want to take advantage of it.

Our next question comes from the line of George Kurosawa with KeyBank. Please proceed with your question.

I had a question about something you mentioned in the prepared remarks about pre-built partner solutions. I was just curious if you could maybe unpack a little about what are some of the typical use cases for that? And is it fair to think about that, following up on a previous question, it’s maybe like a stepping stone into more of a solution space?

I do think that they’re terrific stepping stones into the solution space and I believe that they’re going to make our reputation as a platform on which solutions can easily, efficiently, and successfully be developed. These partner-led solutions are typically industry-specific; they reflect something that a team member of one of our partners has deep expertise in deploying. They’re already subject matter experts. They’ve already got the connections; they know who the buyers are; they know what the buyers' problems are, and they chose to build it once instead of ten times for end buyers. This gives the buyer reassurance that others have done the same thing before, that it’s predictable, and that the seller truly knows how to solve the problem the buyer is experiencing. It’s a high-credibility way for us to deliver a solution, maybe the highest credibility way. I’m pleased with the progress so far. Many of our partners have done this or are planning to do this, and many solutions have been developed on the Appian platform by partners. I believe that this is going to be a primary way that we establish solutions.

Great. Thank you very much. Just one quick follow-up. Obviously, some really impressive results out of EMEA. Anything you would call out in terms of the drivers? Did it feel like that was kind of an improving demand environment or anything specific to your execution? That’s it from me. Thank you.

Yes, if I were to attribute that strong EMEA performance to one thing, it would be partners. Partners really came through for us. I think that we solved the need for them. They needed to deploy an agile solution to help their customers change in a tempestuous year, and they turned to Appian because they knew it worked and they drove us into many new opportunities. Their trust in us, our confidence in being able to solve problems together, and the urgency of the problems that faced everybody last year, this is what I would attribute that growth to above all, the partners.

Our next question comes from the line of Jack Andrews with Needham. Please proceed with your question.

I wanted to ask a little bit more about just given your comments about how the profile of low-code platforms has risen substantially in the last year. Could you talk a little bit more about the changes you’re seeing in terms of just the deal processes? You mentioned a moment ago that deal cycles are compressing, which is great. I assume that relates to the fact that you need to spend less time educating people about the value proposition. But what else is happening behind the scenes? Because so many vendors these days say that they’re in the low-code market. So should we think of more head-to-head bake-offs or what else is happening in this market now that it’s becoming more mainstream?

Yes, I believe mainstreaming low-code will result in shorter sales cycles. Although the interpretation of the definition of low-code is still an issue and different vendors may call themselves low-code but really represent very different products. That’s why I made a point of saying that in our opinion low-code was not a citizen developer tool, at least not exclusively. We believe in low-code for mission-critical applications. It’s more difficult, it’s more valuable, and if you think low-code’s reputation was made in 2020 when businesses needed to deal with change, then you must believe low-code belongs in mission-critical applications because those are the applications that organizations needed to change. So we’re satisfying the most valuable demand in the low-code industry and not everyone is—not everyone who calls themselves low-code can do that or wants to do that. Low-code is still something of an enigma and therefore there will be some explaining that goes into selling it. You still have to explain what is low-code in order to connect with the customer and be sure you’re on the same page. However, it should be faster. By the way, the acceleration we saw last year was about a 30% faster deal cycle, and sales cycles that I don’t believe were very much affected by a new mutual understanding or higher profile for low-code. I would say that happened for its own reasons and that whatever benefit we get from low-code going household has yet to be seen.

That's great. I appreciate your perspective on that. As a follow-up question, could you discuss the characteristics of the new logos delivered by your partner ecosystem over the past year? How do these differ from what Appian has historically captured through your direct salesforce? Do partners help you enter new verticals that you haven't been involved with before? How should we consider the potential changing mix over time given that contribution?

For the most part, they’re alike. There are a few niche cases in which a partner built a solution that appeals to a certain customer that we would not have been able to appeal to in the past, and that is the minority of the cases. For the most part, the partners are sourcing exactly the kind of customers that Appian would like to source but maybe doesn’t have the relationship with or does have the reputation and the established connection with. So the partners are really emphasizing what we have already found in our customers.

Our next question comes from the line of Derrick Wood with Cowen. Please proceed with your question.

It’s Andrew on for Derrick. Thanks, and congrats to a strong finish to the year. Just wanted to ask about the government performance in the quarter versus your expectations and any color on the pipeline for this year and given the strong logo growth there. What type of expansion cadence should we expect out of that this year?

I’d like to say that government performance was very solid in 2020, more in Q3 than in the other quarters. But this is a really solid year for Appian in the federal space. We advance scenarios that we hadn’t always advanced in so we have a higher profile now. We’ve built a reputation and we’ve got some new terrific winning use cases that are leading to expansion and good adoption. You know how the government works—if you establish value, word gets out fast. So we’ve been fortunate enough to have the opportunity a few times over the past year to demonstrate value in high-profile examples in the governmental space and we’ve done well with those opportunities. I think we’re planting seeds that are going to result in good outcomes down the road by providing real value in high-profile federal opportunities.

Great. And then Matt, on the partner front, any new initiatives planned there for this year to keep that strong momentum going? Are you seeing in lean even more into their practices given how strong this year was?

Yes, definitely. I think in 2020, we’ve got more partner momentum in the federal space than I’ve ever seen and we’ve had a programmatic institutional support. We were very pleased with the cooperation we’ve received and winning leads to win in situations like this. I believe that it sets the stage for 2021.

Our next question comes from the line of Brett Knoblauch with Berenberg Capital Markets. Please proceed with your question.

I might have missed it, but did you guys provide an update with the number of customers with $1 million plus in ARR? And then as you look at your 2021 guide, what percentage of those customers will purchase more software? Do you think it will be similar to the 81% you saw in 2020?

All right, well I don’t have a number for you. But I will say that I’m enthusiastic about our expansion prospects in the year ahead because I’m enthusiastic about the value we’re delivering right now. Not for nothing because Appian came out number one in the Gartner Peer Insights poll that just shifted this month. By the way, that’s absolutely fresh analyst update. Appian comes out; not only did we get top marks from our customers but we also got the number one count of responses. Some companies try to get a high average by having just a few customers respond. Appian had not only the top marks but the top count of reviews and we were the only ones listed in the leader quadrant for companies over $10 billion or companies between $1 billion and $10 billion. So the entire big company side of low-code, we were left as the sole leader, so I feel great about the value we’re delivering and the reception we’re getting from our customers today and I believe that there’s no better predictor for expansion than customer satisfaction.

Got you and maybe just one follow-up. When you’re investing in your sales team—how has the salesforce productivity? Obviously the channel partner there is performing greatly, but how has your direct salesforce performed in 2020 compared to previous years?

Yes, I’d say 2020 was better than 2019 in terms of salesforce efficiency. I see it rising and I feel good about 2021 as well. We’re in a good position to continue to increase salesforce efficiency.

Yes, it definitely improved in 2020. There’s definitely more room for improvement. But the sales executive team is focused on that. So we’re looking to squeeze out more efficiencies from the current and existing salesforce. But we’re also looking to aggressively ramp headcount in the salesforce as well.

And our final question comes from the line of Fred with Macquarie. Please proceed with your question.

I might ask here that, subscription revenue per customer remained about flat year-over-year while you’ve accelerated customer ads and also expanded your net retention rate? Would I be interpreting this dynamic correctly; is this indicating you seeing more upsell among the existing customers offset by some new customers landing with lower ASPs?

Let me do the ASP. The ASP is similar year-over-year, right? So it’s really more subscription software; both in the expansion side as well as the net new logo. So when we land, we generally land in kind of the $100,000 to $120,000 range, even higher. I’m being told here too, the workforce safety solutions are a little lower, but our ASPs have been basically very steady year-over-year. Our 119% retention rate reflects expansion. It also reflects, to Matt’s point, our happy customers. Our gross renewal rate was 99%, which I don’t think it can get any higher. So we’re happy with both of those metrics. Your point on the subscriptions revenue being steady year-over-year is a good one.

Thank you. That’s helpful color there. And then just there’s a second follow-up question. I’d like to explore your platform in a little more depth. I’m curious how frequently do you see your customers building apps on their own that are robust enough that if Appian built them you’ll be able to charge for them on a per app basis?

All right, customers build unique applications for the most part. There are only a few examples of applications which are the same for one customer to another. Those are good candidates for reselling. But most of what customers build is suitable for their specific environment. So the first thing I would want to say to your question is, because we’re unique and because we allow customers to express their own uniqueness be it in their strategic, enterprise, or infrastructure, whatever uniqueness, there wouldn’t be a direct portability of an application from one customer to the others. However, do they build things that are of a quality that other customers would want? Do they create IP that other customers would want? Do they create IP that other customers would find of value? I believe, yes. The answer would be yes to those questions, which is to say that expertise is being created out there that would have value. But of course, it’s not on the market. In some cases, the customer has even asked us if they could resell a solution that they create. We have yet to enter into an agreement like that, but it is floated by a customer who feels very strongly about the quality of the application they’ve created on our platform.

Helpful color. Thank you.

And with that, this concludes today’s question-and-answer session as well as today’s conference call. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.