8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 18, 2021

Appian Corporation

(Exact name of Registrant as Specified in Its Charter)

Delaware		001-38098	54-1956084
(State or Other Jurisdiction<br><br>of Incorporation)		(Commission File Number)	(I.R.S. Employer<br><br>Identification No.)
7950 Jones Branch Drive			22102
McLean,	VA		(Zip Code)
(Address of principal executive offices)

Registrant’s Telephone Number, Including Area Code: (703) 442-8844

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):

☐    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of each class	Trading symbol	Name of each exchange on which registered
Class A Common Stock	APPN	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Item 2.02 Results of Operations and Financial Condition.

On February 18, 2021, Appian Corporation (the "Company") issued a press release announcing its financial results for the year ended December 31, 2020, as well as information regarding a conference call to discuss these financial results and the Company's recent business highlights and financial outlook. The Company's press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

The information included in Item 2.02 of this Current Report on Form 8-K and Exhibit 99.1 attached hereto shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit<br><br>Number	Description
99.1	Press release dated February 18, 2021

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Appian Corporation
Date: February 18, 2021	By:	/s/ Mark Lynch
		Mark Lynch
		Chief Financial Officer

Document

Exhibit 99.1

Appian Announces Fourth Quarter and Full Year 2020 Financial Results

Fourth quarter cloud subscription revenue increased 40% year-over-year to $36.9 million

Full year cloud subscription revenue increased 36% year-over-year to $129.2 million

McLean, VA – February 18, 2021 – Appian (Nasdaq: APPN) today announced financial results for the fourth quarter and full year ended December 31, 2020.

“For the full year, we exceeded our guidance and grew cloud subscription revenue by 36% to $129.2 million. Low-code emerged in 2020 as a successful way for organizations to remain nimble in the face of change. Appian is leading this market because our low-code platform is more than 10x faster, our partner ecosystem is growing, and our customers are happy," said Matt Calkins, CEO & Founder.

Fourth Quarter 2020 Financial Highlights:

•Revenue: Cloud subscription revenue was $36.9 million for the fourth quarter of 2020, up 40% compared to the fourth quarter of 2019. Total subscriptions revenue, which includes sales of SaaS subscriptions, on-premises term license subscriptions and maintenance and support, increased 33% year-over-year to $56.1 million for the fourth quarter of 2020. Professional services revenue was $25.5 million for the fourth quarter of 2020, compared to $26.5 million for the fourth quarter of 2019. Total revenue was $81.6 million for the fourth quarter of 2020, up 19% compared to the fourth quarter of 2019. Cloud subscription revenue retention rate was 119% as of December 31, 2020.

•Operating loss and non-GAAP operating loss: GAAP operating loss was $(9.7) million for the fourth quarter of 2020, compared to $(13.1) million for the fourth quarter of 2019. Non-GAAP operating loss was $(5.1) million for the fourth quarter of 2020, compared to $(9.7) million for the fourth quarter of 2019.

•Net loss and non-GAAP net loss: GAAP net loss was $(6.4) million for the fourth quarter of 2020, compared to $(10.8) million for the fourth quarter of 2019. GAAP net loss per share was $(0.09) for the fourth quarter of 2020, based on 70.4 million weighted average shares outstanding, compared to $(0.16) for the fourth quarter of 2019, based on 67.3 million weighted average shares outstanding. Non-GAAP net loss was $(1.8) million for the fourth quarter of 2020, compared to $(7.4) million for the fourth quarter of 2019. Non-GAAP net loss per share was $(0.03) for the fourth quarter of 2020, based on 70.4 million weighted average shares outstanding, compared to $(0.11) per share for the fourth quarter of 2019, based on 67.3 million weighted average shares outstanding.

•Adjusted EBITDA: Adjusted EBITDA loss was $(3.7) million for the fourth quarter of 2020, compared to $(8.2) million for the fourth quarter of 2019.

Full Year 2020 Financial Highlights:

•Revenue: Cloud subscription revenue was $129.2 million for the full year 2020, up 36% compared to the full year 2019. Total subscriptions revenue was $198.7 million for the full year 2020, an increase of 31% from the prior year. Professional services revenue was $105.9 million for the full year 2020, a decrease of 3% from the prior year. Total revenue was $304.6 million for the full year 2020, up 17% compared to the full year 2019.

•Operating loss and non-GAAP operating loss: GAAP operating loss was $(37.9) million for the full year 2020, compared to $(50.5) million for the full year 2019. Non-GAAP operating loss was $(22.6) million for the full year 2020, compared to $(34.0) million for the full year 2019.

•Net loss and non-GAAP net loss: GAAP net loss was $(33.5) million for the full year 2020, compared to $(50.7) million for the full year 2019. GAAP net loss per share was $(0.48) for the full year 2020, based on 69.1 million weighted average shares outstanding, compared to $(0.77) for the full year 2019, based on 65.5 million weighted average shares outstanding. Non-GAAP net loss was $(18.2) million for the full year 2020, compared to $(34.1) million for the full year 2019. Non-GAAP net loss per share was $(0.26) for the full year 2020, based on 69.1 million weighted average shares outstanding, compared to $(0.52) per share for the full year 2019, based on 65.5 million weighted average shares outstanding.

•Adjusted EBITDA: Adjusted EBITDA loss was $(16.8) million for the full year 2020, compared to $(29.3) million for the full year 2019.

•Balance sheet and cash flows: As of December 31, 2020, Appian had cash and cash equivalents and investments of $258.4 million. For the fourth quarter of 2020, net cash provided by operating activities was $5.8 million, compared to $(6.0) million of net cash used in operating activities for the same period in 2019. Net cash used in operating activities was $(7.6) million for the year ended December 31, 2020, compared to net cash used in operating activities of $(8.9) million for the year ended December 31, 2019. In accordance with U.S. GAAP, $17.0 million of tenant improvement allowance reimbursements received during the year ended December 31, 2019 are a source of cash in operating activities.

A reconciliation of GAAP to non-GAAP financial measures has been provided in the tables following the financial statements in this press release. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures.”

Fourth Quarter 2020 Business Highlights:

•Appian RPA achieved the Federal Risk and Authorization Management Program (FedRAMP) certification, the only robotics process automation product to have its cloud components natively certified.

•Appian was named a Leader in Gartner’s 2020 Magic Quadrant for Enterprise Low-Code Application Platforms report for the second consecutive year.

•Appian was named a Leader in Nucleus Research’s 2020 Value Matrix for Low-Code Application Platforms report.

•Appian launched the Connected Claims solution for insurers to streamline the insurance claims process.

•Appian launched the Award Management solution for government organizations to automate an early stage of the award management process.

•Appian was named a 2020 Top Workplace by The Washington Post for the seventh consecutive year and the #1 technology employer.

Financial Outlook:

As of February 18, 2021, guidance for the first quarter 2021 and full year 2021 is as follows:

•First Quarter 2021 Guidance:

◦Cloud subscription revenue is expected to be in the range of $37.7 million and $38.2 million, representing year-over-year growth of between 33% and 35%.

◦Total revenue is expected to be in the range of $81.7 million and $82.7 million, representing a year-over-year increase of between 4% and 5%.

◦Adjusted EBITDA loss is expected to be in the range of $(9.0) million and $(8.0) million.

◦Non-GAAP net loss per share is expected to be in the range of $(0.15) and $(0.13). This assumes 70.8 million weighted average common shares outstanding.

•Full Year 2021 Guidance:

◦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 $353.0 million and $355.0 million, representing a year-over-year increase of between 16% and 17%.

◦Adjusted EBITDA loss is expected to be in the range of $(38.0) million and $(36.0) million.

◦Non-GAAP net loss per share is expected to be in the range of $(0.64) and $(0.60). This assumes 71.2 million weighted average common shares outstanding.

Conference Call Details:

Appian will host a conference call today, February 18, 2021, at 5:00 p.m. ET to discuss Appian's financial results for the fourth quarter and full year ended December 31, 2020 and business outlook.

The live webcast of the conference call can be accessed on the Investor Relations page of Appian’s website at

http://investors.appian.com. To access the call, please dial (877) 407-0792 in the U.S. or (201) 689-8263 internationally. Following the call, an archived webcast will be available at the same location on the Investor Relations page. A telephone replay will be available for one week at (844) 512-2921 in the U.S. or (412) 317-6671 internationally with recording access code 13715479.

About Appian

Appian (NASDAQ: APPN) helps organizations build apps and workflows rapidly, with a low-code automation platform. Combining people, technologies, and data in a single workflow, Appian can help companies maximize their resources and improve business results. Many of the world’s largest organizations use Appian applications to improve customer experience, achieve operational excellence, and simplify global risk management and compliance. For more information, visit www.appian.com.

Non-GAAP Financial Measures

To supplement its consolidated financial statements, which are prepared and presented in accordance with GAAP, Appian provides investors with certain non-GAAP financial measures, including non-GAAP operating loss, non-GAAP net loss, non-GAAP net loss per share, non-GAAP weighted average shares outstanding and adjusted EBITDA. These non-GAAP financial measures exclude the effect of stock-based compensation expense and losses on disposal of an asset. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP, and Appian’s non-GAAP measures may be different from non-GAAP measures used by other companies. For more information on these non-GAAP financial measures, please see the reconciliation of these non-GAAP financial measures to their nearest comparable GAAP measures at the end of this press release. A reconciliation of non-GAAP guidance measures to the most comparable GAAP measures is not available on a forward-looking basis without unreasonable efforts due to the high variability, complexity and low visibility with respect to the charges excluded from these non-GAAP measures.

Appian uses these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. Appian’s management believes that these non-GAAP financial measures provide meaningful supplemental information regarding Appian’s performance by excluding certain expenses that may not be indicative of its recurring core business operating results. Appian believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing Appian’s performance and when planning, forecasting, and analyzing future periods. These non-GAAP financial measures also facilitate management’s internal comparisons to historical performance as well as comparisons to competitors’ operating results. Appian believes these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to measures used by management in its financial and operational decision-making and (2) they are used by Appian’s institutional investors and the analyst community to help them analyze the health of Appian’s business.

Forward-Looking Statements

This press release includes forward-looking statements. All statements contained in this press release other than statements of historical facts, including statements regarding Appian’s future financial and business performance for the first quarter and full year 2021, the impact of COVID-19 on Appian’s business and on the global economy, future investment by Appian in its go-to-market initiatives, increased demand for the Appian platform, market opportunity and plans and objectives for future operations, including Appian’s ability to drive continued subscription revenue and total revenue growth, are forward-looking statements. The words "anticipate," believe," "continue," "estimate," "expect," "intend," "may," "will" and similar expressions are intended to identify forward-looking statements. Appian has based these forward-looking statements on its current expectations and projections about future events and financial trends that Appian believes may affect its financial condition, results of operations, business strategy, short-term and long-term business operations and objectives and financial needs. These forward-looking statements are subject to a number of risks and uncertainties, including the risks and uncertainties associated with Appian’s ability to grow its business and manage its growth, Appian’s ability to sustain its revenue growth rate, continued market acceptance of Appian’s platform and adoption of low-code solutions to drive digital transformation, the fluctuation of Appian’s operating results due to the length and variability of its sales cycle, competition in the markets in which Appian operates, risks and uncertainties associated with the composition and concentration of Appian’s customer base and their demand for its platform and satisfaction with the services provided by Appian, the potential fluctuation of Appian’s future quarterly results of operations, Appian’s ability to shift its revenue towards subscriptions and away from professional services, Appian’s ability to operate in compliance with applicable laws and regulations, Appian’s strategic relationships with third parties and use of third-party licensed software and its platform’s compatibility with third-party applications, and the timing of Appian’s recognition of subscription revenue, which may delay the effect of near term changes in sales on its operating results, and the additional risks and uncertainties set forth in the "Risk Factors" section of Appian’s Annual Report on Form 10-K for the year ended December 31, 2020 filed with the Securities and Exchange Commission on February 18, 2021 and other reports that Appian has filed with the Securities and Exchange Commission. Moreover, Appian operates in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for Appian’s management to predict all risks, nor can Appian assess the impact of all factors on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements Appian may make. In light of these risks, uncertainties and assumptions, Appian cannot guarantee future results, levels of activity, performance, achievements or events and circumstances reflected in the forward-looking statements will occur. Appian is under no duty to update any of these forward-looking statements after the date of this press release to conform these statements to actual results or revised expectations, except as required by law.

Investor Contact

Scott Walker

Director, Investor Relations

703-496-4573

scott.walker@appian.com

Media Contact

Nicole Greggs

Director, Media Relations

703-260-7868

nicole.greggs@appian.com

APPIAN CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

	As of
	December 31, 2020		December 31, 2019
Assets
Current assets
Cash and cash equivalents	$	112,462	$	159,755
Short-term investments and marketable securities	109,826		—
Accounts receivable, net of allowance of $1,400 and $600 as of December 31, 2020 and December 31, 2019, respectively	97,278		70,408
Deferred commissions, current	17,899		14,543
Prepaid expenses and other current assets	27,955		32,955
Total current assets	365,420		277,661
Property and equipment, net	35,404		39,554
Long-term investments	36,120		—
Goodwill	4,862		—
Intangible assets, net of accumulated amortization of $429 as of December 31, 2020	1,744		—
Operating right-of-use assets	30,659		24,205
Deferred commissions, net of current portion	34,198		28,979
Deferred tax assets	489		494
Other assets	3,625		592
Total assets	$	512,521	$	371,485
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	2,967	$	5,222
Accrued expenses	5,821		7,488
Accrued compensation and related benefits	22,981		10,691
Deferred revenue, current	116,256		82,201
Operating lease liabilities, current	6,923		3,836
Finance lease liabilities, current	—		1,447
Other current liabilities	940		1,395
Total current liabilities	155,888		112,280
Operating lease liabilities, net of current portion	51,194		44,416
Finance lease liabilities, net of current portion	—		2,375
Deferred revenue, net of current portion	3,886		7,139
Deferred tax liabilities	70		38
Other non-current liabilities	4,878		—
Total liabilities	215,916		166,248
Stockholders’ equity
Class A common stock—par value $0.0001; 500,000,000 shares authorized and 38,971,324 shares issued and outstanding as of December 31, 2020; 500,000,000 shares authorized and 34,525,386 shares issued and outstanding as of December 31, 2019	4		3
Class B common stock—par value $0.0001; 100,000,000 shares authorized and 31,707,866 shares issued and outstanding as of December 31, 2020; 100,000,000 shares authorized and 32,942,636 shares issued and outstanding as of December 31, 2019	3		3
Additional paid-in capital	470,498		340,929
Accumulated other comprehensive loss	(5,010)		(285)
Accumulated deficit	(168,890)		(135,413)
Total stockholders’ equity	296,605		205,237
Total liabilities and stockholders’ equity	$	512,521	$	371,485

APPIAN CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)

	Three Months Ended December 31,				Year Ended December 31,
	2020		2019		2020		2019
	(unaudited)
Revenue
Subscriptions	$	56,096	$	42,108	$	198,710	$	151,299
Professional services	25,534		26,510		105,863		109,053
Total revenue	81,630		68,618		304,573		260,352
Cost of revenue
Subscriptions	5,641		4,993		20,826		17,098
Professional services	16,299		17,780		67,940		76,743
Total cost of revenue	21,940		22,773		88,766		93,841
Gross profit	59,690		45,845		215,807		166,511
Operating expenses
Sales and marketing	35,425		31,254		130,316		117,440
Research and development	18,875		15,625		70,241		58,043
General and administrative	15,076		12,028		53,152		41,496
Total operating expenses	69,376		58,907		253,709		216,979
Operating loss	(9,686)		(13,062)		(37,902)		(50,468)
Other income
Other income, net	(3,941)		(2,822)		(5,786)		(941)
Interest expense	88		131		478		367
Total other income	(3,853)		(2,691)		(5,308)		(574)
Loss before income taxes	(5,833)		(10,371)		(32,594)		(49,894)
Income tax expense	548		426		883		820
Net loss	$	(6,381)	$	(10,797)	$	(33,477)	$	(50,714)
Net loss per share:
Basic and diluted	$	(0.09)	$	(0.16)	$	(0.48)	$	(0.77)
Weighted average common shares outstanding:
Basic and diluted	70,362,387		67,316,098		69,050,565		65,479,327

APPIAN CORPORATION AND SUBSIDIARIES

STOCK BASED COMPENSATION EXPENSE

(in thousands)

	Three Months Ended December 31,				Year Ended December 31,
	2020		2019		2020		2019
	(unaudited)
Cost of revenue
Subscriptions	$	265	$	185	$	943	$	647
Professional services	542		287		1,477		2,748
Operating expenses
Sales and marketing	984		771		2,821		4,742
Research and development	877		497		2,718		3,480
General and administrative	1,943		1,648		7,320		4,826
Total stock-based compensation expense	$	4,611	$	3,388	$	15,279	$	16,443

APPIAN CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Year Ended December 31,
	2020		2019
Cash flows from operating activities:
Net loss	$	(33,477)	$	(50,714)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	5,851		4,742
Bad debt expense	984		99
Loss on disposal of property and equipment	22		146
Change in fair value of available-for-sale securities	22		—
Deferred income taxes	(184)		(334)
Stock-based compensation	15,279		16,443
Changes in assets and liabilities:
Accounts receivable	(33,559)		7,432
Prepaid expenses and other assets	3,740		8,972
Deferred commissions	(8,575)		(9,319)
Accounts payable and accrued expenses	(4,238)		(4,039)
Accrued compensation and related benefits	11,801		(3,072)
Other liabilities	3,681		1,318
Deferred revenue	27,626		12,573
Operating lease liabilities	3,407		6,827
Net cash used in operating activities	(7,620)		(8,926)
Cash flows from investing activities:
Purchases of investments	(145,968)		—
Payments for acquisitions, net of cash acquired	(6,138)		—
Purchases of property and equipment	(1,251)		(32,421)
Net cash used in investing activities	(153,357)		(32,421)
Cash flows from financing activities:
Principal payments on finance leases	(3,822)		(653)
Proceeds from public offerings, net of underwriting discounts	108,260		101,653
Payments of costs related to public offerings	(346)		(350)
Proceeds from exercise of common stock options	6,376		4,899
Net cash provided by financing activities	110,468		105,549
Effect of foreign exchange rate changes on cash and cash equivalents	3,216		623
Net (decrease) increase in cash and cash equivalents	(47,293)		64,825
Cash and cash equivalents, beginning of period	159,755		94,930
Cash and cash equivalents, end of period	$	112,462	$	159,755
Supplemental disclosure of cash flow information:
Cash paid for interest	$	165	$	331
Cash paid for income taxes	$	1,182	$	356
Supplemental disclosure of non-cash financing information:
Finance lease obligations to acquire new office furniture and fixtures and computer hardware	$	—	$	4,475

APPIAN CORPORATION AND SUBSIDIARIES

RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES

(unaudited, in thousands, except share and per share data)

	Three Months Ended December 31,				Year Ended December 31,
	2020		2019		2020		2019
Reconciliation of non-GAAP operating loss:
GAAP operating loss	$	(9,686)	$	(13,062)	$	(37,902)	$	(50,468)
Add back:
Stock-based compensation expense	4,611		3,388		15,279		16,443
Non-GAAP operating loss	$	(5,075)	$	(9,674)	$	(22,623)	$	(34,025)
Reconciliation of non-GAAP net loss:
GAAP net loss	$	(6,381)	$	(10,797)	$	(33,477)	$	(50,714)
Add back:
Stock-based compensation expense	4,611		3,388		15,279		16,443
Loss on disposal of property and equipment	—		—		22		146
Non-GAAP net loss	$	(1,770)	$	(7,409)	$	(18,176)	$	(34,125)
Non-GAAP earnings per share:
Non-GAAP net loss	$	(1,770)	$	(7,409)	$	(18,176)	$	(34,125)
Non-GAAP weighted average shares used to compute net loss per share, basic and diluted	70,362,387		67,316,098		69,050,565		65,479,327
Non-GAAP net loss per share, basic and diluted	$	(0.03)	$	(0.11)	$	(0.26)	$	(0.52)
Reconciliation of non-GAAP net loss per share, basic and diluted:
GAAP net loss per share, basic and diluted	$	(0.09)	$	(0.16)	$	(0.48)	$	(0.77)
Add back:
Non-GAAP adjustments to net loss per share	0.06		0.05		0.22		0.25
Non-GAAP net loss per share, basic and diluted	$	(0.03)	$	(0.11)	$	(0.26)	$	(0.52)
Reconciliation of adjusted EBITDA:
GAAP net loss	$	(6,381)	$	(10,797)	$	(33,477)	$	(50,714)
Other income, net	(3,941)		(2,822)		(5,786)		(941)
Interest expense	88		131		478		367
Income tax expense	548		426		883		820
Depreciation and amortization expense	1,366		1,469		5,851		4,742
Stock-based compensation expense	4,611		3,388		15,279		16,443
Adjusted EBITDA	$	(3,709)	$	(8,205)	$	(16,772)	$	(29,283)