Appian (NASDAQ: APPN), a software and services company that helps other businesses create custom low-code applications, reported its third-quarter results on Thursday, Nov. 2. Demand for the company's software products and services allowed revenue to grow at a very healthy pace. In turn, the company's bottom line inched closer to breakeven even though management continues to invest heavily in its sales and marketing teams.
Let's take a closer look at the company's results to get a better idea of what the future may hold for this business.
Continue Reading Below
Appian Q3 results: The raw numbers
What happened with Appian this quarter?
Appian's third-quarter results looked solid:
- Subscription revenue grew 35% to $20.7 million. This figure came in ahead of management's guidance range.
- The subscription revenue retention rate -- which is a measure of renewals and sales to the company's existing customer base -- was 122% during the period. This was the best quarterly result since the company went public in 2016.
- Professional services revenue -- which is revenue earned by helping its customers create their apps -- grew 68% to $22 million.
- Non-GAAP operating loss of -$4.9 million was far better than management's guidance range of -$9.6 million to -$9.1 million.
- Non-GAAP EPS of -$0.08 was about half of the loss management had projected.
- Cash usage during the quarter was $10.1 million.
- Cash balance at quarter's end was $72.3 million.
The company's strong growth rates indicate it is doing well competing against low-code products offered by tech giants such as Microsoft and Alphabet.
What management had to say
Appian founder and CEO Matt Calkins kept his brief commentary in the press release focused on the company's great subscription numbers:
On the company's call with analysts, Calkins elaborated on how the company's investments in its sales are marketing teams are driving new types of customers to the platform:
Here's the guidance that management shared with investors for the current quarter:
Given the guidance-topping results in the third quarter, management boosted its projections for the full year 2017:
Despite posting strong growth and raising guidance, Appian's shares fell about 7% on Friday, the day after the report was released.
Short-term price movements aside, Appian's results show that it is successfully attracting new customers to its platform while simultaneously gaining more business from old ones. That's a powerful combination.
10 stocks we like better than AppianWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Appian wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of October 9, 2017
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Teresa Kersten is an employee of LinkedIn and is a member of The Motley Fool's board of directors. LinkedIn is owned by Microsoft. Brian Feroldi owns shares of Alphabet (A shares) and Alphabet (C shares). The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), and Appian. The Motley Fool has a disclosure policy.