Appian (NASDAQ: APPN) has had a roller-coaster ride as a publicly traded company. After soaring in the early stages of the pandemic on high hopes for its low-code technology, the stock fell sharply in 2021. It has stayed down since then as software stocks have been generally under pressure following a "tech recession" in 2022, and slow growth since then.
During that time, Appian has evolved into an artificial intelligence (AI)-based process automation company, which is sometimes called low-code or process mining. It's streamlined its business through layoffs and cost cuts, reformulated its strategy to focus on the high end of the market, and now looks as strong as it has in years as it's delivering strong growth in cloud-based software and is turning profitable.
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The stock moved up 2.6% on Thursday as the market responded to solid results in its third-quarter earnings report. Cloud subscription revenue, the metric the company focuses on, rose 22% to $94.1 million. Overall revenue was up just 12% to $154.1 million, which was due to a decline in professional services revenue, in line with Appian's strategy of pushing more of that revenue toward partners like consultants that help sell the product. Total revenue was ahead of estimates at $151.9 million.
On the bottom line, Appian also showed significant improvement as adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) improved from a loss of $5.3 million to a profit of $10.8 million, benefiting from cost cuts, focusing on the higher end of the market. The company reported adjusted earnings per share of $0.15, up from an adjusted loss of $0.20 per share and well ahead of a per-share loss of $0.08.
Appian also raised its full-year EBITDA guidance of $5 million to $7 million, a significant improvement of its guidance from the beginning of the year for a loss of $20 million to $25 million.
How Appian is harnessing AI
Artificial intelligence has rapidly become the future of technology and for software companies like Appian, and AI is embedded in the company's process automation platform.
Companies like Amazon are talking up the power of "agentic AI," a tool that operates autonomously, making complex decisions based on real-time data. Appian CEO Matt Calkins asserted that the company's process automation is a better solution, saying on the earnings call, "Appian uses AI in a process to create a superior version of Agentic AI."