Shares of Appian (APPN +1.75%) were moving higher today after the low-code software company posted strong results in its fourth-quarter earnings report, including a surprise adjusted profit and better-than-expected revenue.
As of 10:07 a.m. ET, the stock was up 14.4% on the news.
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Appian takes a big step toward profitability
Appian said that cloud subscription revenue was up 26% to $83.1 million, driving overall revenue up 16% to $145.3 million as professional services revenue continued to decline. The overall figure beat estimates for $140.9 million.
Appian also reported a record gross margin of 78% as its business shifts to the high-margin cloud software sector, and subscription gross margin improved to 91%, its strongest result in over a year. Net retention rate, which reflects the increase in spending from existing customers, was 119%, also its fastest growth rate in at least a year.
On the bottom line, the company delivered an adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) profit of $1 million, up from an adjusted EBITDA loss of $24.8 million in the quarter a year ago. It reported an adjusted profit per share of $0.06, up from a loss of $0.28 in the quarter a year ago and much better than estimates calling for a loss of $0.24.
CEO Matt Calkins said: "Appian delivered our plan in 2023 and reached two milestones. Full-year revenue exceeded half a billion dollars, and we achieved the highest quarterly gross margin in our public history."
NASDAQ: APPN
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What's next for Appian
Appian has a history of providing conservative guidance, and the company's forecast for 2024 was slightly below the analyst consensus. It expects cloud revenue to grow 20% to $364 million-$366 million, total revenue to rise 13% to $615 million-$617 million, and adjusted EBITDA loss of $20 million-$25 million.
Calkins said the company was on track to reach an EBITDA profit by 2025 and talked up the company's initiatives around artificial intelligence (AI) and its low-code data fabric, which allows users to gather and connect data from different sets, breaking silos.
The company has an Investor Day conference planned for April where investors should expect more about its AI and data fabric initiatives, among other products.
In a difficult environment for software companies, Appian is still delivering strong cloud revenue growth and taking steps to profitability. It's not surprising to see the stock up on today's news.
