Appian Corporation Q3 FY2025 earnings call

Financial Results - Cloud subscriptions revenue grew 21% to $113.6M, subscriptions revenue 20% to $147.2M, total revenue 21% to $187.0M, adjusted EBITDA $32.2M. ### Go-to-Market - Go-to-market productivity ratio rose to 3.5, ninth consecutive quarterly increase. Weighted Rule of 40 score was 39. ### AI Trend - Emphasized AI needs connection to real work and processes. Appian's serious AI examples include a global pharma and U.S. military using Appian AI. ### Product Launch - Upcoming launch of Agent Studio for powerful AI agents with code-free configuration. ### Upmarket Strategy - Booked over 50% more new 7-figure software deals. Strong federal sector performance. Wins include a restaurant franchise and U.S. military branch using Appian for process automation.

In the third quarter of 2025, Appian's cloud subscriptions revenue grew 21% to $113.6 million. Subscriptions revenue grew 20% to $147.2 million. Total revenue grew 21% to $187.0 million. Adjusted EBITDA was $32.2 million. Subscription revenue represented 79% of total revenue. Cloud subscription revenue retention rate was 111%. International operations contributed 40% of total revenue. Professional services revenue was $39.8 million, up 29%. Gross margin was 77%, subscription gross profit margin 88%, and professional services gross margin 34%.

Fourth Quarter 2025 - Cloud subscription revenue expected $115M - $117M (16%-18% growth), total revenue $187M - $191M (12%-15% growth), adjusted EBITDA $10M - $13M, non-GAAP EPS $0.04 - $0.08. ### Full Year 2025 - Cloud subscription revenue expected $435M - $437M (18%-19% growth), total revenue $711M - $715M (15%-16% growth), adjusted EBITDA $67M - $70M (~10% margin). ### Government Shutdown - Potential $10M revenue/EBITDA impact if shutdown continues through year-end, mostly affecting term license revenue.

Potential impact of ongoing U.S. government shutdown on term license revenue, with modest disruption assumed in guidance, but confidence it's timing-related.

Q: Sanjit Singh asked about cloud ACV bookings strength and go-to-market transformation.

A: Matt Calkins attributed to upmarket strategy and AI traction; Srdjan Tanjga said progress in move-up market, like fourth/fifth inning, with plan to grow sales org.

Q: Steven Enders asked about Fed impact and AI Studio feedback.

A: Matt Calkins bullish on government business; Srdjan Tanjga said strong feedback from beta, monetization via AI advanced tier and consumption.

Q: Raimo Lenschow asked about AI differentiation and profitability path.

A: Matt Calkins emphasized process as complement to AI; Srdjan Tanjga said focus on full-year EBITDA margin at 10% midpoint, modest margin expansion ahead.

Q: Devin Au asked about international performance and professional services gross margin.

A: Matt Calkins said AI driving international growth; Srdjan Tanjga said professional services margin high due to exceeded bookings, not fully sustainable but high profitability expected.

Q: James Wood asked about services model and FTEs.

A: Matt Calkins said CS force helps deploy technology; Srdjan Tanjga said net retention rate part of growth, not all, with minimal migrations.

Q: Jacob Roberge asked about sales headcount growth and margin.

A: Srdjan Tanjga said plan to moderate headcount growth, focus on sustainable growth engine; Matt Calkins talked about modernization opportunity and collaboration in app transformation.