Thank you, operator. Good morning, and thank you for joining us. Today, we will review Appian's first quarter 2024 financial results. With me are Matt Calkins, Chairman and Chief Executive Officer; and Mark Matheos, 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 second quarter and full year 2024, 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 reflect 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 2023 10-K, our Q1 2024 10-Q filing and other periodic filings with the SEC. These documents are available on the Investors section of our website. Additionally, non-GAAP financial measures will be discussed on this conference call. Refer to the tables in our earnings release 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.

Thanks, Reagan. In the first quarter of 2024, Appian's cloud subscription revenue increased by 24% year-over-year, reaching $86.6 million. Subscriptions revenue rose by 19%, totaling $117.7 million. Overall revenue grew by 11% year-over-year to $149.8 million. Our cloud subscription revenue retention rate was 120% as of March 31. Adjusted EBITDA showed a loss of $1.3 million. Two weeks ago, we held our annual user conference, which saw 46% more customers and prospects in attendance compared to last year. The event featured key customers sharing their success stories with our platform. For instance, Novartis cut risk assessment approval times by over 50% with Appian, and the Navy developed an employee onboarding app much faster than using other technologies. TELUS was able to integrate isolated systems into a single Appian app, expecting to reduce planning cycles by 55% and save up to $42 million from misallocation. Speakers included representatives from Merck, the U.S. Army, Axiom Space, and T. Rowe Price, among others. One of my favorite aspects of the event was our new feature announcements. Though not all of them focused on AI, I’ll start there. Our edge AI benefits from our strength in complementary technology, particularly in processes and data, where we excel in all three domains. This year, every company seeks ways to validate AI, with larger budgets anticipated later. Currently, they require quick proof of ROI, making processes an ideal starting point for AI implementation. Processes provide structure, a framework of activities aimed at significant goals, collaboration opportunities with both human and digital workers, and metrics to measure improvements brought by AI. We're confident in demonstrating strong ROI through AI integration into processes, which is why we launched a 30-day fixed price offering announced today at Appian World. Our advantage in AI also includes our controlled data. Appian's data fabric enables connections between data sources without the need to relocate them, allowing us to inform AI with the right enterprise information. By filtering data through our data fabric, sending only the most relevant information to AI, we achieve significant benefits regarding privacy, cost efficiency, auditability, security compliance, and more. Our aim is to make AI both powerful and user-friendly. Last month, we announced a strategic partnership with AWS, building on our long-term collaboration that began when Appian pioneered cloud adoption in our industry nearly 15 years ago. We already handle an impressive volume of 16 billion transactions daily on AWS. This announcement strengthens our partnership as we strive to facilitate powerful and easy enterprise AI usage. When we acquired a process mining company in 2021, it was based on our vision to create what I refer to as the future of process mining. Although process mining was intriguing, it lacked critical features, which we can now provide. As a leader in this domain, our process mining can be actionable, and our data connection capabilities allow for real-time insights. At Appian World two weeks ago, we unveiled Process HQ—our real-time, actionable process mining tool. It's more than just that; it enables users to navigate the entire enterprise of information through Appian's data fabric, allowing deep dives into individual rows and processes and seamless movement among data sources across the enterprise. Process HQ tracks your process performance and offers board-level metrics on efficiency, facilitating quick responses to disruptions and inefficiencies. Additionally, it intelligently suggests changes to improve processes, making it simple to observe and optimize with continuous feedback. Let's talk about a multinational life sciences company that utilized Process HQ to enhance one of their key applications. This customer sells medical devices and pharmaceuticals in over 100 countries, all with unique regulations that require compliance reviews for each product before local sales. They manage hundreds of thousands of product reviews on Appian, where the complexity and data volume highlight the potential for optimization. Business users, without needing extensive data preparation or a team of data scientists, analyzed the process using Process HQ and identified numerous ways to shorten cycle times. The company is implementing these changes and anticipates saving 40,000 labor days annually. Following our commitment to reinventing this industry, Appian was recognized as a leader in Gartner's Magic Quadrant for process mining platforms this week. I'm encouraged by the positive reception of Process HQ from customers and analysts, and I hope our synergies between process mining, processes, and data become widely acknowledged. During Appian World, we also introduced our elastic process execution feature, known as EPEx, which scales infrastructure based on demand. Some customers experience predictable spikes in usage, while others face unpredictable surges, such as insurers preparing for natural disasters. EPEx boosts throughput by 10 to 100 times, in addition to a process engine capable of managing millions of complex processes daily. This reinforces our commitment to being the top choice for high-end applications and further establishes our leadership in scalability. We also launched an AI-driven website called ProcureSight, built on the Appian platform, designed for procurement professionals to search public datasets, extract insights from past government procurements, and draft new requests. It's currently offered free to maximize visibility as we test the concept. This aligns with my perspective on the future of this sector, where excitement about AI's content generation often overshadows its role as a data synthesizer. ProcureSight will enhance our government acquisition management suite, providing additional benefits to its users. Let's now discuss some noteworthy deals from Q1. First, a major U.S. city aims to modernize its budget review process, managing billions in annual funding. In Q1, they selected our platform for automation and became a new client. Previously, employees manually processed physical proposals; now, with Appian, they expect to halve approval times. Next, a leading European automotive manufacturer, already a client using Appian for supply chain, finance, and warranty claims management, saved millions yearly with our platform. In Q1, it purchased a seven-figure software deal to automate more warranty and finance workflows and extend the app to additional users, expecting substantial savings from these projects. Our last example involves a top global medical device company, which uses Appian to manage the order-to-installation process for medical devices in one of its global divisions. In Q1, they bought extra software to automate a similar process for a second division, transitioning from an expensive and unscalable homegrown system. Now, the company will streamline its installation processes and recognize tens of millions in revenue earlier than anticipated this fiscal year. As evident from our recent announcements, Appian is committed to pushing technological boundaries in our industry, delivering both power and simplicity to our customers. This year promises rapid technological advancements, and we feel well-prepared to excel in this environment. Now, I’ll hand the call over to Mark to discuss our financials.

Thanks, Matt. I'll review the financial highlights for the quarter, and then we'll provide guidance for the second quarter and full year 2024. Cloud revenue, total revenue, and adjusted EBITDA came in at or above the high end of our guidance ranges. Cloud subscription revenue was $86.6 million, an increase of 24% year-over-year and above guidance. Our cloud subscription revenue retention rate was 120% as of March 31, 2024, up from 115% a year ago and 119% in the prior quarter. We continue to target a cloud subscription revenue retention rate of 110% to 120% on a quarterly basis. Approximately 82% of our total net new software bookings in the quarter were for the cloud compared to 85% in the prior year's first quarter. Total subscriptions revenue was $117.7 million, an increase of 19% year-over-year. Professional services revenue was $32.1 million, down 11% year-over-year. As we've mentioned previously, professional services revenue can fluctuate from quarter to quarter due to the timing of large projects. We continue to leverage professional services to enable partners and drive customer success. However, long-term, we expect professional services revenue to continue to decline as a percentage of total revenue. Total revenue was $149.8 million, an increase of 11% year-over-year and at the top of our guidance range. Consistent with our strategy, subscriptions revenue was 79% of total revenue compared to 73% in the year-ago period and 80% in the prior quarter. We continue to see global demand for our platform, with our international operations contributing 37% of total revenue compared to 33% in the year-ago period. Note that foreign exchange movements provided a revenue benefit of 1% to 2% this quarter on a constant currency basis. Now I'll turn to our profitability metrics. Non-GAAP gross margin was 76% compared to 75% in the year-ago period and 78% in the prior quarter. Subscriptions non-GAAP gross profit margin was 90%, consistent with the year-ago period and compared to 91% in the prior quarter. Professional services non-GAAP gross margin was 25% compared to 34% in the year-ago period and 26% in the prior quarter. We continue to invest in non-billable areas of our services organization to help our customers achieve the most from our technology and increase adoption of our platform. As a result, and previously communicated, we expect professional services non-GAAP gross margin to decline to the low 20% range in 2024 and beyond. Total non-GAAP operating expenses were $117.3 million, down 2% from $119.3 million in the year-ago period. Adjusted EBITDA loss was $1.3 million for the quarter, well ahead of our first quarter guidance of a loss between $9 million and $5 million and significantly better compared to an adjusted EBITDA loss of $15.8 million in the year-ago period. In the first quarter, we had approximately $11.5 million of foreign exchange losses compared to $0.6 million of foreign exchange gains in the same period a year ago. Just to note, we don't forecast movements in FX rates. Therefore, they aren't considered in our guidance. Non-GAAP net loss was $17.7 million or $0.24 per share compared to a non-GAAP net loss of $19.7 million or $0.27 per diluted share for the first quarter of 2023. This is based on 73.3 million diluted shares outstanding for the first quarter of 2024 and 72.9 million diluted shares outstanding for the first quarter of 2023. As noted above, the first quarter 2024 non-GAAP net loss was impacted by $11.5 million in foreign exchange losses or a loss of $0.16 per share, which was not included in our original guidance. Turning to our balance sheet. As of March 31, 2024, cash and cash equivalents were $170.1 million, providing us significant liquidity to run and invest in our business. This is an increase of $11.1 million compared with cash and cash equivalents and investments of $159 million as of December 31, 2023. For the first quarter, cash provided by operations was $18.9 million versus cash used in operations of $25.3 million in the same period last year. Our cash provided by operations was bolstered by strong cash collections in the quarter and reflects the milestone on our journey towards profitability. We also completed a $50 million share repurchase program in Q1, during which we bought back a total of 1.32 million shares. We're bullish on the long-term growth prospects of our company. We see this buyback as an avenue to deliver value to shareholders. Finally, total deferred revenue was $226.2 million as of the first quarter of 2024, an increase of 14% from the year-ago period. As a reminder, the majority of our customers are invoiced on an annual upfront basis, although we have large customers that are billed quarterly or monthly. Consequently, we continue to believe cloud subscription revenue is a better indicator of our business momentum than deferred revenue, billings, or remaining performance obligations. The latter metrics can fluctuate based on the timing of invoicing, seasonality of on-prem license revenue, and the duration of customer contracts. The true scale of the business is represented by subscriptions revenue, which includes support and all software subscription revenue regardless of whether the customer deploys to the Appian Cloud, their private cloud, or on-prem. Our second quarter 2024 guidance is in line with how we've historically approached guidance setting. As a reminder, due to seasonality, Q2 tends to be our weakest quarter, while Q4 tends to be our strongest. For the second quarter of 2024, cloud subscription revenue is expected to be between $86 million and $88 million, representing year-over-year growth of between 16% and 18%. Total revenue is expected to be between $140 million and $144 million, representing year-over-year growth of 10% and 13%. Adjusted EBITDA loss for the second quarter of 2024 is expected to be between $17 million and $13 million. Non-GAAP net loss per share is expected to be between $0.34 and $0.28. This assumes 72.3 million diluted weighted average common shares outstanding. This includes the reduction of the share count from our share repurchase during the first quarter. For the full year 2024, we are reaffirming our previously announced cloud revenue and total revenue guidance. We are improving our full-year adjusted EBITDA guidance. We now expect the adjusted EBITDA loss to be between $22.5 million and $17.5 million for the full year 2024. This is an improvement of $2.5 million or 11% from the previous guidance range midpoint. We are pleased with the efficiencies we are seeing in our cost structure and we'll continue to look for opportunities to optimize costs on our path towards profitability. Our full-year 2024 non-GAAP net loss per share guidance is updated to a range of $0.85 to $0.79. This new full-year range includes the reduction of the share count from our share repurchase during the first quarter. Our guidance assumes the following: First, as previously disclosed, the variability in our services revenue can be swung by one or two large transactions. For Q2 and the full year, we expect professional services revenue to be flat over the comparison periods. Second, on-premise license revenue will grow by a mid-single-digit growth rate and will track to seasonality that is consistent with prior periods. Third, our second quarter adjusted EBITDA loss will be bigger than the first quarter's adjusted EBITDA loss. This is due to the seasonality in our business and the cost of running our global user conference, Appian World. Fourth, total other income and interest expense are expected to be between $4 million in Q2 and $18 million for the full year 2024. Fifth, capital expenditures are expected to be between $1 million and $2 million in Q2 and between $10 million and $12 million for the full year 2024. Finally, our guidance assumes FX rates as of April 29, 2024. In conclusion, it's an exciting time to be part of Appian as we continue to invest in growth and optimize our cost structure to drive profitability. We are well positioned to continue to demonstrate the value of our world-class platform and capitalize on the opportunities ahead of us. And with that, we'll open the line for questions.

Our first question comes from Steve Enders with Citi.

Okay. Great. I guess maybe just to start, I'd be, I guess, maybe hear an update on what you're hearing out there in the deal environment. And I think you made a comment at the Investor Day that you felt like the macro was maybe getting a little bit better. So I guess it would be good to get a little bit clarity on exactly how that deal environment has shifted and evolved and how you're kind of viewing that today?

Yes. Okay. I think that the macro isn't perfect. There's definitely some concerns around the U.S. government, international affairs, and whether inflation is heading in a clear direction, but it's workable. And with regards to AI, which is almost a macro effect for us, I don't see big budgets around AI among our customers. So that's not something that we're working with and drawing energy from this curiosity, but there's not big line items.

Okay. That's helpful there. And then I guess just on the conference and get an update on the feedback you heard from customers on maybe how they're thinking about AI investments, how they're thinking about some of the new products and the adoption there. And I think also on the pricing and packaging changes that were announced there. So good to get a little bit more clarity on feedback from the customer side.

Yes. First of all, let me say that conferences we went through a bit of a lull with COVID, right? When they went remote, they lost energy. This, in my opinion, was the best conference we've had since before COVID. I love the energy. I love the enthusiasm; the attendance was good, prospects showing up. Very pleased with the conference. I think that the changes in our pricing approach, which serve to both simplify and raise our prices, have been broadly welcomed. I think there's a willingness to see value in the new features that we have announced two weeks ago. And I didn't get any complaints; 'Why isn't this free?' Instead, there was just appreciation for what we've created. And the simplicity—I didn't get any pushback on that. It used to be we had so many different ways to price the software. And now we've got one; it's not drawing additional friction. In fact, it's simplifying and accelerating the process.

Our next question comes from Jake Roberge with William Blair.

Mark, I guess just to start off, can you help us better understand the cloud revenue guidance? It was a solid quarter. But when we look at the sequential increase from Q1 to Q2, it looks a bit softer. But then the guidance implies a few points of back half acceleration. So could you just walk us through some of the building blocks that you have in the model for that acceleration, whether it be the pricing increases, packaging increases, or some of the new products that give you confidence in that guide?

Sure, Jake. I believe you are asking the right question and have the correct analysis. While the price increases are somewhat in the background, the main factor is really the seasonality of our business. Typically, Q2 is our lowest revenue quarter, which can be attributed to what occurred in Q1 regarding bookings and billings. So, it's largely about seasonality, and we do anticipate traction and recovery, which is why we have reaffirmed our full-year guidance.

Okay. Very helpful. And then can you just talk about the uptake you've seen with your new data fabric solution? And just from a competitive positioning perspective, we've heard a few other vendors in the space launch their own fabric solutions over the past few months. So could you walk us through the differentiation of your product? And then just also how the monetization path has been going over the past few quarters?

Yes. Thanks for asking. Those products are completely different. Our data fabric is meant to reach across the enterprise and integrate every data source, whereas our competitors are liable to offer a data fabric that is built just to connect their own data sources to each other because their own internal architecture is so convoluted that there isn't natural compatibility between these products in the first place. Their own products, I'm talking about. So their data fabric is to integrate their own products. Ours is expansive. And the other thing ours is that there does not, is it creates a semantic layer so that all of these data sources are not merely integrated but addressable through a common language, and you can treat them like objects as if they were local objects, all through the same nomenclature. So it's an entirely different product; what we've got, except that they borrowed the data fabric terminology. That's a rough guide. The products are quite different. As for uptake, our data fabric uptake is very high. It's one of the best-adopted features we've ever launched, and we anticipate having it even more deeply integrated in the future as customers reach out to connect a greater share of their enterprise with the data fabric. I like to joke around here that it's such a powerful differentiated feature that we're almost a data fabric company. I do mean that as a joke, but it's a very important differentiator for us.

Our next question comes from Derrick Wood with TD Cowen.

It's Andrew on for Derrick. Mark, the comment you made two questions ago about Q1 bookings impacting the guide. Was there anything maybe a bit of slowness to start the year after a strong Q4 from a bookings perspective? And how is linearity? And did any deals slip into Q2?

Yes, I think it's more typical for us, right? We do have a seasonal effect to our bookings, and it's not abnormal to have the phenomena that we've seen so far in 2024, which is that Q1 is much weaker than Q4. And I think that's kind of almost ubiquitous in the software industry. But we certainly had that this year, and it's nothing abnormal there.

Okay. Good. And then Matt, you made a comment about the new pricing model potentially accelerating things. Would you expect that to accelerate sales cycles potentially this year?

Look, I absolutely have that in mind when I rolled out the new pricing plan. I also have in mind that we'll shift the basis for our discussions with customers away from price. I don't want to be price engineers; I want to be feature engineers. And I want to talk about the features and the scalability, the reliability, the things that make Appian actually different; that's where I want to spend our time. So I am hopeful that it will help us to reduce sales cycles, but I can't put anything down on the table. I do think that it will guide the conversation in a more productive and pro-Appian direction.

Yes, that's great. One last one for you, Matt. You have reduced the number of partners a lot with the focus on quality over quantity, it seems like. Has that kind of improved the quality of leads and pipeline flow from partners?

I'd say that we're early days on this shift. We have emphasized a few partners. You're absolutely right. I think that's going to be healthy for the business. Right now, we're getting a little bit more than we did in the past from partners. So if you take all of our partners added up, even the ones that we dropped, right, the total sum of partners added to our pipeline, yes, it is up. But I think it's still early to see the long-term ramifications of this prioritization. And all I can say is that the first indicator looks like we're probably making the right decision. But I already have more confidence that we're making the right decision based on other things based on internal analysis. So this is just one of the smaller confirmations that we've made the right choice.

Our next question comes from Kevin Kumar with Goldman Sachs.

I wanted to ask about net revenue retention. That's been picking up the last couple of quarters. Just curious kind of the trends you're seeing there and whether some of the go-to-market changes that you've been making to focus on your large customers and maybe some of the pricing changes are impacting that kind of expansion motion?

Yes. Well, first of all, I would love to see this in the kind of range where it is. We always talk about 110 to 120, but between those, I've got a preference. And I think that this is the kind of net revenue retention rate that is encouraged by the moves we have made, just like you pointed out. I think it's too early to say that these changes, which have just happened, have had any impact on the net revenue retention rate. Honestly, that's a trailing indicator. It's going to take a long time for the changes we've made to filter into that metric slowly over the course of a year or two. But they should help. If we focus on large opportunities, if we put more of our attention on our top customers and our top partners, I believe that will be a net revenue retention positive, and I'm not asking to see it in Qs 1 or 2 or even 3, but I do think in the long run, it's going to boost us.

That's helpful. And then maybe can you talk a bit about ProcureSight and how that expands the federal opportunity for Appian? It's probably still a bit early, but what's been the initial response there?

I've been itching to talk about this for quarters. So thank you for bringing it up. As you know, we've got something called the government acquisition management suite, which is a series of solutions, interlocking solutions that cover the entire acquisitions process for a public sector buyer. Those can be adopted singly or in serial and all at once or sequentially. That's been really popular. It's established itself as an emerging standard in the U.S. government. The users are very pleased, and this new offering reinforces it. It capitalizes on the market leadership that we've established in procurement by offering a service, an AI-backed service that taps into a number of different data sets, very deep, very wide data sets that give you the history of procurements of the past, including awards of the past and solicitations of the past. So we're going to give expert AI-based advice on what's happened before in the world of procurement. And then also AI will help you to write your new procurements. This is an extraordinary accelerator. I wouldn't recommend using it without a person in charge, right? This is for the procurement professional, not a substitute for the procurement professional, but it does allow that procurement professional to be far more efficient. And if they're already working with Appian, then they've got the confidence and a framework into which to use the results they get out of ProcureSight. So we've got high hopes for this one. I've been excited about it for a while.

Our next question comes from Tom Blakey with KeyBanc Capital Markets.

Just I guess my question is riding on a couple of the prior questions, one of Andrew's on bookings. But the 1Q bookings sounded a little soft. And just wondering, looking out then with the acceleration expected in the second half, what kind of bookings assumptions were made there, Mark? And maybe dovetailing in the pricing as well, a 25% price lift, I think, is the number sounds high. Is this just for new processes? Is it just for new work? Or does this kind of come upon each contract renewal for a larger set of customers? And I have a follow-up.

You take the first part of the neck and then I'll continue. That's right.

Yes. So Tom, it's really not an abnormal story for us. Again, it's seasonality. One thing I didn't mention, which I should, is that we did have an FX weakness since our last guidance in February. And so we did have a few million dollars leave our backlog for the year. And so we've absorbed that, we're able to reaffirm our full year cloud guide despite that. But that took a toll on Q2 and the full year, and it was an impact as well. But there's nothing about our bookings pattern this year that's different than any other year in our assumptions for guidance or anything like that.

Great. I'm going to talk about our 25%. This is the higher tier and the new higher tier in our pricing system, and all of the new features that we just announced at Appian World, they're all in the advanced tier. So customers like this; we have a lot of momentum. I think it's probably the best feature drop we've had in a long time. And customers understand that in order to use these features—whether it's Process HQ or Case Management—they're going to have to buy the higher tiers at 25% more. I think that this is likely to come up in our renewal negotiations. So it's not all at once. But when customers talk about renewing, we're going to discuss why they should renew at the higher rate. It is not a mandatory 25% increase. It's optional, and we're trying to lure them up with these new features. I don't expect a rapid impact from this. But I do think that Appian has a large consumer surplus, which is to say that our customers get more than they pay for. And so by creating a new higher pay rate, we can sort of take some of that back with features, which I hope soon will be considered mandatory for any Appian customer because they're such good features. That's the plan here.

That's a great answer, Matt. And just as a follow-up to that, is the surplus being shifted to these higher tiers? Or is it just all incremental in terms of these higher tiers? And a leading question to consider if you wager a percentage of revenue that you would expect to take this higher tier, especially given the fact that you have the power to move some of that surplus to those higher tiers.

Yes. I'm going to hold back on making a prediction. I mean look, I love the question. I asked this of myself, but I just don't want to answer it. I want to just see where we fight this and get back with more dollars...

And especially with TCO and other benefits, I'm sure if you could push the surplus to the higher tiers and the consideration of continuing to save the company and customers' money, maybe we'll see a considerable move over. Matt, as a follow-up to your budget commentary, Appian still continues to grow double digits in a kind of flattish to up low single-digit IT budget environment. Where do you see the budgets coming? I think it was Steve Enders' question in terms of AI budgets. Where do you see Appian's budgets coming, and in the context, if you could answer, I saw your $1 million-plus ARR deals, that chart has been phenomenal over the last few years and kind of flattened out a little bit. If you could just kind of combine the two points in terms of an answer, that would be helpful.

Yes. Let me just say, I know some people are watching that chart by the quarter. I wouldn't watch it too closely. I do think there’s some natural volatility, and Q1 is Q1 for us. So don't get too absorbed in the ticks on the $1 million accounts. However, let me say that the real space for us long-term in this market is at that high end, right? That's where a best-of-breed player belongs. And so for us to focus on larger businesses and bigger deals and higher feature sets and elevated prices, this is strategically where we belong. EPEx fits right into that, for example, the new elastic scale feature. What we've done recently, and you could see it in our show and the way we dropped a bunch of great features, and they all have price tags. The way we're reorganizing the priorities in the market to focus more on the larger opportunities, it's all under the understanding that there's a place that we can live comfortably in this market space, and it's at the high end.

Our next question comes from Raimo Lenschow with Barclays.

Matt, if you think about the data platform and the AI adoption, does the data have to come first? So if you think about how the world is going to evolve here? Like you mentioned earlier, there's not that much on the AI budgeting side. Do you think the bigger move, and people don't talk about it, is actually that they need to clean up the data first, and hence your data fabric should be, or could be, and will be the more interesting offering for the time being?

I think the data conversation is underpursued in AI generally. As a society, we don't give data enough credit. As businesses, we're not broadly giving data enough credit for the value it creates inside AI. Now let me take that point one step further and say, AI will truly be valuable when it's about you. This is true for you personally. If you were to type a question into a public AI algorithm, you would get back a generic answer. But if it knew you, it would give you an answer that was valuable to you. And the way people get around this right now is they try to explain themselves very briefly, like if I care about this or if my priority were X, Y, then what would you recommend for me? They're basically prompting the AI with a little bit of themselves. But at that level, when the AI knows little to nothing about you, it's a novelty. When AI moves from being a toy to being a tool, it's going to be because it knows you. And that's true right now when you as a person interact with public AI, and it's also true for businesses. When they interact with AI, it's just a toy until the AI understands the business. And that's the real hurdle because understanding the business means exposure to the data that the business owns—the crown jewels of the business—and there are privacy concerns, regulatory concerns, and a lot of fear in that system. For us to get serious as a civilization about AI, we're going to have to figure out how to make AI about you. In this case, you being the business. And that's going to mean getting across the 'how do we share' question—how will we share our information? And I propose one answer to that question. And that is that the data fabric will allow you to filter, select, and share only a tiny slice of your data, but the right slice with AI in order that you can get a valuable answer and reply without triggering any privacy or regulatory concerns. That's one answer to a critical question that constitutes the frontier of real business value in AI. We're going to have to have an answer to that question. We have one proposal to how we're going to do it. And data fabric is utterly central to our ability to offer that proposal. So I'm a huge believer in the synergy between data and AI and between the capability of the data fabric to facilitate a certain sort of personalization around AI. That's what we're going for. And we've positioned ourselves to be the leader in a specific kind of valuable and yet private AI. I'm going on a little long here, but I want to make a point; it's really important to us strategically what we're trying to do. And since you asked about it, I figured I'd just lay it out. That's our intention with the data fabric.

Yes, that makes total sense. It's really valuable. I have a follow-up for you, Mark. The big question is about the bookings this year; you mentioned that everything is fine. Can you elaborate on the shape of the pipeline? Is that the plan for the year? I would appreciate more clarity on this, as it's where I encounter the most pushback.

Yes. I mean the pipeline has kind of shown the exact behavior we expected. So there's no change. The linearity has been typical for us, which is back-end loaded quarters. And as we've said for years, Q1 is our weakest quarter, and that was just the seasonal buying patterns of our customers. So the only other missing piece is what I'll reiterate, which is the FX piece, which did cause the departure of our cloud revenue backlog of about $2.5 million for the full year. So that's one thing that you could see, obviously, in Q2 as well. But I would caution anyone to read into anything abnormal. It's really more the rule versus the exception for us.

Our next question comes from Steve Enders with Citi.

I guess I just want to clarify the FX impact that you are seeing? And I guess, maybe the framing what was embedded in the guide before for the year? I guess what's now kind of being embedded in the guide for the year now and maybe also kind of the impact for the 2Q guide would be helpful.

Sure. Yes. So we don't forecast changes in FX. And what I'm pointing out is that when we set our guidance for the year after our Q4 results were presented in February, the foreign currency rates yielded a certain amount of revenue, right? And since that time, in the passage of three months, essentially the European exchange rates have weakened to the point that we saw $2.5 million of cloud subscription revenue leave that forecast or that guidance or that backlog, however you want to put it. And so by maintaining our full year guide, we've absorbed that $2.5 million impact. For the second quarter, that impact was around $1 million. Is that helpful?

Yes, that's clear. So you're saying that on a constant currency basis, you would have increased the guidance by $2.5 million for the year, but since you’re not able to do that, it remains unchanged.

Yes. I would hesitate to use the word constant currency because that implies prior year's rates, but just using the rates as of February. If we use those rates, certainly would have had those numbers, a $2.5 million increase for the full year and then a $1 million for the second quarter.

Our next question comes from Oscar Saavedra with Morgan Stanley.

Oscar Saavedra on for Sanjit Singh. I want to ask a question on just the macro demand environment and the health of your core verticals that being financial services, government, and healthcare. It's nice to see your net retention rate uptick in over the past several quarters. So just your view on the general demand environment and what you're seeing that is allowing you to see that consistent uptick while others in software are seeing that deteriorate?

Yes, I would say that our customers are getting a lot of value out of Appian software. You can see in all these new features, the innovation we're doing that we're very attentive to delivering benefit, being reliable and satisfying them with outcomes from their technology investment. I think that shows in the retention and the support that they give us. The gross revenue retention is high as well at 98%, and they also turn up for us on industry satisfaction surveys. So like I can't speculate on what's happening for other firms, but I will say that our customers are enthusiastic and loyal because we make sure that their experience is great.

Got it. So in terms of just like the broader demand environment, are you seeing any particular budget constraints or just anything around that?

Not particularly... No.

Okay. And just one more. On your AWS partnership driving deals, like any additional details on what's driving those early deals?

We announced that part of it that I wanted to announce. So I don't want to get into anything more other than to say that we're enthusiastic about our long-standing relationship with AWS.

I'm showing no further questions at this time. This concludes today's conference call. Thank you for participating. You may now disconnect.