Is Appian a Buy After Its Latest Earnings Report?

Appian (APPN) reported strong third-quarter earnings, up 25% to $234.6 million, surpassing expectations of $217 million. The surge in AI adoption, with customer AI usage rising 50% sequentially, played a significant role in the uptick. Revenue growth was driven by a surge in on-premises revenue, up 64% in the public sector, while cloud subscription revenue, considered core, grew 20% to $136.4 million.

Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) increased from $32.2 million to $43.4 million, and adjusted earnings per share (EPS) climbed from $0.32 to $0.51, both beating estimates of $0.33. For the next quarter, the company anticipates cloud subscription revenue between $143 million and $145 million, reflecting 22%-24% growth, and total revenue between $233 million and $237 million, indicating 15%-17% growth.

Looking ahead, Appian projects adjusted EPS to double to $1.20-$1.24 by the end of the year. The stock saw a 4% increase following the report, after a near 20% jump in premarket trading, though broader market volatility somewhat offset these gains. Appian's CEO, Matt Calkins, emphasized the company's reliability in AI applications, stating that competition has decreased as it now competes with more robust players.

He attributed this success to Appian's focus on reliability, its established position with government agencies and multinational banks, and its comprehensive platform built on a top-rated orchestration layer, governance protocols, and cost-effective token usage. CFO Serge Tanjga expressed strong confidence in the company's future, signaling that Appian intends to be a significant player in the coming years.