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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2023
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from          to         
Commission File Number: 001-38098 
Appian 2021 (blue-white field).jpg
APPIAN CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Delaware54-1956084
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
7950 Jones Branch Drive
McLean, VA
22102
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code: (703) 442-8844
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbolName of each exchange on which registered
Class A Common StockAPPNThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer☒Accelerated filer
☐
Non-accelerated filer
☐
Small reporting company☐
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.  ☐   

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   ☐    No  ☒

As of May 5, 2023, there were 41,663,928 shares of the registrant’s Class A common stock and 31,297,596 shares of the registrant’s Class B common stock, each with a par value of $0.0001 per share, outstanding.



Table of Contents

Page
PART I.
Item 1.
Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022
Item 2.
Item 3.
Item 4.
PART II.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.

2

PART I—FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

APPIAN CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except par value and share data)
As of
March 31, 2023December 31, 2022
(unaudited)
Assets
Current assets
Cash and cash equivalents$198,679 $148,132 
Short-term investments and marketable securities55,803 47,863 
Accounts receivable, net of allowance of $2,182 and $2,125, respectively
147,579 165,964 
Deferred commissions, current30,697 30,196 
Prepaid expenses and other current assets36,556 28,093 
Restricted cash, current2,280 2,249 
Total current assets471,594 422,497 
Property and equipment, net of accumulated depreciation of $19,128 and $18,864, respectively
45,877 41,855 
Goodwill26,711 26,349 
Intangible assets, net of accumulated amortization of $3,125 and $2,715, respectively
4,950 5,251 
Right-of-use assets for operating leases35,425 37,248 
Deferred commissions, net of current portion55,601 55,788 
Deferred tax assets1,596 1,940 
Other assets3,064 3,286 
Total assets$644,818 $594,214 
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable$3,872 $7,997 
Accrued expenses15,373 12,227 
Accrued compensation and related benefits31,443 40,718 
Deferred revenue193,902 194,768 
Debt65,432 2,740 
Operating lease liabilities8,980 8,681 
Other current liabilities4,763 3,121 
Total current liabilities323,765 270,252 
Long-term debt143,728 115,379 
Operating lease liabilities56,073 57,225 
Deferred revenue4,750 5,556 
Deferred tax liabilities103 102 
Total liabilities528,419 448,514 
Stockholders’ equity
Class A common stock—par value $0.0001; 500,000,000 shares authorized and 41,457,783 shares issued and outstanding as of March 31, 2023; 500,000,000 shares authorized and 41,320,091 shares issued and outstanding as of December 31, 2022
4 4 
Class B common stock—par value $0.0001; 100,000,000 shares authorized and 31,497,596 shares issued and outstanding as of March 31, 2023; 100,000,000 shares authorized and 31,497,796 shares issued and outstanding as of December 31, 2022
3 3 
Additional paid-in capital569,618 561,390 
Accumulated other comprehensive loss(7,946)(7,246)
Accumulated deficit(445,280)(408,451)
Total stockholders’ equity116,399 145,700 
Total liabilities and stockholders’ equity$644,818 $594,214 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3

APPIAN CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share data)

Three Months Ended March 31,
20232022
Revenue
Subscriptions$98,957 $83,720 
Professional services36,278 30,546 
Total revenue135,235 114,266 
Cost of revenue
Subscriptions10,448 8,206 
Professional services25,645 22,710 
Total cost of revenue36,093 30,916 
Gross profit99,142 83,350 
Operating expenses
Sales and marketing63,090 45,916 
Research and development41,624 29,839 
General and administrative29,694 31,461 
Total operating expenses134,408 107,216 
Operating loss(35,266)(23,866)
Other non-operating expense
Other (income) expense, net(2,690)787 
Interest expense3,118 74 
Total other non-operating expense428 861 
Loss before income taxes(35,694)(24,727)
Income tax expense (benefit)1,135 (1,573)
Net loss$(36,829)$(23,154)
Net loss per share:
Basic and diluted$(0.51)$(0.32)
Weighted average common shares outstanding:
Basic and diluted72,869 72,217 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.



4

APPIAN CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(unaudited, in thousands)

Three Months Ended March 31,
20232022
Net loss$(36,829)$(23,154)
Comprehensive loss, net of income taxes
Foreign currency translation adjustments(746)757 
Unrealized gains (losses) on available-for-sale securities46 (111)
Total other comprehensive loss, net of income taxes$(37,529)$(22,508)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5

APPIAN CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(unaudited, in thousands, except share data)

Additional Paid-In CapitalAccumulated Other Comprehensive LossAccumulated DeficitTotal Stockholders' Equity
Common Stock
SharesAmount
Balance, December 31, 2022
72,817,887 $7 $561,390 $(7,246)$(408,451)$145,700 
Net loss— — — — (36,829)(36,829)
Issuance of common stock to directors6,713 — — — — — 
Vesting of restricted stock units111,296 — (2,959)— — (2,959)
Exercise of stock options19,483 — 131 — — 131 
Stock-based compensation expense— — 11,056 — — 11,056 
Other comprehensive loss— — — (700)— (700)
Balance, March 31, 2023
72,955,379 $7 $569,618 $(7,946)$(445,280)$116,399 

Additional Paid-In CapitalAccumulated Other Comprehensive LossAccumulated DeficitTotal Stockholders' Equity
Common Stock
SharesAmount
Balance, December 31, 2021
71,462,094 $7 $497,128 $(5,687)$(257,531)$233,917 
Net loss— — — — (23,154)(23,154)
Issuance of common stock to directors2,395 — — — — — 
Vesting of restricted stock units47,038 — — — — — 
Exercise of stock options815,833 — 24,404 — — 24,404 
Stock-based compensation expense— — 6,943 — — 6,943 
Other comprehensive income— — — 646 — 646 
Balance, March 31, 2022
72,327,360 $7 $528,475 $(5,041)$(280,685)$242,756 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6

APPIAN CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)

Three Months Ended March 31,
20232022
Cash flows from operating activities
Net loss$(36,829)$(23,154)
Adjustments to reconcile net loss to net cash used by operating activities
Stock-based compensation11,056 6,943 
Depreciation and amortization2,342 1,773 
Bad debt expense120 (2)
Amortization of debt issuance costs70 — 
Deferred income taxes357 (1,073)
Changes in assets and liabilities
Accounts receivable17,609 8,416 
Prepaid expenses and other assets(8,803)(3,579)
Deferred commissions(314)(1,383)
Accounts payable and accrued expenses(1,878)2,338 
Accrued compensation and related benefits(9,369)(6,798)
Other current and non-current liabilities1,582 129 
Deferred revenue(2,177)(3,764)
Operating lease assets and liabilities969 (450)
Net cash used by operating activities(25,265)(20,604)
Cash flows from investing activities
Purchases of investments(24,184)(16,240)
Proceeds from investments16,289 21,729 
Purchases of property and equipment(4,421)(3,390)
Net cash (used by) provided by investing activities(12,316)2,099 
Cash flows from financing activities
Proceeds from borrowings92,000 — 
Debt repayments(750)— 
Payments for debt issuance costs(278)— 
Payments for employee taxes related to the net share settlement of equity awards(2,959)— 
Proceeds from exercise of common stock options131 24,404 
Net cash provided by financing activities88,144 24,404 
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash15 40 
Net increase in cash, cash equivalents, and restricted cash50,578 5,939 
Cash, cash equivalents, and restricted cash at beginning of period150,381 103,960 
Cash, cash equivalents, and restricted cash at end of period$200,959 $109,899 
Supplemental disclosure of cash flow information
Cash paid for interest$1,233 $78 
Cash paid for income taxes$284 $197 
Supplemental disclosure of non-cash investing and financing activities
Accrued capital expenditures$2,233 $— 

The accompanying notes are an integral part of these unaudited consolidated financial statements.


7
APPIAN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Organization and Description of Business

Appian Corporation (together with its subsidiaries, “Appian,” the “Company,” “we,” or “our”) is a software company that automates business processes. The Appian Platform includes everything you need to design, automate, and optimize even the most complex processes from start to finish. The world's most innovative organizations trust Appian to improve their workflows, unify data, and optimize operations—resulting in better growth and superior customer experiences.

We are headquartered in McLean, Virginia and operate both in the U.S. and internationally, including Australia, Canada, France, Germany, India, Italy, Japan, Mexico, the Netherlands, Singapore, Spain, Sweden, Switzerland, and the United Kingdom.

2. Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements and footnotes have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) as contained in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) for interim financial reporting. In the opinion of management, the interim financial information includes all adjustments of a normal recurring nature necessary for a fair presentation of the results of operations, financial position, changes in stockholders’ equity, and cash flows. The results of operations for the current period are not necessarily indicative of the results for the full year or the results for any future periods. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related footnotes included in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission (the “SEC”) on February 16, 2023. In addition, certain reclassifications have been made to the prior year’s condensed consolidated financial statements to conform to the current year’s presentation, specifically as it relates to our presentation of certain adjustments to reconcile net loss to net cash used by operating activities in our consolidated statements of cash flows.

Use of Estimates

The preparation of our condensed consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and judgments that affect the amounts reported in these condensed consolidated financial statements and accompanying notes. Although we believe the estimates we use are reasonable, due to the inherent uncertainty involved in making these estimates, actual results reported in future periods could differ from those estimates.

Significant estimates embedded in the condensed consolidated financial statements include, but are not limited to, revenue recognition, income taxes and the related valuation allowance, costs to obtain a contract with a customer, and stock-based compensation.

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of Appian and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Revenue Recognition

Refer to Note 3 for a detailed discussion on specific revenue recognition principles related to our major revenue streams.

8
APPIAN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Cost of Revenue

Subscriptions

Cost of subscriptions revenue consists primarily of fees paid to our third-party managed hosting providers and other third-party service providers, personnel costs such as payroll and benefits for our technology operations and customer support teams, amortization of developed technology, and allocated facility costs and overhead.

Professional Services

Cost of professional services revenue includes all direct and indirect costs to deliver our professional services and training, including employee compensation for our global professional services and training personnel, third-party contractor costs, allocated facility costs and overhead, and the costs of billable expenses such as travel and lodging. The unpredictability of the timing of providing services related to significant professional services agreements sold on a standalone basis may cause significant fluctuations in our quarterly financial results.

Concentration of Credit and Customer Risk

Our financial instruments exposed to concentration of credit and customer risk consist primarily of cash, cash equivalents, restricted cash, accounts receivable, and our short- and long-term investments. Deposits held with banks may exceed the amount of insurance provided on such deposits.

In March 2023, Silicon Valley Bank’s (“SVB”) U.S. operations were placed into receivership by the Federal Deposit Insurance Corporation (“FDIC”), and its U.K. operations were placed into a Bank Insolvency Procedure by the Bank of England. SVB’s U.S. operations were later sold to First Citizens Bank and Trust Company (“First Citizens”), and its U.K. operations were sold to HSBC UK Bank, Plc (“HSBC”).

We have access to all of our cash, cash equivalents, and investments that were in accounts previously held by SVB, and we do not expect a material impact to our ongoing operations stemming from the SVB matter. Refer to Note 8 for further discussion regarding the receivership’s impact on our credit facility. We believe the financial institutions holding our cash deposits are financially sound.

With regard to our customers, credit evaluation and account monitoring procedures are used to minimize the risk of loss. Revenue generated from government agencies represented 20.5% and 18.1% of our revenue for the three months ended March 31, 2023 and 2022, respectively, of which the top three U.S. federal government agencies generated 4.2% and 4.6% of our revenue for the three months ended March 31, 2023 and 2022, respectively. Additionally, 33.4% and 33.5% of our revenue during the three months ended March 31, 2023 and 2022, respectively, was generated from foreign customers.

Cash, Cash Equivalents, and Restricted Cash

We consider all highly liquid investments with an original or remaining maturity of three months or less at the date of purchase, as well as overnight repurchase agreements, to be cash equivalents. Restricted cash consists of cash designated to settle an escrow liability stemming from a holdback agreement enacted pursuant to our acquisition of Lana Labs GmbH. We paid 25% of the balance on September 28, 2022, and the remaining 75% of the balance is due on August 11, 2023.

9
APPIAN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The following table presents a reconciliation of cash, cash equivalents, and restricted cash as presented in the consolidated statements of cash flows (in thousands):

As of
March 31, 2023December 31, 2022March 31, 2022December 31, 2021
Cash and cash equivalents$198,679 $148,132 $106,795 $100,796 
Restricted cash, current2,280 2,249 776 791 
Restricted cash, net of current portion— — 2,328 2,373 
Total cash, cash equivalents, and restricted cash$200,959 $150,381 $109,899 $103,960 

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are stated at realizable value, net of an allowance for doubtful accounts. The allowance for doubtful accounts is based on our assessment of the collectability of accounts and incorporates an estimation of expected lifetime credit losses on our receivables. We regularly review the composition of the accounts receivable aging, historical bad debts, changes in payment patterns, customer creditworthiness, and current economic trends. If the financial condition of our customers were to deteriorate, resulting in their inability to make required payments, additional provisions for doubtful accounts would be required and would increase bad debt expense. The allowance for doubtful accounts totaled $2.2 million and $2.1 million as of March 31, 2023 and December 31, 2022, respectively.

Assets Recognized from the Costs to Obtain a Contract with a Customer

We capitalize costs of obtaining a contract with a customer, which consists of sales commissions paid to our sales team, that are incremental costs to obtaining customer contracts. These costs are recorded as deferred commissions in the consolidated balance sheets. Costs to obtain a contract for a new customer or upsell are amortized over an estimated economic life of five years as sales commissions on initial sales are not commensurate with sales commissions on contract renewals. We determine the estimated economic life based on both qualitative and quantitative factors such as expected renewals, product life cycles, contractual terms, and customer attrition. We periodically review the carrying amount of deferred contract acquisition costs to determine whether events or changes in circumstances have occurred that could impact the estimated economic life. Commissions paid relating to contract renewals are deferred and amortized over the related renewal period. We also capitalize the incremental fringe benefits associated with commission expenses paid to our direct sales team. Costs to obtain a contract for professional services arrangements are expensed as incurred as the contractual period of our professional services arrangements are one year or less.

Amortization associated with deferred commission is recorded to sales and marketing expense in our consolidated statements of operations. Total commission expense was $11.0 million and $8.2 million for the three months ended March 31, 2023 and 2022, respectively.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Significant additions or improvements extending the useful life of an asset are capitalized, while repairs and maintenance costs which do not significantly improve the related assets or extend their useful lives are charged to expense as incurred.

10
APPIAN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The following table outlines the useful lives of our major asset categories:

Asset CategoryUseful Life (in years)
Computer software3
Computer hardware3
Equipment5
Office furniture and fixtures10
Leasehold improvements
(a)
(a) Leasehold improvements have an estimated useful life of the shorter of the useful life of the assets or the lease term.

Recent Accounting Pronouncements

Adopted

We did not adopt any new accounting guidance in 2023 that had a material impact on our condensed consolidated financial statements or disclosures.

Not Yet Adopted

There is no pending accounting guidance that we expect to have a material impact on our condensed consolidated financial statements or disclosures.

3. Revenue

Revenue Recognition

We generate subscriptions revenue primarily through the sale of cloud subscriptions bundled with maintenance and support and hosting services as well as term license subscriptions bundled with maintenance and support. We generate professional services revenue from fees for our consulting services, including application development and deployment assistance as well as training related to our platform.

The following table summarizes revenue recorded during the three months ended March 31, 2023 and 2022 (in thousands):

Three Months Ended March 31,
20232022
Cloud subscriptions$69,692 $53,379 
Term license subscriptions23,151 24,707 
Maintenance and support6,114 5,634 
Total subscriptions98,957 83,720 
Professional services36,278 30,546 
Total revenue$135,235 $114,266 

Performance Obligations and Timing of Revenue Recognition

We primarily sell products and services that fall into the categories discussed below. Each category contains one or more performance obligations that are either (1) capable of being distinct (i.e., the customer can benefit from the product or service on its own or together with readily available resources, including those purchased separately from us) and distinct within the context of the contract (i.e., separately identified from other promises in the contract) or (2) a series of distinct products or services that are substantially the same and have the same pattern
11
APPIAN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
of transfer to the customer. Our term license subscriptions are delivered at a point in time while our cloud subscriptions, maintenance and support, and professional services are delivered over time.

Subscriptions Revenue

Subscriptions revenue is primarily related to (1) cloud subscriptions bundled with maintenance and support and hosting services and (2) term license subscriptions bundled with maintenance and support. We generally charge subscription fees on a per-user basis or through non-user based single application licenses. We bill customers and collect payment for subscriptions to our platform in advance on an annual, quarterly, or monthly basis. In certain instances, our customers have paid their entire contract up front.

Cloud Subscriptions

We generate cloud-based subscriptions revenue primarily from the sales of subscriptions to access our cloud offering, together with related support services to our customers. We perform all required maintenance and support for our cloud offering. Revenue is recognized on a ratable basis over the contract term beginning on the date the service is made available to the customer. Our cloud-based subscription contracts generally have a term of one to three years in length. We bill customers and collect payment for subscriptions to our platform in advance, and they are non-cancellable.

Term License Subscriptions

Our term license subscription revenue is derived from customers with on-premises installations of our platform. The majority of our contracts are one year in length. Although term license subscriptions are sold with maintenance and support, the software is fully functional at the beginning of the subscription and is considered a distinct performance obligation. If a cloud-based subscription includes the right for the customer to take possession of the license, the revenue is treated as a term license. Revenue from term license subscriptions is recognized when control of the software license has transferred to the customer, which is the later of delivery or commencement of the contract term.

Maintenance and Support

Maintenance and support subscriptions include both technical support and when-and-if-available software upgrades, which are treated as a single performance obligation as they are considered a series of distinct services that are substantially the same and have the same duration and measure of progress. Revenue from maintenance and support is recognized ratably over the contract period, which is the period over which the customer has continuous access to maintenance and support.

Professional Services Revenue

Our professional services revenue is comprised of fees for consulting services, including application development and deployment assistance as well as training services related to our platform. Our professional services are considered distinct performance obligations when sold standalone or with other products.

Consulting Services

We sell consulting services to assist customers in planning and executing the deployment of our software. Customers are not required to use consulting services to fully benefit from the software. Consulting services are regularly sold on a standalone basis and either (1) under a fixed-fee arrangement or (2) on a time and materials basis. Consulting services contracts are considered separate performance obligations because they do not integrate with each other or with other products and services to deliver a combined output to the customer, do not modify or customize (or are not modified or customized by) each other or other products and services, and do not affect the customer's ability to use the other consulting offerings or other products and services. Revenue under consulting contracts is recognized over time as services are delivered. For time and materials-based consulting contracts, we
12
APPIAN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
have elected the practical expedient of recognizing revenue upon invoicing since the invoiced amount corresponds directly to the value of our service to date.

Training Services

We sell various training services to our customers. Training services are sold in the form of prepaid training credits that are redeemed based on a fixed rate per course. Training revenue is recognized when the associated training services are delivered.

Significant Judgments and Estimates

Determining the Transaction Price

The transaction price is the total amount of consideration we expect to receive in exchange for the service offerings in a contract and may include both fixed and variable components. Variable consideration is included in the transaction price to the extent it is probable a significant reversal will not occur. The amount of variable consideration excluded from the transaction price for the three months ended March 31, 2023 and 2022 was insignificant. Our estimates of variable consideration are also subject to subsequent true-up adjustments and may result in changes to transaction prices; however, such true-up adjustments are not expected to be material.

Allocating the Transaction Price Based on Standalone Selling Prices (“SSP”)

We allocate the transaction price to each performance obligation in a contract based on its relative SSP. The SSP is the observable price at which we sell the product or service separately. In the absence of observable pricing, we estimate SSP using the residual approach. We establish SSP as follows:

1.Cloud subscriptions - Given the highly variable selling price of our cloud subscriptions, we establish the SSP of our cloud subscriptions using a residual approach after first determining the SSP of consulting and training services. We have concluded the residual approach to estimating the SSP of our cloud subscriptions is an appropriate allocation of the transaction price.

2.Term license subscriptions - Given the highly variable selling price of our term license subscriptions, we have established the SSP of term license subscriptions using a residual approach after first determining the SSP of maintenance and support. Maintenance and support is sold on a standalone basis in conjunction with renewals of our legacy perpetual software licenses and within a narrow range of the net license fee. Because an economic relationship exists between the license and maintenance and support, we have concluded the residual approach to estimating the SSP of term license subscriptions is an appropriate allocation of the transaction price.

3.Maintenance and support - We establish the SSP of maintenance and support as a percentage of the stated net subscription fee based on observable pricing of maintenance and support renewals from our legacy perpetual software licenses.

4.Consulting and training services - The SSP of consulting and training services is established based on the observable pricing of standalone sales within each geographic region where the services are sold.

Contract Balances

Timing may differ between the satisfaction of performance obligations and the invoicing and collection of amounts related to our contracts with customers. Contract assets primarily relate to unbilled amounts for contracts with customers for which the amount of revenue recognized exceeds the amount billed to the customer. Contract assets are transferred to accounts receivable when the right to invoice becomes unconditional. As of March 31, 2023 and December 31, 2022, contract assets of $14.9 million and $14.3 million, respectively, are included in the Prepaid expenses and other current assets and Other assets line items in our consolidated balance sheets.

13
APPIAN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Contract liabilities consist of deferred revenue and include payments received in advance of the satisfaction of performance obligations. Deferred revenue is then recognized as the revenue recognition criteria are met. Deferred revenue that will be recognized during the succeeding 12-month period is recorded as current, and the remaining deferred revenue is recorded as non-current. For the three months ended March 31, 2023, we recognized $85.4 million of revenue that was included in the deferred revenue balance as of December 31, 2022.

Transaction Price Allocated to the Remaining Performance Obligations

As of March 31, 2023, we had an aggregate transaction price of $366.1 million allocated to unsatisfied performance obligations. We expect to recognize $237.7 million of this balance as revenue over the next 12 months with the remaining amount recognized thereafter.

4. Leases

As of March 31, 2023, our lease portfolio consists entirely of operating leases, most of which are for corporate offices. Our operating leases have remaining lease terms with various expiration dates through 2031, and some leases include options to extend the term for up to an additional 10 years.

Lease Costs

Expense for operating leases is recognized on a straight-line basis over the lease term as an operating expense. We have lease agreements which require payments for lease and non-lease components (i.e., common area maintenance) that are accounted for as a single lease component. Variable lease payment amounts that cannot be determined at the commencement of the lease such as maintenance costs, utilities, and service charges, are not included in right-of-use (“ROU”) assets or lease liabilities but rather are expensed as incurred and recorded as variable lease expense.

The following table sets forth the components of lease expense for the three months ended March 31, 2023 and 2022 (in thousands):

Three Months Ended March 31,
20232022
Operating lease cost$2,146 $1,634 
Short-term lease cost365 88 
Variable lease cost1,026 973 
Total$3,537 $2,695 

14
APPIAN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Supplemental Lease Information

Supplemental balance sheet information related to operating leases as of March 31, 2023 and December 31, 2022 is presented in the following table (in thousands, except for lease term and discount rate):

March 31, 2023December 31, 2022
ROU assets for operating leases$35,425$37,248
Operating lease liabilities, current$8,980$8,681
Operating lease liabilities, net of current portion56,07357,225
Total operating lease liabilities$65,053$65,906
Weighted average remaining lease term (in years)8.28.4
Weighted average discount rate9.4 %9.4 %

Supplemental cash flow and expense information related to operating leases for the three months ended March 31, 2023 and 2022 is shown below (in thousands):

Three Months Ended March 31,
20232022
Operating cash outflows for operating leases$1,132 $2,085 
Amortization of operating lease ROU assets652 306 
Interest expense on operating lease liabilities1,495 1,321 

A summary of our future minimum lease commitments under non-cancellable leases as of March 31, 2023 is shown below (in thousands):

Operating Leases
2023 (excluding the three months ended March 31, 2023)
$6,830 
202410,927 
202511,408 
202611,664 
202711,838 
Thereafter42,504 
Total lease payments95,171 
Less: imputed interest(30,118)
Total$65,053 

15
APPIAN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
5. Goodwill and Intangible Assets

Goodwill was comprised of the following as of March 31, 2023 and December 31, 2022 (in thousands):

Carrying Amount
Balance as of December 31, 2021
$27,795 
Foreign currency translation adjustments(1,446)
Balance as of December 31, 2022
26,349 
Foreign currency translation adjustments362 
Balance as of March 31, 2023
$26,711 

Intangible assets, net consisted of the following as of March 31, 2023 and December 31, 2022 (in thousands):

As of
March 31, 2023December 31, 2022
Developed technology$6,987 $6,893 
Customer relationships - Non-Robotic Process Automation (“RPA”)838 827 
Customer relationships - RPA250 246 
Intangible assets, gross8,075 7,966 
Less: accumulated amortization(3,125)(2,715)
Intangible assets, net$4,950 $5,251 

Intangible amortization expense was $0.4 million for each of the three months ended March 31, 2023 and 2022. As of March 31, 2023, the weighted average remaining amortization periods for developed technology, non-RPA customer relationships, and RPA customer relationships were approximately 3.2 years, 8.4 years, and 6.8 years, respectively.

The following table shows the projected annual amortization expense related to amortizable intangible assets as of March 31, 2023:

Projected Amortization
2023 (excluding the three months ended March 31, 2023)
$1,118 
20241,491 
20251,186 
2026763 
202794 
Thereafter298 
Total projected amortization expense$4,950 

16
APPIAN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
6. Property and Equipment, net

Property and equipment, net consisted of the following as of March 31, 2023 and December 31, 2022 (in thousands):

As of
March 31, 2023December 31, 2022
Leasehold improvements$50,973 $45,959 
Office furniture and fixtures3,698 3,476 
Computer hardware9,326 9,689 
Computer software820 1,353 
Equipment188 242 
Property and equipment, gross65,005 60,719 
Less: accumulated depreciation(19,128)(18,864)
Property and equipment, net$45,877 $41,855 

Depreciation expense totaled $2.0 million and $1.4 million for the three months ended March 31, 2023 and 2022, respectively. We disposed of or retired $1.4 million worth of fully depreciated property and equipment during the three months ended March 31, 2023. There were no disposals or retirements during the three months ended March 31, 2022.

7. Accrued Expenses

Accrued expenses consisted of the following as of March 31, 2023 and December 31, 2022 (in thousands):

As of
March 31, 2023December 31, 2022
Hosting costs$3,393 $2,802 
Legal costs1,682 475 
Marketing and tradeshow expenses836 1,000 
Third party license fees799 1,223 
Contract labor costs1,527 1,465 
Reimbursable employee expenses854 1,004 
Audit and tax expenses1,393 911 
Capital expenditures2,233 744 
Other accrued expenses2,656 2,603 
Total$15,373 $12,227 

17
APPIAN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
8. Debt

Senior Secured Credit Facilities Credit Agreement

We have a Senior Secured Credit Facilities Credit Agreement (the “Credit Agreement”) which provides for a five-year term loan facility in an aggregate principal amount of $120.0 million and, in addition, up to $60.0 million for a revolving credit facility, including a letter of credit sub-facility in the aggregate availability amount of $15.0 million and a swingline sub-facility in the aggregate availability amount of $10.0 million (as a sublimit of the revolving loan facility). On February 21, 2023, we executed the second amendment to the credit agreement which increased the aggregate principal amount of the term loan facility by $30.0 million and the limit of the revolving credit facility by $15.0 million. The Credit Agreement matures on November 3, 2027. We will use the proceeds from the $150.0 million term loan to fund the continued growth of our business and support our working capital requirements.

Under the agreement, we may elect whether amounts drawn bear interest on the outstanding principal amount at a rate per annum equal to either (a) the higher of the Prime rate or the Federal Funds Effective (“Base Rate”) rate plus 0.50% or (b) the forward-looking term rate based on the secured overnight financing rate (“Term SOFR”). An additional interest rate margin is added to the elected interest rates. During the first three years of the Credit Agreement, the additional interest rate margin ranges from 1.50% to 2.50% in the case of Base Rate advances or from 2.50% to 3.50% in the case of Term SOFR advances, depending on our debt to recurring revenue leverage ratio (as defined in the Credit Agreement). During the final two years of the Credit Agreement, the interest rate margin ranges from 0.5% to 2.5% in the case of Base Rate advances and from 1.5% to 3.5% in the case of Term SOFR advances, depending on our debt to consolidated adjusted EBITDA leverage ratio (as defined in the Credit Agreement).

In addition, the Credit Agreement contains other customary representations, warranties and covenants, including covenants by us limiting additional indebtedness, guaranties, liens, fundamental changes, mergers and consolidations, dispositions of assets, investments, paying dividends on capital stock or redeeming, repurchasing or retiring capital stock, or prepaying certain junior indebtedness and preferred stock, certain corporate changes, and transactions with affiliates. The Credit Agreement also provides for customary events of default, including but not limited to, non-payment, breaches or defaults in the performance of covenants, insolvency, bankruptcy, and the occurrence of a material adverse effect on us.

The following table summarizes outstanding debt balances (in thousands):

As of
March 31, 2023December 31, 2022
Borrowings under revolving credit facility expiring November 3, 2027
$62,000 $— 
Secured term loan facility148,625 119,375 
Less: Debt issuance costs(1,465)(1,256)
Total debt, net of debt issuance costs$209,160$118,119
Debt, current$65,432$2,740
Long-term debt, net of current portion143,728115,379
Total debt$209,160$118,119

We were in compliance with all covenants contained in the Credit Agreement. We believe, based on our current financial forecasts and trends, that we will remain compliant with all covenants for the foreseeable future. As of March 31, 2023, we had $62.0 million outstanding under our $75.0 million revolving credit facility, and we had outstanding letters of credit totaling $12.0 million in connection with securing our leased office space.

18
APPIAN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
As discussed in Note 2, in March 2023 SVB, the lead lender of our Credit Agreement, was placed into receivership by the FDIC and subsequently purchased by First Citizens. Under the purchase and assumption agreement, First Citizens assumed SVB’s obligations under our existing credit facility. None of the terms of our Credit Agreement were amended or otherwise impacted by First Citizen’s acquisition of SVB.

9. Income Taxes

The provision for income taxes is based upon the estimated annual effective tax rates for the year applied to the current period income before tax plus the tax effect of any significant or unusual items, discrete events, or changes in tax law. Our operating subsidiaries are exposed to statutory effective tax rates ranging from zero to approximately 35%. Fluctuations in the distribution of pre-tax income among our operating subsidiaries can lead to fluctuations of the effective tax rate in the condensed consolidated financial statements. For the three months ended March 31, 2023 and 2022, the actual effective tax rates were (3.2)% and 6.4%, respectively. The tax benefit recognized in the three months ended March 31, 2022 was primarily driven by a discrete benefit of $1.1 million related to the release of a valuation allowance for Lana Labs GmbH as a result of post-acquisition tax planning and the merger of German subsidiaries.

As of March 31, 2023, our net unrecognized tax benefits totaled $4.5 million, which if recognized would result in no net effect on the effective tax rate due to a valuation allowance. The amount of reasonably possible unrecognized tax benefits that could decrease over the next 12 months due to the expiration of certain statutes of limitations or settlements of tax audits is not material to our condensed consolidated financial statements.

We file income tax returns in the U.S. federal jurisdiction and in various state and foreign jurisdictions. Due to our net operating loss carryforwards, the tax years 2016 through 2022 remain open to examination by the major taxing jurisdictions to which we are subject. There are no open examinations that would have a meaningful impact to our condensed consolidated financial statements.

10. Stock-Based Compensation

We account for stock-based compensation expense related to stock-based awards based on the estimated fair value of the award on the grant date. We calculate the fair value of stock options containing only a service condition using the Black-Scholes option pricing model. The fair value of restricted stock units (“RSUs”) is based on the closing market price of our common stock on the Nasdaq Global Market on the date of grant. For service-based awards such as RSUs, stock-based compensation expense is recognized on a straight-line basis over the requisite service period. For awards that contain market conditions, compensation expense is measured using a Monte Carlo simulation and recognized using the accelerated attribution method over the derived service period based on the expected market performance as of the grant date. We account for forfeitures as they occur rather than estimating expected forfeitures.

As of March 31, 2023, the total compensation cost related to unvested stock options not yet recognized, which relates exclusively to the 2022 CEO Grant, was $14.7 million and will be recognized over a weighted average period of 2.9 years. Total unrecognized compensation cost related to unvested RSUs was approximately $55.2 million, which will be recognized over a weighted average period of 1.5 years.

19
APPIAN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The following table summarizes the components of our stock-based compensation expense for the three months ended March 31, 2023 and 2022 (in thousands):

Three Months Ended March 31,
20232022
Cost of revenue
Subscriptions$272 $179 
Professional services1,591 1,057 
Operating expenses
Sales and marketing2,445 1,788 
Research and development3,626 2,314 
General and administrative3,122 1,605 
Total stock-based compensation expense$11,056 $6,943 

11. Basic and Diluted Loss per Share

Basic net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during the reporting period. Diluted loss per share is computed similar to basic, except the weighted average number of common shares outstanding is increased to include additional outstanding shares from the assumed exercise of stock options and vesting of RSUs, if dilutive. The dilutive effect, if any, of convertible shares is calculated using the treasury stock method. As we reported net losses for all periods presented, all outstanding shares would be considered antidilutive if they were to be assumed as vested or exercised.

The following outstanding securities, prior to the use of the treasury stock method, have been excluded from the computation of diluted weighted-average shares outstanding for the respective periods below because they would have been antidilutive to earnings per share:

Three Months Ended March 31,
20232022
Stock options2,678,476 2,128,943 
Non-vested restricted stock units1,190,286 1,340,037 

12. Commitments and Contingencies

Minimum Purchase Commitments

In July 2021, we executed a non-cancellable cloud hosting arrangement with Amazon Web Services (“AWS”) that contains provisions for minimum purchase commitments. Specifically, purchase commitments under the agreement total $131.0 million over five years. The agreement, which is in its second year, contains minimum spending requirements of $25.0 million in the second year and $28.0 million in each of the third, fourth, and fifth years. Spending under this agreement for the three months ended March 31, 2023 and 2022 totaled $9.4 million and $7.8 million, respectively. The timing of payments under the agreement may vary. However, we expect to meet our minimum purchase commitments for the remainder of the contract term.

Exclusive of the AWS contract, we have other non-cancellable agreements for subscription software products that contain provisions stipulating minimum purchase commitments. However, the annual purchase commitments under these contracts are, individually and in the aggregate, immaterial to our condensed consolidated financial statements.

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APPIAN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Pegasystems Litigation

On May 29, 2020, we filed a civil complaint against Pegasystems, Inc. (“Pegasystems”) and Youyong Zou, a Virginia resident, in the Circuit Court for Fairfax County, Virginia. Appian Corp v. Pegasystems Inc. & Youyong Zou, No. 2020-07216 (Fairfax Cty. Ct.). On May 10, 2022, we announced the jury awarded us $2.036 billion in damages for misappropriation of our trade secrets and $1 in damages for violating the Virginia Computer Crimes Act. Pegasystems filed several post-trial motions seeking relief in the form of reducing the damages award or setting aside the jury’s verdict and either granting a new trial or entering judgment in Pegasystems’ favor. All of these motions were denied, and final judgment was entered by the Court on September 15, 2022. The final judgment reaffirmed the $2.036 billion in damages and also ordered Pegasystems to pay Appian $23.6 million in attorney's fees associated with the case as well as statutory post-judgment interest on the judgment at an annual rate of 6%, or approximately $122.0 million per year.

Defendant Youyong Zou has satisfied the judgment of $5,000 (plus interest) against him in lieu of appealing that judgment. On September 15, 2022, Pegasystems filed a notice of appeal, and on February 6, 2023, Pegasystems filed its opening brief with the Court of Appeals of Virginia. On March 29, 2023, we filed our response brief. Pegasystems filed a reply brief on May 3, 2023. The timeline of the case is solely within the control of the Court of Appeals until it rules. Pegasystems is not required to pay us the judgment, attorney’s fees, or post-judgment interest until all appeals are exhausted. We cannot predict the outcome of any appeals or the time it will take to resolve them. Consistent with other judgments, there is no guarantee we will be able to collect all or any portion of the judgment. Consequently, we will not record the award in our consolidated financial statements until all contingencies are resolved and we collect on the judgment.

Other Legal Matters

From time to time, we are subject to legal, regulatory, and other proceedings and claims that arise in the ordinary course of business. Other than as disclosed elsewhere in this Quarterly Report, we are not presently a party to any legal proceedings that, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, financial condition, or cash flows. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.

13. Segment and Geographic Information

We operate one operating and reportable segment, representing our consolidated business that helps organizations build applications and workflows rapidly with our low-code platform to maximize their resources and improve business results. Our reportable segment determination is based on our management and internal reporting structure, the nature of the subscriptions and services we offer, and the financial information that is evaluated regularly by our chief operation decision maker.

The following table summarizes revenue by geography for the three months ended March 31, 2023 and 2022 (in thousands):

Three Months Ended March 31,
20232022
Domestic$90,005 $76,039 
International45,230 38,227 
Total$135,235 $114,266 

With respect to geographic information, revenue is attributed to respective geographies based on the contracting address of the customer. There were no individual foreign countries from which more than 10% of our total revenue was attributable for the three months ended March 31, 2023 or 2022. Substantially all of our long-lived assets were held in the United States as of March 31, 2023 and December 31, 2022.

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APPIAN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
14. Investments and Fair Value Measurements

Fair Value Measurements

U.S. GAAP establishes a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires us to use observable inputs when available and to minimize the use of unobservable inputs when determining fair value. The three tiers are defined as follows:

•Level 1. Observable inputs based on unadjusted quoted prices in active markets for identical assets or liabilities;

•Level 2. Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and

•Level 3. Unobservable inputs for which there is little or no market data and which require us to develop our own estimates and assumptions reflecting those that a market participant would use.

The asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques maximize the use of relevant observable inputs and minimize the use of unobservable inputs. There were no instruments measured at fair value on a recurring basis using significant unobservable inputs as of March 31, 2023 and December 31, 2022.

The valuation techniques that may be used to measure fair value are as follows:

•Market approach - Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities;

•Income approach - Uses valuation techniques to convert future amounts to a single present amount based on current market expectations about those future amounts; and

•Cost approach - Based on the amount that currently would be required to replace the service capacity of an asset (i.e., replacement cost).

The carrying amounts of our cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value as of March 31, 2023 and December 31, 2022 because of the relatively short duration of these instruments. Additionally, the carrying value of our debt associated with the term loan facility approximates fair value because the interest rates are variable and reset on relatively short durations to the then market rates.

Investments

Our investment portfolio consists largely of debt investments classified as available-for-sale. Changes in the fair value of available-for-sale securities, excluding other-than-temporary impairments, are recorded in Other comprehensive income (loss). The components of our investments as of March 31, 2023 are as follows (in thousands):

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APPIAN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
As of March 31, 2023
Fair Value MeasurementBalance Sheet Classification
Fair Value LevelCost BasisUnrealized Gains (Losses)Market ValueCash and Cash EquivalentsShort-term Investments and Marketable Securities
Money market fundLevel 1$94,081 $— $94,081 $94,081 $— 
U.S. Treasury bondsLevel 112,149 25 12,174 — 12,174 
Commercial paperLevel 238,708 — 38,708 — 38,708 
Corporate bondsLevel 22,490 (1)2,489 — 2,489 
Agency bondsLevel 22,432 — 2,432 — 2,432 
Total investments$149,860 $24 $149,884 $94,081 $55,803 

At December 31, 2022, our investments consisted of the following (in thousands):

As of December 31, 2022
Fair Value MeasurementBalance Sheet Classification
Fair Value LevelCost BasisUnrealized Gains (Losses)Market ValueCash and Cash EquivalentsShort-term Investments and Marketable Securities
Money market fundLevel 1$39,469 $— $39,469 $39,469 $— 
U.S. Treasury bondsLevel 19,396 (13)9,383 — 9,383 
Commercial paperLevel 226,704 — 26,704 — 26,704 
Corporate bondsLevel 29,353 (12)9,341 — 9,341 
Agency bondsLevel 22,432 3 2,435 — 2,435 
Total investments$87,354 $(22)$87,332 $39,469 $47,863 

There were no Level 3 assets held at any point during the three months ended March 31, 2023 and 2022. Additionally, there were no transfers between Levels 1 and 2 during the three months ended March 31, 2023 and 2022. Interest income on our investments totaled $2.1 million and $0.1 million for the three months ended March 31, 2023 and 2022, respectively.

The amortized cost basis and fair value of debt securities as of March 31, 2023, by contractual maturity, are as follows (in thousands):

As of March 31, 2023
Cost BasisFair Value
Due in one year or less$149,860 $149,884 
Total investments$149,860 $149,884 

Actual maturities may differ from the contractual maturities in the table above because borrowers have the right to call or prepay certain obligations.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with (1) our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and (2) the audited consolidated financial statements and the related notes and management’s discussion and analysis of financial condition and results of operations for the year ended December 31, 2022 included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission, or SEC, on February 16, 2023.

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These statements are often identified by the use of words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “will,” “would,” or the negative or plural of these words or similar expressions or variations, including statements regarding our future financial and operating performance, anticipated expansion of the usage of partners to perform professional services, the increase of our subscriptions revenue as a percentage of total revenue, the fluctuation of gross margin on a quarterly basis, our future capital requirements, and our ability to meet our financial covenants under our Credit Agreement. Such forward-looking statements are subject to a number of risks, uncertainties, assumptions, and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified herein and those discussed in the section titled “Risk Factors,” set forth in Part I, Item 1A of our Annual Report on Form 10-K filed with the SEC on February 16, 2023 and in our other filings with the SEC. Forward-looking statements should not be relied on as predictions of future events. Furthermore, such forward-looking statements speak only as of the date of this report. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.

Overview

Appian is a software company that automates business processes. The Appian Platform includes everything you need to design, automate, and optimize even the most complex processes from start to finish. The world's most innovative organizations trust Appian to improve their workflows, unify data, and optimize operations—resulting in better growth and superior customer experiences.

We have generated the majority of our revenue from sales of subscriptions, which include (1) cloud subscriptions bundled with maintenance and support and hosting services and (2) term license subscriptions bundled with maintenance and support. Our subscription contracts are priced based primarily on the number of users who access and utilize the applications built on our platform or, alternatively, non-user based single application licenses. Our subscription contract terms generally vary from one to three years with most providing for payment in advance on an annual, quarterly, or monthly basis. Due to the variability of our billing terms and the episodic nature of our customers purchasing additional subscriptions, we do not believe changes in our deferred revenue in a given period are directly correlated with our revenue growth.

We have invested in our Customer Success organization to help ensure customers are able to build and deploy applications on our platform. We have several strategic partnerships, including with KPMG, Accenture, PwC, EY, Infosys, Wipro, and Deloitte, which allow them to refer customers to us in order to purchase subscriptions and then our partners provide professional services directly to the customers using our platform. We intend to further grow our base of strategic partners to provide broader customer coverage and solution delivery capabilities. In addition, over time we expect our professional services revenue as a percentage of total revenue to decline as we increasingly rely on strategic partners to help our customers deploy our software. We believe our investment in professional services, including strategic partners building their practices around Appian, will drive increased adoption of our platform.

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Our customers include financial services, government, life sciences, insurance, manufacturing, energy, healthcare, telecommunications, and transportation organizations. Generally, our sales team targets its efforts to organizations with over 2,000 employees and $2 billion in annual revenue. Revenue from government agencies represented 20.5% and 18.1% of our total revenue for the three months ended March 31, 2023 and 2022, respectively. No single end-customer accounted for more than 10% of our total revenue in the three months ended March 31, 2023 or 2022.

We offer our platform globally. Our platform supports multiple languages to facilitate collaboration and address challenges in multinational organizations. In the three months ended March 31, 2023 and 2022, 33.4% and 33.5%, respectively, of our total revenue was generated from customers outside of the United States. As of March 31, 2023, we operated in 15 countries. We believe we have a significant opportunity to continue to grow our international footprint, and we are investing in new geographies, including through investment in direct and indirect sales channels, professional services, and customer support and implementation partners.

Our business model focuses on maximizing the lifetime value of customer relationships, which is a function of the duration of a customer’s deployment of our platform as well as the price and number of subscriptions of our platform that a customer purchases. We incur significant customer acquisition costs, including expenses associated with hiring new sales representatives, who can take anywhere from six months to a year to become productive given the length of our sales cycle, and marketing costs which, with the exception of certain types of sales commissions, are expensed as incurred.

Key Factors Affecting Our Performance

The following are several key factors that affect our performance:

•Market Adoption of Our Platform. Our ability to grow our customer base and drive market adoption of our platform is affected by the pace at which organizations digitally transform. We expect our revenue growth will be primarily driven by the pace of adoption and penetration of our platform. We offer a leading custom software platform and intend to continue to invest to expand our customer base. The degree to which prospective customers recognize the need for our software platform that enables organizations to digitally transform, and subsequently allocate budget dollars to purchase our software, will drive our ability to acquire new customers and increase sales to existing customers, which, in turn, will affect our future financial performance.

•Growth of Our Customer Base. We believe we have a substantial opportunity to grow our customer base. We define a customer as an entity with an active subscription or maintenance and support contract or a legacy perpetual license as of the specified measurement date. Furthermore, we define a new customer as an entity that has entered into its first active subscription or maintenance and support contract within one calendar year of the specified measurement date while existing customers are defined as entities that have maintained an active subscription or maintenance and support contract for at least one calendar year from the specified measurement date. Legacy customers from entities acquired in business combinations are not counted as new customers until they enter into a new active subscription or maintenance and support contract with us subsequent to the completion of the business combination. Additionally, to the extent we contract with one or more entities under common control, we count those entities as separate customers.

We have aggressively invested, and intend to continue to invest, in our sales team in order to drive sales to new customers. We continue to make investments to enhance the expertise of our sales and marketing organization within our key industry verticals of financial services, government, and life sciences. In addition, we have established relationships with strategic partners who work with organizations undergoing digital transformations. Our ability to continue to grow our customer base is dependent, in part, upon our ability to differentiate ourselves within the increasingly competitive markets in which we participate.

•Further Penetration of Existing Customers. Our sales team seeks to generate additional revenue from existing customers by adding new users to our platform. Many of our customers begin by building a single application and then grow to build dozens of applications on our platform. Generally, the development of new
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applications on our platform results in the expansion of our user base within an organization and a corresponding increase in revenue. As a result of this “land and expand” strategy, we have generated significant additional revenue from our customer base. Our ability to increase sales to existing customers will depend on a number of factors, including the size of our sales and professional services teams, customers’ level of satisfaction with our platform and professional services, pricing, economic conditions, and our customers’ overall spending levels. We have also re-focused some of our professional services personnel to become customer success managers. Their role is to ensure customers realize value from our platform and support strategic partners and the “land and expand” strategy versus delivering billable hours.

•Mix of Subscriptions and Professional Services Revenue. We believe our professional services have driven customer success and facilitated the adoption of our platform by customers. During the initial period of deployment by a customer, we generally provide a greater amount of support in building applications and training than later in the deployment, with a typical engagement lasting from two to six months. At the same time, many of our customers have historically purchased subscriptions only for a limited set of their total potential end users. As a result of these factors, the proportion of total revenue for a customer associated with professional services is relatively high during the initial deployment period. Over time, as the need for professional services associated with user deployments decreases and the number of end users increases, we expect subscriptions revenue as a percentage of total revenue to increase. In addition, we continue to grow our base of strategic partners to provide broader customer coverage and solution delivery capabilities. These partners perform professional services with respect to any new service contracts they originate. As the usage of partners expands, we expect the proportion of our total revenue from subscriptions to increase over time relative to professional services. For the three months ended March 31, 2023 and 2022, 73.2% and 73.3% of our revenue, respectively, was derived from sales of subscriptions while the remaining 26.8% and 26.7%, respectively, was derived from the sale of professional services.

•Investments in Growth. We have made, and plan to continue to make, investments for long-term growth, including investing in our platform and infrastructure to continuously maximize their power and speed, meet the evolving needs of our customers, and take advantage of our market opportunity. In addition, we may pursue strategic acquisitions that enhance our product offerings. We also intend to continue to invest in sales and marketing as we further expand our sales teams, increase our marketing activities, and grow our international operations.

Key Metrics

We monitor the following metrics to help us measure and evaluate the effectiveness of our operations. All dollar amounts are presented in thousands.

Cloud Subscription Revenue

Three Months Ended March 31,
20232022% Change
Cloud subscription revenue$69,692 $53,379 30.6 %

Cloud subscription revenue includes cloud subscriptions bundled with maintenance and support and hosting services. Our cloud subscription revenue for any customer is primarily determined by the number of users who access and utilize the applications built on our platform or by the number of application licenses purchased, as well as the price paid. We believe increasing cloud subscription revenue is an indicator of the demand for our platform, the pace at which the market for our solutions is growing, the productivity of our sales team and strategic relationships in growing our customer base, and our ability to further penetrate our existing customer base.

Cloud Subscription Revenue Retention Rate

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As of March 31,
20232022
Cloud subscription revenue retention rate115 %117 %

A key factor to our success is the renewal and expansion of subscription agreements with our existing customers. We calculate this metric over a set of customers who have been with us for at least one full year. To calculate our cloud subscription revenue retention rate for a particular trailing 12-month period, we first establish the recurring cloud subscription revenue for the previous trailing 12-month period. This effectively represents recurring dollars we should expect in the current trailing 12-month period from the cohort of customers from the previous trailing 12-month period without any expansion or contraction. We subsequently measure the recurring cloud subscription revenue in the current trailing 12-month period from the cohort of customers from the previous trailing 12-month period. Cloud subscription revenue retention rate is then calculated by dividing the aggregate recurring cloud subscription revenue in the current trailing 12-month period by the previous trailing 12-month period. This calculation includes the combined impact on our revenue from customer non-renewals, pricing changes, and growth in the number of users on our platform. Our cloud subscription revenue retention rate can fluctuate from period to period due to large customer contracts in any given period.

Key Components of Results of Operations

We generate revenue primarily through sales of subscriptions to our platform as well as professional services. We generally sell our software on a per-user basis or through non-user based single application licenses. We generally bill customers and collect payment for subscriptions to our platform in advance on an annual, quarterly, or monthly basis. In certain instances, we have had customers pay their entire contract value up front.

Revenue

Our revenue is comprised of the following:

Subscriptions

Subscriptions revenue is primarily derived from cloud subscriptions bundled with maintenance and support and hosting services and on-premises term license subscriptions bundled with maintenance and support. Our maintenance and support agreements provide customers with the right to unspecified software upgrades, maintenance releases and patches released during the term of the maintenance and support agreement on a when-and-if-available basis, and rights to technical support. On-premises term license subscriptions are offered when the customer prefers to self-manage the deployment of our platform within their own infrastructure. When our platform is delivered as a cloud subscription, we manage operational needs in third-party hosted data centers.

Professional Services

Our professional services revenue is comprised of fees for consulting services, including application development, deployment assistance, and training related to our platform. Over time, we expect professional services revenue as a percentage of total revenue to decrease as the usage of our partner network expands.

Cost of Revenue

Subscriptions

Cost of subscriptions revenue consists primarily of fees paid to our third-party managed hosting providers and other third-party service providers, personnel costs, including payroll and benefits for our technology operations and customer support teams, amortization of developed technology, and allocated overhead costs. We expect cost of revenue to continue to increase in absolute dollars for the foreseeable future as our customer base grows.

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Professional Services

Cost of professional services revenue includes all direct and indirect costs to deliver our professional services and training, including employee compensation for our global professional services and training personnel, third-party contractor costs, allocated overhead costs, and the costs of billable expenses such as travel and lodging. The unpredictability of the timing of providing services related to significant professional services agreements sold on a standalone basis may cause significant fluctuations in our cost of professional services which, in turn, may impact our quarterly financial results.

Gross Profit and Gross Margin

Gross profit and gross margin (defined as gross profit as a percentage of total revenue), have been, and will continue to be, affected by various factors, including the mix of cloud subscriptions and on-premises term license subscriptions, the mix of total subscriptions revenue and professional services revenue, subscription pricing, the costs associated with third-party hosting providers, and the extent to which we expand our professional services to support future growth. Our gross margin may fluctuate from period to period based on the above factors.

Subscriptions Gross Margin

Subscriptions gross margin is primarily affected by the growth in our subscriptions revenue as compared to the growth in, and timing of, costs to support such revenue. We expect to continue to invest in customer support and cloud operations to support growth in our business, and the timing of those investments is expected to cause subscriptions gross margin to fluctuate on a quarterly basis.

Professional Services Gross Margin

Professional services gross margin is affected by the growth in our professional services revenue as compared to the growth in, and timing of, the cost of our Customer Success organization as we continue to invest in the growth of our business. Professional services gross margin is also impacted by the amount of services performed by subcontractors and partners as opposed to internal resources. In 2023, we expect professional services gross margin to be consistent with 2022; however, the margin remains subject to fluctuation based on the factors discussed above.
Operating Expenses

Operating expenses consist of sales and marketing, research and development, and general and administrative expenses. Personnel-related costs such as salaries, bonuses, commissions, payroll tax payments, and stock-based compensation expense are the most significant components of each of these expense categories. Other components of each category include professional fees for third-party services such as contract labor, legal, software development resources, and consulting as well as allocated overhead costs, which can include, among other types of costs, facility costs, travel and entertainment expenditures, human resources costs such as placement fees, referral bonuses, training costs, and employee relations spending, office-related expenditures, and information technology costs for such items as infrastructure, software, and cloud computing services.

In general, our operating expenses are expected to continue to increase in absolute dollars as we invest resources in growing our various teams although at a more measured rate than prior years.

Sales and Marketing Expense

Sales and marketing expense primarily includes personnel costs, including salaries, bonuses, commissions, stock-based compensation, and other personnel costs related to sales teams. Additional major expenses in this category include travel and entertainment, marketing activities and promotional events, subcontracting fees, and allocated overhead costs.

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In order to continue to grow our business, geographical footprint, and brand awareness, we expect to continue investing resources in sales and marketing by increasing the number of sales and account management teams. Additionally, we expect certain classes of expense such as travel and entertainment and in-person marketing events to increase relative to recent years. As a result, we expect sales and marketing expense to increase in absolute dollars as we continue to invest to acquire new customers and further expand usage of our platform within our existing customer base.

Research and Development Expense

Research and development expense consists primarily of personnel costs for our employees who develop and enhance our platform, including salaries, bonuses, stock-based compensation, and other personnel costs. Also included are non-personnel costs such as subcontracting, consulting and professional fees to third party development resources, and allocated overhead costs.

Our research and development efforts are focused on enhancing the capabilities, speed, and power of our software platform. In 2022, we opened a new product development center in India. Although we expect research and development expense to continue to increase in absolute dollars as such costs are critical to maintain and improve the quality of applications and our competitive position, we believe our new product development center will result in cost savings over time.

General and Administrative Expense

General and administrative expense consists primarily of personnel costs, including salaries, bonuses, stock-based compensation, and other personnel costs for our administrative, legal, information technology, human resources, finance, and accounting teams as well as our senior executives. Additional expenses included in this category are non-personnel costs such as travel-related expenses, contracting and professional fees for such services as audits, taxation, and legal, insurance and other corporate expenses, including allocated overhead costs, and bad debt expenses. In 2023, we expect our general and administrative expense to decrease in absolute dollars largely due to an anticipated decline in legal costs.

Other Non-Operating (Income) Expense

Other (Income) Expense, Net

Other (income) expense, net consists primarily of unrealized and realized gains and losses related to changes in foreign currency exchange rates, interest income on our cash and cash equivalents and investments, and other sources of income or expense not related to our core business operations.

Interest Expense

Interest expense consists primarily of interest on our debt, amortization of deferred financing fees, unused credit facility fees, and commitment fees on our letters of credit.

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Results of Operations

The following table sets forth our consolidated statements of operations data (in thousands):

Three Months Ended March 31,
20232022
Revenue
Subscriptions$98,957 $83,720 
Professional services36,278 30,546 
Total revenue135,235 114,266 
Cost of revenue
Subscriptions(1)
10,448 8,206 
Professional services(1)
25,645 22,710 
Total cost of revenue36,093 30,916 
Gross profit99,142 83,350 
Operating expenses
Sales and marketing(1)
63,090 45,916 
Research and development(1)
41,624 29,839 
General and administrative(1)
29,694 31,461 
Total operating expenses134,408 107,216 
Operating loss(35,266)(23,866)
Other non-operating expense
Other (income) expense, net(2,690)787 
Interest expense3,118 74 
Total other non-operating expense428 861 
Loss before income taxes(35,694)(24,727)
Income tax expense (benefit)1,135 (1,573)
Net loss$(36,829)$(23,154)
(1) Stock-based compensation as a component of these line items is as follows:

Three Months Ended March 31,
20232022
Cost of revenue
Subscriptions$272 $179 
Professional services1,591 1,057 
Operating expenses
Sales and marketing2,445 1,788 
Research and development3,626 2,314 
General and administrative3,122 1,605 
Total stock-based compensation expense$11,056 $6,943 

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The following table sets forth our consolidated statements of operations data expressed as a percentage of total revenue:

Three Months Ended March 31,
20232022
Revenue
Subscriptions73.2 %73.3 %
Professional services26.8 26.7 
Total revenue100.0 100.0 
Cost of revenue
Subscriptions7.7 7.2 
Professional services19.0 19.9 
Total cost of revenue26.7 27.1 
Gross profit73.3 72.9 
Operating expenses
Sales and marketing46.7 40.2 
Research and development30.8 26.1 
General and administrative22.0 27.5 
Total operating expenses*99.4 93.8 
Operating loss(26.1)(20.9)
Other non-operating expense
Other (income) expense, net(2.0)0.7 
Interest expense2.3 0.1 
Total other non-operating expense0.3 0.8 
Loss before income taxes(26.4)(21.6)
Income tax expense (benefit)0.8 (1.4)
Net loss(27.2)%(20.3)%
* Totals may not foot due to rounding.

Comparison of the Three Months Ended March 31, 2023 and 2022

Revenue

Three Months Ended March 31,
20232022$ Change% Change
(dollars in thousands)
Revenue
Subscriptions$98,957 $83,720 $15,237 18.2 %
Professional services36,278 30,546 $5,732 18.8 %
Total revenue$135,235 $114,266 $20,969 18.4 %

Total revenue increased $21.0 million, or 18.4%, in the three months ended March 31, 2023 compared to the same period in 2022 due to an increase in our subscriptions revenue of $15.2 million and an increase in our professional services revenue of $5.7 million. The increase in subscriptions revenue was driven by a $16.3 million increase in cloud subscription revenue and a $0.5 million increase in maintenance and support revenue, both of which were partially offset by a $1.6 million decrease in on-premises subscription revenue. With respect to new versus existing customers, there was a $7.8 million increase in subscriptions revenue stemming from sales of
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subscriptions to new customers, while the remaining $7.4 million of the increase was attributable to expanded deployments and corresponding sales of additional subscriptions to existing customers. The increase in professional services revenue was due primarily to a $6.4 million increase in sales to new customers, which was partially offset by a $0.7 million decrease in revenue from existing customers.

Cost of Revenue

Three Months Ended March 31,
20232022$ Change% Change
(dollars in thousands)
Cost of revenue
Subscriptions$10,448 $8,206 $2,242 27.3 %
Professional services25,645 22,710 $2,935 12.9 %
Total cost of revenue$36,093 $30,916 $5,177 16.7 %
Subscriptions gross margin89.4 %90.2 %
Professional services gross margin29.3 %25.7 %
Total gross margin73.3 %72.9 %
 
Cost of revenue increased $5.2 million, or 16.7%, in the three months ended March 31, 2023 compared to the same period in 2022, primarily due to a $2.7 million increase in professional services and product support personnel costs, a $1.4 million increase in hosting costs, a $0.5 million increase in contractor costs, and a $0.3 million increase in travel and entertainment expenses. Personnel costs increased due to an increase in professional services and product support personnel headcount of 12.7% from March 31, 2022 to March 31, 2023 in addition to increased wages and fringe benefits, coupled with a $0.6 million increase in stock-based compensation expense. Hosting costs increased as sales of our cloud offering increased in the three months ended March 31, 2023. Contractor costs increased in the three months ended March 31, 2023 compared to the same period in 2022 due to an increase in the usage of subcontractors and consultants for professional services engagements.

Subscriptions gross margin slightly decreased to 89.4% for the three months ended March 31, 2023 compared to 90.2% in the same period in 2022 due to increased hosting costs as sales of our cloud offering increased. The increase in hosting costs was partially offset by an increase in subscriptions revenue during the three months ended March 31, 2023 as compared to the three months ended March 31, 2022. Professional services gross margin increased to 29.3% for the three months ended March 31, 2023 compared to 25.7% in the same period in 2022 due largely to the aforementioned increase in professional services revenue. The increase in professional services revenue was partially offset by higher personnel and other allocated costs such as human resources, information technology, and office-related spending in the comparable periods. Gross margin rose slightly to 73.3% for the three months ended March 31, 2023 compared to 72.9% for the three months ended March 31, 2022.

Sales and Marketing Expense

Three Months Ended March 31,
20232022$ Change% Change
(dollars in thousands)
Sales and marketing$63,090$45,916$17,174 37.4 %
% of revenue46.7 %40.2 %
 
Sales and marketing expense increased $17.2 million, or 37.4%, in the three months ended March 31, 2023 compared to the same period in 2022, primarily due to a $15.2 million increase in sales and marketing personnel costs and a $2.7 million increase in overhead costs, which were partially offset by a $0.7 million decrease in marketing costs. Personnel costs increased due to an increase in sales and marketing personnel headcount of 29.0% from March 31, 2022 to March 31, 2023 in addition to increased wages and fringe benefits, a $3.6 million
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increase in severance costs, a $2.7 million increase in commissions expense due to increased sales, and a $0.7 million increase in stock-based compensation expense. Overhead costs increased due to increases in certain allocated costs tied directly to our growth such as spending for offices, human resources costs, and information technology infrastructure. Additionally, travel and entertainment expense increased due to a higher number of in-person engagements and events as compared to the prior year. Marketing costs decreased primarily due to a decrease in advertising expense stemming from a decrease in the number of advertising campaigns launched in the three months ended March 31, 2023 relative to the three months ended March 31, 2022.

Research and Development Expense

Three Months Ended March 31,
20232022$ Change% Change
(dollars in thousands)
Research and development$41,624$29,839$11,785 39.5 %
% of revenue30.8 %26.1 %

Research and development expense increased $11.8 million, or 39.5%, in the three months ended March 31, 2023 compared to the same period in 2022, primarily due to an $11.9 million increase in research and development personnel costs and a $0.1 million increase in overhead costs. These increases were partially offset by a $0.2 million decrease in professional fees. Personnel costs increased due to an increase in research and development personnel headcount of 31.5% from March 31, 2022 to March 31, 2023 in addition to increased wages and fringe benefits coupled with a $1.3 million increase in stock-based compensation expense and a $0.2 million increase in severance costs. Overhead costs increased due to increases in certain allocated costs tied directly to our growth. Professional fees decreased due to a decrease in consulting fees stemming from a lower usage of external resources to assist in our platform development efforts relative to the prior year.

General and Administrative Expense

Three Months Ended March 31,
20232022$ Change% Change
(dollars in thousands)
General and administrative expense$29,694$31,461$(1,767)(5.6)%
% of revenue22.0 %27.5 %
 
General and administrative expense decreased $1.8 million, or 5.6%, in the three months ended March 31, 2023 compared to the same period in 2022 primarily due to an $8.5 million decrease in professional fees. This decrease was partially offset by a $5.6 million increase in general and administrative personnel costs and a $1.2 million increase in overhead costs. Professional fees decreased due to a $9.9 million decline in legal fees incurred relative to the three months ended March 31, 2022, which was partially offset by a $1.2 million increase in consulting fees. Personnel costs increased due to an increase in general and administrative personnel headcount of 27.2% from March 31, 2022 to March 31, 2023 in addition to increased wages and fringe benefits, as well as a $1.5 million increase in stock-based compensation expense. Overhead costs increased primarily due to an increase in certain allocated costs tied to our growth such as information technology spending and office-related expenses.

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Other Non-Operating (Income) Expense, Net

Three Months Ended March 31,
20232022$ Change% Change
(dollars in thousands)
Other (income) expense, net$(2,690)$787$(3,477)***
% of revenue(2.0)%0.7 %
*** Indicates a percentage that is not meaningful.

Other income, net was $2.7 million in the three months ended March 31, 2023 compared to other expense, net of $0.8 million in the three months ended March 31, 2022. This change was primarily due to $0.6 million in foreign exchange gains in the three months ended March 31, 2023 as compared to $1.9 million in foreign exchange losses in the three months ended March 31, 2022 as well as a $2.0 million increase in interest income in the three months ended March 31, 2023 related to our investments.

Interest Expense

Three Months Ended March 31,
20232022$ Change% Change
(dollars in thousands)
Interest expense$3,118 $74 $3,044 ***
% of revenue2.3 %0.1 %
*** Indicates a percentage that is not meaningful.

Interest expense increased $3.0 million in the three months ended March 31, 2023 as compared to the corresponding period in 2022 primarily due to interest expense on the new term loan facility we entered into during the fourth quarter of 2022.

Non-GAAP Financial Measures

To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with GAAP, we provide investors with certain non-GAAP financial performance measures. We use these non-GAAP financial performance measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. Management believes these non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding certain expenses that may not be indicative of our recurring core business operating results. We believe both management and investors benefit from referring to these non-GAAP financial measures in assessing our 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. We believe 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 institutional investors and the analyst community to help them analyze the health of our business.

Our non-GAAP financial performance measures include non-GAAP net loss, non-GAAP net loss per share, and non-GAAP operating loss. These non-GAAP financial performance measures exclude the effect of stock-based compensation expense, certain litigation-related expenses consisting of legal and other professional fees associated with the Pegasystems cases, which are not indicative of our core operating performance, and severance costs related to involuntary reductions in our workforce. While these items may be recurring in nature and should not be disregarded in the evaluation of our earnings performance, it is useful to exclude such items when analyzing current results and trends compared to other periods as these items can vary significantly from period to period depending on specific underlying transactions or events that may occur. Therefore, while we may incur or recognize these types of expenses in the future, the Company believes removing these items for purposes of calculating the non-
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GAAP financial measures provides investors with a more focused presentation of our ongoing operating performance.

We also discuss adjusted EBITDA, a non-GAAP financial performance measure we believe offers a useful view of the overall operation of its businesses. We define adjusted EBITDA as net loss before (1) other non-operating (income) expenses, net, (2) interest expense, (3) income tax expense (benefit), (4) depreciation and amortization, (5) stock-based compensation expense, (6) litigation expenses directly associated with the Pegasystems cases, and (7) severance costs. The most directly comparable GAAP financial measure to adjusted EBITDA is net loss. Users should consider the limitations of using adjusted EBITDA, including the fact this measure does not provide a complete measure of our operating performance. Adjusted EBITDA is not intended to purport to be an alternative to net loss as a measure of operating performance or to cash flows from operating activities as a measure of liquidity.

The presentation of these non-GAAP financial measures is not intended to be considered in isolation from, as a substitute for, or superior to the financial information prepared and presented in accordance with GAAP, and our non-GAAP measures may be different from non-GAAP measures used by other companies.

The following tables reconcile our non-GAAP measures to their nearest comparable GAAP measures. The reconciliation of GAAP operating loss to non-GAAP operating loss for the three months ended March 31, 2023 and 2022 is as follows (in thousands):

Three Months Ended March 31,
20232022
GAAP operating loss$(35,266)$(23,866)
Add back:
Stock-based compensation expense11,056 6,943 
Litigation expenses1,842 11,792 
Severance costs4,204 — 
Non-GAAP operating loss$(18,164)$(5,131)

The following table reconciles GAAP net loss to non-GAAP net loss for the three months ended March 31, 2023 and 2022 (in thousands):

Three Months Ended March 31,
20232022
GAAP net loss$(36,829)$(23,154)
Add back:
Stock-based compensation expense11,056 6,943 
Litigation expenses1,842 11,792 
Severance costs4,204 — 
Non-GAAP net loss$(19,727)$(4,419)
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The following table sets forth non-GAAP net loss per share for the three months ended March 31, 2023 and 2022 (in thousands except per share data):

Three Months Ended March 31,
20232022
Non-GAAP net loss$(19,727)$(4,419)
Weighted average shares used to compute net loss per share, basic and diluted 72,869 72,217 
Non-GAAP net loss per share, basic and diluted$(0.27)$(0.06)

GAAP basic and diluted weighted average shares outstanding were equal to non-GAAP basic and diluted weighted average shares outstanding for each of the three months ended March 31, 2023 and 2022.

The following table reconciles GAAP net loss per share to non-GAAP net loss per share for the three months ended March 31, 2023 and 2022:

Three Months Ended March 31,
20232022
GAAP net loss per share, basic and diluted $(0.51)(0.32)
Add back:
Non-GAAP adjustments to net loss per share0.24 0.26 
Non-GAAP net loss per share, basic and diluted$(0.27)$(0.06)

The following table reconciles GAAP net loss to adjusted EBITDA for the three months ended March 31, 2023 and 2022 (in thousands):

Three Months Ended March 31,
20232022
GAAP net loss$(36,829)$(23,154)
Other (income) expense, net(2,690)787 
Interest expense3,118 74 
Income tax expense (benefit)1,135 (1,573)
Depreciation and amortization2,342 1,773 
Stock-based compensation expense11,056 6,943 
Litigation expenses1,842 11,792 
Severance costs4,204 — 
Adjusted EBITDA$(15,822)$(3,358)

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Liquidity and Capital Resources

The following table presents selected financial information and statistics pertaining to liquidity and capital resources as of March 31, 2023 and December 31, 2022:

As of
March 31, 2023December 31, 2022
Cash and cash equivalents$198,679 $148,132 
Short-term investments and marketable securities55,803 47,863 
Property and equipment, net45,877 41,855 
Working capital*145,549 149,996 
* Defined as current assets net of current liabilities, excluding the current portion of restricted cash

As of March 31, 2023, we had $198.7 million of cash and cash equivalents and $55.8 million of short-term investments and marketable securities. We believe our existing cash and cash equivalents and short-term investments and marketable securities, together with any positive cash flows from operations and available borrowings under our line of credit, will be sufficient to support working capital and capital expenditure requirements for at least the next 12 months.

We have in the past and may in the future enter into, investments in or acquisitions of complementary businesses, products, or technologies, which could also require us to seek additional equity financing, incur indebtedness, or use cash resources. We have no present binding agreements or commitments to enter into any such acquisitions. If we are unable to raise additional capital when desired, our business, operating results, and financial condition could be adversely affected.

Sources of Funds

We have historically financed our operations in large part with equity financing arrangements. Through 2022, we have completed four public offerings and received net proceeds of $344.8 million. Outside of equity offerings, we have financed our operations through sales of subscriptions and professional services.

To further help strengthen our financial position and support our growth initiatives, in 2022 we entered into a Senior Secured Credit Facilities Credit Agreement, or the Credit Agreement, which provides for a five-year term loan facility in an aggregate principal amount of $120.0 million and, in addition, up to $60.0 million for a revolving credit facility, including a letter of credit sub-facility in the aggregate availability amount of $15.0 million and a swingline sub-facility in the aggregate availability amount of $10.0 million (as a sublimit of the revolving loan facility). On February 21, 2023, we executed the second amendment to the credit agreement which increased the aggregate principal amount of the term loan facility by $30.0 million and the limit of the revolving credit facility by $15.0 million.

The Credit Agreement matures on November 3, 2027. We will use the proceeds from the $150.0 million term loan to fund the continued growth of our business and support our working capital requirements. We were in compliance with all covenants as of March 31, 2023. We believe, based on our current financial forecasts and trends, that we will remain compliant with all covenants for the foreseeable future. As of March 31, 2023, we had used borrowing capacity of $62.0 million under our $75.0 million revolving credit facility, and we had outstanding letters of credit totaling $12.0 million in connection with securing our leased office space.

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We expect future sources of funds to consist primarily of cash generated from sales of subscriptions and the related professional services. We may also elect to raise additional sources of funding through entering into new debt financing arrangements or conducting additional public offerings. Our future capital requirements will depend on many factors, including our growth rate, the timing and extent of spending to support research and development efforts, the expansion of sales and marketing activities, particularly internationally, the introduction of new and enhanced products and functions as well as platform enhancements and professional services offerings, and the level of market acceptance of our product.

Uses of Funds

Our current principal uses of cash are funding operations and other working capital requirements. Historically, we have also utilized cash to pay for the acquisition of businesses that were complementary to ours, and we may pursue similar opportunities in the future. Over the past several years, revenue has increased significantly from year to year and, as a result, cash flows from customer collections have also grown. However, as we continue to invest in growing our business, operating expenses have also increased. Outside of cash used in operations, other uses of cash in 2023 to date have included capital expenditures related to the expansion of our headquarters, repayments of existing debt, and purchases of investments. Non-operating cash uses in the prior year through March 31, 2022 consisted primarily of capital expenditures related to the expansion of our headquarters.

Furthermore, in 2021 we executed a non-cancellable cloud hosting arrangement with Amazon Web Services that contains provisions for minimum purchase commitments. Specifically, purchase commitments under the agreement total $131.0 million over five years. The agreement, which is in its second year, contains minimum spending requirements of $25.0 million in the second year and $28.0 million in each of the third, fourth, and fifth years. The timing of payments under the agreement may vary, and the total amount of payments may exceed the minimum depending on the volume of services utilized. Spending under this agreement for the three months ended March 31, 2023 and 2022, totaled $9.4 million and $7.8 million, respectively. We expect to meet our minimum purchase commitments for the remainder of the contract term.

Silicon Valley Bank

In March 2023, Silicon Valley Bank’s (“SVB”) U.S. operations were placed into receivership by the Federal Deposit Insurance Corporation (“FDIC”), and its U.K. operations were placed into a Bank Insolvency Procedure by the Bank of England. SVB’s U.S. operations were later sold to First Citizens Bank and Trust Company (“First Citizens”), and its U.K. operations were sold to HSBC UK Bank, Plc (“HSBC”).

We have access to all of our cash, cash equivalents, and investments that were in accounts previously held by SVB, and we do not expect a material impact to our ongoing operations stemming from the SVB matter. We believe the financial institutions holding our cash deposits are financially sound.

We are closely monitoring the ongoing events involving limited liquidity, defaults, non-performance, or other adverse developments that affect financial institutions or other companies in the financial services industry. In March 2023, we elected to draw down $62.0 million of our available revolving line of credit to protect us against disruptions and volatility in the credit markets. We continue to believe we have sufficient assets and liquidity to cover our future obligations and to maintain compliance with the covenants contained in our Credit Agreement.
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Historical Cash Flows

Three Months Ended March 31,
20232022$ Change% Change
(dollars in thousands)
Beginning cash, cash equivalents, and restricted cash$150,381 $103,960 $46,421 44.7 %
Operating activities:
Net loss(36,829)(23,154)(13,675)59.1 
Stock-based compensation and other non-cash adjustments13,945 7,641 6,304 82.5 
Changes in working capital(2,381)(5,091)2,710 (53.2)
Net cash used by operating activities(25,265)(20,604)(4,661)22.6 
Investing activities:
Net cash (used by) provided by investing activities(12,316)2,099 (14,415)***
Financing activities:
Net cash provided by financing activities88,144 24,404 63,740 ***
Effect of exchange rates15 40 (25)(62.5)
Net change50,578 5,939 44,639 ***
Ending cash, cash equivalents, and restricted cash$200,959 $109,899 $91,060 82.9 %
*** Indicates a percentage that is not meaningful.

Operating Activities

Net cash used by operating activities was $25.3 million for the three months ended March 31, 2023 as compared to $20.6 million used by operating activities for the three months ended March 31, 2022. The increase in net cash used by operating activities was primarily due to a $13.7 million increase in net losses, most notably driven by the increase in operating expenses as discussed above. The increase in net losses was partially offset by a decrease in cash flows used by working capital of $2.7 million. This change in working capital was comprised primarily of a $9.2 million increase from accounts receivable due to collections from large renewals that occurred in the fourth quarter of 2022, partially offset by an increase in disbursements from accounts payable and accrued expenses of $4.2 million driven by the timing of vendor payments.

Investing Activities

Net cash used by investing activities was $12.3 million for the three months ended March 31, 2023 as compared to $2.1 million in net cash provided by investing activities for the three months ended March 31, 2022. This change was primarily driven by a $7.9 million increase in purchases of investments, a $5.4 million decrease in proceeds from the sale of investments, and a $1.0 million increase in capital expenditures.

Financing Activities

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Net cash provided by financing activities was $88.1 million for the three months ended March 31, 2023 as compared to $24.4 million of net cash provided by financing activities for the three months ended March 31, 2022. The increase in net cash provided by financing activities was primarily due to a $92.0 million increase in proceeds from borrowings during the three months ended March 31, 2023. This increase was partially offset by a $24.3 million decrease in proceeds received from the exercise of stock options, a $3.0 million increase in payments for employee tax withholdings associated with the net settlement of stock awards, and a $0.8 million increase in debt repayments.

Critical Accounting Estimates

There have been no material changes in our critical accounting policies from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 16, 2023. We are not aware of any specific events or circumstances that would require us to update our estimates, assumptions, and judgments.

Recent Accounting Pronouncements

See Note 2 to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for a discussion of recent accounting pronouncements.
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Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risks in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily the result of fluctuations in interest rates and foreign currency exchange rates.

Interest Rate Risk

We had total cash, cash equivalents, and restricted cash of $201.0 million as of March 31, 2023, which consisted of a money market fund, cash in readily available checking accounts, and overnight repurchase investments. These instruments, which are not dependent on interest rate fluctuations that may cause principal amounts to fluctuate, are held for reinvestment and working capital purchases.

In addition, as of March 31, 2023, we held $55.8 million of fixed income securities such as U.S. Treasuries, commercial paper, corporate bonds, and agency bonds. These securities are subject to market risk due to fluctuations in interest rates, which may affect our interest income and the fair value of our investments. We classify investments as available-for-sale, including those with stated maturities beyond twelve months. As such, no gains or losses due to changes in interest rates are recognized in our condensed consolidated statements of operations unless such securities are sold prior to maturity or due to expected credit losses. A hypothetical 100 basis point change in interest rates would not have had a material effect on the fair market value of our investment portfolio as of March 31, 2023. To date, fluctuations in interest income have also not been significant. Our investments are made for the purpose of preserving capital, fulfilling liquidity needs, and maximizing total return. We do not enter into investments for trading or speculative purposes.

As of March 31, 2023, we had outstanding debt of $210.6 million, which carries interest as defined in our Credit Agreement. Refer to Note 8 of the condensed consolidated financial statements in this Quarterly Report on Form 10-Q for additional details. We assessed our exposure to changes in interest rates by analyzing sensitivity to our operating results assuming various changes in market interest rates. A hypothetical increase of one percentage point in the interest rate as of March 31, 2023 would increase our interest expense by approximately $2.1 million annually.

Inflation Risk

We are exposed to market risks related to inflation in personnel costs, third-party service providers, subcontracting costs, professional fees, and general overhead expenses. During 2022, inflation increased to rates beyond recent history, and as a result we experienced rising costs. If these inflationary pressures continue or increase in severity, we may not be able to fully offset such higher costs through price increases and productivity initiatives. While we do not believe inflation has had a material impact on our results of operations to date, a continued high rate of inflation in the future may have an adverse effect on our ability to maintain operating costs and adversely affect our gross profit margin.

Foreign Currency Exchange Risk

Our reporting currency is the U.S. dollar. Due to our international operations, we have foreign currency risks related to revenue and operating expenses denominated in currencies other than the U.S. dollar, primarily the Australian dollar, Swiss franc, British pound, and Euro. Our international sales contracts are primarily denominated in the local currency of the customer making the purchase. In addition, a portion of operating expenses are incurred outside the United States and are denominated in foreign currencies. Increases in the relative value of the U.S. dollar to other currencies will negatively affect revenue and net operating results as expressed in U.S. dollars. Based on a sensitivity analysis, a 10% change in the foreign currency exchange rates for the three months ended March 31, 2023 would have impacted our total revenue by approximately 3% and operating loss by approximately 1%. This calculation assumes all currencies change in the same direction and proportion relative to the U.S. dollar.

We have experienced and will continue to experience fluctuations in net loss as a result of transaction gains or losses related to remeasuring certain current asset and current liability balances denominated in currencies other
41
than the functional currency of the entities in which they are recorded. We have not engaged in the hedging of foreign currency transactions to date, although we may choose to do so in the future.

Item 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act that are designed to ensure information required to be disclosed by a company in the reports it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure information required to be disclosed by a company in the reports it files or submits under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2023. Based on the evaluation of our disclosure controls and procedures as of March 31, 2023, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, believes our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives and are effective at the reasonable assurance level. However, our management does not expect our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance the objectives of the control system are met. Further, the design of a control system must reflect the fact there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

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PART II—OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

Other than as discussed below, during the period covered by this report, there were no material developments in the legal proceedings disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022.

Pegasystems Litigation

On March 29, 2023, we filed our response brief in Appian Corp v. Pegasystems Inc., No. 2020-07216 (Fairfax Cty. Ct.). Pegasystems filed a reply brief on May 3, 2023. The timeline of the case is solely within the control of the Court of Appeals until it rules. Refer to Note 12 in the accompanying condensed consolidated financial statements for further information.

Other Matters

From time to time, we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business. Other than as disclosed elsewhere in this Quarterly Report on Form 10-Q, we are not presently a party to any legal proceedings that, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, financial condition, or cash flows. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.

Item 1A. RISK FACTORS

Our business is subject to risks and events that, if they occur, could adversely affect our financial condition and results of operations and the trading price of our securities. In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors described in “Part I, Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 16, 2023. Other than as set forth below, there have been no material changes from the risk factors described in that report.

We maintain cash deposits in excess of federally insured limits. Adverse developments affecting financial institutions, including bank failures, could adversely affect our liquidity and financial performance.

We regularly maintain domestic cash deposits in banks insured by the Federal Deposit Insurance Corporation (the “FDIC”) that exceed the FDIC insurance limits. Bank failures, events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, or concerns or rumors about such events, may lead to liquidity constraints. For example, on March 10, 2023, Silicon Valley Bank (“SVB”) was closed by the California Department of Financial Protection and Innovation, and the FDIC was appointed receiver of SVB. If other banks and financial institutions enter receivership or become insolvent in the future due to financial conditions affecting the banking system and financial markets, our ability to access our cash, cash equivalents, and investments, including transferring funds, making payments or receiving funds, may be threatened and could have a material adverse effect on our business and financial condition. There can be no assurance our deposits in excess of the FDIC or other comparable insurance limits will be backstopped by the U.S. or that any bank or financial institution with which we do business will be able to obtain needed liquidity from other banks, government institutions, or by acquisition in the event of a failure or liquidity crisis.

The failure to address the Federal debt ceiling in a timely matter may adversely affect our business, financial condition, results of operations and prospects.
A government shutdown or the U.S. government’s failure to raise the debt ceiling, which increases the possibility of a default by the U.S. government on its debt obligations, could adversely affect our business, financial condition, results of operations, and prospects. Revenue generated from government agencies represented 19.2%, 19.6%, and 18.1% of our revenue for the years ended December 31, 2022, 2021, and 2020, respectively, of which
43
the top three U.S. federal government agencies generated 4.5%, 5.6%, and 6.6% of our revenue for the years ended December 31, 2022, 2021, and 2020, respectively. The failure of the U.S. government to raise the debt ceiling could cause our revenue to decline in the near-term as our U.S. federal government customers may be unable to renew existing contracts or enter into new agreements with us and could affect our prospects for future revenue generated from such customers.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

a.Recent Sales of Unregistered Equity Securities

Not applicable.

b.Use of Proceeds

Not applicable.

c.Issuer Purchases of Equity Securities

Period
Total number of shares purchased(1)
Average price paid per shareTotal number of shares purchased as part of publicly announced plan
Maximum number of shares that may yet be purchased under the plan(2)
January 1 to January 31, 20236,879 $31.97 6,879 925,126 
February 1 to February 28, 20236,223 $42.12 6,223 918,903 
March 1 to March 31, 20235,663 $44.55 5,663 913,240 
Total18,765 $39.13 18,765 913,240 
(1) Shares purchased represent shares purchased on the open market pursuant to the Appian Corporation Employee Stock Purchase Plan (“ESPP”), which was approved by the Company’s stockholders on June 11, 2021. Shares purchased under the ESPP are deposited into the participants’ accounts.
(2) Because the number of shares that may be purchased under the ESPP depends on each employee’s voluntary election to participate and contribution elections and on the fair market value of our Class A Common Stock at various future dates, the actual number of shares that may be purchased under the plan cannot be determined in advance. We have filed a registration statement on S-8 that covers 1,000,000 shares.

Item 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

Item 4. MINE SAFETY DISCLOSURES

Not applicable.

Item 5. OTHER INFORMATION

Not applicable.

44
Item 6. EXHIBITS

Exhibit No.
DescriptionReference
10.1Joinder and Second Amendment to Credit Agreement, dated as of February 21, 2023, by and among Appian Corporation, MUFG Bank, Ltd., Wells Fargo Bank, National Association, Comerica Bank, Customers Bank, and Silicon Valley Bank.
31.1Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*
Certifications of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INSXBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.Attached.
101.SCHXBRL Taxonomy Extension Schema DocumentAttached.
101.CALXBRL Taxonomy Extension Calculation Linkbase DocumentAttached.
101.DEFXBRL Taxonomy Extension Definition Linkbase DocumentAttached.
101.LABXBRL Taxonomy Extension Label Linkbase DocumentAttached.
101.PREXBRL Taxonomy Extension Presentation Linkbase DocumentAttached.
104Cover page formatted as Inline XBRL and contained in Exhibit 101Attached.
* The certifications furnished in Exhibit 32.1 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent the company specifically incorporates it by reference.



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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
May 9, 2023By:/s/ Matthew Calkins/s/ Mark Matheos
Name: Matthew CalkinsName: Mark Matheos
Title: Chief Executive Officer and Chairman of the Board (Principal Executive Officer)Title: Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

46
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