Appian (APPN +0.75%) stock fell late last week following its first-quarter earnings report as second-quarter guidance came in under expectations.
Management called for a decline in overall revenue of 7%-8%, though much of that impact was because of $4 million in on-premise subscription revenue that was pulled from the second quarter into the first, as well as weakness in the professional services segment due to the impact of COVID-19. Nonetheless, the company still called for solid revenue growth of 25%-26% in cloud subscriptions.
Like much of the business world, Appian is facing challenges stemming from the uncertainty around COVID-19. But the low-code cloud software maker has also stepped up to help organizations manage through the crisis.
Appian provides a low-code automation platform that accelerates the creation of high-impact business applications. In other words, it allows businesses to create apps using little or no code to quickly deploy and update them with the help of artificial intelligence tools and bots.
Image source: Appian.
It launched three apps to help organizations deal with COVID-19-related issues, including:
- A free app to help workplaces manage COVID-19 incidents, including tracking the health status, location, and travel history of employees. The app can be configured and adopted within two hours. Hundreds of companies have signed onto the app from around the world, from industries including financial services, manufacturing, and healthcare. CEO Matt Calkins sees the free app as a way to improve the company's visibility and attract potential customers.
- An app to help banks accept and manage Paycheck Protection Program loan applications, including all phases of the lifecycle from the loan application and qualification to Small Business Administration compliance. The app can be rolled out in days and includes Appian's advanced features, including bots and AI-powered intelligent document processing.
- A new Workforce Safety and Readiness app to help ensure safety at workplaces during the COVID-19 crisis (or a similar crisis) and manage the return-to-work procedure. The app provides a central command center, easy workforce screening, and fast issue resolution. Two-thirds of the app's users so far are new customers for Appian and include Bexley Health Neighbourhood Care, a British healthcare provider using the app to ensure the safe discharge of patients and compliance with National Health Services rules; and a top-10 U.S healthcare provider whose doctors are using the technology to submit COVID-19 patients for clinical trials for a new drug. The company built the app in 24 hours without help and has already deployed it to thousands of doctors and their medical centers.
The long-term opportunity
Appian is chasing an opportunity in low-code development that is expected to grow from a $5.6 billion market in 2018 to a $52.3 billion one by 2024, according to Prescient & Strategic Intelligence, growing at a compound annual rate of 45%. The software company is recognized as a leader in the category by Gartner, and Calkins said that Appian strengthened its leadership position with its acquisition of Robotic Process Automation (RPA) in January. With the acquisition, Appian has become a "one-stop shop for automation, with best-in-class solutions for workflow, AI, and RPA." RPA by itself will represent a $12 billion market by 2023.
Beyond the new COVID-19 apps that Appian has launched, Calkins sees the crisis as benefiting category leaders like his company and posing problems for challengers and start-ups, which tend to have more trouble raising money in a recessionary climate. Such a crisis also tends to force larger competitors to retrench and focus on their strengths. That should help protect Appian's lead in low-code and automation, as Calkins anticipates that the most disruptive competition in the category would come from a start-up or an aspirant. Founded in 1999, Appian has managed and grown through previous recessions, and Calkins is confident that the company can do it again -- despite the headwinds and uncertainty, the company is continuing to hire in categories like sales and engineering.
With the recent acquisition of RPA, the secular shift to low-code and automation, and the impact of the recession and COVID-19 on competitors -- which should also make top talent easier to hire -- Appian looks set to emerge from the crisis in a stronger position. Considering the market opportunity in low-code cloud stock, Appian should have plenty of room for growth in front of it.
