Any thoughts on APPN?

This is one of the few SaaS companies I follow that has gone down in recent weeks. I can’t find anything obvious to help me decide if I should be buying or not. Has anyone been watching closely? Anything you can share as a leaping off point?

This recent foolishly (with a small “f”) article is literally useless. It doesn’t even mention Appian except for the headline and the ticker symbol at the start for SEO click-bait:…

This slightly older article is much better (I wish every single TMF report (Buy, Best Buy Now, etc) had this level of information. It is so much better than the usual “we like this because ” format we get so often. Well done Nicholas Rossolillo! This is behind the paywall so I’m not going to quote anything directly. I’m going to assume the numbers posted are publically available, and correct, as are any statements quoted as made by the company, though.…

My take-away:

  • Growth was pretty good last quarter at 31% (I had 33% down for some reason), BUT they pulled some stuff forward from Q2 so this number is contaminated to some degree.
  • Subscription revenue, which is what I’m really interested in, grew by 46% and is a significant revenue driver at ~63% of total revenue.
  • Gross margins also improved YoY by 9.3%! 60.1% to 69.4
  • Free cash flow was negative but at -10M vs -20M YoY, it improved a nice amount.

Taken all together this points towards an acceleration in growth. If subscriptions grow at the same rate, and margins stay the same or improve further, the overall revenue growth will start to catch up to that 46% in subscription revenue, and more falls through to cash, right?

…but we can’t ignore the pandemic. According to this article (I didn’t crunch any of these numbers or check filings myself), The company painted a bleak picture where subscription revenue growth drops to 25% and total revenue is down 7% (which I assume means +72M still, which is still really good if you consider they did $78.9M with some goodness pulled up from Q2 and it sounds like this was already a very large surprise to the up-side). The article also states that Appian warned this could continue through to the end of the year…and this is the real “ouch”-point.

So I guess the questions that remain are a month old but still relevant since we have nothing to add? Like so many companies, the coming quarter’s report is going to have a big focusing effect on the current picture. Regardless, long-term, potential sounds high, but we don’t know how long the short-term beating is going to last.

Anyone have anything that supports or rebukes this shallow dive?

Anyone taking this as an opportunity to buy? Waiting for another set of numbers first?

I’m of two minds:

Mind #1: There is little reason to buy now to get some extra value if growth will go nowhere for a quarter or two or three, versus putting money in companies that are growing currently. I mean if Appian is going to head toward accelerating 40%+ growth, I can buy once we know that to be true and still be ok, right?

Mind #2: Things will only get better from here and I have new money to deploy and this is one of my smaller holdings. Long term I don’t see how the current landscape can hurt business permanently. I really like this company and what it offers. Why not add some today to hold on to for a while?


I looked at appian in nov 2017 and passed on it for a few reasons.

  1. Subscription revenue was only about 2/3s of their revenue, the other is low/negative margin professional services.

  2. operational leverage never has materialized. It was crummy back in 2017 and continues to be subpar

  3. revenue growth has been very marginal when compared to our other companies.

I’ve recently been interested in them again because they acquired a company that does RPA (robotic process automation)… RPA has the potential to be huge in my opinion and almost made me put some speculative money into the company despite their relatively crappy numbers. The company I actually want to invest in is called UIpath but they are private.