Company Reports

We will discontinue analyst coverage of Appian on or about Dec. 23. We provide analyst research and ratings on over 1,500 companies globally and periodically adjust our coverage according to staffing and investor interest.

No-moat Appian reported strong third-quarter results, with slightly better-than-expected revenue and much better-than-expected profitability. Guidance was mixed, with in-line revenue and lower profitability. Management believes recent pricing changes, artificial intelligence introductions, and selling strategies are bearing fruit. Based on results and guidance, we have fine-tuned our near-term assumptions and are maintaining our fair value estimate of $35 per share. We see shares as slightly overvalued and continue to prefer moatier names under our coverage.

Appian is a leading provider of low-code enterprise software for business process management, or BPM, specializing in process automation. We expect digitization tailwinds to fuel demand for low-code BPM software over the coming decade, as businesses seek to drive operating efficiencies and automate manual processes. However, while we’re encouraged by the firm’s ongoing investments to support top-line growth, we expect this will be at the expense of profitability for the foreseeable future.

No-moat Appian reported reasonable second-quarter 2024 results, meeting our top-line forecasts and surpassing our and FactSet's consensus profitability estimates. However, the firm issued mixed near-term guidance following a go-to-market restructure and headcount reductions, including accelerated profitability but a cut to top-line growth assumptions. Following the result, we have adjusted our forecasts to align with updated guidance and lowered our fair value estimate to $35 from $38. Our valuation now includes a projected probability-weighted cash inflow associated with the trade secret misappropriation case against Pegasystems and the associated judgment preservation insurance policy.

Appian is a leading provider of low-code enterprise software for business process management, or BPM, specializing in process automation. We expect digitization tailwinds to fuel demand for low-code BPM software over the coming decade, as businesses seek to drive operating efficiencies and automate manual processes. However, while we’re encouraged by the firm’s ongoing investments to support top-line growth, we expect this will be at the expense of profitability for the foreseeable future.

We are maintaining our $38 per share fair value estimate and Very High Morningstar Uncertainty Rating for no-moat Appian after a Virginia court overturned the 2022 misappropriation judgment against Pegasystems. Appian was previously awarded $2 billion in a case involving misappropriation of trade secrets; however, a Virginia court of appeals determined that errors were made in the original ruling that required the case to be retried. We had not included the forecast net settlement of $790 million into our base-case valuation scenario, and therefore we maintained our fair value estimate in light of this decision. Appian intends to appeal the overturned decision and reinstate the judgment against Pegasystems.

Appian is a leading provider of low-code enterprise software for business process management, or BPM, specializing in process automation. We expect digitization tailwinds to fuel demand for low-code BPM software over the coming decade, as businesses seek to drive operating efficiencies and automate manual processes. However, while we’re encouraged by the firm’s ongoing investments to support top-line growth, we expect this will be at the expense of profitability for the foreseeable future.

No moat Appian’s first-quarter 2024 results met our top-line expectations but exceeded our adjusted EBITDA forecast. Appian foreshadowed this result by providing preliminary results at its annual customer conference in April. Despite the firm delivering a reasonable quarter, shares crumbled around 20% after release as foreign exchange losses weighed on net income and resulted in an earnings per share miss relative to FactSet consensus. We believe Appian is executing well on a path to future profitability supported by solid retention metrics, and that the market has overreacted to this near-term nonoperating headwind. Appian does not hedge foreign exchange risk, so is expected to report fluctuations in net earnings as result of gains or losses on remeasurement.

Appian is a leading provider of low-code enterprise software for business process management, or BPM, specializing in process automation. We expect digitization tailwinds to fuel demand for low-code BPM software over the coming decade, as businesses seek to drive operating efficiencies and automate manual processes. However, while we’re encouraged by the firm’s ongoing investments to support top-line growth, we expect this will be at the expense of profitability for the foreseeable future.

No-moat Appian announced preliminary first-quarter 2024 results at the firm’s annual customer conference, Appian World, which met our top-line expectations and slightly exceeded our non-GAAP adjusted EBITDA forecasts. Based on this announcement, we make no changes to our $42 fair value estimate and will update our valuation model once full results come out around early May. On a risk-adjusted basis, Appian shares continue to screen as fairly valued.

Appian is a leading provider of low-code enterprise software for business process management, or BPM, specializing in process automation. We expect digitization tailwinds to fuel demand for low-code BPM software over the coming decade, as businesses seek to drive operating efficiencies and automate manual processes. However, while we’re encouraged by the firm’s ongoing investments to support top-line growth, we expect this will be at the expense of profitability for the foreseeable future.

No-moat Appian reported fourth-quarter results above our expectations for revenue and profitability. The firm’s main growth driver, cloud subscriptions, increased 26% with near-100% gross retention, while cloud net retention ticked up to 119% as the firm demonstrated its ability to cross-sell and upsell existing customers while attracting new business. Appian continues to demonstrate its prowess in artificial intelligence and within the sticky government sector and figures to benefit from both over the long term. Considering the firm’s ability to attract and retain customers coupled with an improving margin profile, we have raised our fair value estimate to $42 per share, from $37. Shares traded significantly higher upon results and screen as slightly undervalued relative to our updated valuation.

We are launching coverage of Appian with a $37 fair value estimate, a no-moat rating, and a Very High Uncertainty Rating. The business process management firm specializes in process automation and is a leader in low-code enterprise software enabling organizations to have more efficient processes and achieve cost savings. We expect digitization tailwinds to fuel demand for low-code BPM software over the coming decade, as businesses seek to drive operating efficiencies and automate manual processes. However, while we’re encouraged by the firm’s ongoing investments to support top-line growth, we expect this will be at the expense of profitability for the foreseeable future.

Appian is a leading provider of low-code enterprise software for business process management, or BPM, specializing in process automation. We expect digitization tailwinds to fuel demand for low-code BPM software over the coming decade, as businesses seek to drive operating efficiencies and automate manual processes. However, while we’re encouraged by the firm’s ongoing investments to support top-line growth, we expect this will be at the expense of profitability for the foreseeable future.